Tourism Hotels and Leisure Ltd - Research Paper Example

MARKETING OF SERVICE PRODUCT 2005 Executive Summary Marketing is defined differently among perspectives, but none can deny the importance of the subject toward business. Marketing products are somewhat more popular than marketing services, despite the fact that the service sector is responsible for providing more jobs than the tangible product sector. There are some unique characteristics in marketing services, thus marketing strategies for services required different concerns also. This elaboration provides the literature review of basic marketing services techniques taken from several text books. By the end of the discussion, we present a brief example of how Tourism Hotels and Leisure Ltd (THL), an Australian company registered in ASX since 1985, uses several marketing strategies to sustain its global operations while maintaining its competitive advantage. In addition, we also provide tabular forms for analyzing marketing strategies that THL provide. There are four quadrants: product, product delivery, auxiliary services, and additional marketing. Table of Content Executive Summary i Table of Content ii List of Figures iii I. Marketing of Service Product 1 II. Aims and Scope of the Report 3 III. Research Methodology 3 IV. Results 4 IV.1 Tourism Hotels and Leisure Ltd 4 IV.2 M-S model of Tourism Hotels and Leisure Ltd 6 IV.2.1 Product Segment 6 IV.2.2 Product Delivery 8 IV.2.3 Auxiliary Services 11 IV.2.4 Additional Marketing 12 Bibliography 15 List of Figures Figure 1: Multi-Segment Model (M-S Model) 5 Figure 2: Buyer's Perspective: Product 7 Figure 3: Buyer's Perspective: Product Delivery 9 Figure 4: Buyer's Perspective: Auxiliary Services 11 Figure 5: Buyer's Perspective: Additional Marketing 13 I. Marketing of Service Products In his book Marketing Management, Philip Kotler (2000), mentioned that 21st century marketing is marked by companies that managed to're-design' all the rules of marketing. In exchange of spending thousands of dollars on expensive market research, those companies took advantage of all their limited resources, producing near to their customers' locations and creating more solutions that are satisfying their customers. "They built customer's clubs, engage in creative public relations, and focus on efforts to produce high quality products and win-over customer's long term loyalty", said Kotler. Those companies have proven that marketing is an ever-developing science, and it has a very important role on deciding the faith of a company There are several definitions of marketing but we can divide them into two important segments, which are social and managerial definition. According to the social definition, marketing is designed to provide customers with products and services they required, thus, several marketers believed that marketing is simply a way of increasing the quality of life. On the other hand, Peter Drucker, as representative of the managerial perspective stated that sales are not the end goal of a marketing process. He stated that the goal of marketing is "to have an understanding of the consumer in such a kind that products meet consumers' needs and sell themselves" (Kotler, 2000). Within this short elaboration, our goal is to describe techniques of marketing services and present a real example of application in a real company. There are several definitions of the core difference between products and services. However, most will focus on the fact that products can be seen and touched prior to purchase, while services cannot. Another obvious difference is the idea that most services require the consumer to be present when the service is performed while products do not. An example is buying a pair of shoes compared to purchasing a hair cut. Nevertheless, many outcome of a company cannot be differentiated as products or services. According to Philip Kotler, the differentiation of a company's outcome can vary as: 1. Pure Tangible Products, as soap, toothpaste, or salt 2. Tangible Products accompanied with services, such as showroom, installation advice, after sale service, etc 3. Mixed between products and services, like restaurants 4. Main services accompanies with additional products, like airlines 5. Pure services, like babysitting, pshycotherapy and massage services. (Kotler, 2000) Wilson (1972), suggests that "the more intangible the service, the greater will be the difference in the marketing characteristics of the service". Because the definition is important for designing marketing strategies, discussions of the subject are developing among marketers. One of the most recent concepts is the service-good analysis1, which aimed to speed up the process of product/service definition in order to quickly produce the proper marketing strategy (Langford, 1997). According to Kurtz and Clow (1997), there are several unique characteristics of services, which demand different marketing concerns including intangibility, perishability, inseparability, and variability. The intangible nature of the service requires companies to make the service more tangible by stressing tangible cues within promotional efforts. Company image, recommendations and word of mouth are becoming important within marketing services strategies. Services also have perishability character, which means that the service will be over as soon as customers leave the premises. Thus, the physical facility and the physical capacity of the sites are very much important for the service business. The service industry also contains inseparability character, where demand is more sensitive to supply. Thus, firms