(eex0)8eN Revision Series Marketing © Hospitality and Tourism UNIVERSITY PRESSOXFORD Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delbi Shanghai Taipei Toronto © Oxford Fajar San. Bla, (008974-T) 2017 Hirst published 2017 ISBN 978 983 47 22531 All rights reserved. No par of this publication may be reproduced, stored ina retrieval syste, oF transmitted in any form or by airy means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Oxford University Press. Within Malaysia and Singapore, exceptions are allowed in respect of any fair dealing forthe purpose of research or private study orentcism or review, as permitted under the Copyright Act currently in force. Enquiries concerning reproduction outside these terms and in other countries should be sent to Oxford University Press at the address below. While every effort bas been made to trace the original source of copyright material contained in this book, there might be omissions. For this we sincerely tender ‘our apologies. Perpustakaan Negara Malaysia Catloguing-n-Publicaton Data ‘Yusnza Kamarudzaman “Marketing jor Hesptaly and Tourism /Yasniza Kamarulzaman, Norn than, Asinda Mohd Shab, Mazina Madea (OXFORD Revision Series) Includes index ISBN 978-983-47.253-1 1. Hespiaiy industry Marketing. 2 Touro industy-Markeing. 1.NorAin Othman. Il Asind Mohd. Shaky 1, Moslna Mahar IV Tie, V. Serie. 647-910688 Impression. 987654321 Text set in 11 point Kepler Std by Eclics, Selangor Darul Ehsan Printed by Percetakan Printpack Sdn. Bhd. Selangor Daral Ehsan Published by Oxford Fajar Sdn. Bhd. (008974-T) sunder licence from Oxford University Pres, 4 Jalan Pernaju UUIS, Seksyen UL Hicom-Glenmarie Industrial Park, 40150 Shab Alam Selangor Darul Ehsan, MalaysiaOxford Advisory Board Dr Hamim Omar Senior Lecturer School of Tourism, Hospitality and Environmental Management Universiti Utara Malaysia, Kedah Lai Mun Loon Teaching Fellow Centre for Tourism, Hospitality and Culinary Management Sunway University, Selangor Lisa Tang Programme Director School of Hospitality, Tourism and Culinary Arts Taylor's University Lakeside Campus, Selangor Dr Yuhanis Abdul Aziz Associate Professor Deputy Dean (Postgraduate Studies) Faculty of Economics and Management Universiti Putra Malaysia, SelangorPreface ‘The Oxford Revision Series: Marketing for Hospitality and Tourism merges marketing, topics and themes exclusive to-hospitality.and.tourism,,with a focus on both theories and applications of marketing. The book provides readers with the tools they need to successfully execute marketing campaigns for a hospitality business. ‘The availability of local marketing books with focus on the practices within the Malaysian context is rather limited, or non-existent; this predicament initiated the idea of this book. To the best of our knowledge, we have incorporated Malaysian companies" practices along with more well-known multinational organizations as much as possible in the examples. It is our hope that by using companies, products and brands that students are familiar with, they will be able to relate instantly to the hospitality and tourism marketing practices in their environment. The content of the book enables students to:quickly review the marketing concepts, principles and practices. A chapter map and learning outcomes are provided at the beginning of each chapter. The main content is highlighted with relevant figures and tables for quick review. In each chapter, an opening case, mini cases, key terms and review questions are provided to enhance understanding. This is arranged so that students may apply the marketing concepts and practices discussed and find solutions to the problems. This book is meant essentially for students and practitioners who are new or have been exposed to marketing hospitality and tourism concepts, and have limited time and resources to view or review the bulky marketing textbooks available in the market. Useful hospitality and tourism marketing concepts have been summarized and presented in a simple yet concise manner using pictures, figures, tables and point-pointers. We have used local and international instances in the text to make it more celevant and contemporary. This book is designed to be used as a guide for students to understand marketing concepts better and to prepare for examinations. Practitioners would be able to quickly read and apply the concepts in business. We strongly believe that this approach would make the book a useful resource to students and practitioners.Acknowledgements This book is basically the result of twenty-two years of teaching various marketing courses. | am grateful to the Oxford Fajar editorial team who proposed the idea and for their patience and tolerance. My infinite gratitude goes to my mentor, the late Professor Martin Evans, who guided and initiated my interest in writing. A million thanks to all my colleagues and collaborators at the Faculty of Business and ‘Accountancy, University of Malaya for their support and encouragement. My love and honor go to my family, my husband, Dr AM and daughter Nina, for supporting me throughout the sacrifice and hardships. You are the reason why I keep soldiering on. ‘To my parents and brothers, you are my pillars of strength. To my wonderful readers, T hope you have as much fun learning through this book as I have had in writing it. Lastly, this book is dedicated to all my students over the years, for all the sweet memories and fun we had in class. —Yusniza Kamarulzaman I would like to include a special note of thanks to Dr Nor’Ain Othman who invited me to contribute to this book. I would like to thank Terence Chiew and the Oxford Fajar team for their guidance. 1 also extend my gratitude to my co-authors who have worked hard to complete this book. A special thanks to my family for their endless Jove and support. —Aslinda Mohd Shahril 1 express my sincere appreciation to the many people who provided support, direction, and assistance in completing this book. I am grateful to my students, academic colleagues and friends at the Faculty of Hotel and Tourism Management, Universiti Teknologi MARA (UiTM) for the opportunities to discuss ideas, listen and learn. A very special thank you to my colleagues and co-writers Nor’Ain Othman and Aslinda Mohd Shahril for allowing me to be a part of this team. 1 am also indebted to my family for their unconditional support and for believing in me: in particular, my beloved husband, Badrunnizam, and kids Muzamil, Mia, and Magil. Their endless support, love and patience are highly appreciated. —Mazlina MahdzarAckoowiedgements | vii ‘My utmost gratitude goes to Yusniza Kamarulzaman for inviting me to co-write, and to my colleagues and co-writers, Aslinda Mohd Shahril and Mazlina Mahdzar for their endless support, cooperation and contributions. Thank you to the Oxford Fajar editorial team for their encouragement, understanding and tolerance. To my husband, Dzulkifi Ahmad, my marketing guru: T appreciate the continuous discussions and your opinions and ideas shared throughout the writing process. Lastly, this book is dedicated to the Faculty of Hotel and Tourism Management, Universiti Teknologi MARA (UiTM) for their support and encouragement. —Nor’Ain Othman We collectively acknowledge and appreciate the work of the authors cited throughout the text. A special mention to the following authors: Philip Kotler, John Griffith Bowen and James C. Makens (Marketing for Hospitality and Tourisnr}; and Philip Kotler and Gary Armstrong (Principles of Marketing), whose work have been a constant guide and inspiration to us. We are grateful to all the individuals and companies for granting us the permission to reproduce some of their material for this book, without which this text would have been impossible.Contents Oxford Advisory Board Preface Acknowledgements CHAPTER 1 CHAPTER 2 CHAPTER 3 DEFINING MARKETING FOR HOSPITALITY AND. TOURISM 1.1 Introduetion 1.2. Understanding the Hospitality and Tourism Industry 1.3 Marketing Concepts in Hospitality and Tourism 1.4 Major Principles of Marketing in Hospitality and Tourism 1.5. The Hospitality and Tourism Marketing Environment 1.6 Conclusion Summary Key Terms References Review Questions SERVICE CHARACTERISTICS IN MARKETING FOR HOSPITALITY AND TOURISM 2.1. Introduction 2.2 Service Culture 2.3, Service Characteristics of Products and Services 24 Service Quality 2.5. Conclusion Summary Key Terms References Review Questions MARKETING ENVIRONMENT AND THE HOSPITALITY AND TOURISM MARKETING SYSTEM 3.1. Introduction 3.2. Microenvironment Forces 3.3 Mactoenvironment Forces 3.4 Environmental Analysis 3.5. The Hospitality and Tourism Marketing System 4s 17 7 18 19 19 20 21 22 24 32 32 32 33 33 34 35 36 38 44CHAPTER CHAPTER CHAPTER 3.6 Conclusion Summary Key Terms References Review Questions MARKETING INFORMATION SYSTEM AND MARKETING RESEARCH 4.1 Introduction 4.2. Understanding the Marketing Information System 4.3. Marketing Research 4.4 Conclusion Summary Key Terms References Review Questions BUYING BEHAVIOUR OF CONSUMERS AND ORGANIZATIONAL MARKETS 5.1 Introduction 5.2 Consumer Behaviour 5.3. The Consumer Buying Process 5.4 Organizational Buyer Behaviour 5.5. Trends in Consumer Behaviour 5.6 Conclusion Summary Key Terms References Review Questions MARKET SEGMENTATION, TARGETING AND POSITIONING 6.1. Introduction 6.2. Market Segmentation 6.3 Selecting Target Markets and Developing Targeting Strategies 6.4. Developing Marketing Mixes for Market Segments 6.5. Developing Positioning Strategies 6.6 Conclusion Summary Key Terms References Review Questions contents |x 7 48 48 49 30 St 32. 7 or o7 67 68 69 70 71 2 78 7 79 80 81 81 82 82 83 84 85 88 a 94 98 99 100 1011x | Marketing for Hosptality and Tourism CHAPTER = MANAGING PRODUCT 102 Zz | 7.1 Introduction 103 7.2. Understanding Product 103 7.3. Product Branding 109 j 7.4 New Product Development 1s 7.5. Product Life Cycle Stages 119 7.6 Categories of Adopters 121 7.7, Conclusion 123 Summary 123 | Key Terms 124 | ences 125 | uestions 125 | ae PRICING 126 | 8.1 Introduction 127 | 8.2. Understanding Pricing 127 | 8.3 General Pricing Approaches 129 | 8.4 Factors to Consider in Price Setting, 134 | 8.5. Pricing Strategy 137 | 8.6 Changes in Price 143 ] 8.7 Conclusion 144 | Summary 145 | Key Terms 146 References 147 Review Questions 147 Se DISTRIBUTION STRATEGIES 148 9.1 Introduction 149 9.2. Understanding Distribution Channels 150 9.3. Levels of Marketing Channels 153 9.4 Channel Members of the Hospitality and Tourism Industry 157 9.5 Channel Design 162 9.6 Channel Organizations 164 9.7. Channel Management Decisions 166 9.8 Business Location 167 | 9.9 Conclusion 169 | Summary 170 Key Terms 171 References 172 Review Questions 172contents | xi CHAPTER PHYSICAL ENVIRONMENT AND SERVICE 173 10 PROCESS. 10.1 Introduction 174 10.2 The Role of the Physical Environment 174 10.3 Physical Environment Dimension 178 10.4 Physical Environment Elements 17 10.5 Guidelines for Effective Strategy of Physical Evidence in Services 178 10.6 Customer Behaviour in the Servicescape 180 10.7 Layout Accessibility 182 10.8 Service Process” 185 10.9 Understanding Service Process 186 10.10 Dealing with Processes in Hospitality and Tourism 186 10.11. Service Quality and Blueprint 187 10.12 Service Process Strategies 189 10.13. Conclusion 190 Summary 190 Key Terms 190 References 191 Review Questions 191 Cr CUSTOMER RELATIONSHIP AND BUILDING LOYALTY 192 11.1 Introduction 193 11.2. What is Customer Satisfaction? 