Revision for Graduation Exam Marketing for Tourism and Destination Tran Tuan Anh.

Revision for Graduation Exam

Marketing for Tourism and DestinationTran Tuan Anh

Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 2

Details

Chapter 3 & 11 “Services Marketing” by Lovelock et al

Chapter 3

Customer Behaviour in Service Settings


Chapter 3 Objectives

Examine the typical CB process for buying and consuming services

Explore key differences between Eastern & Western cultures that impact services

Examine the impact of mood states, role, script and control theory

Understand customers’ intrinsic needs


The Consumer’s Decision Making Process

The Decision making process is influenced by our cultural values and norms and comprises three stages:

The pre-purchase stage

The service encounter stage

The post-purchase stage


The Pre-purchase Stage

Recognition of needs

Information search

Evaluation of alternatives


The Service Encounter Stage

Understanding customer’s intrinsic needs and values

Mood states Role theory Script theory Communication Style


The Post –purchase Stage

This stage will be covered in Chapter 4.


Culture

‘Human beings draw close to one another by their common nature, but habits and customs keep them apart’ (Confucian saying).


Hoftstede’s Cultural Dimensions

Collectivism Vs. Individualism: Do people rely on themselves or depend on and respect the group?

Power distance: Does society value equality or inequality in interpersonal interactions?


Hoftstede’s Cultural Dimensions

Uncertainty avoidance: What is the attitude towards risk in society?How does this affect consumption patterns?

Masculinity Vs. femininity: To what extent and at whose expense should the weaker members of society be cared for?


Types of Risk

Functional: this is a concern about performance outcomes e.g. ‘How can I be sure my car will be properly serviced?’

Financial: this reflects financial risks and unexpected costs e.g. ‘Will I incur extra expenses?’

Temporal: this is about wasting time or unexpected delays e.g. ‘Will the service be too slow?’


Types of Risk

Psychological: personal fears and other ‘negative’ emotions e.g. ‘Will the service make me feel good?’

Social: how others think and react e.g. ‘Will my friends approve or admire me?’

Sensory: these are unwanted impacts on the five senses e.g. ‘Will the restaurant be too noisy?’


Strategies for Risk Reduction

Provide information Firm’s reputation Provide guarantees/warrantees Standardise the service Internet search Seek tangible cues


Factors Influencing the Consumer’s Service Evaluation

Mood states

Role theory

Script theory

Control theory Behavioural control Cognitive control


Factors Influencing the Consumer’s Service Evaluation

Mood States- moods are part of the affective domain, they may include: boredom, aggression, joy, enthusiasm, disgust, interest etc. Moods alter but can vary in duration.

Role Theory- this implies that consumers are often acting a role-there may be a pattern of behaviour, responses and attitudes that are learned and applied to different situations


Factors Influencing a Consumer’s Service Evaluation

Script Theory- Scripts are cognitive structures that provide a framework for service delivery. They may vary in scope and intensity.

Control Theory- there are two main modes of control-behavioural and cognitive. This theory looks at the correlation between the consumer’s feeling of control, behaviour and judgement of service provision


Consumers’ Needs in a Service Setting

Security: this includes serious physiological issues as well as safety needs such as our need for protection and stability. Security needs may include avoidance of physical and/or financial risks.



Respect: a fundamental, higher-level human need.

Esteem: the individual’s self concept, or self identity

Is the service level provided congruent with the consumer’s respect and esteem needs?



Face: this represents dignity based on a correct relationship between a person and the groups to which they belong i.e. all interpersonal relationships.

‘Face’ incorporates personal pride, a high sensitivity to shame and dislike of open conflict.



Fairness / Equity: this is about how people feel they are treated in terms of fairness, justice or equity.

Distributional fairness: perceived fairness of the outcome or decision

Procedural fairness: the perception of whether the procedures used to arrive at the outcome or decision are fair.