must be more carefully match services with existing demands to ensure satisfaction. In the case of variability of services, marketing department would have to work closely together with the service performers to ensure a consistent level of service quality. II. Aims and Scope of the Report 1. Using the non-participant observation method, collecting data and analyzing qualitative information from journal, books, magazine and other online materials, this paper is to analyze product offering of service products by using Multi-Segment (M-S) model 2. Conduct analysis by using M-S model on a service company in Australia III. Research Methodology In general, there are two approaches to research: Qualitative and Quantitative. Qualitative approaches are research that is carried out through interviews and observations. This kind of research enables a researcher to investigate in little more detail on the individual perceptions of a phenomenon. Since the research deals with the personal, therefore, such an investigation is limited in its scope. Moreover, observation becomes an important technique for collecting data concerning what occurs in a real-life situation. This method also helps us to reach an understanding about the perceptions of those who are being studied, in that situation. To be specific, we employ non-participant observation method especially by analyzing qualitative information from journals, books, magazines and many more. The most important of conducting observation is it provides researchers with an understanding about the perceptions about things or people we observe. However, since observation deals with someone's perception, we plan to avoid preconceptions since it would provide this research with some bias. The method does not involve direct interviews which will slightly reduce objectivity and the accuracy of information. We are retrieving more reliable data from experts' analysis, journals and various publications from available media. Using the data resources above, we are hoping to present an independent and objective analysis toward the contemporary issue. IV. Results IV.1 Tourism Hotels and Leisure Ltd Figure 1 shows Multi-Segment model, which is known as M-S Model. There are in general four quadrants in the model, each consists of four elements: entities (E), Marketer action (M), Buyer Action (B), and Interaction (I). In order to describe how the services marketing strategies above are applied in a real case, we use the profile of Tourism Hotels and Leisure Ltd, an Australian-based service company, and further analyze this company by using the M-S model. Tourism, Hotels and Leisure Limited is a global accommodation management company based in Sydney and listed on the Australian Stock Exchange since 1985. There are several key business asset of the company, which are: proprietary hotel operating systems, intellectual properties, trade marks and management franchise agreements ('Golden Tulip Brands', 2005). The company owned five hotel brands in Asia pacific, which are: Grand Pacific Suites & resorts, Pacific International Suites, Apartments & Resorts; Golden tulip Hotels, Inns & Resorts, Plaza Hotels and Pensione Hotels. The company, together with its affiliates, has more that 435 hotels, in 370 locations across 43 countries in five continents. In Asia Pacific alone the company owned 53 hotels providing up to 4,200 rooms. In Australia, the company recently purchased the Plaza hotels consist of a group of 30 hotels in mid market category ('THL', 2005). Figure 1: Multi-Segment Model (M-S Model) Source: McColl-Kennedy, J. 2003, Service Marketing: a Managerial Approach, John Wiley and Sons, Australia IV.2 M-S model of Tourism Hotels and Leisure Ltd IV.2.1 Product Segment The operation of a service company differs from products resulted from a series of production activities. There are several benefits or the tangible product industry that cannot be obtained in the service industry. For example, the benefits of industrialization cannot be generalized to the service industry. Services cannot be produced in advance and stored for future use. However, the concept of marketing services provides a different perspective of that consist of three operational positions, which are cost efficiency, customization and service quality. The process of producing the services also differs from creating a product. Each service is differentiated by complexity of the process and the variability of each step of the process. There are several strategies related to the operations of a service company, some of them are position mapping and blueprinting A service company can benefit from creating position mapping and blueprinting. Both analysis tools will help the company to define its competitors, the intensity of the competition and the direction it heads for (Kurtz and Clow, 1997). To better describe the product segment of Tourism Hotels and Leisure Ltd, below is tabular form of buyer's perspective on products quadrants. Entity Booking rooms by any ways (via telephone, online etc) for specified date without mistakes on customers' preference in all the company's five hotel brands in Asia pacific: Grand Pacific Suites & resorts, Pacific International Suites, Apartments & Resorts; Golden tulip Hotels, Inns & Resorts, Plaza Hotels and Pensione Hotels. Providing value added service for customers who booking penthouse rooms such as free dinner, limousine services etc. Market Activity Provide computerized booking systems Train reservation staffs to handle the computerized system Arrange joint marketing with limousines service providers Buyer Activity