193 11.3. Managing Complaints 195 11.4 Service Recovery 199 11.5 Dimensions of Justice and Satisfaction with ‘Complaint Handling 202 11.6 Strategic Customer Relationship Management 204 11.7 Conclusion 209 Summary 209 Key Terms 209 References: 210 Review Questions 210 CHAPTER — PROMOTION STRATEGIES | — COMMUNICATION, 12 PROMOTION MIX AND ADVERTISING ait 12.1 Introduction 212 12.2. Understanding Integrated Marketing ‘Communication (IMC) and Promotion Mix 213 12.3 The Marketing Communication Process 215 12.4 Developing Effective Communication 217xii | Marketing or Hospitality ana Tourism CHAPTER 13 CHAPTER 14 Index 12.5 Promotion Mix 12.6 Advertising 12.7 Conclusion Summary Key Terms References Review Questions PROMOTION STRATEGIES II — PUBLIC RELATIONS, SALES PROMOTION, PERSONAL SELLING, EVENT SPONSORSHIPS AND E-MARKETING 13.1 Introduction 13.2 Public Relations 13.3. Sales Promotion 13.4 Personal Selling 13.5 Event Sponsorships 13.6 E-Marketing 13.7 Conclusion Summary Key Terms References Review Questions TRENDS IN HOSPITALITY AND TOURISM MARKETING 14.1 Introduction 14.2 _ Islamic Offerings for Destinations in Targeting the Muslim Market 14.3, Health Tourism 14.4 Marketing Gastronomic Tourism 14.5 Marketing Ecotourism 14.6 Marketing Transportation Tourism 14.7. Ethics And Corporate Social Responsibility 14.8 Relationship Tourism 14.9 Destination Analysis 14.10 Conclusion Summary Key Terms References Review Questions 223 224 229 229 230 231 231 232 233 234 239 249 251 253 258 259 259 260 260 261 262 263 264 266 267 269, 271 272 274 276 276 277 278 278 279“DEFINING MARKETING FOR HOSPITALITY AND TOURISM LEARNING OUTCOMES After studying this chapter, you should be able to « explain the concept of hospitality and tourism ‘+ describe the importance of hospitality and tourism + define the marketing concepts and discuss the marketing evolution + compare and contrast the roles of marketing during the four evolutionary eras + describe the external environment for marketing in the hospitality and tourism industry Setting the Scene The Malaysia Tourism Promotion Board The Tourist Development Corporation of Malaysia (TDC) was established on 10 August 1972 as an agency under the former Ministry of Trade and Industry by an Act of Parliament. With the inception of the Ministry of Culture, Ars and Tourism on 20 Nay 1987, TDC was moved to this new ministry, and became the Malaysia Tourism Promotion Board (MTPB) through the ‘Malaysia Tourism Promotion Board Act 1992. Popularly known as Tourism Malaysia its mission is to market Malaysia as a destination of excellance and to make the tour's industry a major contributor tothe socio-economic development ofthe nation. ts objectives are to: (a) promote Malaysia as an outstanding tourist destination, (b) showcase Malaysia's unique. wonders, attractions and cutures, (e) enhance: Malaysia's. marta, siiare for meetings, incentives, Conventions and exhibitions, (6) increase Malaysia's tourism revenue by increasing tourist numbers to Malaysia and encouraging them to extend their length of stay (e} encourage growth of tourism and its related industries in Malaysia, and () help develop domestic tourism and promote new investments inthe counry, as well as provide increased employment opportunities. Years 2014 and 2015 were a critical period of promotion to met the tourism targets of 36 milion tourists and RM168 billion receipts by year 2020. It was Visit Malaysia Year in 2014, and 2015 was the Malaysia Year of Festivals. Year 2014 recorded a growth in tourist arrivals with 27.4 milion, 6.7% better than the previous year. Up until November 2015, Malaysia receved 23.1 millon artvas, a figure that reflects the challenging tourism industry. The target for 2016 is 3055 milion tourist arivals and RM103 bilion in tourist receipts. To achieve these targets,2 | Masketng or Hosptality and Touism Tourism Malaysia is working closely with old and new partners to increase alr connect, explore new markets, facitate travel and introduce new and exciting products and packages. ‘The opening of new tourist attractions such as Resorts World Genting’s 20th Century Fox World ‘outdoor theme park and Ipoh's Movie Animation Park Studios will be good forthe country. In ‘addition, the implementation of e-visa faites wil alsa help to boost arrivals from China, Case Questions 1. Outline possible products, including ways in which product enhancement can be introduced and branding identified for Malaysia 2 What are te suitable markets forthe product offering in Malaysia? '3- Discuss possible marketing acthites for Tourism Malaysia to increase tourist arivals, 4 Ident who are Tourism Malaysia's partners i increasing air connectivity and exploring new markets, 1.1 INTRODUCTION ‘Marketing is a philosophy and not just business. It is the way a business is structured and planned. In today’s business world, the customer is your priority. It is especially so in the hospitality and tourism industry. Managers in this industry find that it is important to not only satisfy customers, but to also select the right customers to meet the company’s objectives, A manager must create a good marketing mix to satisfy customers, and create a pool of loyal and repeat customers to stay ahead of the competition. Marketing within this industry is a challenging task. Attracting tourists to holiday destinations and creating an attractive image of the company and country is no easy feat. Customer value and satisfaction is central to the hospitality and tourism industry's business. Many factors can contribute to making a business successful. However, today’s successful companies have one thing in common: they are focused on customers and committed to marketing. AirAsia is a good example of customer-focused business. It has become the world’s best low-cost airline, meeting the needs of passengers with its now famous tag line, ‘Now Everyone Can Fly’. Sri Sutra Travel and The Ritz-Carlton Hotel Company are among other examples of companies focused on satisfying customers. McDonald's has grown into one of the world’s largest fast food restaurant chains by providing its customers with quality and value-for-money food products, service and facilities. These and other successful hospitality and tourism companies have found that if they care about their customers, market share and profits will soon follow. To be a successful manager in this industry, you need employees who can deliver superior value for customer satisfaction. In this chapter, we will discuss the importance of the hospitality and tourism industry. We will draw comparisons between marketing in traditional manufacturing companies and in the hospitality and tourism business. Marketing has evolved over four eras: production, sales, marketing and societal marketing. The marketing orientation is the concept mostly adopted by successful hospitality and tourismDefining Marketing far Hosp and Tour | 3 businesses. We will explore the principal characteristics identified in the marketing orientation and the core principles of marketing, We will also discuss the hospisality and tourism marketing environment. 4.2 UNDERSTANDING THE HOSPITALITY AND TOURISM INDUSTRY Hospitality and tourism is one of the world’s major industries. Irs fast growing, and it focuses on the satisfaction of travellers, tourists, guests and customers, Hospitality and tourism work hand-in-hand. The hospitality part of the equation that forms this industry comprises the services offered at hotels, restaurants, holiday resorts and catering businesses. Danny Meyer; a successful restaurateur in New York City and the CEO of the Union Square Hospitality Group, puts hospitality into perspective. In his book, Setting the Table: The Transforming Power of Hospitality in Business, he writes, ‘Service is a monologue—we decide how we want to do things and set ‘our own standards for service. Hospitality, on the other hand, is a dialogue. To be fon a guest's side requires listening to that person with every sense, and following up with a thoughtful, gracious, and appropriate response. It takes both great service and sgreat hospitality to rise to the top’ (Meyer, 2006, p. 65). Tourism on its own is an important source of income for many countries. ‘The Manila Declaration on World Tourism of 1980 described tourism as an activity essential to the life of nations because of its direct effects on the social, cultural, educational, and economic sectors of national societies and on their international relations. The World Tourist Organization (UNWTO) reported that in 2014, the number of tourists globally grew by 4.4%5 reaching UNWTO’s long-term projection forecast of 3.8% growth for the period of 2010 to 2020, well on track to reach the projected 1.8 billion international tourists by year 2030. Tourism continues to be a key driver of global economic recovery that contributes to job opportunities, alleviation of poverty, protection of the environment and greater understanding of multicultural peace and conservation of heritage and tradition. There are four different perspectives in tourism. The tourist, The business providing tourist goods and services, ‘The government of the host community or area, and ‘The host community. Tourism can be defined as the process, activities and outcomes arising front the relationship and interactions with tourists, tourism suppliers, host governments, host communities and surrounding environments involved in attracting and hosting visitors (Goeldner and Ritchie, 2003). The World Tourism Organization (UNWTO)4 | Marketing fr Hsptaity and Tourism defines tourism as activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes. Tourism can be categorized into four parts: international rourism, internal tourism, domestic tourism and national tourism. a. International tourism is divided into six categories: (i) Inbound tourism which refers to visits to a country by non-residents. (ii) Outbound tourism, involving residents travelling in another country. (iii) ‘The traveller, which refers to any person on a trip between two or more countries or between two or more localities within his/her country of usual residence. (iv) International visitors, which refers to persons who travel for a period not exceeding 12 months to a country other than the one in which they generally reside, not for work purposes. (*) Tourists, which refer to visitors who stay in the country visited for at least fone night or 24 hours. (vi) Same-day visitor which refers to visitors who do not spend the night in an accommodation in the visited place. For example, a cruise ship passenger spending four hours in a destination/port. b. Internal tourism refers to visits by residents of a country to another country. ¢ Domestic tourism involves residents of the given country traveling only within this country. 4. National tourism is internal tourism plus outbound tourism (the resident tourism market for travel agents and airlines). The Importance of Hospita ity and Tourism The tourism industry contributes to the income of the local economy, which in turn creates employment opportunities in the industry. The operating sectors of the tourism industry are: a. The transportation sector which includes airlines, bus or coach companies and ‘cruise ships. b. The accommodation and lodging sector which includes hotels and resorts. ‘The food services sector which involves a broad spectrum of restaurant chains and fast food outlets such as McDonald’s and KFC. 4. The tourist attractions sector which includes the national park, theme parks and museums, ¢- The events sector which includes the Olympic Games, the FIFA World Cup, and Formula One Grand Prix. {. The adventure and outdoor recreation sector which involves activities such as golfing, white water rafting, parasailing, mountaineering, and skiing.Dating Marketing for Hospital and Touts | 5 g The entertainment sector which includes amusement parks, casinos, shopping malls, theatres and musical venues. h, The travel trade sector which includes retail travel agents and wholesale tour operators. i. Other sectors include souvenir shops, traditional and local handicrafts, and other supplies bought by tourists. Careers in Hospitality and Tourism All the operating sectors require manpower to make the various processes work and offer a range of activities and experience to travellers. It ranges from simple jobs to highly sophisticated tasks in order to provide memorable experiences or efficient business travels. Graduates from hospitality courses eventually find jobs at hotels, motels and resorts, or become restaurant managers, food and beverage managers, cruise ship representatives and dozens of other positions. Students with tourism qualifications find jobs at national tourist organizations, state or national parks, museums, or become representatives for major travel companies, travel agents and tour guides. 