Service Sector Management

UNIQUE CHARACTERISTICS OF SERVICES

          There are four commonly cited characteristics of services that make them different to market from goods: Intangibility, Inseparability, Variability and Perishability.

INTANGIBILITY:
          Intangible means that which cannot be seen or touched. Intangible services are difficult to sell because they cannot be produced and displayed ahead of time. They are therefore harder to communicate to prospective customers.

           Apart from food & beverages provided by the hotels, all other offerings such as accommodation, catering etc are intangible & are experience-oriented, thus its difficult to convince the customer about the quality of these offerings.

        Marketers of hotel services can overcome this characteristic by stressing tangible cues like brochures, photos etc., that will convey reassurance and quality to the prospective customers. These tangible cues range from the firm's physical facilities to the appearance and demeanor of its staff to the letterhead on its stationery to its logo, recent facts & figures etc.

Ex:    Centaur hotel overcomes this factor through its logo – The Centaur (a mythical creature who is half man & half horse), with a bow & arrow, signifying speed & focus.

          McDonalds uses Ronald, the clown to attract children.

INSEPARABILITY:

        This characteristic is interpreted differently by different service marketing marketers, but all interpretations point out that special operations problems exist for the firm's managers. One interpretation of this term is the inseparability of customers from the service delivery process. In particular, many services require the participation of the customer in the production process.

         

          In case of the hotel industry, customer has to be present for experiencing the services being offered.

          This factor can be overcome by opening new branches/outlets, facilitating instant communication (through telecom), with the customers in case of any type of information/services needed during the stay in the hotel etc.

Ex : Previously Domino’s mostly used to deliver its products to the homes of the customer; but there was no question of serving the customers. Thus, Domino’s started opening more and more outlets so that it could provide the customers with more range of services.

VARIABILITY :

The fact that service quality is difficult to control compounds the marketer's task. Intangibility alone would not be such a problem in customers could be sure that the services they were to receive would be just like the successful experiences their neighbors were so pleased with. But in fact, customers know that services can vary greatly. Even the same service provider has good days and bad days or may be less focused at different times of day. Services are performances, often involving the cooperation and skill of several individuals, and are therefore unlikely to be same every time. This potential variability of service quality raises the risk faced by the consumer.

          In the hotel industry, different front-line personnel have different abilities. The variability of hotel and catering services would differ because of the distinct skills and behavior of the various personnel serving the customers.

        The service provider must find ways to reduce the perceived risk due to variability. One method is to design services to be as uniform as possible - by training personnel to follow closely defined procedures, or by automating as many aspects of the services as possible. A second way to deal with perceived risk from variability is to provide satisfaction guarantees or other assurances that the customer will not be stuck with a bad result.

Ex : Coin operated soft drink machines which saves the time of the consumer. There is no scope for variations in the service level.

PERISHABILITY:

The fourth characteristic distinguishing services from goods is their time dependence. Services cannot be inventoried, since they are performed in real time. And time periods during which service delivery capacity sits idle represent revenue-earning potential that is lost forever. Periods of peak demand cannot be prepared for in advance by producing and storing services, nor can they be made up for after the fact. A service opportunity occurs at a point in time, and when it is gone, it is gone forever. This can present great difficulty in facilities planning.

In the hotel industry, the accommodation provided can get perished if not booked or occupied on time.

The service providers must developed alternative, counter seasonal service products to use slack capacity, although that has long been a common practice by goods marketers. Many service providers also control demand by requiring appointments. Some service firms keep on call frontline personnel who can arrive on short notice to meet the surges in demand, or cross train support personnel to assist with customer service during busy periods. The service providers must overmarket their services to avoid the perishability factor.

Ex : Hotels in Goa have less occupancy during monsoon.

FORMULATION OF MARKETING MIX FOR HOTELS ORGANISATIONS

          The term marketing mix is the combination of what market offers and studies which help in identifying the actual point where marketing action can be taken to improve the acceptability of hotel product and stimulate demand. A modern hotel is a major establishment, a sophisticated job manned by trained personnel from hotel schools, an institution of commercial hospitality and a building or an institution where guests expect refined behaviour, excellent services and personal attention. This draws our attention on the combination of sub-mixes in the hotel industry. With the viewpoint of marketing a hotel product, the combination of different sub-mixes is found significant. The combination of core and peripheral services, the creative promotional decisions, the pricing strategies helping hotels in maintaining the commercial viability, the efficient hotel personnel instrumental in minimising the gap between the services-promised and services-offered, the education and training programme for the development of hotel personnel efficacious in enriching their excellence as high performers are important decision making areas which gravitate our attention on the formulation of a sound mix for the hotel industry. It is against this background that we go through the different sub-mixes of the marketing mix;

PRODUCT MIX

          In any organisation, we find product the focal point. The hotel services also require a fair combination of core and peripheral services. It is right to mention that in almost all the hotels of same category by and large the core services are found identical and therefore the peripheral services divert a close attention where the hotel personnel need professional excellence. More innovative the peripheral services, more attractions we add to our product mix. This makes it essential that hotels and hotel companies assign due weightage to the formulation of an optimal product mix in which peripheral services prove to be a point of attraction.

