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CLASSIFICATION OF SERVICES
CLASSIFICATION OF SERVICES
Classification based on the nature of service act
Tangible actions towards customers Passenger transportation Health care Beauty saloon Restaurants
Tangible actions towards customers’ possessions Freight transportation Industrial equipment repairs Laundry and dry cleaning Lawn care Veterinary care
Classification based on the nature of service act (contd..)
Intangible actions towards customers’ intellect Education Broadcasting Theaters Museum
Intangible actions towards customers’ assets Banking Legal services Accounting Security insurance
Classification based on the nature of service act (contd..)
Key questions: Does the customer need to be present
physically throughout the services? Does the customer have to be present
only to initiate or terminate the transaction?
Is customer’s presence not required at all?
Is a customer changed as a result of the service?
Classification based on the type of relationship the customer has with the service provider Continuous delivery/Membership related
Insurance Telephone subscription College enrollment Banking Trade associations
Continuous delivery/Without formal relationship Radio station Police protection Public highway
Classification based on the type of relationship the customer has with the service provider (contd..) Discrete transaction/ Membership related
Long distance phone calls Theater series subscriptions Commuter ticket or pass
Discrete transaction/ without formal relationship Car rental Mail service Toll highway Pay phone Movie theater Public transportation
Classification based on the type of relationship the customer has with the service provider (contd..) Key questions:
Can anything be done to move informal to member relationship?
Where can there be tradeoff between pricing and usage rates?
Classification based on the scope for customization and judgment in service delivery High judgment/ High customization
Professional services Surgery Beautician Plumber
High judgment/Low customization Education Preventive health care programs College food services
Classification based on the scope for customization and judgment in service delivery Low judgment/High customization
Telephone services Hotel services Retail banking
Low judgment/Low customization Public transportation Routine appliance repair Movie theater Spectator sports
Classification based on the scope for customization and judgment in service delivery Key questions:
Is it desirable to limit customization and get benefited by standardization and economies of scale?
Should customization be increased to reach wide range of customers?
Should service be simplified so that less judgment is required by the contact person?
Should service be updated in order to capitalize on the expertise of the staff?
Classification based on the nature of demand and supply for the service
Peak demand met without major delay/Wide fluctuation Electricity Natural gas Telephone Hospital maternity services Police and fire emergencies
Peak demand met without major delay/Narrow fluctuations Insurance Legal services Banking Laundry and dry cleaning
Classification based on the nature of demand and supply for the service
Peak demand met with delay/ wide fluctuations Accounting and tax preparations Passenger transport Hotel, Motel Restaurant Theater
Peak demand met with delay/ narrow fluctuations Similar to without delay but where the scale of
operations is very small comparitively
Classification based on the nature of demand and supply for the service
Key questions: What is the nature of demand fluctuation? Does
it have a predictable cycle? What are the underlying causes for these
fluctuations? Could marketing effect a change? What opportunities exists to change the level of
supply? Should alternative strategies be adapted for
adopting differential pricing? Should a new mix of strategies be experimented
with, involving both capacity and price?
Classification based on the method of service delivery
Customer to organization/ Single site Theater Saloon
Customer to organization/Multiple sites Bus services Fast food chain
Organization to customers/Single site Lawn care service Pest control Taxi
Classification based on the method of service delivery
Organization to customers/Multiple site Mail delivery Emergency repairs
At an arm distance/Single site Credit card company Local TV station
At an arm distance/Multiple site Broadcast network Telephone company
Classification based on the method of service delivery
Key questions: Should the service be delivered at a
single site or multiple sites? What is the most convenient type of
transaction for the customers? Would the service quality improve or
deteriorate with the type of change in interaction?
Can suitable intermediaries be used in order to establish multiple outlets?
MARKETING MIX
Elements of the service marketing mix
Product Price Promotion Place People Process Physical evidence
Product ( Service package) Services are products. Even though
intangible, they are things Consumer services:
Shoe repair, dry cleaning and clothing alterations
Shopping services: Insurance, banking, airline travel and
automotive repairs Specialty services:
Legal services, medical care, hair styling
Conceptualization of the service concept
Customer benefit concept: Customers are not buying goods. They
are buying specific benefits and values Purchase bundle comprises of:
Physical items- tangible elements that come with services
Sensual benefits- those experiences which hits one or more of customer’s senses ex: aroma, taste, ambiance.