4.3 MARKETING CONCEPTS IN HOSPITALITY AND TOURISM ‘The Chartered Institute of Marketing (CIM) defines marketing as the management process responsible for identifying, anticipating, and satisfying customer requirement profitably (CIM, 2007). The American Marketing Association defines marketing as activities, set of institutions and processes for creating, communication, delivering and exchanging offerings that have value for customers, clients, partners and the society at large (AMA, 2007). Kotler, Bowen and Makens (2017) define marketing asa social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others, Core marketing concepts include needs, wants and demands, products and services, value, satisfaction and quality, exchange, transaction and relationships, and ‘marketing orientation (Figure 1-1). Neods, wants —_ and omen Marketing Core Products orientation Marketing and servioes Z Exchange, Value, transaction and satstaction relationstips and quality Figure 1.1 Core marketing concepts6 | Marketing or Hospitality and Tourism Needs, Wants and Demands Needs form the most basic concept of marketing which involves physiological needs (for example food, water, shelter, and clothing), safety needs (for example protection, security, law and order), social needs (for example friendship, sense of belonging, and affection), esteem needs (for example approval, recognition, and self-confidence) and self-actualization needs (for example accomplishment and self-growth). The need for stress relief would motivate one to go on a relaxing holiday to a beach or an island. ‘Wants ave influenced and shaped by culture and individual personality. Wants are largely dependent on the needs of the individual. For example, a hungry man can satisfy his hunger by eating a burger, but he wants a double cheese burger from MeDonald’s and coffee from Starbucks. Needs must not be confused with wants. ‘Customers may have the same needs but different wants of a product. Demand relies on the buying power to choose the products and the satisfaction in purchasing the product. Tune Hotels offer basic accommodation to travellers which are low in price and convenient. However, travellers may choose to stay at the Hilton oor The Ritz-Carlton for more luxurious accommodations. Travellers choose products and services that benefit and satisfy their wants depending on their purchasing power Or resources, Products and Services ~ Offering A product is something that is offered to satisfy a need or want. In order to break away from a monotonous routine and highly stressed work atmosphere, an executive would decide on a relaxing after work activity. He may satisfy his needs or wants by going to thecinema to catch a movie, or dine at a restaurant, or go for yoga or dance classes. The concept of the product in this context is not limited to the physical and tangible product but includes experiences, persons, places, organizations, informa- tion and ideas. For example, Disneyland provides a wholesome family experience, Starbucks provides coffee, tea and snacks while Reliance Travel focuses on travelling experiences, Value, Satisfaction and Quality How do customers choose from the many products and services? Most customers make their choices based on what they perceive to be the best value and cost of the products and services, Individuals decide on their holiday destinations based on their impression of the destination, fuelled by the images and packages offered by travel agencies (Figure 1.2). They will evaluate the benefits and costs of each tour package. For example, a 10 days 8 nights tour to Turkey will cost USD2000 while a 5 days 4 nights stay in Bali will cost USD500.Detring Marketing for Hospitality anaToursm | 7 Figure 1.2 Relaxing at a holiday resor for stress reli Customer satisfaction. Customer satisfaction depends on the product's perceived performance in delivering value relative to the buyer's expectation. Successful companies will offer customers what they can actually deliver rather than offering more than what they can deliver, Customer expectations depend on previous buying experiences, opinions of relatives and friends, and promotional activities by the companies. A five-star hotel should live up to expectations of customers and ensure their guests experience a terrific stay at the hotel. If guests are satisfied, they will return and recommend the hotel to their friends and relatives. Figure 1.3 A olday destination requenteu by travellers Quality. Quality can be defined as a measure of excellence or free from defect and deficiencies. The fundamental aim of total quality management (TQM) is total customer satisfaction. It is therefore an important task for companies to improve their products and service quality and ensure that they are better than their competitors, Marketers must develop strategies for total quality excellence and deliver service of high standards through quality marketing research, sales training for staff, ethical advertising and promotional activities, and improving customer services. This is a universal concept adopted by hospitality and tourism businesses to survive in8 | Maketing for Hospitaty and Tourism competitive markets, It is not just the price but also the value and quality of products and services plus customer satisfaction that make a difference. Exchange, Transaction and Relationship Marketing Exchange isthe act of obtaining a desired object from someone by offering something in return. The exchange can take place after money is offered in return for the goods or service provided. ‘Transaction on the other hand is the marketing’s unit measurement. It is a trade- off between two parties. A transaction can involve money or a barter trade between two parties that involves value, an agreed condition and within a specific time and place. In a broader sense, it can develop into relationship marketing. Relationship marketing is building a relationship between valued customers, suppliers, dealers and distributors. Relationship marketing within the hospitality and tourism industry is important in the following areas: a. Relationship between retailers of travel-hospitality services such as hotels or airlines, and tour operators and travel agencies. b. Relationship between retailers of travel-hospitality services and key customers such as private companies and government agencies. ©. Relationship between food service chains and organizations such as hotels, transport terminals and large companies in which the food chain is the provider. 4. Relationship between hospitality organizations and their marketing agencies, banks and legal companies. Market. A market is a set of potential buyers who might develop an exchange or transaction with a seller. Sellers offer the products with information for the market and the market provides the seller with money and information, For example, Tourism Malaysia promotes Malaysia as a value-for-money destination to the Japanese market. ‘A market includes the following customers: a. Consumer market: Customers who buy products for their own consumption. b. Business market: Customers who buy products for further processing, reselling, renting and not for their own personal consumption. ©. Reseller market: Customers who buy goods to resell the goods for a profit. 4. International market: Customers in other countries, including consumers, producers, resellers and government. Marketing means working with markets to bring about exchanges for satisfying human needs and wants. Marketing management can be defined as the analysis, planning, implementing and control of programmes designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives (Kotler, Bowen and Makens, 2014).Detning Mating or HosptltyandTautsm | 9 Morrison (2009) defines marketing in hospitality and tourism as @ continuous process through which management in the hospitality and travel industry plans, researches, implements, controls and evaluates activities designed to satisfy both customer needs and wants and their own organization objectives. Marketing requires the efforts of everyone in an organization and can be made more or less effective by the action of complementary organizations. The definition highlights six marketing fundamentals: a. Satisfaction of customers’ needs and wants: The main focus of marketing is to satisfy customers’ needs (what customers have and what they would like to have) and customers’ wants. b. Continuous nature of marketing: Continuous management activities c. Sequential steps in marketing: Process of following a number of sequential steps. Key role of marketing research: Undergo marketing research to identify customers’ needs and wants for effective marketing. ¢. Interdependence on hospitality and travel organizations: Collaboration and cooperation in marketing among organizations of the industry. f. Organization-wide and multidepartment effort: Marketing is the effort of all departments or divisions in the organization. Marketing Orientation Marketing in manufacturing of tangible products and goods has evolved into six concepts: (a) production, (b) product, (c) selling, (d) marketing, (e) societal marketing and (f) holistic marketing. These concepts emerged and evolved due to technological advancement, productivity improvement, competition, high market demand, innovative management and changing societal values. The hospitality and tourism industry and other service industries have not followed the same historical evolution in marketing. The industry is lagging behind the manufacturing and packaged-goods industry in its use of marketing as far back as 10-20 years. There are many reasons for this. For one, many managers have rose through the ranks to become successful entrepreneurs. For example, many chefs have now opened and manage their own chain of restaurants, ex-airline pilots have created airline companies, am many hotel company presidents were once front-office staff and tour operators. Secondly, major technological break-through in the hospitality and tourism industry came later than in the manufacturing and packaged-goods industry. For example, Henry Ford introduced mass production in the early 1900s while the hospitality and tourism industry arrived at the same point about three or four decades later. Pan American World Airways (also known as Pan Am) offered its first transatlantic flight in 1939. Kemmons Wilson began franchising the Holiday Inn chain as the ‘Holiday Inn of America’ in 1957. The McDonald's Corporation opened the first franchised restaurant in 1955. In the same year, Walt Disney opened the first Disneyland in California,10 | Marketing for Hospitality and Tourism a. Production concept: The first evolutionary stage in the development of marketing is the production orientation or also known as manufacturing concept. The concept focused on the demand from consumers, and manufacturers concentrated on production and distribution efficiency. The scenario is that demand exceeded supply. Management produced as many goods as possible without giving priority to customers’ needs and wants. The era began during the industrial revolution until the 1920s, in which Henry Ford; founder and owner of the Ford Motor Company, stated that it does not matter what colour you want, as long as itis black. b. Product concept: Product concept emerged around the time of production concept. This concept favours products that offer the best quality, performance or innovative features to consumers. Marketing managers concentrated on improving the products from time to time with the assumption that superior products sell themselves. Marketing activities were focused primarily on improving the products rather than satisfying the market's needs. c. Selling concept: As competition intensified, the production orientation switched to selling and it became the priority of manufacturers. This era lasted until the 1950s for manufacturing companies but not for the service industries such as hospitality and tourism organizations. Many hospitality and tourism organizations continued to be either production or sales oriented. They focused more on sales rather than profit. Companies offered services based on the opinion ‘of managers which they felt were good for the customers, The following symptoms can be used to identify a production or sales oriented company. (i) Short-term planning and long-term planning have little value. (ii) Long-term decisions are made when problems arise. (iii) Top management is reluctant to change. (iv) Confident of business growth and guaranteed business volumes. (v) Best and highest quality service is assumed to guarantee success and profit. (vi) Customers’ needs and wants are less of a priority. Managers think they know what customers need without proper research. (vii) Promotions emphasizing on service or product features rather than satisfying customers’ needs. (viii) Customers are given only what they want and ask for. (ix]_ Decisions ate made from production or sales perspectives rather than customers’ needs. (x) Cooperation among departments and other organizations is not considered