          The emerging trends in the socio-economic parlance necessitate an analogous change in the product mix. With the passage of time, it is quite natural that some of the services becomes outdated and therefore, we need to eliminate them. At the same time, it is essential that we keep our minds open and come to know the latest developments in the likes and dislikes of the customers, and while including new services in the product mix, assign due weightage to their preferences, While formulating the product mix it is pertinent that we make the ways for frequent innovation. It is also right to mention that frequency in innovation is found essential and at the same time easier in the context of peripheral services. The hotel professionals are required to formulate a package that helps in attracting the customers. Modifications in the existing services by adding a few outstanding properties is found to be a suitable strategy for the development of product. The generation of idea, the formulation of concept, the analysis of product cost and the testing of services before their final commercial launch become significant in the very context. This necessitates an in depth study of product life cycle. A hotel manager bears the responsibility of adding attractions to the product mix and this is possible when they have world class professional excellence.

          While formulating the product mix for the hotel services, it is essential that catering management, restaurant and cafeteria management, management of bedrooms, management of convention halls are given due weightage. The boarding services are considered to be an important part of product mix. In addition, the lodging services also become significant. Here it is essential that facilities like light, water, electricity, ventilation, entertainment, sanitation arrangement of bed etc. are available to the guests. While formulating the product mix, the hotel organisations are required to make possible a fair mix of core and peripheral services.

          We can't deny the fact that as and when we talk about the services of hotel industry, our focus is on the tourism industry because from there we get profitable business. In addition, the industries and their executives also divert our attention since they help us substantially in getting the business. We can't devalue the instrumentality of educational institutions and business houses in getting business for our convention halls. These facts make it clear that while formulating product strategy, it is pertinent that the hotel professionals keep in their minds the users of services and their characteristics.

          In the formulation of a sound product strategy, it is essential that we assign due weightage to the mix of services expected and desired by the potential customers. We need to make the information system strong enough to initiate suitable guidelines for the strategic decisions. What to offer?  What to modify? What to alter? What to eliminate? These questions require suitable answers which are expected from the professionally sound and high performing team of hotel personnel. If we find that our competitors have been innovating their strategies, we have no option but to practise the same. If we want to project our image as a leader, we have no option but to make the ways for innovation. We need broad-based information related to the local community vis-a-vis the foreign and domestic tourists. In addition, the information regarding the facilities available in the hotel would be related to both such as areas producing revenue and areas not generating profitable financial returns. The information regarding the details of competition are also to be collected regarding the various facilities made available in a hotel including the prices, profile of potential customers, such as age-bracket, sex. Type of group, place of employment, place of residence, mode of transport, room popularity, new guest, first choice, length of stay, any complaints and who made the booking. Besides, we also need information related to hotel activities, such as occupancy statistics, seat turnover percentage, number of empty days. pattern of sales in restaurant and bar or so. It is not to be forgotten that needs of the guests are the cornerstone of marketing analysis. An in depth study of what the competitors are doing, implementation of unique selling proposition to fulfill the needs of customers, determination of objectives and the formulation of strategies, advertise a promise which is genuine and creditable and in which the customers can easily discern their own benefits can't be devalued in the very context. It is pertinent that we view everything from the customers perspective. The accommodation facilities available and the housekeeping draw our attention to improve the quality of services. While formulating strategic decisions, it is significant that we include in our product mix all the new services offered by our competitors. Not only the primary and auxiliary or core and peripheral but even the supportive services offered by allied industries divert our attention. The development process can’t remain static. This necessitates a continuous effort for incorporating 'he necessary changes in our service mix. The issue of concern here is how and what to incorporate? A sound product strategy is found a pre-requisite for establishing a fair or positive image. Image is the way in which a hotel portrays itself. The factors like atmosphere, brand name, the status, type of people and corporate institutions patronising a hotel would be instrumental in building up a fair image. And the most important thing in the projection of a fair image is the quality of services and the behaviour of the front-line staff.

