Service Operations and the Hospitality - Essay Example

BA in Hospitality & Service Management TSM09904 Service Management Service Operations and the Hospitality/ Tourism/ Event Industry: an integrated analysis of the service operation system in the service industry. Lecturer: Ros Sutherland Local Tutor: Sue Wong Student name: Matriculation no.: Student No.: Year and Class: Submission Date: Word Count: 2545 Table of Contents Ocean Park – Hong Kong 1.0 The service concept In a service organisation, especially in one as competitive as theme parks in Hong Kong, it is important to identify which services are tangible and intangible and look for methods to differentiate these services from competing organisations. Intangible services are those that are not easily identified and cannot, generally, be touched or felt (Edinburgh Napier, 2010). At a theme park, these types of services include the personalised experience between different staff members and the customers or special events that are participatory in nature. In order to maintain competitive edge, understanding how these tangible or intangible services will impact consumer behaviour is important for developing a workable marketing plan. Concepts for this type of service industry include factors such as the ease of purchasing a ticket (intangible), the promise of an exciting time through the delivery of a value proposition or coming up with an operational strategy that avoids long queues associated with waiting for different thrill rides and attractions. All of these factors, including the human resources capacity to support them successfully, will impact whether customers have a fun and rememberable experience or whether they simply choose to visit competitor theme parks in the future. From the operational view, managing these services and promoting them through marketing are ongoing, daily responsibilities to avoid losing market share or competitive edge. 1.1 Nature of service operations Customer satisfaction and the successful delivery of competent service (either through tangibles or professional labour) make up the nature of service operations. Especially in an organisation as complex as a multi-level theme park, customer satisfaction is the primary operational goal at the business. “Satisfaction is the result of customers’ assessment of a service based on a comparison of their perceptions of service delivery with their prior expectations” (Edinburgh Napier, 2010, L3). It needs to be recognised that customers who attend these complex theme parks have pre-determined expectations for what they might receive in terms of quality, experience, and perception of service from different attractions and the labour hired to support these services. Service operations success can be measured through word-of-mouth from customers that have visited these parks, different quantitative research tools such as post-service surveys or questionnaires, or simply through revenue analysis showing ticket increases based on different marketing promotions for special events. Based on feedback provided through these steps, issues of service quality can be addressed, either by creating new attractions, making the theme park more accessible and inviting (aesthetically) or creating training programmes that assist workers in being more service-oriented and satisfaction-oriented. 1.2 Model of service operations For theme parks, the model of service operations is aligning the organisation, at the structural level, to support all of the different rides, eateries and attractions that are provided. Always with a service focus, issues of ethics must be considered for personalised services with staff as well as developing the electronic or automated systems necessary to provide excellence in service. Multi-level theme parks use promotions, as part of marketing, to position these organisations as service-focused businesses that seek only to cater to the needs of the visiting customers. When developing new services, which is part of the service operation model at theme parks, innovation is key. Innovation for this type of business starts with new ideas generation, followed by testing or prototyping, and eventual promotion of these changes or improvements. New product development, with a qualified and innovative research and development team, can manage these new attractions or thrill rides to provide excellence in service delivery and give a competitive edge. 2.0 Application of the service concept to Ocean Park Hong Kong In 2003, Ocean Park was bordering on bankruptcy, described as a “weather-beaten business” that was having difficulty competing with its larger rival, Disney parks (Lau, 2010, p.9). The key for the park was to diversify its different attractions and rides in order to give the business a renewed service focus and positive customer experience. Owned completely by the government (Lau), Ocean Park has certain financial capabilities that privately-owned theme parks do not have. This gives them an opportunity to test different prototypes and measure customer reaction through different quantitative research materials, as well as develop faster attraction improvements. Ocean Park Hong Kong focuses on several core values, including conservation, education and the beauty of the natural environment (Sudhaman, 2007). Ocean Park also includes attractions that include giving customers the ability to swim with dolphins, to dine in restaurants that are built underwater, or allow customers to get married in a shark tank (Lau, 2005). On top of all of these attractions and many more, the theme park includes many elements of Western culture, such as including different characters from well-known Western movies and cartoons, since there is a trend in consumer behaviour that looks to be exposed to these cultural artefacts (Emmons, 2002). The service model for Ocean Park, in order to sustain all of these different features and benefits for consumers, requires well-trained employees and full-scale promotion of these innovations using concepts from marketing to give competitive edge. “Human beings in the role of service employees are essential to the service production and they tend to respond to their inner feelings and interpretations” (Sandoff, 2005, p.530). For Ocean Park, part of the operational service strategy must involve recruitment and retention efforts, from a human resources angle, to make sure that customers are receiving value and positive interaction with different staff members of very diverse backgrounds and cultures. The theme park must be aligned, internally, with the talent necessary to operate sophisticated machinery and provide excellence in areas of food service delivery and attraction expertise. These are strategic operational standards that must be addressed on an ongoing basis in order to align the organisation with the final goal of achieving superior customer service and value. 