Marketing of Services: Travel Agency - Essay Example

MARKETING OF SERVICES- TRAVEL AGENCY By Marketing of Services: Travel Agency Introduction The service industry is a predominant and robust sector for the economically developing and developed nations of the world since it encompasses almost every aspect of the economy. In the UK, the travel industry has developed over the years due to the UK’s position in the European Union zone. Many activities take place in the country that ranges from business trips to tourism in which travel agents are tasked with the provision of logistical services to the clients (Fisk et al., 2008). The paper examines the challenges facing the travel agencies in the UK to market their services by using the five service characteristics, the Servuction model and the service marketing triangle. The travel agents in the UK have faces a number of challenges in their operations in the industry. With the rapid technological advancement taking place in the world, travel agencies are facing a multitude of challenges as they struggle to remain relevant and competitive in an industry that is booming fast with technology to phase the traditional booking system (BBC News, 2014). Currently, a number of the tours and travel companies have online portals through which customers can directly make their reservations without contacting ground agencies and other business brokers (Bhattacharjee, 2006). However, the marketing of services is a challenging endeavor because of their invisible nature and this necessitates the need for firms to formulate elaborate and comprehensive marketing strategies (McIvor, 2010). Service Challenges in the Travel Agency Sector Perishability Services are usually characterized by a high degree of perishability, in that, they cannot be stored for the future use. Thus, a service should be used in its entirety to avoid wastage. For instance, in the travel business sector, seats that are not booked in an aircraft, tour bus or van cannot be stored or reserved for future use but can only go to waste; thus resulting in losses to the operators due to under capacity. Thomas Cook, a primer travel agency in the UK, for instance, indicates that its summer bookings have dropped by about 10% in the company’s core business area of making family bookings to destinations such as the Balearics and Canaries (Moulds, 2012). For this reason, some of their planes and tour buses travel to the designated destinations carrying way below their capacities. The perishability factor dictates that a plane or tour van cannot be delayed to ensure it is fully booked since the service will lose its utility since clients’ value convenience and reliability, thus will always wish not to be delayed. Most of the UK travel agencies operate on scheduled timelines, and this has resulted in many firms incurring losses, especially during the low summer seasons (Moulds, 2012). Thus, it is challenging to institute measures to safeguard the travel agencies from incurring losses due to under capacity as it is a common scenario in the industry. For instance, the air transport authority in their 2013 report indicated that about $ 220 million is lost yearly due to under capacity (Verma, 2012). Intangibility Services are intangible in the sense that they cannot be seen, felt or smelt. Therefore, a service is only experienced by the user personally. Thus, consumers will be enticed into purchasing or consuming a travel service based on their experience rather than on imagination. Over the past ten years, the number of physical bookings in the travel agent firms in the UK has dropped by almost 70% due to the digitization of the process. For instance, about 20% of the travel industry has been directly affected by the growth of peer to peer travelling and as a result, firms have been forced to spend close to $24000 annually to market their products online to capture potential clients (BBC News, 2014). In 2010, travel firms spent around $540000 to simulate their services either through adventure or regular travel expeditions with the aim of ensuring the customers relate to their products. Studies indicate that 45% of new clients will purchase a product based on the information they have received from their peers; 24% will purchase due to influence from adverts while 7% will buy it to try out a new experience (Jenster et al., 2005). For this reason, the travel industry incurs large amounts of expenses in demonstrating their services to customers. Variability The levels of quality of services offered by the travel agents depend on human elements, that is, the person that is professionally entitled to the duty of directly providing the service or operating a machine to actualize the real service. A research conducted by the University of Liverpool indicated that 67% of clients report different satisfaction levels of services provided by the same travel agent firms over a period of time, while only 21% said they consistently received the experience over time (Tsiotsou and Goldsmith, 2012). Thus, if a client books a tour bus, the kind of hospitality that he/she will experience will not be similar to the one that he/she will experience in future (Tsiotsou and Goldsmith, 2012). Inconsistency in service delivery is a major challenge in the UK travel agents sector since it is almost impossible to standardize the travel services or predict the kind of experience a consumer receives due to the human and technical factors (Shanker, 2002). Inseparability Mostly, services cannot be separated from their providers. The person offering the service must be there in person for the client to experience the service and thus this makes the venture occupationally immobile. The travel industry in the UK has close to 800,000 employees of which 87% are in fixed jobs. It implies that they can only offer their services to that particular occupation with no freedom of hoping to another. For example, a driver taking clients on a road trip will have to finish an assignment before beginning the next, even though, an opportunity arises (Gilmore, 2003). Similarly, the same service cannot be experienced by clients that are geographically dispersed. For instance, in 2011, 13% of Thomas Cook’s flights were delayed because of the wellbeing of the cabin crew. Therefore, this