PROMOTION MIX

          For successful marketing, it is only not sufficient that we concentrate on the quality of services but it is also impact generating that we promote our business in such a way that our prospects come to know about the quality to be offered to them as hotel customers- This focuses our attention on innovative promotional measures. It is against this background that we talk about the promotional measures. There are a number of components for promoting the business and it is hoped that a professionally sound employee would blend the different constituents in such a way that effects are proactive but the process of persuasion is cost-effective. The components like advertisement, publicity, sales promotion, personal selling, word-of-mouth promotion and telemarketing need due attention of hotel professionals.

          The success rate of a hotel is virtually coiled in the essence of transforming the occasional visitors into the habitual visitors because this helps substantially the process of increasing the occupancy ratio. The sensitivity is vigorously influenced by creativity. This makes it essential that the decision makers in the hotel industry make sincere efforts to formulate sound promotional strategy. We can't deny the fact that creation of awareness has a far reaching effect on the formulation of promotional strategy. If scientifically formulated, optimally blended promotional measures are used by the  professionally-sound and personally-committed hotel personnel, the rate of success would be found satisfactory. We find a number of instances to quote that even quality services failed in creating and expanding market because the promotional measures failed in sensitizing the prospects. This draws our attention on using the different components of promotion in such a way that we find them very much instrumental in throwing a positive impact.

Advertisement: We are well aware of the fact that advertisement is a paid form of communication which helps in informing, sensing and persuading the prospects or users, While advertising, it is significant that the hotel professionals make possible a productive use of print media, broadcast media and telecast media. In the face of potentials, requirements and the intensity of competition, we need to select media for promoting our messages and slogans. It is possible to be descriptive while advertising. We are in a position to attract the attention of prospects by displaying attractive scenes, events, landscape, comforts, costs etc. In this context, it is pertinent that the hotel professionals advertise sensibly, intelligently and for that seek the co-operation of advertising professionals who can simplify and sensitize the process. We have a big circulation of different newspapers, magazines and keeping in view the target market/audience to be covered, we can take a decision in the every context.

          The services of advertising professionals would make possible creativity in the advertisement messages and appeals. While selecting the media for advertisement, it is significant that we keep in our minds the magazines, newspapers preferred by the target audience. The magazines, newspapers preferred by women and teens should be given due weightage since in a majority of the cases, the decisions regarding a particular tour hotel are taken by them.

          The broadcast media can also be used for advertising the hotel services but if we make a comparative analysis of this media with others, the effects are found of low intensity. The hotel professionals are supposed to select a suitable time for transmission when a majority of the target audience are supposed to be close to the radio set. We find a particular season during which the pilgrims prefer to visit the sacred places and the hotels located in that catchment area need to advertise on sensitive hours. The messages, themes need rural orientation in the very context. It is essential that the advertising professionals are well aware of the nature and requirements of target audience.

Publicity: Another dimension of promotion known as an unpaid form of persuasive communication also plays an incremental role in promoting the hotel business. While publicising, thy hotel professionals play a significant role by managing the media personnel or publishing news items related to the hotel. Public relations activities thus become instrumental in the process of publicising.

          In the hotel industry, we find public relations activities more instrumental in informing the clients the outstanding merits of different services offered. The specialities of hotel are presented in such a way that the prospects are motivated to avail of the facilities offered by a particular hotel- It also helps in creating an atmosphere where the users at large are convinced. Besides, it also helps in collecting the information on the preferences of the prospects. It is right to mention that we find a few or even a very few consumer industries to be benefited substantially by public relations as the hotel industry. The vast majority of hoteliers welcome publicity not only because it is free but because they know that most people buy a magazine or a newspaper to read the articles, news and editorials, rather than the advertisements unless they are looking for a product or are interested in booking a holiday or a restaurant or a convention hall or a wedding hall.

          In the hotel business, we find a number of events which should be transmitted to the local press, such as the appointment of a new chef, list of cocktails, menus for certain functions held at hotel, particulars of certain important conferences or exhibitions to be held, menus for special days of the year, photographs of staff dressed up for special days and well-known people staying in the hotel. Of late, the sponsored events start and finish at hotels or are run even in the hotel grounds. Sponsored walks, sponsored car rallies, sponsored fashion-designing events, sponsored entertainment programmes, sponsored beauty contest or so. We find all appearing in the newspapers and magazines. Journalists always prefer to visit a hotel as they get their full enjoyment free of cost. You can give journalists a write-up of your story and preferably a story with a photograph. Of course, the photographs cover a lot of space but if media use it, we find this the finest eye-catching free publicity. Sometimes a stunt is also thought to obtain a write-up.

           In the public relations, the activities range from a press release to' newspapers and magazines, specially to create the interest of prospects in a holiday package in a good resort of a country. The holiday package tours and trips on familiarity with a tour spot, organised by tour operators for the travel agents help them in enriching their knowledge and making the travelling decisions.