2.1 The sector definition and background information of Ocean Park Hong Kong Disney is the only major competitor for Ocean Park, and the CEO of the park has the focus of “trying to out-Disney Disney” (Young, Liu, Au and Hung, 2006, p.1). Though Disney park is also a service-oriented organisation that has similar attractions and rides, it tends to cater mostly to children. Offers one supporter of the Disney brand, “The accumulated Disney magic most kids experience from movies, theme parks and toys builds powerful positive associations” (Murphy, 2006, p.15). Disney is a long-standing brand that relies on its history and perceptions of providing magic to customers to boost sales and bring more interested visitors. However, Ocean Park sells more than the dream, it is a diverse collection of naturalistic and thrill-ride attractions that is promoted to adults in the same volume as children. This gives them a competitive edge as the company does not have to rely on historical success with known characters, but can innovate new creations or characters without damaging a long-running brand history. This is Ocean Park’s competitive edge. Ocean Park sits on 170 acres of land, making it one of the biggest parks of its kind in the world (travelchinaguide.com, 2009). The park supports redesigned ancient structures such as pavilions and temples, with many different animal habitats such as the Hong Kong Jockey Giant Panda Habitat and acres of lush, tranquil environments (travelchinaguide). Unlike its rival Disney, the organisation’s service focus is on promoting cultural history and diversity whilst also giving children and adult fun-seekers the opportunity to explore innovations in ride presentation. Therefore, the real success for Ocean Park rests in the ability to successfully promote these activities, along with the service model that provides excellence in service delivery, in order to boost customer visitation and give the business a positive word-of-mouth reputation in many different demographic groups. This sector is marked by unpredictable changes in consumer behaviour, such as periods where sales seem to fall for no apparent reason or periods where sales increase without any genuine cause that can be measured quantitatively. Because of this unpredictability, the park must conduct ongoing environmental analyses to view the activities of its rival and attempt to innovate when possible in order to differentiate the business. Ocean Park must also realise that pricing is a large issue for theme parks and adjust it seasonally without creating negative consumer outcry without risk to the profit expectations. 2.2 Focus for investigation The focus for investigation include an analysis of service delivery, quality and customer satisfaction, operational needs within the supply chain and how best to manage revenue and total profit performance for Ocean Park. These factors were chosen because they are connected strongly with operational performance and the successful delivery of customer satisfaction, with satisfaction being the most competitive tool to outperform Disney. Ocean Park does not only receive customers from mainland China, but from all over the world and must therefore provide services that are unique and not easy for Disney to replicate. 2.3 Application of service concept According to a marketing expert, “The Disney brand is Teflon – occasionally PR messes sizzle in the pan, but they slip right off” (Murphy, 2006, p.15). This means that Disney is a solid brand that does not have the same risks that Ocean Park experiences when small-scale problems with service delivery are experienced. In essence, the brand just bounces back based on its marketing success and global appeal. This strong brand is a major risk for Ocean Park that could face serious sales declines if the organisation does not remain strictly focused on excellence in service delivery and innovation. This strong competitive force known as Disney puts Ocean Park on the defensive in areas of promotion to keep its competitive edge. 2.3.1 Service – Delivery process Ocean Park knows that marketing is the key success factor to ensure it can compete, and has therefore elected WE Communications to be its main advertising ally (Savage, 2006). However, even the best promotional materials cannot stand up if the business is unable to provide superior customer service. The delivery process of service first involves separating the intangible service factors from the tangible ones and then making sure that management is knowledgeable in areas of human resources. Intangible services at Ocean Park include the experience between customers and the different animal experts or simply in their experiences at the many dining facilities offered by the park. Operational managers must measure capacity issues when considering new innovations and make sure that the budget exists to support new concepts or attractions as well as the staffing needs necessary to make these innovations a success. To provide excellence in intangible services, which actually make up most of Ocean Park’s services, basic understanding of worker motivation need to be addressed. This might include bonuses for reaching certain sales targets or the promise of promotion in the event of positive feedback received from customers for excellence in service delivery. 