important. (xi) Departments have overlapping activities and responsibilities related to marketing.Deting Marketing far HosptaltyandTousm | 14 (sii) Department managers are defensive and protective of their ‘domains’. (xiii) The owners prefer to offer products and services they think is right for the customers. Based on the symptoms stated, the following are examples of statements from managets that reflect a production and sales oriented company or marketing myopia (short-sightedness or a lack of sensitivity or planning). Travel agency ‘Tam so sorry, Mr Ahmad, but that was the fault of the airline not ours. You did not ask me to recommend any other package or a different airline.” Symptoms x and viii Hotel “There is always great demand for rooms from the increase number of guests coming to this hotel. Our rooms and restaurants are the best available in the Symptoms iv and v Restaurant ‘My husband and I love Italian food and we are going to open an Ialian restaurant because we are sure that there are many Italian food lovers like us in this town’ Symptoms vi and xiti Travel destination “We really cannot handle the high increase of tourist arrivals during the month of July, so we are going to shift our promotional efforts to December. Symptoms i, iiand iv Marketing concept: The concept emerged in the 1950s due to intense competition and technological advancement which resulted in the development of the ‘marketing orientation era. Companies began to realize that customer needs had to be taken into consideration in trying to market their products and services Supply now exceeded demand. Companies realized that selling alone did not guarantee satisfied customers and higher sales profits. The three basic features of this concept are customer satisfaction, coordinated efforts by every unit in the organization and long-term profit. In order to satisfy ‘customers, employees are required to cooperate and coordinate related marketing activities such as advertising and customer service. Entire departments within the organization are responsible to satisfy customers’ needs and matketing is seen as a long-term, organizational concern. ‘The marketing concept is being rapidly adopted in the hospitality and tourism industry today. For example, the Four Seasons Hotels and Resorts and McDonald's follow this concept: these companies determine the needs and wants of target markets and deliver the desired satisfaction more effectively and efficiently.12 | Marketing tx Hospitality and Tous ‘The selling concept starts with the company’s existing products, The company experiences heavy selling and promoting to achieve profits through sales. The marketing concept on the other hand, starts with the needs and wants of the company’s target customers. The company coordinates and integrates all marketing activities based on their market research. It gains profits through customer satisfaction, and repeat and loyal customers. ‘The selling concept ‘Starting point Focus Means ‘End Selling famoy——idigpoacs =a Pats on pont ‘The marketing concept ‘Starting point Focus ‘Means End . Integrated Profits through a Customers neads ‘marketing ‘customer satisfaction Figure 1.4 Differences between the seling concept and the marketing concept How can we identify an organization with a marketing concept? Nine principal characteristics of marketing oriented hospitality and tourism orga as follows: izations are (i) Makes customers’ needs the utmost priority: Examples are travel agenci that meet their customers on a frequent basis in focused groups before they embark on their travelling experiences. Fast food restaurants in Malaysia display the halal signage by the Islamic Religious Department at their premises so as to ensure their food is safe to be consumed by their Muslim customers. Satisfied customers will recommend the service or restaurant to their friends and relatives. This often results in repeat customers and potential new customers. (ii) Knows marketing research is a continuous activity and gives it high priority: Examples include Sunway Lagoon Theme Park conducting interviews and surveys each week to find out if customers are satisfied with their services and receive value for money experiences. Most hotels distribute guests’ survey forms to get feedback of the services offered by their employees and hotel outlets. (iii) Is aware of customers’ perception of the organization: Examples are customer service managers of hotels giving out questionnaires to guests,(iv) Ww) (wi) ii) (viii) (ix) Defining Marketing for Hospaltyand Tours | 13. who have made reservations to stay at their hotels to find out what impression guests have of their hotels’ services. Based on the feedback, they will improve their services and facilities to enhance their hotels’ image. ights the organization's strengths and improves weaknesses in order to be better than competitors: One example is AirAsia promoting themselves as a budget airline that caters to all types of customers. Tickets are priced competitively and are reasonable enough, making travel affordable for all customers. Knows the: importance of long-term planning: The development of marketing strategies is important for long-term planning in hospitality and tourism businesses. One of the most important strategies in this industry is to develop close relationships with customers, suppliers, distribution channels, and other partners that complement the business. One example is travel agencies, tour operators, airlines and hotels collaborating to create a partnership in order to market their products and services. Collaborations can take up to 5 years to adapt to the changes and marketing opportunities. Sets up broad activities and scopes for business: Hospitality and tourism companies that adopted the marketing orientation will take advantage of ‘opportunities to satisfy the customers and improve the related fields. The company does not resist change but rather adapt smoothly to change. Is conscious of the importance of cooperation between departments in the organization: All departments within the organizations such as hotels, restaurants, airlines and travel agents work together with a common goal of satisfying their customers. For example, front office employees can work closely with housekeeping staff to ensure that the rooms are ready once guests arrive and register at the reception. Managers can empower certain divisions to ensure they provide quality customer services. Builds a network by cooperating with business related organizations: Partnership and cooperation between different companies in the hospitality and tourism industry is important. The many tour packages offered by travel agencies are mostly the result of cooperation between hotels and airlines. This creates a better offering to customers. Andalusia Tour and Travel offer great packages for umrah and haj, and also other Muslim holiday packages to other parts of the world such as Japan, Korea, Europe and the US. Continuously monitors and evaluates marketing activities: Market- oriented organizations normally prepare a report of the success and failures of its marketing activities. The effective marketing activities are identified and enhanced further whereas ineffective marketing activities are re-evaluated.14 | Meeting fr Hosptaty ns Touism e. Societal marketing concept: This is a new concept wherein organizations consider the consumers’ social well-being to fulfil the needs, wants and interests of the target market. The environmental problems, climate change, and shortage of resources, growth in the population, inflation and social services lead to the development of the societal marketing concept. Companies adopting the societal marketing concept seek to ensure their customers are satisfied and the society benefits from their products and services over the long term. Examples include hotels establishing non-smoking floors and no smoking areas in restaurants Hotels practising the eco-friendly system in waste removal and chemical use, and conserving energy and water. Green marketing activities being introduced in ‘major hotels such as Frangipani Langkawi Resort, to preserve the natural beauty of the beach, and in Mutiara Resort Taman Negara, to ensure the sustainability of the national park. Malaysia also promotes homestay programmes to tourists? to ensure the community and society benefit from the tourism industry. £, Holistic marketing concept: This is the newest and latest approach to marketing in business based on the changes in the current marketing environment, such as demographic changes, globalization, internet development, corporate social responsibility and wide usage of social media. According to Kotler and Keller (2014), holistic marketing concept is based on the development, design and implementation of marketing programmes, processes and activities that recognize the breadth and interdependencies. Holistic marketing recognizes that ‘everything ‘matters’ with marketing and that a broad, integrated perspective is necessary to attain the best solution. The holistic approach includes all elements of marketing mix, and there are four main components, namely: (i) Relationship marketing, (ii) Integrated marketing, (iii) Internal marketing, and (iv) Socially responsible marketing. MINI CASE 1.1 Kampung Pelegong is a village in Negeri Sembilan located 15 Klometres away from the city of ‘Seremban. Most of the residents have inherited the Minangkabau culture and customs that were ‘brought and practised by their ancestors wino were immigrants from Westem Sumatra, Indonesia, “The uniqueness of this culture has become an attracting factor for the Kampung Pelegong Homestay, ‘especially since Negeri Sembilan is the only state in Malaysia where the residents still practice the ‘Minangkabau way of life. The beautiful natural surroundings of the village adds to the beauty of this homestay. ‘Source Adapted from Kayat 2017)Detning Marketing fo Hospitality aneToursm | 15 4.4 MAJOR PRINCIPLES OF MARKETING IN HOSPITALITY AND TOURISM ‘The core principles of marketing within the hospitality and tourism industry can be described as follows: a. Marketing concept: Adopting the marketing concept means that companies have to ensure their marketing activities will focus on satisfying customers’ needs and wants. A good example is Walt Disney’s Disneyland Park which is designed not just as entertainment for children but for the whole family. b. Customer orientation: Organizations should embrace the marketing concept and ensure that marketing and customer orientation is the main focus of the organization. Examples include hotels daily reviewing guests’ feedback. cc. Satisfying customers’ needs and wants: Organizations must realize the importance of satisfying customers to survive in the competitive business environment. Theit success relies very much on returning customers, and new customers who have a positive impression of the company. d. Market segmentation: Customers are divided into different segments and specific ‘groups or target market. The company is focused on the target market to ensure better profit and returns. ¢. Value and the exchange process: Value and value for money are terms frequently used in marketing. Customers perceive the value of products and services in terms of their ability to satisfy their needs and wants. Price is not an indicator of value. Marketing is an exchange process. Companies exchange or trade items of value with their customers. For example, hotels provide services, facilities and experiences to customers who are away from home. Guests make reservations and pay for services rendered. f. Product life cycle: A product life cycle has four stages—introduction, growth, maturity, and decline. Marketing strategies and approaches need to be planned and modified according to the stages. For example, Malaysia as a holiday destination is now experiencing the growth stage, and Tourism Malaysia's marketing efforts will focus on tourist awareness and increasing tourist arrivals to Malaysia. Marketing mix: Ina traditional marketing mix, the 4Ps comprise product, place, promotion and price, however, in hospitality and tourism, there are additional 4Ps—people, packaging, programming and partnership (Figure 1.5). a * Product ‘Additional 4Ps + Poople See + Price forMarketing in| |» Packanin a « Promtion Hospitality and + Programming + Price Tourism + Parnership Figure 1.5 Marketing mic1 | Markeong tar Hospaty and Tots 1.5 THE HOSPITALITY AND TOURISM