Realization of having booked hotel rooms without mistakes on customers' preferences Have an additional services for customers booking penthouse rooms like limousine service, free dinner etc Interaction The buyer and reservation staffs arrange the hotel rooms booking via telephone, e-mail, online booking, travel, surface mail. Additional value added services are agreed upon including limousine service, free dinner, and free city tour Figure 2: Buyer's Perspective: Product The company has been known as developer of world class hotels. More than 20 years of experience in the business has provided the company with methods to guide developers and owners to achieve success with the most efficient and cost effective ways. The company provides unique features, ensuring optimum guest experience at all of their properties, combined with efficient operations of the hotels management to ensure employee satisfaction also. In one of their sites, managers of THL claim that "delivering a consistent, quality customer experience is the aim for all THL brands" ('Global Distribution Platform', 2005). In above quadrant, we found that the buyers aware of having additional services when they book penthouse rooms. In order to meet the demand, the company arranges additional service with third party (travel agent and limousine service). In addition, the company also offers several unique programs like the central meeting line, ambassador club, and leisure marketing to ensure maximum guest experience and to take advantage of existing resources. IV.2.2 Product Delivery The distribution aspect of marketing services displays several important concerns. First, the operating hours of a service is important because it determines when the business is available to customers. Several services are designed to operate around the clock to anticipate every possibility of consumer behavior. Second, the firm must ensure that services reach the right consumers. Some uses multi channel distribution in order to increase market coverage, lower distribution of cost and ease access for customers. Third, brand-names must be taken advantages properly. A positive brand name helps the firm to differentiate the service, assure customers of a uniform level of service, and create brand loyalty which encourages repetitive purchase behavior (Kurtz and Clow, 1997). The most popular steps of distribution concepts is the consumer focused distribution strategy which consist of the following steps: 1. Identification of the market segments being served 2. Identification of benefits being sought by customers 3. Matching customer needs to corporate channel and distribution growth strategy 4. And managing quality control & corporate growth (Kurtz and Clow, 1997) Entity Booking rooms in accordance with customers preference on specified date (no mistake on the schedule of customers' arrival and departure) Market Activity Ensure that computerized system can handle multi task Train staff to use computerized system and know how to input date on the computer Direct notification to buyers about their arrival and departure schedule Make correction on the schedules in case there are some mistakes Buyer Activity Provide details to reservation staffs about arrival and departure schedules Provide details on how they want to be treated when they come to hotels (welcome drink, plane arrival etc) Interaction Delivery of hotel according to requested schedule Providing of requested welcome drinks in accordance with customers' preferences Delivery of limousine to airport according to the customers' arrival date Delivery of limousine to airport according to requested departure date Figure 3: Buyer's Perspective: Product Delivery Table shows that customers aware of the exact delivery of their booked hotel rooms. Fortunately, THL hotels are supported by experienced sales force operating globally across Australia, New Zealand, Asia, Europe, UK and USA. The key objective of the sales team is to delivering business trough sales calls, representation at key trade shows and preferred partnerships. THL is using high tech cost-saving and revenue generating strategies. The Central Reservation System (CRS) provide real-time bookings for individuals, companies and agents. The system is integrated with global distribution network. All of THL hotels are networked online in 17 languages and connected to the CRS also ('Global Distribution Platform', 2005). IV.2.3 Auxiliary Services Within the customer focused-pricing2, customers are known to concerned with the perceived value of the service, availability of alternatives, switching costs, personal needs and purchase risk. To customers, price is an input to form expectations of a service. As prices get higher, customers will expect more from the services. Prices also have a considerable effect on purchase decisions. Despite efforts of providing value for money, customers could instead be scared away by our high prices. Sensitive customers might also use our pricing decision to evaluate the level of service quality we provide (Kurtz and Clow, 1997). There are traditional efforts of increasing prices, which are: Waiting until another firm raises their price and the quickly follow the lead Increase the prices, then use a communication program to explain to customers why the price increase was necessary Make no acknowledgement of the price hike and hope customers do not notice Add a complementary service or a service feature to justify price increases. (Kurtz and Clow, 1997) Nevertheless, there are several more advanced strategies available in order to use pricing policies for our benefits. Some of them