Psychological benefits- which are determined by the customer subjectively.
Service concept The general benefits the service provider
will offer Core benefits Expected benefits Augmented services Potential services
Service offer and service package It spells out in more detail those services
to be provided, how they will be provided and to whom
It is the elements that make up the total service package, including both the tangible and intangible components of the service.
Service delivery system How the service is provided to the
consumer. This speaks about the interaction
between the customer and the service provider and the interaction between the customer and the service facility.
It is a carefully designed blueprint that describes how the service is rendered to the customers.
Analysis of the service
Basic framework, services are classified into: Core services Secondary services
But, the managerial perspective classifies it as: Core service: is the reason for being in the business Facilitating services: they are the support services
which are used to add value to the core service. Reception, check-in service etc
Supporting service: are used as a means of competition only. Without them, the core service can be used but the total service package may be less attractive.
Price
A customer pays for some product or service because of its ability to satisfy some specific need or want.
Price is the value attached to the product by the service provider and it must compliment with the value attached by the consumer
Managerial tasks in pricing involves Establishing pricing objectives Identifying the factors governing the
price Determining the methods of pricing Formulation of pricing strategies and
policies
Price is service is also called as Professional service- fees or
retention charges Transport- fare Insurance- premium Clubs- subscription, membership Hotel- tariff, rent etc
Special issues to be considered Since service is intangible, many service firms
portray their quality as the value for the customers’ money
A service provider always uses price as a tool to manage the demand
In certain cases, a customer may have to spend time, exert physical efforts or bear psychic cost. So the marketer has to include these intangible aspects of the cost related factors while fixing the price
In some service industries especially public sector, price cannot be used as a tactical tool as the Govt. determines the price
Pricing strategies
Most marketers use competitive pricing
Some firms who like to ration the supply would charge a higher price than the market price
Higher price can also serve as an indication about the higher perceived quality
Pricing strategies
Flexible pricing is more prevalent in service sector than in other fields
Some service firms either do not have a fixed price list or do not follow it in making price quotations
Some firms mainly try to meet competition, some firms attempts to use tables of standard costs and a few even attempt to bargain with the customers.
Most service marketers appear to have a definite profit margin in mind when quoting prices
A Pricing decision maker should consider: Set annual profit and sales margin Target a definite price margin while
quoting prices for each job Determine and understand their cost
structure Review and update their price schedules
regularly Work to secure higher rather than lower
average price Strive for greater price flexibility
Promotion
It is a combination of strategies that an organization uses to communicate the service benefits to customers and influence them to buy their services
They don’t sell any of their products. Instead, they sell the dreams and experience that the customer would want to have by availing a service
McDonald’s, makemytrip.com, axis bank etc
Promotion mix
Advertising Personal selling Direst mails Sales promotion Publicity Word of mouth Corporate identity
Advertising
Experience Beliefs Values Policies Process Customer oriented aspects
Personal selling
The service provider has to be utmost knowledgeable
Telephone orders Outbound tele-marketing Sales support staff Delivery personnel
Direct mails
Medicines Medical insurance These direct mails also play the role
of follow-ups to track the response of the customers to the promotional activities of the company
Sales promotion
Sampling, display, demonstration becomes difficult
Premiums Contests Sign-up rebates
Publicity
News release Stage activities Press conferences Sponsorship
Word of mouth
Customers are closely involved in service delivery and they tend to talk about their service experience to the potential customers
An outsider promoting a company without any monetary gains can add more value and trust in the minds of the prospective customers
Corporate identity
Refers to the use of distinctive colours, symbols
Lettering in prominent visible elements such as: Signage Vehicle Uniform Stationary
To provide a unifying and recognizable theme linking all the firm’s operations
Place
Place no more means a geographical location where buyers and sellers meet.
But in services, service being intangible, the service provider has to be present at the time of the delivery of services.