MARKETING ENVIRONMENT Some of the factors in a firm’s marketing environment can be controlled by the firm but some are not within its control. The marketing environment is made up of everything that affects the way a company operates or runs the business, There are six major marketing environment factors: competition, legislation and regulation, economic environment, societal and cultural environment, technology, and organizational objectives and resources. a. Competition: The hospitality and tourism industry is very competitive. There are many players in the field, for example hotels (i.e. luxury hotels, budget hotels, boutique hotels, rest houses, etc.) restaurant chains, fast food chains, local food stalls, airline companies (ie. full services airlines and low-cost carriers, travel operators and travel agencies, etc), tourist attractions, and convention and exhibition centres. ‘Competition is also becoming global as more companies are expanding into foreign Countries. When one restaurant introduces a new menu, its competitors will start to do the same thing just to keep up. A low-cost carrier will introduce seasonal tickets, and its competitors will do the same. Marketing managers need to keep abreast of all the latest developments with competitors and current marketing activities. b. Legislation and regulation: A company is bound not only by the legislation and regulation of its home country but also by those countries in which it operates. There are specific laws as to how services and products can be advertised, how sales and travel discounts are to be carried out, guidelines on travel insurance, etc. which need to be adhered to, These laws are there to govern the business and to ensure the safety and security of the customers. © Economic environment: Inflation, recession and unemployment are three economic environments that can badly affect the tourism industry. For example, the high exchange rate of the US dollar and British pound can affect the number of travellers to the US and UK. Travellers may choose a less costly destination such as Indonesia or China. 4d. Societal and cultural environment: Companies in offering their services and carrying out their promotional activities need to be sensitive to societal and cultural norms. For example, travel agencies should include clean hotels, provide halal food, abide by the Muslim prayer times and provide kiblat directions in their tour packages for Muslim travellers to non-Muslim countries. Technology: Marketers must incorporate the use of the latest technology in their products and services so as to have a competitive edge over their rivals. The use of social media and online marketing can be a good promotion of the services offered by the company. This would also encourage a more exciting and fun travel experience for their customers £, Organizational objectives and resources: Marketing activities should run parallel to the organization’s objectives and policies. For example, hotels and restaurants should not engage in criticisms of competitors in their advertising or media campaigns.Dering Marketing for Hospitality and Tourism | 17 4.6 CONCLUSION “Tourism has become one of the major players in international commerce and represents cone of the main income sources for many nations. Tourism plays an extensive role in stimulating economic sectors such as food, transport, accommodation, entertainment, handicrafts, shopping, spa and wellness, and healthcare and education. Marketing is important to the business as the marketplace is very competitive. There are more and more hotels, restaurants, airline companies, theme parks, car rental companies ‘and cruise liners opening up every day in countries around the world. In Malaysia, the tourism industry has grown significantly both in terms of tourist arrivals as well as economic contribution. Malaysia’s tourism industry currently ranks the second largest foreign exchange earner after export of manufactured goods, and is the sixth largest contributor to the economy, contributing a total of RM161 billion or 14.9% of the GDP in 2014. In 2014 tourism brought in RM19.4 billion of investments and contributed a total of 1.77 million jobs, ie. 13 per cent of total employment. The UNWTO outlook for 2016 projects international tourist arrivals to grow by 4% worldwide in 2016. By region, growth is expected to be stronger in Asia and the Pacific (+4% to +5%). This sets the course for future opportunities and challenges in the hospitality and tourism industry. Marketers must face up to the challenge and innovate on the seven core principles of marketing—the marketing concept, marketing orientation, market segmentation, satisfying customers’ needs and wants, value, product life cycle and marketing mix. © Marketing managers need to understand the importance of the hospitality and tourism industry. © The core marketing concepts include needs, wants and demands, products, ‘exchange, transactions and relationships, and market orientation © Marketing in manufacturing and packaged-goods have evolved over four major ‘concepts: production, sales, marketing, societal marketing, © The marketing concept is being rapidly adopted in the hospitality and tourism industry. © Marketing managers in the hospitality and travel companies should be able to differentiate between the selling concept and marketing concept. © The traditional marketing mix includes the 4Ps~product, place, promotion and price. In marketing for hospitality and tourism, there are additional 4Ps—people, programme, package and partnership. © Marketing managers must understand the marketing environment and the forces that affect the way the company operates.18 | Marketing tr Hospitality and Tourism Sati Customers’ needs refer to a person's physiological, safety, social, esteem and self- actualization needs. . Customer satisfaction refers to the customer's experience with a firm, products, or services that exceeds expectation Customers’ wants are influenced by their needs and are shaped by their personality and culture. Hospitality industry includes businesses that provide accommodation, prepared food and beverage service, andior entertainment for the traveller. ‘Market comprises the actual and potential buyers and sellers of products and services. ‘Marketing is a social and managerial process by which people and groups obtain what they need and want through creating and exchanging products and value with others. Marketing concept is the marketing management philosophy that controls organizational goals, determines the needs and wants of the target market, and delivers desired satistaction more effectively and efficiently than competitors. Marketing mix elements include product, price, promotions, place and some include people, programme, packaging and partnership that are facing the company. Product concept is the idea that consumers will favour products that offer most ‘quality, performance and features and company will focus on product improvement. Product quality refers to the features and characteristics of a product that meets the customer needs and satistaction, Selling concept is adopted by companies that focus on a large selling and promotion effort to atract customers to purchase their product and services. Societal marketing concept is adopted by companies that deliver products and services to fulfil the needs, wants and interests of the target market for better improvement of customer's and society's well-being, Relationship marketing refers to creating, maintaining and enhancing strong and close relationship with customers and stakeholders, Tourism industry involves the people, activities, and organizations involved in providing services for people on holiday, for example hotels, restaurants, travel agents, tour guides, car rental companies, national tourist organization,Detng Marting for Hospital and Tour | 19 Lien ‘American Marketing Association (2007). Definition of marketing, Retrieved 12 October 2016 from . Chartered Institute of Marketing (2007). Leading body calls for a new definition of marketing, Retrieved 20 April 2016 from . Goeldner, C. R. and Ritchie, J. R. B. (2003). Tourism: Principles, Practices, Philosophies, 9th Edition, New Jersey: Wiley. Kayat, K. (2011), Homestay Programme as a Malaysian Tourism Product. Malaysia: UUM Press. Kotler, P, and Armstrong, G. (2018). Principles of Marketing, 16th Edition. New York: Pearson. Kotler, P,, Bowen, J. T., and Makens, J. (2014). Marketing for Hospitality and Tourism, 6th Edition. New York: Pearson. Lumsden, L. (1992). Marketing for Tourism: Case Study Assignments. UK: Macmillan. Meyer, D. (2006). Setting the Table: The Transforming Power of Hospitality in Business. New York: Harper Collins, Morrison, A. M. (2009). Hospitality and Travel Marketing, 4th Edition, New York: Delmar Publications. REVIEW QUESTIONS 1. Discuss why marketing is important to hospitality and tourism managers, 2 You are the Customer Service Manager at a travel agency. A customer complains that the tour package he purchased did not follow through on the activities listed in the detailed itinerary provided at the start of the tour. What can you do? 3 Give examples of two companies in the hospitality and tourism industry that adopt the holistic marketing concept. 4 Explain how hotel managers can attract repeat guests and create a loyal pool of customers. 5 Discuss the adttiona 4Ps in marketing mix forte hospitality and tourism industry.a CHAPTER 2 ~ SERVICE CHARACTERISTICS 4 IN MARKETING FOR HOSPITALITY AND TOURISM LEARNING OUTCOMES After studying this chapter, you should be able to sxplain the importance of excellent service culture ‘+ explain the service characteristics and the challenges in managing service in the service industry * enhance knowledge on the importance of service quality and the Gap model ‘+ explore the profound impact of technology on service Setting the Scene A Service Culture That is Different ‘A hotel can compete by nurturing a service culture that attracts the very best emplayees in the industry In attracting the best, the hotel would have an advantage over the competition in ‘terms of providing the best of services and thus becoming both the ‘employer of choice’ and the ‘provider of choice in the industry. For example, this approach is used by Four Seasons Hotels ‘and Resorts, The Rtz-Carton Hotels and Marriott Hotels & Resorts. At Marriot, the keystone of the company's culture is take care of associates and they wil ake care of your customers’. At Four Seasons, to ensure that employees delver superior sevice, it begins with the recruiting Drocess. Interviews take place over four sessions with in-depth behavioural assessments, ‘The interviewers look at body language and note eye contact, communication skils, attitude ‘and take in the complete package of the employee. This is mainly to ensure that employees Provide innate rather than scripted service. Four Season's personal service culture is valued by its customers. They are wiling to pay more, return again and again and recommend the Four Seasons to their friends and relatives,Service Castres in Mating fr Hosptltyand Tourism | 21 ase Questions “| How can firms motivate and select the best employees to ensure that they wil deliver the best service? 2 How can the organization balance standards and personal touches to maximize eficiency and saisty customers? ‘3 Why are service personnel so important in the hospitality industry? 44 What can a service fim do to become a prefered employer and attrac a large number of employee applications? 