are differential pricing3, yield management4 and price bundling5. IV.2.3 Auxiliary Services Entity Price - hotel room rates for Penthouse Rooms Friendly chauffer of Limousine, tour guide, and reservation staffs Dedicated customer service officer for customers booking penthouse rooms Market Activity Train reservation staffs, chauffer of limousine, and tour guide to be polite and warm to customers. Ensuring that there is a dedicated customer service officer for penthouse-room customers. Providing suitable price for penthouse room including additional requested services charges Buyer Activity Responds kindly to well-mannered reservation staffs, chauffer of limousine, and tour guide. Take advantage of having dedicated customer service officer in case there are facilities do not meet expectation Pay at any price for penthouse room as long as the requested additional service is fulfilled Interaction Friendly interaction when booking hotel, having city tour, and in limousine Pleasant interaction between customers and a dedicated customer service officers Conduct agreement on offered price Figure 4: Buyer's Perspective: Auxiliary Services From above table, we know that customers concern on services they want and how the hotels deliver the services. For this reason, the customers will pay at any charge for penthouse room if all requested services are fulfilled. Pricing policies are designed to meet customer preferences for several segments. THL's brands range from superior tourist to deluxe class, which operate under management and franchise models. Hotels, Suites, Apartments, and Resort Accommodation from 3-5 stars are delivered via 7 major brands. Price diversification is their key strategy to reduce risk. Market segments are developed in order to produce different types of services ('Success Strategy', 2005). Value for money is presence within their image. The company reward innovation and development by creating supportive environment to encourage individuals to contribute ideas. Value enhancing ideas are developed by head office and shared across the group globally. IV.2.4 Additional Marketing Within this discussion, people consist of employees and customers. The success of a firm is greatly influenced by its ability to meet the demand of both. According to the internal marketing concept, to meet the demands of employees is as important as meeting consumer's demands. The concept believed that if a firm meets the needs of their employees, their employees will work harder to meet the demands of customers. Happy employees lead to satisfied customers (Kurtz and Clow, 1997). There are several steps of achieving customer focused personnel, which are: 1. The first are conceptual aspect, every job in the firm must be organized with the customer as the focus. 2. Second, it is important for the firm to recruit people who have a desire to serve customers and meet their demands. 3. Third, a firm must design orientation and training to focus on customers. New personnel must be made aware that the company's focus is the customer. 4. Fourth is empowering employees with training and experience to deal with dissatisfied customers. 5. The last and the most important step is to design compensation system and environmental condition that encourage good customer service. (Kurtz and Clow, 1997) Entity 25% discount of Penthouse Rooms for next visit in all THL five hotel brands in Asia pacific and its affiliates Market Activity Sending promotional brochures and offerings material to former guests of penthouse rooms Buyer Activity Assessment of the offering with possibility to take the offering in the future vacation or visit Interaction Confirmation from buyers (guests) on buying or not buying the promotional items Figure 5: Buyer's Perspective: Additional Marketing The above table shows that satisfied buyers tend to visit the hotel in the future. For that reason, it is imperative that THL meet these characteristics. Fortunately, the company has a close and strong relationship with supporting industries like airlines, car rentals and automobile clubs. Connections between affiliates are strengthening with annual meetings and an active intranet system, trough it QA (Quality Assurance) program, the company is committed to ensure that all of their employees are motivated to deliver a consistent quality service ('Global Distribution Platform, 2005). Bibliography 'Global Distribution Platform', 2005, Hospitality Technology, [Online] Retrieved September 4, 2005, Available at: 2005 from http://www.hospitalitytechnology.com.au/search 'Golden Tulip Brands', 2005, Hospitality Technology, [Online] Retrieved September 4, 2005, Available at: http://www.hospitalitytechnology.com.au/search Kotler, Philip. 2000, Marketing Management, Prentice Hall Inc, New Jersey. Kurtz, David L. & Clow, Kenneth E. 1997, Services Marketing, Wiley Langford, Barry E. 1997, 'What is Service Good Analysis', [Online] Retrieved September 4, 2005, Available at: http://www.fgcu.edu/cob/mkt/langford/analysis.html McColl-Kennedy, J. 2003, Service Marketing: a Managerial Approach, John Wiley and Sons, Australia 'Success Strategy', 2005, Hospitality Technology, [Online] Retrieved September 4, 2005, Available at: http://www.hospitalitytechnology.com.au/search 'Tourism Hotels & Leisure Plans to Acquire Up to 48% of Golden Tulip Hospitality; Partnership Will Comprise 534 hotels in 45 Countries', 2005, Hotel Online, [Online] Available at: Retrieved August 4, 2005 from http://www.hotel-online.com/News/PR2005_1st/Jan05_THLGoldenTulip.html Wilson, A. 1972, Marketing of Professional Services, McGraw-Hill: New York Read More