At the same time, certain services like mail and ATM do not require the presence of the service provider
Distribution is he provision of personal service and information to the customer. It adds value to the service
The strategies involved in making the services available and accessible to the customer, will focus on two major factors: Where should he service be made
available- the choice of location? Who should deliver the service- the
choice of channel?
Importance of location in pricing Who the target customers are? What is the degree of interaction required
between the provider and customer in the delivery of the service?
To what extent convenience of accessibility will affect customer decision making regarding use of the service?
Is the service technology-based or people-based? How do competitors operate their service? Can new system and technology be used to
improve existing location decision?
Modes of selling
Directly to the customers Use an intermediary who act on
behalf of the buyer or seller- the intermediary may be an agent or a contracted franchise
People
The problem lies in the inseparability of the production consumption interface
The satisfaction of not only the recipient of the service, that is the customer, but also the providers of the service, that is the company’s own personnel becomes extremely important
Different roles of the service personnel Primary- where the service is actually
carried out by the service provider Ex: Teachers, Consultants, Doctors, Lawyers etc
Facilitating- where employees facilitate the service transaction and participate in it. Ex: Bank counter staff, Waiter at a hotel, Front office personnel, compounder etc
Ancillary- where the employees helps to create the service exchange but is not part of it. Ex: travel agent, insurance agent etc
Level of presence of the service personnel Customer contact employees-
These come in contact with the customers in the process of the service delivery
They are also called as the frontline staff or “boundary spanners”
These have a great influence on the customers’ perception about the service as the customers try to find tangibility of service in them
As they influence the customers a lot, they are marketers too
There might be either high contact or low contact
Support personnel or non-contact personnel- These do not come in contact with the
customers Chefs in the hotel, laundry staff in the
hotel etc They possess high technical skill and
have high competency level They may be management support or
technical support Without these people the customer
contact employees cannot perform
Human resource planning in service involves: Hire the right people Develop people to deliver service quality Provide needed support system Retain best people
Internal marketing The key element of healthy business, is the
individual contribution of every employee, both contact and support to the ultimate result of increase in company value
Process
It is concerned with the way in which the service is delivered How the personnel delivers the service Added value of the service becomes an important
competitive weapon in differentiating the service Ex: Banks. Storing money is the basic activity
but they introduced so many added services like ATMs, Debit Cards, Over drafts etc
Many benefits from service occur not so much as a result of what is offered, but, in the way in which it is offered
Designing a service process Location Facility design and layout for effective
customer and work flow Procedure and job definitions for service
providers Measures to ensure service quality Extent of customer involvement in the
service delivery Equipment selection if it is equipment
based service delivery
Physical evidence
Since the service is intangible, it is important for the client to search for tangible or physical clues which enable them to evaluate the service
Physical evidence verifies either the existence or the completion of a service
Categorization
Peripheral evidence- Is usually possessed as part of the
purchase of a service It has little or no independent value Ex: a Cheque book, an ATM card,
Napkins etc
Essential evidence- It cannot be possessed by the consumer It may be so dominant in its impact on
service purchase and use that it must be considered virtually an element in its own right
Ex: transport vehicle, office premise, staff uniform etc
product place promotion Price people Process Physical evidence
Physical attributes
Channel type Promotion blend
Flexibility Employee research
Flow of activities-customized/standardized
Facility design
Quality level Outlet location Sales people: number, selection, training, incentives
Price level Training No. of steps- simple/complex
Aesthetics
Product lines Intermediaries Advertising: targets, media types, types of ads
Terms Motivation Level of customer involvement
Functionality
Branding Segmentation Sales promotion
Differentiation Rewards Ambient conditions
Positioning Franchising Publicity Discounts Teamwork Equipment
New services Managing channels
Direct marketing
allowances Communicating culture and values
Signage
Motivating channel members
Employee uniform and appearanceBusiness card
Statementguarentees
CONSUMERS IN SERVICE INDUSTRY
Introduction
Consumer purchased goods/services based on their mental and economic forces.
The mental forces creates desires and wants to satisfy pride, fear, love, fashion etc
Economic forces included the purchasing power
Fundamentals of marketing concept: The service provider should first
determine the needs and expectations of the target group of customers
Organize the input to deliver the service
Achieve customer satisfaction to earn profits
Managing customer relationship and building loyalty
Service firms’ problems:
How to create and deliver superior service?
