The 7 Ps of Service Marketing in Hilton Hotel Corporation - Case Study Example

Hilton Hotel Introduction: 2 Company Background: 3 What is Service Marketing? 4 Marketing Mix: 5 Physical Evidence: 5 Product: 5 People: 6 Process: 6 Promotions: 7 Price: 8 Place: 8 Recommendations: 9 Conclusion: 9 References: 11 Introduction: The role and the process of marketing have undergone a sea change in the last few decades. With every company trying to get the maximum slice of the cake, competition has increased immensely. The traditional practices of mass marketing, mass media and impersonal communication have become a passé. In this extremely competitive environment, marketers cannot afford to be complacent. In the past, companies never had access to modern technologies which helped them in interacting directly with the customers, collect and mine information about them and customize their offering according to the customer’s preference. Similarly, even the customers never interacted so freely with the company and didn’t have access to any information about the company. In order to survive in this intensely competitive market environment, companies are shifting their focus from transaction orientation to increased customer value. They are trying to build customers who would be associated with the company for their lifetime by focusing on customer relationship management (Rust, 2010). The importance of the service sector can be understood from the fact that the service sector contributes 70% of the GDP globally (Grzinic, 2007). Realizing the difference between product marketing and service marketing the marketing mix has been extended from 4P’s to 7P’s. Hilton hotel, engaged in providing world class service to its guests, has well understood the significance of the above mentioned context. The report attempts to understand the marketing mix of Hilton. It starts with an explanation of the characteristics of service marketing differentiating it from the traditional product marketing. The next section tries to study the 7 P’s of service marketing from the perspective of hotel Hilton. Finally recommendations are provided as to what Hilton hotel should do to maintain its leadership position. The report shows the importance of marketing in order to stay ahead in this competitive market environment. Company Background: Hilton Hotel Corporation is a global leader in the hospitality industry. The legacy of the hotel was started by Conrad Hilton back in 1919 when he bought the first hotel in Cisco, Texas. Since then Hilton has been expanding all across the globe presenting their own original hotels and focusing on developing innovative technologies and travel concepts to add value to the guest experience. It has 3300 hotels located in 77 countries worldwide. Of the 2800 hotels, around 2300 hotels are located in USA. It has been in business over the last 90 years and has been providing world class services, facilities, value and accommodation to its leisure and business guests all around the world. Its businesses span from luxurious hotels, to sprawling resorts, to mid-sized hotels and stay suites. The company is focused on delivering exceptional experience to its guests worldwide. Some of the well known hotels under the Hilton worldwide banner are Waldorf Astoria Hotels and Resorts, Homewood Suits, Hilton Grand vacations, Conrad Hotels & Resorts Embassy Suites Hotels, Doubletree, Hampton Inn & Suites, Home to Suites and Hilton Garden Inn. It also takes care of Hilton H Honors which is a world class reward program for its guests. The vision of the company is ‘to fill the earth with the light and warmth of hospitality’. The mission of Hilton is ‘We will be the preeminent global hospitality company – the first choice of guests, team members and owners alike’ (Hilton Worldwide-a, n.d.). The values of Hilton are as follows: H- Hospitality : Hilton is committed towards delivering exceptional experience to its guests I- Integrity : Doing the right things every time L- Leadership : To be the leader in the industry T- Teamwork : Fostering team spirit among themselves in everything O- Ownership : Taking ownership for their actions N- Now : Everything must be taken care of immediately and urgently. What is Service Marketing? Louis V. Gerstner said that, “Services are going to move in this decade to being the front edge of the industry” (Zeithaml, 2008). Although service marketing has some similarities with traditional product marketing, there are some inherent differences in both of them. The fundamental difference between products and services lies in their nature. The differences between products and services are explained below: Intangibility: Unlike products, services cannot be physically stored, felt, seen or touched. The extent of intangibility helps in differentiating between products and services. Services are heterogeneous, perishable and are consumed when they are produced. For example, banking services, legal services, hotel and tourism services etc. Inseparability: A service cannot be separated from the provider of the service. Inseparability refers to the simultaneous production and consumption of a service. For example, legal service cannot be separated from the lawyer. Hence the personality, behavior, professionalism and other personality traits will together affect the quality of the service being provided. Moreover a service has to be consumed where it is produced. Heterogeneity: The kind of service offered differs from person to person since a service cannot be separated from the people. Heterogeneity refers to the amount of variability in a service. A lawyer can win a case for one client but might lose it for another client. The packages offered by tours and travels operator is also customized according to the preference of the customer. Perishability: Services cannot be stored for using it in future. For example a serious patient would not wait for a doctor; even if the doctor is not available he will need the treatment (Wolak, R. et al, n.d.). The nature of services has led to the addition of extra 3 P’s to the traditional 4 P’s of marketing which are: People Process Physical Evidence Marketing Mix: Physical Evidence: The intangible nature of services makes customers rely heavily on tangible cues for evaluating the services before purchasing it. It also leads to post purchase satisfaction. Physical evidence includes various aspects of a company’s physical facilities. Physical evidences include both interior and exterior aspects associated with a service. In case of a hotel the exterior aspects includes physical evidences like signage, landscape, parking facilities, surrounding locality, driveway, structure of the building, color, lights and other aspects which add to the exterior looks of the hotel. The interior aspects of physical evidence include interior design, ambience, design of the rooms, facilities available like banquets, spa, swimming pool, gymnasium, restaurant etc. The physical evidences of Hotel Hilton are excellent. The exteriors of the hotel have been designed to perfection. The rooms have been designed with great care and best designs. There are different rooms to take care of the different needs of their guests. The rooms are airy and bright and have access to high speed internet connection. The rooms are beautifully painted in cool and calm shades. Rooms have the facility of on-demand movies for the entertainment of the guests. Product: The products offered by service industry are intangible in nature. For hotels the primary product is hotel rooms. The rooms in Hilton are beautifully designed and planned to suit the taste of their guests. In addition to this there are various other facilities which form a part of the extended product of Hilton. They are beauty salon, indoor pool, fitness centre, sauna, business rooms, steam pool, foreign currency exchange and various other amenities which add to the satisfaction of the guests. People: In case of service industry, people are an important ingredient for their success. Recruiting and training the right kind of people is essential for the organization to stay ahead in competition. Consumers of the service form impression about the service based on their interactions with the employees. The employees should have good service knowledge, aptitude and excellent interpersonal skills. Hilton hotel have realized the importance of its people in delivering superior customer experience. For delivering quality service, it runs various training and development programmes for its staffs. It encourages its employees to remain loyal by providing them online learning platform. The Hilton University offers access to the team members of Hilton for various learning activities. Hilton has been able to increase brand loyalty of its employees by taking care of their growth and development. The employees can gain theoretical knowledge from Hilton University and apply it at their workplace in Hilton hotel. This can be compared to just in time learning where employees implement whatever they learn instantaneously. Process: Hilton works by offering franchise opportunities to interested business partners. It has its processes in place to ensure that everything works smoothly. Franchisee License Agreement (FLA) to open a new Hilton hotel is subjected to strict timelines. The franchisee owner’s team works in close collaboration with Hilton team. A report is then prepared jointly by the franchisee owner and the Hilton’s team mentioning the fees, restrictions and various licensing experiments. Every hotel under the Hilton hotel has a code attached to it. The management team is issued a password which allows them to access all necessary information. Hilton provides all necessary support required to run the hotel successfully (Hilton-a, 2007). A hotel industry needs an effective supply chain in order to ensure its smooth operations. Hotel Hilton is dedicated to promoting and implementing best practices to ensure improvement of its supply chain. It carefully selects the best vendors to ensure that their commitment towards quality is consistently maintained. The supply chain management practices at Hilton are such that they are able to provide the best price deals which are negotiated on a national scale and deliver products and services which meet and exceed the standards of each brand. Hilton’s supply chain management is responsible for the operations of five important areas namely, Food & Beverage, Property Operations, Energy Management, Public Space & Guest Rooms and Global Travel (Hilton-b, n.d.). Food and Beverage: In the food and beverage segment, supply management is entrusted with the responsibility to work with regional and national food producers so as to offer a wide variety of high quality dishes and beverages to its guests. Public Space & Guest Rooms: The management is responsible for all facilities in the rooms which include toiletries, curtains, furniture’s, lights beds, artworks, carpeting etc. It is also responsible for all housekeeping supplies. Property Operations: Supply management is responsible for the things necessary for the hotel’s infrastructure like MRO supplies, laundry equipments, dishwashers, computers etc. Global Travel Management: This is a special facility for the guests where they are provided air travel assistance, car rentals and other aspects of travelling. Energy Management: The supply management is responsible for the energy requirements of a hotel like electricity, natural gas for the kitchens. It is responsible for the purchase of all energy requirements of Hilton. Promotions: Hilton Hotel undertakes various promotional activities to communicate with its customers. It offers special packages like: Advance Purchase Rates: It offers discounted rates to customers who book in advance. It offers discount up to 20% for customers who book in advance. Hilton’s Bed & Breakfast Package: This package offers complimentary breakfast buffet to its guests. Package Hotel (inclusive of Air and Car): This is a great package offered to the guests of Hilton. Guests don’t need to go through the hassles of booking hotels, air ticket and car services separately. All these are offered in a single package by Hilton. Romance Package: This is a special package for all those lovers who want to spend their special occasions like anniversary, birthdays or honeymoon with someone special far away from the rest of the world (Hilton-c, n.d.). Hilton Hotel Corporation (HHC) is committed to corporate social responsibility. This helps in building a good brand image among the customers (Hilton-d, n.d.). Price: In case of service marketing there are no fixed prices for the service offered. For example, the same room is available at different rates depending on the time of the year. Moreover several non monetary costs like time costs, energy costs, and psychological costs play an important role in services marketing. For example, a customer at a bank expects prompt services after he has arrived at a bank. It is extremely important that the bank attends to its customers as soon as he or she arrives at the bank or else it leads to customer dissatisfaction. Hilton hotel offers various price slabs which suits the requirement of its guests. It offers discounts to those who make advance bookings, it has special offers for romantic couples, it offers discounts to those guests who take a package tour instead of a single room etc. Place: The location of a hotel plays a crucial role in the marketing of its services. Place refers to the location of the hotels and whether they are convenient for the guests. Hilton Hotel operates 3300 hotels at 77 countries globally. Moreover it is located at the best places and in the most picturesque locations which adds to customer value. Hence it takes care of this aspect very well. Recommendations: First and foremost Hilton lags behind in internet marketing initiatives. It needs to exploit the social media and other digital marketing platforms which would help it to communicate better with its target market segment. Secondly, public relations play an important role in service marketing especially in case of hotels. Hilton hotel should launch a massive public relation campaign which would help it in sustaining its image as a leader in the hospitality segment. Hilton hotel has various discount offers for its guests who book well in advance. The programs like advance purchase rate, package offers and romance packages are suited only for the leisure travelers. These offers do not take care of those guests who stay in a hotel out of urgency. Business trips are not usually planned and they may happen with a sense of urgency. Hilton should come out with attractive schemes for this group of customers so that whenever this group of customers visits any part of the world where Hilton hotel is present, they are motivated to check out the rates of Hilton hotel first followed by others. Conclusion: Marketing of a service and marketing of a product are almost similar except a few differences which stem from the inherent difference in the nature of a product and a service. The success of a hotel industry depends on the quality of service it offers. The quality of service provided helps a service company to stay ahead in the competition by building a sustainable competitive advantage. In case of the hotel industry a major gap exists between what a customer expects from the service and what he actually gets. In case he does not receive what he expects, it leads to a negative word of mouth publicity which adversely affects the brand of the hotel (Grzinic-b, 2007). Hilton hotels deliver the best of the services in all aspects barring a few areas. The marketing mix of Hilton shows that it offers world class products to provide the ultimate satisfaction to its guests. The processes are in place to ensure that the best food, dining and lodging experience is provided to its guests. Hilton is the world leader in the hotel industry yet it cannot afford to be complacent because it is not alone in the race. Its closest competitors are Marriott, Hyatt and The Intercontinental who are also putting their best efforts to gain the number one position. Hence the marketers need to come out with innovative ideas which would help it to sustain its leadership position. References: Grzinic-a, S.C. J. May 31, 2007. Introduction. CONCEPTS OF SERVICE QUALITY MEASUREMENT IN HOTEL INDUSTRY. [pdf]. Available at: http://eprints.undip.ac.id/3396/1/CONCEPTS_OF_SERVICE_QUALITY_MEASUREMENT.pdf [Accessed on April 30, 2010]. Grzinic-b, S.C. J. May 31, 2007. Introduction. CONCEPTS OF SERVICE QUALITY MEASUREMENT IN HOTEL INDUSTRY. [pdf]. Available at: http://eprints.undip.ac.id/3396/1/CONCEPTS_OF_SERVICE_QUALITY_MEASUREMENT.pdf [Accessed on April 30, 2010]. Hilton-a. 2007. Building a new Hilton. [pdf]. Available at: http://www.hiltonfranchise.com/marketing/building_a_hilton_brochure.pdf [Accessed on April 30, 2010]. Hilton-b. No Date. Global Programs and Services. Supply Management. [Online]. Available at: http://hiltonsupply.com/nationalprograms.asp [Accessed on April 30, 2010]. Hilton-c. No date. Featured Specials. Special Offers. [online]. Available at: http://www.hilton.com/en/hi/promotions/index.jhtml [Accessed on April 30, 2010]. Hilton-d. No Date. Social Responsibility. Supply Management. [Online]. Available at: http://hiltonsupply.com/social.asp [Accessed on April 30, 2010]. Rust, R.T. et al. 2010. Rethinking Marketing. Harvard Business Review. [online] Available at: http://hbr.org/2010/01/rethinking-marketing/ar/1 [Accessed on April 30, 2010]. Hilton Worldwide-a. No Date. Leadership. [Online]. Available at: http://www.hiltonworldwide.com/aboutus/index.htm [Accessed on April 30, 2010]. Wolak, R. et al. No Date. An Investigation Into Four Characteristics of Services. [pdf]. Available at: http://members.byronsharp.com/empgens/emp1.pdf [Accessed on April 30, 2010]. Zeithaml. 2008. Services Marketing. Tata McGraw-Hill. Read More