is a significant challenge as it renders services to be occupationally and geographically immobile, thus limiting the opportunities and revenues that a firm can generate (Strouse, 2004). Non-ownership In the service sector clients pay for the experience, they obtain from the services rendered rather than assuming the ownership of the service. Since services are inseparable from their providers, it is impossible for the consumers to own the same services rather they will just have an experience. Sometimes it seems strange for a client to pay $ 55000 for a business class flight and after a few hours the experience is gone. In essence, the services are user desecrated, and that the consumers’ claim is limited, to the experience, they obtain (Lovelock et al., 2015). The element is a significant challenge as it makes it impossible to quantify the amount of experience a client receives help in the billing process. The Marketing Triangle External Marketing In the market triangle, this is the initial stage, which involves the travel agencies making promises to their clients on what they expect to get from their services. Numerous activities are included in this phase including; price determination, communication with customers, as well as promotional activities (Hoffman and Bateson, 2009). Factors such as unemployment that is nearing 2.47 million in the U.K. and the high global unrefined petroleum prices that hit a high record of $148 a barrel in September 2008 have affected the operations of both the air transport and other players in the sector negatively. Firms are, therefore, incurring billions of dollars in terms of marketing and discounts to attract new and retain their customers without increasing the prices of the services to offer (Cartlidge, 2012). In 2012, the UK travel agencies spent approximately $ 1.5 billion in marketing and advertisement ventures (Lovelock et al., 2015). Internal Marketing This stage involves the management with its team of employees. Once promises have been made to the clients, the travel agencies will get back to their personnel to ensure they are committed to delivering to their esteemed customers (Srinivasan, 2004). Internal marketing involves team building activities to bond the entire personnel teamwork towards a common objective; training to enhance their level of skills and knowledge to increase the quality of service delivered to clients. For instance, Ryanair spends approximately $1.2 million annually to train its staff on emerging issues in the industry as well as in team building exercises to bond its personnel towards a common objective. On average employees in the travel sector in the UK are paid approximately 1.8% higher in wages and salaries than other sectors, even though, the rates tend to fluctuate from one organisation to another. These costs are a big challenge to many travelling agent firms in the UK, even though, they enable them to create value for the company. For instance, Thomas Cook the premier UK travelling agency, suffered huge losses when the CEO, Harriet Green left the firm. The share prices of the company also plummeted as investors became skeptical about the future of the company (Thomas and Marlow, 2014). Interactive Marketing Interactive marketing is the moment of truth through which the employees get to interact with the clients in the actual provision of the services (Rothkopf, 2009). It is such a crucial stage as it helps create a perfect relationship between the workers and the customers. To gauge their level of services, 980 of the 1247 travel agent firms in UK assess the satisfaction level of their clients by seeking their feedback after the services. However, this has been a challenge for many travel agents in the UK because clients often do not provide feedback or there is no elaborate system provide for feedback. Statistics indicates that 67% of customers who enjoy their services build brand loyalty for that individual firm while 23% of them opt for different brands or to explore new options (Rao, 2007). Servuction Model The Servuction model is typically utilized by the management of firms to examine the factors that influence the experience that clients get from services. The model involves two sets of factors vis-à-vis the visible and the invisible elements (Hennig-Thurau, 2000). The visible factors are the inanimate environment, consumer and service providers while the intangible factors include the hidden organization and systems. The invisible environment refers to the non-living elements that are present during service delivery that serve to influence the overall feeling that the customer receives (Gallouj, 2002). For instance, in the travel agency business music in the tour bus creates a positive mood to the clients as they continue their journey. Employees are an element in the Servuction model, and thus play a critical role in the overall experience that customers receive. Moreover, the clients will often interact with several other employees within that organization. The manner in which the employees handle customers will contribute significantly to the overall experience that the client receives from the company (Strydom, 2004). Their interpersonal and communication skills act as a foundation that creates a good relationship or utterly destroys it. Peer group travelling is another significant factor that affects most UK travel agents. Thus, due to the intense competition existing in the travel agents industry in the UK, firms faces many challenges of attracting and retaining customers. Conclusion Ultimately, the service industry in the United Kingdom has developed over the years amid a lot of challenges. Issues related to environmental sustainability have significantly impacted on the manner in which the firms in the travel industry run their operations. The air passenger tax of the UK is among the highest in the world, which has is about 400% more than what the rest of the world commands. It makes holiday makers to choose foreign firms when it comes to international travelling to avoid those exorbitant costs. Bibliography BBC News, 2014. Hotels chafe at online travel firms. Available at: http://www.bbc.com/news/business-29898641 [Accessed 12 March 2015]. Bhattacharjee, C., 2006. 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