How to sustain service improvement efforts- in short, how to build “customized” organization?
Model of buyer behaviour
marketing stimuli other stimuli buyer's black box buyer's response
product economic buyer characteristics buyer's
decision making process
product choice
price technology dealer choice
place cultural
purchase timing
promotion political buyer's response
Buyer characteristics
Cultural factors Values, practices, customs, social class etc
Social factors Family, friends, relatives, colleagues, reference groups etc
Personal factors Age, life cycle stage, occupation, economic
circumstances, life style etc Psychological factors
Motive, perception, learning etc How do customers learn about the services offered for sale? How do they learn to recognize and recall these products
and services? What process they develop in buying and consuming habits?
Related needs at a hotelSelf actualization
The pride of being at the right place
A place to feel wanted,
loved a
warm and friendly greeting
Need for room or shelter (relieving concern & anxiety)
Guests looking for restaurant, bar
and room service
Buyer decision making process
Problem recognition
Information search
Evaluation of alternatives
Purchase of service
Post-purchase decision
Problem recognition
The need may be triggered by internal or external stimuli
The intensity of the need will indicate the speed with which the buyer will try to fulfill the want
The buyer should identify the stimuli, which induces interest in the service and develop marketing programs based on the stimuli
This close knowledge of customers can be found through marketing research, in its various forms
Information search
When the consumers are not aware of the type of service that can best satisfy the need, how and where it an be secured, they will have to search for the relevant information
The consumer gets these info from family, friends, reference groups, their past experience with the service firms etc and also from marketers in the form of advertisements, sales promotions etc
This increases the awareness of the availability of the services and its attributes
In services, the customer relies most on the personal sources
Evaluation of alternatives The basic elements in the process of
evaluation are Distinct service features Image of the service provider, Quality and price
The major challenge of the service provider is to research customer expectations and demands in such a situations and offer more personalized services to these customers.
Ex: Hotel:- food quality, menu variety, price, atmosphere and convenience etc
Purchase of service
The purchase of a service is an experience which, lead to the satisfaction of customer needs.
The success of the service delivery depends on the service encounter
The service encounter involves the interaction between the customer and the service provider
Therefore, apart from motivating the staff, the service provider must also consider the moods and emotions of the customer and should attempt to influence those moods and emotions in a positive way
Purchase of service (contd.) The service provider must anticipate,
acknowledge and deal with the heterogeneous customers who have the potential to be incompatible.
The service provider can also bring the homogeneous customers together and solidify relationship between them
Post purchase evaluation
Only after experiencing the service, the customer will be able to judge the service quality, in relation to his expectation and actual service delivered
In some cases like medical diagnosis, legal services, the customers may find it difficult to judge the service rendered even after going through the service experience
Customer complain less frequently about those services which requires their participation too
Comparison of consumer and organizational buying behaviour Organizations buy services for profit maximization,
reducing costs, meeting employee needs, and satisfying legal obligations. While, individuals buy services for their own need satisfaction.
More people involved in organizational buying. There might be several influencers. The degree of influence is relatively less in case of individual buying even though there might be several influencers involved
Organizational purchase in based on more formal routine like purchase policies, constraints and requirements by the organization. This does not apply to individual customers
Comparison of consumer and organizational buying behaviour Poor service to individual may lead
to dissatisfaction but, for the business, it may lead to losses
To retain organizational customers, the service firms believe in long term relationship building, whereas, it prefers service bundling to retain individual customers
Customer involvement in service process
customer
Other custom
ers
Employees of
the service
firm
Service
delivery
Degree of customer involvement in service process Low level participation: only physical presence.
Ex: Airline travel, entertainment concert. There are standardized services
Medium level participation: customer needs to give information to customize the service. Ex: hair cut, full service restaurants, some consultancies.
High level participation: here the customer has to participate in the generation of the service. Ex: personal training, weight loss programs.