2.1 INTRODUCTION Services are performance, process and deeds provided or co-produced by one entity for person for another entity or person. Services cover a huge variety of complex activities. Service may include tangible services such as reports or instructional ‘material, or intangible services such as designing a web page, training, providing information or passing down knowledge. For the most part, the entire service is represented to the customer through activities; follow-up calls with clients, meetings and reports, which involve a series of acts, deeds, processes and overall performance. Similarly, the core offerings of hotels, travel agents, airlines, and banks are mainly focused on the actions, deeds and overall performance delivered to customers. Services and. the. sesvice.sector have different definitions which may often be confused for the same thing when discussing services and when describing industries comprising the service sector. The broad definition of service includes all economic activities wherein the output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value such as comfort, health, timeliness, and convenience that are essentially intangible to the purchaser. In this chapter, we will discuss service culture, service characteristics, service quality and the service quality gap model, and customer satisfaction, 2.2 SERVICE CULTURE One industry where a strong service culture is very important to the business is the hospitality industry. Service culture is a shared purpose where each member of the organization is focused on creating value for others inside and outside the organization. A customer not only expects state of the art facilities, but also the best customer service culture. Hotels with defined service cultures constantly look for new ways to deliver excellent customer service because they know the value of superior service and satisfying customers’ needs. ‘The company must be very clear of the service culture it intends to foster. Four Seasons, for example, have an unbreakable culture which is based on a very simple yet rigorous standard. According to Isadore Sharp, founder and Chairman of Four Seasons Hotels and Resorts, in all their interactions with their guests, customers, business associates, and colleagues, they seek to ‘deal with others as we would have them deal22, |_ Marketing or Hosta and Tourism with us’. The Four Seasons believes thet true luxury lies in excellent service and not so much the décor. The hotel's quality service is their distinguishing feature, giving them a competitive advantage over their competitors. Employees at Four Seasons follow this “golden rule” when interacting with guests, business partners and each other. ‘With the hotel’s personal service culture, Four Seasons continues to increase their customer base of repeat guests who perceive their services to be greater value for money because of all the thoughtful extra touches, from the concierge to the overnight services. How are horel firms responding to the market-driven need to revolutionize service? One other example that reflects a commitment to the service culture where the hotel is focused on the customer rather than the product is Hilton International To strengthen its service positioning, Hilton conducts customer and employee surveys to identify market needs and expectations, the employees’ views and opinions and what the employees believe their customers want them to provide. All these efforts enhance the service culture of the hotel, The findings of the surveys suggest that the hotel should be more customer oriented, and employees should undergo training designed to support the employees’ skills relating to customers’ needs. Ultimately, the surveys suggest the Hilton brand presence and personality is strengthened through a personalized service culture and warm hospitality. Both examples represent the importance of service culture that encourages the growth of the business and builds a brand name synonymous with quality. An excellent service culture will be supported by highly motivated employees that show their commitment in delivering high quality service to customers. 2.3 SERVICE CHARACTERISTICS OF PRODUCTS AND SERVICES Service is intangible and normally occurs in interactions between service suppliers and customers, and/or physical resources or goods and/or systems of the service Provider that offer solutions to customers. It is also an act and process delivered or offered by one party to another. Service is not an object, thus it is distinguished from products based on its attributes which are intangibility, heterogeneity, inseparability and perishability. Service cannot be displayed to the customer. Service cannot be seen or touched. Service is a performance that requires both the service provider's and the customer's Presence during the service transaction. Although service may be intangible, the organization has to provide tangible or physical evidence to customers in order to convince them of the organization's presence and support the existence of the services offered. (See Figure 2.1.) This increases the customer's confidence towards the organization and reduces the customer’ risk of being cheated. A hotel, for example, has its tangible elements such as the physical building, facilities and employees on display. These are useful for customers to evaluate the services offered. The hotel’s website is more useful toService Chaatrssin Marketing fr HsptatyandToursm | 23 Figure 2.1 The hotes wetsite helps to make the intangible service appear tangible customers to get information and helps to make the service offerings tangible prior to the final purchase. Intangibility presents several marketing challenges, and in hotel services fluctuations in demand are often difficult to manage. There will be peak season room ‘occupancies and occasions when the hotel is fully booked and there will also be low room occupancies and off peak seasons. Yet, hotels still have the same number of rooms to sell year-round. This is the area where managers need to make decisive plans for advertising and promotional activities as well as strategic pricing to help even out sales and profits the whole year round. Inseparability refers to simultaneous production and consumption wherein the customer's presence and involvement is required during the service transaction. This isa critical moment for the service provider as the quality of service rendered will be aluated by the customer based on this interaction. This interaction is also called a ‘critical incident’. Good interactions between customers and staff at the front desk will give customers a good impression of the company’s overall service offering, Heterogeneity represents the variable quality of service delivered to customers. Customers may not experience the same quality of service by the service provider in each transaction. The standardization and consistency in delivering quality service is difficult to achieve due to the various types of services offered. Quality of service depends on many factors that the service provider has not complete control over, such as the ability of employees to satisfy the different needs and demands of customers. Due to these complicating factors, service managers can never be sure of the quality of service delivered and whether the service was delivered ina manner consistent with the company’s service culture. Sometimes services may be provided by a third party, further increasing the potential of heterogeneity in the offering. Nevertheless, staff training is one effective tool in delivering consistent and quality service to satisfy the needs of different customers. Perishability of service refers to services that cannot be stored or inventoried. Restaurant services cannot be provided until they have been sold, and the dining experience is essentially produced and consumed at the same time. This situation24 | Marketing rosa and Tours Figure 2.2 Restaurant service requires the presence of waiters and customers and the ‘Quality of service rendered may vary with multiple visits also means that customers are present while the service is being produced and thus customers may even take part in the production process as co-creators during the service delivery. ‘Therefore, it requires the management to have strategy in managing the capacity of supply and demand such as through booking and reservation of restaurants and rooms, promotion of important events of the year and pricing strategies in the hotel or travel agent websites. Increasing customer confidence with the services offered is imperative as it will motivate their purchase decisions. Indeed, customers often rely on the organization's promises and hope that they will be treated fairly. The relationship between service organizations and customers is strengthened with the ability of the organization to keep its promises. 2.4 SERVICE QUALITY In the hospitality industry, service quality is important to encourage customers to return and to earn their loyalty and satisfaction. The benefits of a good service quality as far as the hotel industry is concerned include having greater guest satisfaction and enhancement of employee performance. Simply put, service quality is ‘satisfaction of expectation’. Expectations are often subjective and based on the service process and outcome. Service quality has been defined as a form of attitude that relates to satisfaction resulting from expectations and the actual service performance. Customers have some expectations of the hotels’ or resorts’ service quality before they arrive. The expectation would be based on the hotels" or resorts’ star rating, company website or even customer testimonials. Customers will evaluate and rate‘Service Oaracteristis in Marketing fr Hospitality and Tourism | 25 the premises and services as soon as they arrive. Some may meet expectations and others may be below expectation. Service quality and its implications ro organizations have gained much attention, Conceptual and empirical evidence have shown the importance of service quality company’s reputation, Service quality is vital to maintain customer satisfaction, and acts a uideline ro be more proactive in designing services and improving customer perceptions which enables the organization to position itself better, Quality measures for service firms are more difficult when compared. to manufacturing companies that use zero defect’ as their golden rule, Howeves serving companies have their own form of measurement: customer retention, which trarclores to customers returning for repeat services or a loyal customer base that indicates satisfaction with the previous service experience. Customers will be delighted if he A review of service quality literature highlights the conceptualiation and important dimensions of service quality. The dimensions of service quality have been ‘dentfed through severab piomeering-researches by-Parasuramen, Zetha 1 and Berry in 1985 and 1988, jhe ft-Carton’s gold standard encompasses the values and phlsophy by which they operate, it cute the ‘te steps of sence that must be adhered toby al emplyees of The iz thera step "sol as a hotel that priorzes genuine care and comfort of quests ‘ox:2:+ Fit Caton'sphtosonties of sening their quests Service Quality Dimensions here is no single paradigm that discusses the nature of service quality and its dimensions. Gronroos (1984) establishes three main components of vencve quality Which include technical quality, functional quality and corporate image. Technical quality refers to tangible elements that support the service experience Which enable the customer to evaluate the quality of service. be. mal ke restaurant,26 | Marketing for Hospitality and Tours Functional quality focuses on the service performance and the way itis delivered to customers. The corporate image dimension is the combination of technical and functional auality. ‘Another service quality dimension which is widely accepred was put forward by Parasuraman ef al. in 1988, wherein they identified five measurable service Gamensions that have been widely accepted and which are reliable and valid: tangibility, reliability, assurance, empathy and responsiveness. Among the five, reliability is the most important dimension rated by customers. The development df service dimensions was initiated by the need to understand customer perceptions Cowards service quality and they have been broadly used in service businesses to match customer perception and expectation to service quality “Tangibility of service is important in order for customers to evaluate the existence of the service provided and the organization's capability in delivering quality service. Buildings, facilities and employee uniforms are examples of tangibles. Reliability is the promise to perform services according to the customers’ satisfaction. It has been consistently shown to be the most appreciated service dimension by customers. Service reliability depends on the organization’s ability to make and keep their promises. “The promise to deliver quality service, prompt action from employees and able to solve the problems efficiently is highly regarded by customers and itis an important Component to satisfy and keep them loyal. Customers are interested to do business ‘with organizations that keep their promises and deliver the expected service outcome. ‘Assurance is