Service Marketing - Essay Example

Running head: Service Marketing Marketing Management must recognize the extent to which operations are influenced by concepts in service marketing ___________ ________________________ ________________ Marketing Management must recognize the extent to which operations are influenced by concepts in service marketing Marketing of services is quite a distinct process from marketing of tangible goods due to peculiar characteristics of services. Philip Kotler (in Gronroos, 1990) credits Lynn Shostack’s 1977 path breaking article Breaking Free From Product Marketing with “altering the course of our thinking about Services Marketing”. From about this period it is widely accepted in the academic circles that at operational levels, in particular in organizations processing services, such as hotels, hospitals, beauticians, transportation, retail banking, the marketing of services is different and more widespread across institutionally than marketing of physical products. (Zeithaml & Bitner, 2004; Daly, 2004). The Classification of industries or businesses facilitate some generalizations about appropriate marketing strategies for each classified group. The service sector has multiple varieties of businesses ranging from airlines, telecommunications to professional services to even one person businesses such as body masseurs. This multiplicity makes categorizations of services more tedious than physical goods (Samiee, 1999). Lovelock and Yip (1996) classified services into various groups. One important grouping was - People Processing Services: These services necessitate the customer’s presence while the service is being provided. Most of such services are aimed or applied to people and so their presence is essential. In order to buy, use and appreciate these services customers must be ready to spend time, co-operating with the service operation (Lovelock, Vandermerwe & Lewis, 1996). Typical examples of such services are medical services, passenger transport, hotels, fitness centers and beauticians. It is the marketing of these services which is radically different from marketing of physical products. The focus of this paper is the marketing efforts of one such service viz.Hotel services. We have chosen a start Hotels marketing efforts and examine them for their focus and propriety in elation to its operations management. The entire paper has theoretical support covering various aspects of service marketing. Features of Services’ Marketing A service is an activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything.Kotler (2000) demonstrates that in the goods continuum the distinction between products and services is far from clear as one traverses from tangibility to intangibility. The lack of distinction is particularly prominent mid way through this continuum where tangibility and intangibility may gel indistinguishably. However the fact remains that the tangibility dimension of the offering is a critical distinction and can identify a service offering. For instance, in a hotel stay once the stay has been completed nothing tangible is left with customer for preservation except experience, hence hotel stay is a typical person processing service offering. Such an offering may have tangible dimensions to it like the complementary food and products; however it may be seen that most of these are consumed and do not survive the stay. Even if some tangible offering e.g. souvenirs etc does survive the hotel stay; it does not emanate from the main service but is only incidental to the service offering. On the whole the services retain their intangible and perishable characters in most offerings. Chief characteristics associated with services can be stated as below: Intangibility - Services are not physical. They can neither be possessed nor seen or felt. The tangible indicators of service are few, if any, and they are not good enough indicators to reduce consumer uncertainty. This increases the work of service marketers who must diligently determine how to effectively communicate the service process and the final outcome the consumer will receive -most importantly the quality. (Any how quality is ultimately determined by the consumer, not the service provider. Consumers determine what quality they value, and service providers must research consumers to know their expectations of quality; question here is not of "zero defects" but consumers expectations.) Inseparability -- The production of the services cant be separated from its consumption. For instance, the production and consumption of a medical examination happen together. This means that the consumer often expects the service to be provided in a specific way or by a specific individual -- and that means a bigger burden on the image, knowledge, attititude, appearance, etc. of the person delivering the service. Thus service delivery person becomes critically important in several service situations. Perishability - One can not store services for future use. When a consumer misses an appointment with his attorney, that time can never be recaptured. Empty hotel rooms, unsold theater tickets implies that the value has vanished. Its supply and demand. Another issue has to do with performance - which is what service marketers are really selling. When the demand fluctuates, it may be difficult to maintain the same consistency. For example, a CPA at tax time has difficulty giving the same level of attention/ performance as at other times of the year. Variability - sometimes called "heterogeneity," services quality and consistency is subject to great variability because they are delivered by people and human behavior is difficult to control. Because services are people based, quality can vary with time of day (people get tired), experience, attitude, knowledge, style, etc. Maintaining client trust during lapses (which