          There are a number of media sources available for publicity. Illustration, copy and the spoken word are the primary publicity to media which are grouped into the following heads:

• Printed Publicity

• Advertising Publicity

• Projected Publicity

• Structural Publicity .

• Personal Publicity

          Thus it is right to say that public relations activities occupy a significant place in the promotion mix of hotel companies. In thy hotel companies, the tour operators, travel agents explore opportunities for educating the masses You spend nominal amount but get big coverage which help you substantially, if not at present of course in future.   

Sales Promotion : In almost all the organisations, we feel the need of offering incentives for promoting the business. Like other organisations, the hotels and hotel companies also offer incentives to the users vis-a-vis to the personnel and organizations evincing interest in promoting the business. We consider sales promotion a temporary device to increase the business with certain objectives. It is a short term activity seeking to boost sales during peak demand periods to make it sure that the firm obtains its market share and helps launch a new product or support an ailing or modified services. These facts make it clear that sales promotion is complementary to advertising. Sales promotion and advertising objectives do not conflict but reinforce one another.

          This tool of promotion is designed to appeal particularly to those customers who are found sensitive to price. It is quite natural that the tools of sales promotion attract buyers even having little brand loyalty. It is against this background that the promotional measures are found more effective where brand loyalty is a feature, such as certain cruise makers are holiday package operators but here it is essential that efforts are aimed at present clientele to attract more business from the existing market instead of trying to encourage brand-switching and targeting new clients- This is not to be a case of value-addition to the business of tour operators and the travel agents. In the hotel business, we find perishability a risk and this factor is also given due weightage while offering off-season accommodation at low price tags.

          We find repeated advertising and competitive market conditions two important reasons for the growing significance of sales promotion in the hotel industry. The techniques may be directed the hotel staff, tour operator and the travel agents including the users of the services. We find tools of sales promotion directed at the hotel staff, tour operator and travel agents and guests or clients. We find three-tier arrangements for sales promotion in the hotel business. There are a number of incentives offered to them. In addition, we also find some of the hotels offering concessional travelling and accommodation facilities, specially to their staff. Besides, we also find cases of organising sales contests.

 Tools of Sales Promotion

          The following tools of sales promotion are used for all the three heads instrumental in promoting the hotel business.

1. Brochure:  It is a device to stimulate customers and motivate them to visit a hotel and avail of the benefits offered by the management of the hotel It is a detailed publication helping hotel companies in promoting their business. The guests, clients get detailed information from the brochure.

2. Folder: We find folder the most commonly used sales promotion tool. In this respect, it is essential that folders have an impressive appearance in totality. The particulars are required to be in brief but clear. The hotels can use folders for promoting the business.

3. Packaging: We call packaging an attractive wrapper of product. When we talk about packaging in the hotel industry, our emphasis is on the outer cover and internal layout of brochures and leaflets.

 4. Attraction leaflets: This is exclusively meant for presenting a view of the different theme parks, museums, amusement parks, outstanding points of attraction in the hotels or so.

5. Merchandising: It is found helpful in promoting mass-market- This tool is found significant to restaurants and bars. The merchandising involves displaying of food stuffs and drinks in the right location.

6. Direct Mail Materials: The sales letters are found to be a direct mail material which can either be used alone or in combination with brochures and folders.

7. Display Materials: In the materials to be displayed at sensitive points are posters, dispensers, exhibits etc. We can use these materials in the offices of the travel agents, tour operators or at the places where tourists come, such as tourists spots, resorts, airports, railway and bus stations.

8. Competition and Exhibition: We find organisation of competition and exhibition for promoting the business.

9. Special Officer: We also find a provision for special offer for all, such as users, travel agents, tour operators, hotel personnel. The aforesaid tools of sales promotion help hotels and hotel companies in increasing the business.

Word-of-mouth Promotion : We consider word-of-mouth promotion very much instrumental in sensitizing the prospects. In the hotel industry, it is much more significant that the satisfaction of users is give top priority- Of course, there are a number of components to promote sale but it is right to mention that other constituents may be ineffective but the word-of-mouth can't. The word-of-mouth promoters are those who are satisfied with the services of hotels or are motivated to motivate the prospects. We can't deny the fact that one bad meal would often do more damage by word-of-mouth than fifty good meals. Our guests take a good meal for granted but don't forget to narrate to their friends and relatives about a bad meal or the bitter experiences of menu-fatigue. This speaks of the fact that word-of-mouth promotion can show more negative effects and therefore the hotels and hotel companies need to assign due weightage to this component of the promotion mix. Of course, the dissatisfied group of users are free to complain to the hotel management but often they don't act. We find them close-mouthed and