“CREATING A SERVICE PRODUCT- HOTELS/RESTARURANTS”

Submitted To: Submitted By:Prof. Frince Thomas Abhishek SinghCMS, DDU MBA-1201Nadiad CMS, DDU

Nadiad

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HOTEL INDUSTRY

INTRODUCTION:

The increase in the need for accommodation has hugely increased the demands for hotels which in turn has boosted the growth of the hospitality sector in India especially that of the hotel industry.

Over the last decade and half the mad rush to India for business opportunities has intensified and elevated room rates and occupancy levels in India. The successful growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific. The Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fueled the growth of Indian hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry.

What is the reason behind this sudden growth in the hotel industry in India?

The hotel industry in India is going through an interesting phase. The industry has a capacity of 110,000 rooms. According to the tourism ministry, 4.4 million tourists visited India last year and at the current rate, the demand will soar to 10 million by 2010 – to accommodate 350 million domestic travelers. The hotels of India have a shortage of 150,000 rooms fueling hotel room rates across India. With tremendous pull of opportunity, India has become a destination for hotel chains looking for growth.

The Government's move to declare hotel and tourism industry as a high priority sector with a provision for 100 per cent foreign direct investment (FDI) has also provided a further impetus in attracting investments in to this industry.

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Consumer behaviour in services encounters of hotel industry

There are four broad categories of services: people processing, possession processing, mental stimulus processing and Information processing. Out of these hotels/restaurants comes under people processing because in this customers must physically enter the service system.

Customer decision making:

1. Pre-purchase stage:

This stage begins with need arousal- the prospective customer’s awareness of a need and continues through information search.

In this customer states his need that what he want i.e. which type of hotels he need to stay, for how many days/nights he need to stay, which type of food he likes and whether that hotel provide that food or not, what is his budget to stay in a hotel.

In this customers seek the information from respected personal sources (family, friends, peers), visiting service facilities, examine tangible cues, using the Internet to compare service offerings etc.

Components of service levels:

1. Desired Levels: In this customer wished for luxurious services like spa, swimming pool, gym etc.

2. Adequate service: In this customer wished for minimum level of service without being getting dissatisfied like tasty and hygiene foods, cleanliness, goods behaviour of waiters etc.

3. Zone of Tolerance: The extent to which customers are willing to accept this variation is called zone of tolerance.

2. Post-Encounter stage:

In this customers evaluate the service performance they received and compared it with their prior expectations.

One thing to measure this is to take feedback from the customers and encourage them to give the feed back. Feed back can be taken by the manager by asking verbally customers about his experience their or by giving him small feedback

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form to be get filled up and asking for what is need to be done to improve the service of the hotel.

Positioning services in competitive markets

A brand’s position is the set of perceptions, impressions, ideas and feelings that consumers have for the product compared with competing products. Marketers plan positions that give their products the greatest advantage in selected target markets, and they design marketing mixes to create these planned positions

The brand is defined, if we collectively give people an experience that says, yes, I’m proud of what it says about me to stay here, it makes me feel good; I’m in charge of my stay.’ What is the role and function of marketing anyway? To collectively give people an experience that makes them proud of what it says about them? That is the role and function of the hotel itself.

In planning their positioning, marketers often prepare perceptual maps that show consumer perceptions of their brand versus competing brands on attributes that are important to the consumer, whether functional or symbolic.

Assessing strengths and weaknesses relative to competing brands along certain criteria important to the customer. This is revealed by the positions of the marketer's brand and competing brands along the axes.

Process of Positioning of hotel industry:

Generally, the product positioning process involves:

Defining the market in which the product or brand will compete (who the relevant buyers are)

Identifying the attributes that define the product 'space'. Collecting information from a sample of customers about their perceptions

of each product on the relevant attributes.

Positioning Map for hotel Industry:

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Hotel business is highly competitive, especially during seasons like Christmas, New Year, winter etc, when the supply of rooms exceeds demand. Customers have many choices out of them degree of luxury and comfort in physical amenities will be one criteria and also characteristics of other physical spaces, ranging from the reception area to meeting rooms, a swimming pool and exercise facilities. The quality and range of services offered by hotel staff is another key criterion. Can clothes be laundered and pressed? Additional attributes include factors such as quietness, safety, and special rewards programs for frequent guests.