associated with the employee's knowledge and courtesy and the onganization’s ability to create customer trust and confidence. This dimension is especially important to service experiences which customers perceive to be high risk and are uncertain of the service outcome or performance. Empathy focuses on the caring, personalized attention that the organization provides to its customers. The principle of empathy is through customized 0 personalized services which make the customers feel that they are special and [ppreciated by the organization. Customers are glad when the organization cnderstands their needs and wants by having employees that display a cheerful ‘mood, proper attitude and patience in delivering the service. Responsiveness entails the willingness to help customers with prompt service. ‘This dimension focuses on the prompt action in dealing with service failure, requests, questions and complaints. Time taken to resolve the problems or attend to requests and complaints communicate the responsiveness of the organization to its customers. ‘The review of each service dimension above highlights the interaction between employees and customers especially in high contact customer-employee relations, particularly in service oriented industries, such as the horel industry. With the increasing demand in customers’ expectations, and in order to sustain a competitiveService Chractesticsin Marking oc Hositalty 2nd Tours | 27 edge in the service industry offering service quality is deemed to be relevant to the service provider as they are involved directly with customer satisfaction. in relation to this, although service designs and standards are well documented, discrepancies may occur between the development of customer-driven service Stendards and the actual service delivery by the service employees which result in a cervice quality gap. Thus, the following section will discuss this issue, Service Quality Gap Model ‘The Gap model conceptualizes service quality by defining the customers’ expectations with the service dimensions and their perceptions on the services delivered. When there is a mismatch between expectations and perceived service quality it is called a -gap’. The model highlights five service quality gaps: a, Gap 1 (the customer gap): Customers’ expectations-management’s perceptions gap or the difference between what customers really need and what management thinks customers want b. Gap 2 (the knowledge gap: Management's perceptions-service quality speci- fication gap or the difference berween what management perceives customers’ expectations to be and the actual quality specifications provided. &. Gap 3 (the service designs and standards gap): Service quality specifications service delivery gap or the gap between what has been set for quality service delivery and the actual quality of service delivery. Word-of-mouth Personal Past communications needs experience v 4 wd sence femal delivery “> communication @tt wastes Saves ako tt ‘Management's perceptions of customer expectations Figure 2.3 The Gap model of service quality28 | Marketing or Hosp ano Tors 4. Gap 4 (the service performance gap): Service delivery-external communication gap or the difference between what has actually been delivered, and the quality of service promoted and advertised by the organizations. ¢. Gap 5 (the communication gap): Expected service-perceived service gap or gap between the service that customers expect and the actual service received by the customers, The first three gaps are related to service design quality, while the other two are related to conformance quality. The highlighted gaps should not be ignored by service providers as they are important elements in delivering quality service which will ultimately bring in profits for the organization. Conformance quality is the actual result produced to customers and it should be based on the service blueprint and specifications. Firms usually have their specific service blueprints or service designs with guidelines on how to deliver services to customers. A guided procedure included in job specifications will ensure employees perform as expected. Organizations must take a closer look at employee performance to overcome the service gap. Accordingly, to create a positive service culture, organizations must focus on their employees, since they are not only the service, but also the brand and good marketers representing the organization in the customer's eyes. Service and Technology It is apparent how technology has been the basic force behind service innovations. Automated voice mails, interactive voice response systems, fax machines, automated teller machines (ATMs), online banking services and other common services have been possible only because of new technologies. Today’s customers have only to access the hotel’s website to visualize the hotel’s services and facilities and decide on making a reservation. Which means, the hotel’s website is the customer's first view of the hotel’ facilities and other information. The Internet is the host to a lot of new services. Hotels and travel agents have their own websites for customers to browse and retrieve useful information, Internet- based companies like Amazon and eBay offer e-services previously unheard of. Established companies find that the Internet opens up many opportunities for new service offerings. For example, The Wall Street Journal offers an interactive edition that allows customers to organize the newspaper's content to suit their individual preferences and needs. The hotel is a place where high-technology meets a high-contact industry. Gone are the days of wasting money on shiny objects. ‘What's really changed is that today it is not about giving the guest the technology’ says Wayne Goldberg, president and CEO of La Quinta Inns & Suites. “Today it is about giving guests the capability of leveraging all of the technology that they are travelling with’Senice Characters in Marketing for HosptaltysodToursm | 29 While on a road trip, customers can access weather forecasts and warnings, find cout the best time to shop, and check in using their smartphones. The CRS (computer erservations system) can also book a room at a nearby hotel, recommend a restaurant, and make dinner reservations. ‘90% ot hotels use «73% of US travellers. 64% of hotel quests 80% ofa hotels social media, but prefer tocheck in. would prefertouse in 2015 were only 21% actualy via a mobile pp their mobile phones expected to have monitor and analyse asa room key in ‘amobile ap ‘the content, ‘order to bypass the compared to 40% front desk entirely in 2013 Figure 2.4 Emerging tectnologis that shape customer behaviour “Source: Adapted fram Joha Weber (Seporiber 2014), Hote Technology By the Numbers, itsus com. Retrieved 12 August 2016 trom New Ways to Deliver Service In addition to providing opportunities for new service offerings, technology is providing tools for delivering existing services in a more convenient and productive way. Technology facilitates basic customer service functions such as online booking, electronic key card, paying bills, answering frequently asked questions, checking wunts records, and tracking reservations. Evolving technologies have changed one pect of service, namely customer service. Companies have moved from face-to-face service to telephone-based service t0 widespread use of interactive voice response systems to Internet-based customer service and now to wireless service. Interestingly, some companies are coming full circle'and now offer human contact as the ultimate form of customer service. Technology also facilitates transactions by offering a direct vehicle for making purchases and conducting business. In the financial services field, Charles Schwab transformed itself from a traditional broker to an online financial services company that currently conducts more than 70 per cent of its customer transactions online. Internet banking is also growing worldwide with the Dutch bank, ING Direct, Maybank2u online banking service and other services. ‘Another example of how technology enhancement has added value to service delivery is The Peninsula in Tokyo. With its own research and development team and30 | WarketngtorHesptity ana Toursm designated electronics service department, The Peninsula Hotels Group knows more than their fair share of hotel technology. The group claims to have pioneeted in-room satellite TV and a nifty indolent in-built bathtub ‘telephone’ (a keypad accessible from the bathtub with a microphone embedded in the bathroom ceiling that silences music when calls are taken) at their long-standing Hong Kong property. The Peninsula in Tokyo takes things to another level however, with the forward-looking property having embraced new technologies quicker than computer executives at a tech conference. What this equates to is 314 liberally-appointed rooms which boast features such as wireless phones with Skype that can be used hotel-wide; three-in-one fax/eopy/print machines that can print photos for free; an in-room nail-dryer; a wireless bedside electronic panel; dimmable Lutron lights that fade into darkness at night; plus 3000- station Internet radio and plasma screen televisions. The toiletry technology includes electronic Toto toilets, a digital clock set into the mirror, and a one-touch spa button which dims the lights, switches on soothing music and activates the do-not-disturh indicator. The hotel also uses iPads at the concierge desk and they have an‘iPeninsula® app on which rooms, spa treatments and restaurant reservations can be made. Finally, technology, specifically the Internet, provides easy access for customers to learn, carry out research, and collaborate. Access to information has never been simpler. For example, there are more than 20,000 websites offering health-related information online now, Many provide answers to specific diseases, drugs and treatment questions, In a study of online health care information usage, the Pew organization found that among Americans with Internet access, 80 per cent had looked up health or medical information on the Web (‘More people search for health online’ Jane Weaver, NBC News, July 2016). Enabling Both Customers and Employees Technology enables both customers and employees to be more effective in getting and providing services. Through self-service technologies, customers can serve them. selves more efficiently. Customers using online reservations are confident that they have successfully made a room booking, and with efficient and effective on-line banking payment facilities, they know that their reservations are secured. For employees, technology can provide tremendous support in making them more effective and efficient in delivering services. When a customer want to check-in to a resort, for example, a receptionist need only ask for the booking number, and all the necessary information will be displayed. Customer relationship management and sales support software are broad categories of technology that can aid frontline employees in providing better service. By having immediate access to information about their products and service offerings, as well as about particular customers, employees are better able to serve them, This type of information allows employees to customize services to ft the customer’s needs. Different types of customers require different treatment from service providers, and technology can ease the burden of employees when it comes to personilizing their services. They can also be much more efficient and timely in rendering services‘Serve Cheracaristesn Maratig for Hosptty and Tors | 34 compared to the old days when most customer and product information was on paper or in the heads of sales and customer service representatives. Figure 2.5 Hotel Manager welcoming VIP guests in their hotel room ‘Technology infusion results in the potential for teaching out to customers around the globe in ways not possible before. The Internet itself knows no boundaries, and therefore information, customer service, and transactions can move across countries and across continents, reaching any customer who has access to the Web. Technology also allows employees of international companies to stay in touch ceasily—to share information, to ask questions, and to serve on virtual teams. All this technology facilitates the global reach as well as the effectiveness of service businesses. The Internet is a Service An interesting way to look at the influence of technology is to realize that the Internet is just ‘one big service.’ All businesses and organizations that operate on the Internet are essentially providing services—whether they are giving information, performing basic customer service functions, or facilitating transactions. Thus, all the tools, concepts, and strategies you learn have direct application in an Internet or e-business world. Although technology and the Internet are profoundly changing how people do business and what offerings are possible, it is clear that customers still want basie service. ‘They want what they have always wanted: dependable outcomes, easy access, responsive systems, flexibility, apologies, and compensation when things go wrong. But now they expect these same outcomes from technology-based businesses and from e-commerce solutions. ‘With hindsight it is obvious that many dot-com start-ups have suffered and even failed because of the lack of basic customer knowledge and failure in implementation, logistics, and service follow-up. Finally, technology such as the Internet can facilitate regulation and order, or it can lead to upheaval and disorder. Technology can facilitate independence, or it could lead to dependence or more restriction. With the emerging borderless world, technology can facilitare human togetherness, involvement and activity, however, it could also lead to disconnection and disruption.32 | Marketing tor Hosptaity and Tourism MINI CASE 2.1 Today, anyone with a smart phone can download or send texis and pictues to friends, or anyone else for that matter, over the intemet. Consumers can make and confirm bookings anywhere, and anytime. Booking a hotel room, conducting a video conference or chatting over Skype has been never ‘een easier Advanced technology capabilities has influenced the way people do business, but more 0 for travel agents and hotels (especially when controling their room inventory). The Internet has also ‘rally enhanced information-sharing, collaboration, and networking by connecting people across the lobe. n the hospitality industry the internet is important to manage organizations. The combination of innovative high-tech solutions and services willbe increasingly recognized as a competiive strategy ‘ane advantage that will be rewarded in the marketpace. 2.5 CONCLUSION Service employees are extremely important for the success of a service firm, Service employees represent the organization in the eyes of customers and leave a lasting impression, Another major trend in service delivery now is the shift in focus from service employees to emerging technologies that currently shape the hospitality industry and profoundly influence the practice of service delivery. Technology has become the force behind service innovations making customer transactions easier, offering convenience and enhancing the customer experience, LA. © Service dominates the modern economies of the world, which explains the focus on Service as a competitive business imperative that is supported by employees in the organization, © The basic characteristics of service quality include responsiveness, assurance, tangibilty, empathy and reliability © The Gap model is important to managers because it helps them to understand each service gap and take proactive measures to close it © Technology combined with the support of employees will ease service transactions and enhance the value of offerings to customers. ‘Assurance is associated with the employee's knowledge and courtesy, and the crgarization’ ablity to create customer trust and confidence Empathy focuses on the caring, personalized attention that the organization provides to its customers,Service Charactetisin Marketing fr Hospi anToursm | 33 Functional quality focuses to the service performance and the way itis delivered to the customer. inseparability requires simultaneous production and consumption, customer presence and involvement is required to ensure the successfulness of service transaction. Intangibility refers to the unseen, we cannot feel the product but can only experience it Reliability is the promise to perform a service satisfactorily to the customer. Service culture is a shared purpose where everyone is focused on creating value for others inside and outside the organization. Service quality is the abiliy ofthe organization to meet or exceed customers expectations. Technical quality refers to tangible elements that support the service experience which enable the customer to evaluate the quality of service, i.e, meal in the restaurant ‘The Gap model conceptualizes service quality by defining the customers’ expectation with the service dimensions and their perceptions on the services delivered. When there is mismatch between expectation and perceived service quality, itis defined as a ‘gap: CLUES Craven, D. W., Piercy, N. F. (2012). Strategic Marketing, 10th Edition. New York: MoGraw- Hillrwin Education, Grénroos, C. (1984). A Service Quality Model and Its Marketing implications, European Journal of Marketing, Vol.18, No.4 Kotler, P, and Armstrong, G. (2015). Principles of Marketing, 16th Edition. New York: Pearson. Kotler, P, Bowen, J. T., and Makens, J. (2014), Marketing for Hospitality and Tourism, 6% Edition. New York: Pearson. Weaver, J. (2016). More People Search for Health Online. NBC News, July 2016. Zeithaml, V. A., Bitner, M. J., and Gremler, D. D. (2008). Services Marketing: Integrating Customer Focus across the Firm, Sth Edition. New York: McGraw-Hill/nwin. REVIEW QUESTIONS 4 Explain how can service be defined and improved when the product is intangible ‘and non-standardized. 2 Discuss how a hotel accommodates fluctuating demand when the asset Is fixed and the service itself is perishable. 3 How can the organization communicate quality and value to consumers when the offering cannot be readily tried? 4 Discuss how the organization can ensure consistent service delivery when both ‘employees and customers affect the service outcome. 5 How can the Internet improve the service delivery to customers?MARKETING ENVIRONMENT AND THE HOSPITALITY AND TOURISM MARKETING SYSTEM ARNING OUTCOMES After studying this chapter, you should be able to ‘+ describe the marketing environment components * describe the marketing environment in the hospitality and tourism industry * explain the influence of the environment on hospitality and tourism’s marketing activities * explain the hospitality and tourism marketing system * enumerate the four fundamentals and benefits of using the hospitality and tourism ‘and marketing system * define long: and short-term marketing planning * distinguish between a strategic marketing plan and a marketing plan Setting the Scene ‘ri Sutra Travel Enhancing its Value Proposition Sr Sutra Travel Sdn Bhd is a recognizable name inthe travel and tourism industry and has been around for over 20 years. tis a fully licensed service travel agency which has affiliations across ‘the world. started out as a smal travel agency with five employees. The annual turnover then was RM milion. Now thas an office at the Pekeling Business Cente with over 70 employees Sr Sutra underwent a major restructuring exercise which included enfianced value propositions '0 clents, better customer service, up-to-date business technology tools and solutions, and ually products and services. is major competitors are Trivays, Mayflower and Reliance Travel Sri Sutra launched an onine solution, SUTRA (www.sutra.my), SUTRA'S primary objective is to market over 200,000 of Sri Sutra’ products and services worldwide. These include inbound 4nd outbound tours, ticketing services, transportation, accomadation, and other services (for‘aren Envanmert anh Hsptaty and Tours Marking System | 35 example, roaming services, travel insurance, visa application and butler services). Si Sutra's ‘annual turnover today is RMS milion, It re-launched its website with a new ook showcasing SUTRA as "our Trvel Designer’. The new website provides more travel arrangement products encompassing airines, buses, tains, and fery tickets anda variety of accommodation options ‘SUTRA also provides the price, making it corwenient for clients to check and select vacation destinations to match their budgets. Sci Sutra introduced a franchise business concent 10 expand its business strategy and to provide opportunites for new entrepreneurs inthe tourism industry, Sri Sutra’s franchise concept will develop strategic business aliances with service providers from domestic and international reians. Wit these plan in place, Si Sura hopes to evolve the travel agency business through innovative travel management and to prove ‘superior and profession prot and services to their customers. ‘Source: Adapied from collated information from Sutra Magazine and information. Retrieved 12 October 2016 from . Case Questions “1 Describe Sri Sutra’s mioro and macroenvironments, 2. Discuss Sri Sur's challenges in carrying out its business inthe tourism industry. 3. Discuss the marketing strategies adopted by Sri Sutra in terms of Innovative travel management. “4. Explain the infuence of technology over Si Sutra’ business dealings, INTRODUCTION Different countries have different approaches to defining the hospitality and tourism industry. According to Morrison (2009), in the US, hospitality includes travel, tourist, food and beverage, and lodging operations. However, in the UK, Canada, Australia, New Zealand and Malaysia, the term encompasses accommodation, transportation, destinations, the public sector and restaurants. The Ministry of Tourism and Culture Malaysia and. Malaysia: Tourism Promotion Board oF Tourism Malaysia was formed to market Malaysia as a tourist destination. The success of an organization or company depends on its marketing strategy and marketing environment factors. The marketing environment is divided into microenvironment (internal) and macroenvironment (external). The microenviron- ent comprises forces closest to the company that play an important role on the Company's ability to fulfl customers’ needs (Kotler and Armstrong 2015). The macroenvironment comprises larger forces that affect the microenvironment such as demographic, natural, political and legal, technological, socio-cultural and economic forces, Figure 3.1 illustrates the forces within’ the macro and microenvironment of the hospitality and tourism industry.36 | Market for Hospitaty an Tourism (MACROENVIRONMENT Soci-cuitra Economic ees es ot HOSPITALITY ‘AND TOURISM [MARKETING ‘SVSTEM te Tecnologia Cae uses Political an legal Natural Figure 3.1 The hospitality and tourism marketing environment 3.2 MICROENVIRONMENT FORCES Microenvironment forces include the company, its suppliers, customers/tourists, competitors, marketing channel firms (intermediaries), and the public. Marketing plays a major role in fostering relationships with customers by creating customer value and satisfaction. The success of a marketing plan will require working relationships within the company’s microenvironment. The Company In a hotel setting, the marketing manager works closely with top management and various departments in the company. Top management will set the company’s vision, mission, objectives and strategies, and develop policies. The finance and accounting division on the other hand is responsible for budgeting and funding to carry out marketing activities, and measure revenues and operating costs to help marketers achieve their objectives. The food and beverage (F&B) department handles restaurants’ operations and is responsible for operations at all the food outlets Housekeeping ensures cleanliness and the upkeep of the hotel. The front office provides courteous and friendly services to customers, while the sales division is responsible for marketing the rooms and facilities offered by the hotel. The marketing concept involves managers, supervisors and employees working towards a common goal, that is,to satisfy guests. Suppliers Tourism comprises a mix of accommodation, transport, tourist attractions and other related organizations. Suppliers in this industry are companies that provide‘Marketing Enurenment ane the Hositaty and Tourism Marketing System | 37 the resources t0 produce the goods and services, For example, restaurant managers Fequire a continuous supply of poultry, vegetables and fruits to satisfy the demands Malpeir customers. Some hotels operate their own F8CB outlets, but others work

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