will happen) is critical. And this is why it can be very dangerous to a client relationship to have one person make the sale and establish the relationship, and another person to deliver the service. The original personal contact reduced risk in the mind of the consumer and they may become agitated when someone else must deliver the service with an entirely different approach and attitude (www.marketingprofs.com). Services have two more important qualities as below: First, the satisfaction criterion is different. With a hard good, the consumer can access the product (a car, washing machine, etc.) and see/test it. A consumer will never know how good the service is until after he gets it! This can be unsettling for the consumer. Second, with a service, the consumer is, essentially, "in the factory," watching production all along the way. It is very important for a service provider or consultant to carefully manage the "production process" as the client is able to observe it and make judgments about quality and value ( www.marketingprofs.com). Theoretical Foundations of the Marketing of Services Philip Kotlers book Marketing Professional Services mentions ten frequent distinctive problems faced by marketers of professional services: third-party accountability, client uncertainty, demonstrating experience, limited differentiability, maintaining quality control, making the "doers" the sellers, allocating time to marketing, pressure to react rather than be proactive, conflicting views about advertising and a limited marketing knowledge base. While Kotlers focus is on professional services (lawyers, architects, doctors, CPAs), this listing is invaluable for technology and other service sectors as well, including Hotel offerings. All of the above marketing dilemmas can be considered through an extended model of service quality which primarily has as its objective the identification of various gaps between expected service and perceived service. The gap analysis, in order to be effective, must begin with the bottom most layers of the service marketing plan. It must reckon gaps in marketing research orientation of the organization and communicate the same to all tiers of management. This would ensure that the important aspect of researching consumers remains the top agenda item; management should be entirely committed to service quality, it should do active goal setting for service quality and attempt maximum possible task standardization with clear estimate of feasibility of the same; management should also ensure smooth teamwork by having job-employee and technology-job fits and devise appropriate supervisory control systems to reduce role conflicts and ambiguities with an objective to achieve targeted levels of control(this is essential to have full personalized orientation of delivered service); a perfect horizontal communication with a close check on tendencies to over promise the customers would rationalize the process of offering service to customers and make it look more realistic. The above gaps when reduced or eliminated would tend to make the service delivery not only more responsive, reliable, assured but also increase the much needed empathy with the customer in service offerings. A gelled empathy with customer perceptions is, in fact, core of service quality. While many theoretical constructs have been used to describe marketing efforts in hospitality industries such as hotels; the one that appears most appropriate for hotel industry, temporally, seems to be the "Memorable Experience" one. This theory states that," to generate value, service providers must stage memorable experiences for which customers will pay. The experiences can be in the form of entertainment, education, escapism, or aestheticism .This forms the vanguard strategy of service marketing"(Bang, 1999). In their provocative new book, B. Joseph Pine II and James H. Gilmore predict that we are on the cusp of a new economic era that is leaving the service economy behind. The Experience Economy requires businesses to go beyond making quality goods and providing first-rate services. This includes businesses offering services such as hotels. More so because service is a perishable offering consumed entirely at the point of sale and a “memorable experience” would help make it a distinguished offering with recall and repurchase value (Bang, 1999).Several examples can be sited in support of varied service providers packaging their offerings as memorable experiences, particularly in travel and entertainment industries, almost competing neck to neck to launch an Experience Economy: - Club Disney, a play site experience where guests pay to play -American Wilderness Experience, with films that incorporate motion sensations and present the world from an animal’s point of view - Cabala’s, an outdoor gear store, which has a 35-foot-high mountain with waterfall, stuffed taxidermic animals, dioramas of African scenes, and three aquariums(Bang,1999). This construct gives us an opportunity to maximize customer delivered value in a state of perfect empathy with the customer. The fresh and new dimensions, comprised of more intangibles or tangibles, when added to the generic service package, create more opportunities for marketer to make the service responsive, reliable and assured. A gap analysis would be readily forthcoming, eliciting ready contributions even from the delivery staff as new dimensions add excitement to the service offering-thus creating potential for evolving niche marketing strategies like focused differentiation. In order to explain the operational links involved in service marketing arguments were gathered from secondary source in order to put at one place the service marketing practice in a Star hotel chain. The brief findings are as under. Service Marketing at a Star Hotel Chain Strategic service marketing of hotel