Effects of other customers in service process and delivery system The customer may sometimes interact with the
other customers in the service delivery as they may receive the service simultaneously
Or even as they may have wait at the service premise for their turn to come
They may impact the service positively or negatively
Positive: knowledgeable co-customer, health clubs, holiday resorts where they may support each other
Negative: crying babies in the restaurant, smoking co-customers, noisy or unruly groups
Role played by the customers in the service delivery Customer as co-producer Ex:
Consultancy Customers as contributor to service
quality, value and satisfaction Ex: Education
Customers as competitors Ex: Child Care, Catering for staff, Business legal service etc.
Management of service encounter for customer satisfaction
Service Firm
Customers
Employees of the
service firm
Internal Marketing“Enabling the Promise”
External Marketing“Setting the promise”
Interactive Marketing“Delivering the promise”
Customer evaluation of service delivery The customer perception of the service quality can
be judged in two aspects: technical quality-
The service product, competence of the service provider in the form of skill, production facilities and equipment in the delivery of the service
Refers to what the customers receive in heir interaction with the firm.
These are quantifiable hence can be measured to some extent
Hence more attention is given to this aspect Ex: food in the restaurant, transportation in the airlines But customers are not interested in what is just what is
being delivered but also how it is delivered. This leads us to the next dimension of quality- functional quality
Customer evaluation of service delivery The customer perception of the service quality can be
judged in two aspects: Functional quality
Relates to the behaviour of the employees and the manner in which the production facilities are used.
It portrays the credibility of the service provider to serve the customer better.
Thus, functional quality refers to how the service is delivered. It includes attitude, appearance of the personnel and
approachability. Rude behaviour of receptionist, sloppy of the waiter can
reverse the impression. Functional quality can be judged only on relative basis Both technical and functional qualities have a strong influence
on the overall impression of the quality of the service
Expected service quality
Factors influencing: Personal needs External communication of the service
provider Word of mouth Past experience
Perceived service quality
Five criteria: Tangibles Responsiveness Empathy (Human Touch) Assurance Reliability
Responsiveness shows willingness to meet customer needs and empathy indicates willingness to go beyond customer needs.
Customer satisfaction and service quality leads to: It is linked to customer loyalty and
relationship commitment Highly satisfied customers promote
positive word of mouth Hence, this lowers the cost of
attracting new customers Satisfied customers are less
susceptible to competitive offerings
Market segmentation and targeting Basis for segmentation:
Demographic Psychological Behavioural
Criteria to evaluate choice of target market: Profit projection, size and growth options in the
market The accessibility of the market for communication
and service delivery Availability of substitute products and the strength of
competitors Compatibility with the firm’s objectives and resources
Alternative strategies
Undifferentiated marketing: it ignores segmentation and attempts to appeal to the whole market with a single strategy and brand.
Differentiated marketing: concentrating on multiple segments with tailor made strategies for each segment
Concentrated marketing: it caters to the specific needs of one well defined market segment only
Expanded service pyramid
Platinum
Gold
Iron
Lead
Loyal and Profitable Customers
Least Profitable Customers
Relationship marketing and customer loyaltyTransaction marketing
Relationship marketing
Focus is on a single transaction of sale
Limited customer commitment
Short term orientation Salesperson is the main
interface between seller and customer
Quality is the responsibility of the production team
Focus is on retention of customers
High customer commitment
Long term orientation Multiple levels of
relationship between seller and customer
Quality is the responsibility o the departments
Customer Relationship Management (CRM) With an effective CRM, a business
can increase revenues by: Providing services and products that are
exactly what customer wants Offering better customer service Cross selling products more effectively Helping sales staff close deals faster Retaining existing customers and
discovering new ones
Customer service can be improved by Providing online access to product
information and technical assistance around the clock
Identifying what customers value and devising appropriate service strategies for each customer
Providing the mechanisms for managing and follow-up sales calls
Tracking all contacts with a customer
Customer service can be improved by Identifying potential problems before they occur Providing a user-friendly mechanism for
registering customer complaints Providing a mechanism for handling problems and
complaints Providing a mechanism for correcting service
deficiency Storing customer interest in order to target
customers selectively Providing mechanisms for managing and
scheduling maintenance, repairs and on-going support
The increased profitability associated with customer retention efforts occur because:
The cost of acquisition occurs only at the beginning of a relationship
Account maintenance costs decline as a percentage of total cost
Long term customers may be less inclined to switch They may initiate free word of mouth They are more likely to purchase ancillary products They make it difficult for the competitors to enter
the market and establish themselves Leads to ease in servicing as they are familiar with
the service Makes the employees’ job easier
Virtuous circleTraining
and empowerment of
employees Employee
satisfaction and
competence
Superior service delivery
Customer satisfactio
n
Customer loyalty
High sales and profit margins
The various stages that take place before the relationship is developed
It begins with buyers and sellers being aware of each other
On entering into a relationship, the buyer and seller makes series of promises, which gives rise to expectations
The information of the customers is usually recorded to assess future needs
The firm would offer incentives to customers for maintaining relationship
Retention strategies
Financial bonds: These are monetary benefits Lower price for greater volume of purchase Lower price for loyal customers Volume and frequency rewards
Non-Financial or social bonds: Customization. Continuous touch with customers These bonds may even be formed amongst the
customers. Ex: Alumni meetsService firms may adopt different versions of the
above retention programmes or move on to higher levels of customer intimacy.