The hotel’s management team worked with a consultant to prepare charts that displayed the hotel’s position in the business traveler market both before and after the advent of new competition. Four attributes may be selected for study: room price, level of physical luxury, level of personal service, and location. Scales were then created for each attributes.

Designing a service concept

Core product: The core product for any hotel industry is to provide good food and comfort to the customers.

Supplementary services: These are the services which enhances the value and the appeal to the hotel. It plays a vital role in differentiating and positioning the core product. It includes services like spa, Gym, swimming pool, safety, location etc.

Delivery processes:

This concern the process used to deliver both the core product and supplementary services. The core product- overnight rental of a bedroom- is dimensioned by service level, scheduling (how ling the room may be used), and the role of customers in terms of what they are expected to do for themselves and what the hotel will do for them, such as making the bed, supplying bathroom towels, and cleaning the room.

Flowcharting service delivery:

In this marketers create a flow chart for the delivery of their services to customers. For instance, for restaurants, food and beverages constitute the core product, but supplementary services may include reservations, parking, a coat room, ordering from the menu, payment, and use if restrooms. This helps to see the nature of customer’s involvement with service organization.

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Flower of Service:

Information: providing full and accurate information to new as well as old customers. It may include what is the best things of that city, why is the city famous for, what the places for visit their.

Order Taking: The process of order taking should be polite, fast, and accurate, so that customers do not waste time and undue mental or physical effort.

Billing: Bill should be accurately and neatly typed. It should be informative, and itemized in ways that make it clear how the total amount was computed.

Hospitality: It should reflect pleasure at meeting new customers and greeting old ones when they return. It starts with an offer of transport to and from the service site, as with courtesy shuttle buses, providing latest magazines, newspapers, TV. Recruiting employees who are naturally warm, welcoming, and considerate for customer-contact jobs helps to create a hospitable atmosphere.

Role of Marketing Communication

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Arrive by Taxi

Check In Spend Night in Room

Breakfast Check Out

Housekeeping

Makes up Room

Breakfast Prepared

In a service, marketing communications tools are especially important because they help create powerful images and a sense of credibility, confidence, and reassurance.

Adding Value through Communication Content: In this hotel management may send greetings/letters on special occasions like customers birthday, Christmas Eve, New Year etc. also for any kind of offer given by the hotel to frequent customer to maintain the relationship with their customer.

With the availability of new technology it is easy to reach customer and provide them more information so that they can compare the prices and menus of all the hotels nearby to an unknown place.

Word of Mouth: Customers who are less knowledgeable about a hotel service rely more on WOM than do expert consumers. This also takes place when customers who are staying in a hotel talk with each other in the hotel premises. If a customer faces a good experience at a hotel he will also suggest it to his friends, neighbors, and company officials and also vice-versa.

Website Design:

The website of the hotel should be-

1. High in content quality: It should have information for which customers are searching their website like how many rooms were there, what facilities they are providing, transportation facilities, and prices of each service.

2. Easy to use: website should never be complicated to use. It should not create confusion in the mind of customers.

3. Quick to download: Hotel should provide a brochure containing information about their hotels and it should be easy to download and should not be too big.

4. Updated frequently: It should look fresh and up to date. It should have new changes in the menu price and inclusion of new services.

Pricing Management

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Pricing is typically more complex in services than it is in manufacturing, because there is no ownership of services. In hotel business time plays an important role. If customer makes reservation for a room in hotel well in advance he should be offered low price and if he makes reservation at an eleventh minute he may be charged little higher.

Customers are constantly looking for ways to save money rather than spend more of it, so companies that position products in the premium price range may struggle. However, with the right formula, you can earn the right to charge customers more than your competitors do.

Pricing strategy is based on three legs:

1. Costs: It is the minimum costs that a firm needs to recover. It includes the cost of building, cost of foods and cost of various others services provided by the hotel like swimming pool, Gym etc.

2. Competition: It is the price charged by competitors for similar or substitute services. It is helpful for new entrepreneur who starts new business to evaluate the price and keeping the price at par with the competitors.

3. Value to customer: If hotel management is providing more comfort and wants to adopt premium pricing strategy, they may charge higher price but it depend on the customer how they perceive this high price because there are many options available to customer in hotel business.

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