services would essentially employ the simple analysis of defining what comprises the basic and elementary (stripped) form of service on offer. It would commence by defining customer expectations about the basic package. This will be juxtaposed to hotel’s own strengths in offering this package. Alongside will be assessed the weaknesses in offering basic package. First these weaknesses would be impartially evaluated based on candid customer feedback collected through questionnaires. These weaknesses will have to be removed before foundation is laid for leveraging on strengths to build the experience package. Experience package would build on the basic package and carry surprise element and substantial inputs of innovations. This is essentially the gap analysis involved in above referred extended service marketing model. Examples of such innovation can be aplenty-an upgrade to room space on a predetermined repeat visit, adding loyalty days depending upon annual number of days occupied, a Casino experience with guaranteed downside risk, a celebrity dinner, premium alcohol vouchers, free guests boarding, a subsidized holiday jaunt, free bouquet to contacts in city, a personal celebration with surprise element e.g.birthday, anniversary, clinching a deal etc.These can be offered in permutations and combinations and can be targeted for new breed of affluent clients who have emerged in the form of investment bankers, corporation lawyers, entrepreneurs, real-estate developers and entertainment moguls of todays business and professional elites who tended to be in constant and paced motion with a hunger to let their money buy some memorable experience. The solution to Hotels problems has been stated ahead of its problem as because it is more facile to show contrast in deficiencies. The Spirit to Serve, a hotel management book written by its Chairman and CEO has been made essential for all newly hired staff at Hotel. This book is an interesting narrative ranging from how the founder boss rose from humble beginnings starting his first A&W Root Beer stand in 1927 to how to do just about anything involved in running a hotel in the best way possible. It includes, for instance, his famous 66-step process for cleaning a room. Even an IT associate involved at project work at Hotel would recite passages from this book. A copy of this book has been kept in each room for, unmistakably, visiting customers to read. It is evident that the CEO of the Hotel is preoccupied with his business to the exclusion of his customers. When a 66 steps way to clean a room can be devised it implies that management is entirely preoccupied in offering the basic service package in a more effective way rather than upgrading the package itself to memorable experience dimensions. Hotel is more occupied in processes then people and its operating philosophy resembles that suggested in Frederick Winslow Taylors time and motion studies. Apparently the new niche of emerging and wealthy customers who have distinct experience needs has escaped Hotels SWOT analysis. Hotels views itself as a lodger more than anything as a senior Hotel executive put it once. At Hotel there is a mindset and fixation with a culture focused entirely on operating values hovering around basic hotel service viz.that of a lodger. Hotel has a stated rule that they must stop doing what does not add to value. Hotel has a very narrow definition of its business as being just a lodger. Hotel must redefine its business on a broader basis as “a hospitality experience business”.Its media campaigns should be aligned accordingly. It must introduce service differentiation on the lines suggested above. It can then skim premium segment of emerging affluent customers. The extended service marketing model can help identification of these gaps on pin pointed basis and help Hotel assume a successful Focused Differentiation Marketing Strategy which would not only maximize delivered customer value but also makes its service offering a memorable experience. Given its extended chain of presence globally Hotel would be well suited to skim the premium segment of customers with a reorientation of its extended service model. A USP-unique selling proposition -would help Hotels strategy further. In fact a complete CRM package covering the entire international chain is in place in the above hotel ;however if its marketing focus is more related to operational aspects rather than value added aspects then the marketing effort would attract only those customers that are looking for basic hotelling service and it would exclude a large number of customers that are increasingly seeking ‘an experience’ ou of their hotel stays. Works Cited Gronroos.Service Management & Marketing – Managing The Moments Of Truth In Service Competition. Lexington Books.1990. Zeithaml & Bitner. Services Marketing. Third Edition. McGraw-Hill. Higher Education. 2004. Daly, Aidan.Lights, Camera, Action ….. How Applicable Is Service Theatre In Service Businesses?. MII News. February 2004. Samiee, S. The Internationalisation Of Services: Trends, Obstacles & Issues. Journal Of Services Marketing. Vol. 13, no. 4/5, pp. 319-336. 1999. Lovelock, C.H., & Yip, G.S. Developing Global Strategies for Services Businesses. California Management Review.Vol. 38.No 2.pp. 64-86. 1996. Lovelock, C., Vandermerwe, S., Lewis, B. Services Marketing – A European Perspective. Prentice Hall. Europe.1996. Kotler, P. Marketing Management, Millennium edition. Prentice Hall. 2000. Retrieved on May 13,2007 from:http://www.marketingprofs.com/ea/qst_question.asp?qstID=8976. Bang, Axel F. The Experience Economy: Work Is Theatre and Every Business a Stage, By B. Joseph Pine II and James H. Gilmore Published by Harvard Business Press, 1999-A Review in The Society for Marketing Professional Services Published Bimonthly Volume 19 Issue 5 October 1999 Read More