PLANNING AND MANAGING SERVICE DELIVERY
Introduction
Designing a service delivery process is a creative task
The rapid growth of internet means that the service strategy must address issues like space, cyber space, and time paying at least as much attention to speed, scheduling and electronic access.
Service design elements
Structural- Delivery system
Front and back office, automation, customer participation
Location- Size, aesthetics, layout
Capacity planning Managing queues, number of servers,
accommodating average or peak demand
Service design elements
Managerial- Service encounter
Service culture, motivation, selection and training, employee empowerment
Quality Measurement, monitoring, methods, expectations
versus perceptions, service guarantee Managing capacity and demand
Strategies for altering demand and controlling supply, queue management
Information Competitive resources, data collection
Considerations in the design of the service delivery system Nature of contract between the service
provider and the customer Sequencing of the various steps in the
service delivery process Where (location) and when (scheduling)
should delivery take place? Imagery, atmosphere and experience to
be created and delivered Nature of the service process Service protocol
Generic approaches to service system delivery Production-line approach
Limited discretionary action of personnel Division of labour Substitution of technology for people Service standardization
Customer as co-producer Self service Smoothing service demand
Generic approaches to service system delivery Customer contact approach
Degree of customer contact Separation of High and Low-contact
operations
Delivery channel decision
Factors to be considered: It should ensure easy accessibility and
convenience for the customers to interact
These distribution channel should add some value to the customers
The channels chosen should not eat away the margins of the service provider
The channel chosen should cover all the target markets
The channels chosen should be reliable
Types: without intermediaries Direct distribution:
Advantages Control Healthy customer relationship Flexibility and confidentiality
Disadvantages Financial risk Lack of knowledge
Types of intermediaries for service delivery Franchising:
Advantages Business expansion Improved revenues Reduced risk Consistency in service offering Local presence through global franchising Increased working capital and minimized financial risk
Disadvantages Trouble in motivating franchisees Conflict between the two parties Quality maintenance Relationship with the customers
Types of intermediaries for service delivery Agents and brokers Electronic channels
Advantages Lower costs Increased customer convenience Increasing bargaining power of the
customers Extensive distribution Ability to customize services and gain
quick feedback
Place decision in service delivery Multi-site strategy
Ministores Locating in multipurpose facilities
Multi-service strategy Multi-segment strategy
Time decision in service delivery Economic pressure form consumers Economic incentives to improve
asset utilization Availability of workers to work during
unsocial hours Automated self service facilities Use of call centers
Promoting and delivering services in cyberspace Development of smart mobile
phones Voice recognition technology Creation of web sites Commercialization of smart cards
Service productivity
Efficiency Effectiveness Economy Production function Capacity utilization
Reasons for low productivity Small size of most of the service
firms Difficulty of using machine
technology
Improving service productivitymethods Benefits
Improve quality of labour force Higher service qualityFewer customer complaintsLower employee turnover
Improvement in capital equipment Reduce labour costIncreased no. of customers can be servedImprove consistency of services
Automate tasks Reduce costImprove consistence of serviceIncreased no. of customers can be served
Change customer/service interaction Speed up transactionsIncreased no. of customers can be served
Separate the customer contact and support functions
Increase quality of serviceEnhance quality of customer/employee interaction
Increase self service options Reduces costIncreased no. of customers can be served
Use outsourcing Reduce costIncreased no. of customers can be servedReduces the strain on service organization
Consumer participation and productivity Consumer predisposition Consumer potential/commitment/
willingness to become involved Consumer knowledge and skills, how
easily can they be developed if needed to be?