2.3.2 Quality & customer satisfaction Part of ensuring quality is first recognising that there is a definite life cycle to different rides and attractions. Simple competitor analysis can show internal researchers whether or not Disney (or any other smaller competition) is working on similar innovations. When a new attraction is built, this is a costly effort and should therefore not be considered as part of the service delivery model if customers will find only short-term value in these improvements. Many issues of presenting customer satisfaction have already been identified, such as new attractions development and providing employees with the tools necessary to interact positively to give the business a strong reputation through word-of-mouth. However, at Ocean Park, customer satisfaction is even more than the rides and attractions themselves, it is about giving customers the total perception of value for their money. Ocean Park has teamed up with Nissin noodles, as a promotional campaign, to provide park visitors large discounts on their ticket price for purchasing certain Nissin noodles value packs (Savage, 2006). The goal of Ocean Park marketing is to make the park a “must-see” attraction that is positioned as “a totally different experience” from competition (Savage, 2006, p.11). Starting with ticket price promotions, the perception of customer value is delivered before they even enter the gates, giving them more for their money than Disney or other mainland competitors. This perception of value continues as the customer moves through the park, viewing the many innovations and excited staff members trained to interact with customers throughout their entire visit to the park. It is a value focus that ensures successful customer satisfaction that starts with price and runs through attraction innovation unlike competitors. 2.3.3 Supply chain In this type of organisation, supply chain issues are important to make sure that there is an ample amount of foods relevant to the local and international cultures. Since many attractions at the park include eateries, this is a major operational concern. At peak periods, such as during the Chinese New Year Celebration, visitors increase significantly and there must be a quality-measured supply chain that understands when to overstock and when to reduce quantities of raw products. During the New Year, increases of 230,000 visitors were experienced (Hargrave-Silk, 2004), making supply chain issues very seasonal. Different branded merchandise must also be increased or reduced during these periods so that customers do not witness any problems that could lead to negative sentiment about the organisation. Most of these are controlled through quality systems such as electronic resource planning software technologies. 2.3.4 Revenue management and performance Ocean Park is currently working through a five-year transformation plan that required loans from ten different banks, totalling 537 million US dollars (Euroweek, 2006). These loans were designed to assist in maintaining current attractions, building new ones, and for improvements designed to better assist in positive service delivery. Therefore, issues of ticket pricing must be adjusted during peak seasons, such as the New Year, without angering customers or causing profit problems. Environmental issues, such as the recent SARS outbreak in China (Landreth, 2005), can cause rapid sales losses and must be considered when deciding on ticket prices. The technology upgrade improvements, as well, are necessary for rapid service delivery in different eateries and can represent sizeable investments that must be offset by different merchandise or ticket prices. 3.0 Conclusion Ocean Park is well-positioned for providing value and quality service that is not experienced by Disney. Ocean Park provides innovation as part of routine operational strategy and has the financial backing, internal staff expertise and knowledge of consumer behaviour to make the park remain successful and have a long brand life cycle. By using promotion as a main success tool, the park extends the concept of value to all of its customers and has the systems necessary to control operations to deliver on these promises. 4.0 Recommendation The only recommendation for Ocean Park is to use more promotion for its animal exhibits and attractions, especially with recent trends across the globe with concerns about ecology. Current promotions typically involve price, however much of Ocean Park is about animals, their habitat and the natural environment. By linking this type of promotion with its must-see value proposition, the park can attract more customers from international locations that cannot find similar attractions in any Western theme park currently. China is experiencing much growth in tourism and the park should take advantage of this opportunity by highlighting its diverse animal population and trained experts. References Edinburgh Napier. (2010). The Service Encounter and the Service Concept, Lecture L2 and L3. Emmons, N. (2002). Hard work key to success at Ocean Park Hong Kong, Amusement Business, 114(46), p.8. Euroweek. (2006). Ocean Park loan swamped after blowout syndication, London. May 19, p.1. Hargrave-Silk, A. (2004). Ocean Park eyes CNY visitor boom, Media, Hong Kong. January 30, p.9. Landreth, J. (2005). In the Far East, a focus on family, Amusement Business, 117(8), p.8. Lau, J. (2010). Ocean Park has local edge over Disney rival, Financial Times, London. March 20, p.9. Lau, J. (2005). HK theme park plans to revamp to compete with Disneyland, Financial Times, London. March 21, p.6. Murphy, J. (2006). Morale crisis shakes HK’s House of Mouse, Media, Hong Kong. May 19, p.15. Sandoff, M. (2005). Customization and standardization in hotels – a paradox or not? International Journal of Contemporary Hospitality Management, Bradford, 17(6/7), pp 529-536. Savage, M. (2006). Nissin eyes families via Ocean Park deal, Media, Hong Kong, May 5, p.10. Savage, M. (2006). Ocean Park taps WE to boost figures, Media, Hong Kong. June 30, p.11. Sudhaman, A. (2007). Mickey Mouse no match for Hong Kong pioneer, Media, Hong Kong. March 9, p.16. Travelchinaguide.com. (2009). Ocean Park. http://www.travelchinaguide.com/attraction/hongkong/island/ocean_park.htm (accessed March 23, 2010). Young, M., Liu, D., Au, D. and Hung, K. (2006). Hong Kong’s Ocean Park: Taking on Disney, Richard Ivey School of Business Case Collection, London. August 30, p.1. Read More