Technology and service productivity Hard technology Soft technology Hybrid technology
Role of technology and physical aids in service process Cost rationalization More effective quality Making higher quality possible Closer link up with the customers Technology as a factor affecting
behaviour
TOURISM & TRAVEL SERVICES
Introduction
Tourism is a very complicated operation due to its multiple activities, which satisfy the need of the tourist.
Tourism embraces transportation, accommodation, food catering, tourist attraction, as well as organizers like tour operators and agents.
The main problem lies in maintaining standards of these components
The peculiarities of tourism: It cannot be provided by a single enterprise;
each component of tourism- hotel, transport etc is highly specialized and together makes the final product
The sales intermediaries play a dominant role Tourism has diverse motivation to travel The demand for tourism is highly unstable due
to seasonal, economic and political factors Marketing of tourism is complicated dichotomy
as supply is inelastic but demand is
Changes in lifestyle
The old sun, sea and sand mass market has fragmented. People want more specialized versions of it such as CLUBS, quieter resort with select hotels, self catering etc
Changes in lifestyle
People are taking second holiday in the form of in the form of short breaks/city breaks, ranging from British and European cities to country hotels
Changes in lifestyle
There has been a growth of niche markets catering for special interest or activities
Development of technology ahs lead to The development of mass cruise
holiday market The advent of affordable holidays to
long-haul destinations such as New Zealand or Kenya
The phenomenon of low budget airlines, utilizing private carriers and a new generation of small regional airports
Forms and types of tourism Domestic/international Holiday/professional or business Individual/group
Factors driving the growth of tourism Leisure and life style Business needs The rise of free independent
travelers Expanding channels and networking Professional approach Leveraging technology Innovative partnership and
promotions
Market segmentation
Eco, Cultural and spiritual for self discovery
Pride of being at exotic location
Provide excellent packages for fun, excitement and make new friends
Need to reassure visitors safety, of their destination, travel comfort, etc
Attraction of locations for recovery, rest and relaxation
7 Ps of tourism industry
Tourism is a high-involvement, high-risk products to its consumers Involves committing large sum of money
to something reasonably unknown Tourism is a product partly
constituted by the dreams and fancies of its customers Unlike banking and car repair, tourism is
not consumer for rational or functional purposes
Tourism is a fragile industry susceptible to external forces which are beyond the control of its suppliers Tourism organizations sometimes have
to make rapid responses to crisis in the form of product redesign, price reduction or promotional damage limitation
7Ps of tourism market
Product Price Place promotion People Process Physical evidence
Product
Defining and communicating the distinguishing characteristics of the product to consumers is the key too successful marketing. A tourism product consists of two components: Attributes: Benefits:
People
Know who your target market is. Travelers or Tourists? What do they expect?
People- (Employees)
A tourism organization’s most valuable resource Physical appearance, behaviour,
knowledge and attitude, has a powerful impact on customers’ perception of the tourism product
Ensure uniform, grooming etc, conform to branding and target market
People- (Employees)
Ensure staff are trained to ensure the product is delivered in accordance with the marketing strategic plan
Employees physically embody the product and are walking billboards from a promotional point of view
Process
Process is inseparable product If any part of the process is found to be
unsuitable by the customer, it could result in the negative evaluation of the whole product
Physical evidence
Defined as the built environment owned and controlled by a tourist organization
The tangible aspect of the tourism product
May be used to facilitate the service delivery process. Ex: layout and signage
Communicates message about quality, positioning and differentiation
Marketing tourism
Product and service Tangible and intangible People led and operated Market oriented