Issues of Fairness and Equity

Keeping promises

Inequity of waiting lines or queues

Discrimination

Chapter 11

Managing Capacity and Demand


Chapter 11 Objectives

Explain and use capacity management techniques to meet variations in demand

Explain the patterns and determinants of demand

Formulate demand management strategies and techniques


Managing Capacity: The Challenge

Productive capacity may concern: Physical facilities such as hotels, medical

clinics, entertainment facilities, and transport Service provision equipment such as

telephones, hairdryers, scanners, and cash registers

People processing services in which the capacity to serve is constrained by the number, experience and expertise of personnel employed


Meeting the Challenge

Two measures of capacity are: The percentage of total time facilities and

equipment are in use The percentage of the physical space e.g.

seats or cubic freight capacity Labour constraints may include inadequate

levels of staffing which may lead to overworked, unhappy staff

The capacity of the facility, supporting equipment and service personnel must be in balance


Creating Flexible Capacity

Provide for additional capacity : some capacity has an elastic ability to absorb extra demand

Increase the number of casual and part-time employees: hire extra staff during busy seasons such as Christmas

Outsource facilities: rent facilities & equipment


Managing Capacity

Create flexibility in what is offered: review what is offered at different times and consider what might be gained by offering more or less at those times

Review the hours of business: consider extending or shortening hours


Managing Capacity

Schedule downtime in periods of low demand: carry out data-processing, repair and maintenance activities when demand is expected to be low

Cross-train employees: employees who can perform several functions can be moved to bottle neck points when needed


Understanding the patterns and determinants of demand

1. Does the level of demand for the service follow a predictable cycle? Does the cycle duration vary by the hour, day, week, month or season?

2. What are the underlying causes of these cyclical variations? Employment schedules, payment dates, school holidays, public holidays, natural cycles?


Understanding the patterns and determinants of demand

3. Do demand patterns seem to change randomly? Are the underlying causes due to weather patterns, health events, accidents, a force majeur?

4. Can continual demand for a particular service be disaggregated by market segments to reflect such components as use patterns by a particular type of customer for a particular purpose or variations in net profitability of each completed transaction


Weekday

Weekend

Morning peak

Midday

Afternoon peak

Evening/Night

Off-peak Shoulder

Peak

Season of yearD

ay o

f wee

k

Tim

e o

f d

ay

Figure 11.1Identifying variations in demand by time period


Demand Conditions

Demand exceeds maximum available capacity so that potential business may be lost

Demand exceeds the optimum capacity level, no one is turned away but there is a reduction in perceived service quality

Demand and supply are balanced at the level of optimum capacity

Demand is below optimum capacity and productive resources are underused posing a risk of customer disappoint or doubt about viability


Time cycle 1 Time cycle 2

Volume demanded

Figure 11.2 Implications of variations in demand relative to capacity

Optimum capacity use (demand and supply

are well balanced)

Demand exceeds capacity (business is lost)

Demand exceeds optimum capacity

(service quality declines)

Low use (may send bad signal) Excess capacity

Wasted resources)

Maximum available capacity


The Main Approaches to Managing Demand

Take no action and leave demand to find its own level through experience and WOM

Reduce demand in peak periods through pricing, incentives and marketing communications

Increase demand through pricing incentives, special offers and the creation of additional service offerings

Control inventory demand through creating queuing systems and offering access to capacity at different times


Using the Marketing Mix Elements to Shape Demand Patterns

Product variations: offering varying ‘packages’ or ‘bundles’ of product benefits at different times

Modifying the timing and location of delivery involving three basic options:

1. No change2. Varying the times when the service is

available3. Offering the service to customers at a new

location


Using the Marketing Mix Elements to Shape Demand Patterns

Pricing strategies: effective pricing depends on the marketing manager having an understanding of how the demand responds to increases or decreases in the price per unit

Communication efforts: advertising, signage, publicity and sales messages to encourage increased use in off-peak times


Inventorying Demand

Ask customers to wait in line on a first- come, first-served basis

Offer the opportunity of reserving booking space in advance


Managing Customer Behaviour Through Queuing Systems

Waiting lines occur when the number of arrivals exceeds the capacity of the system to process them

Queue management requires the collection of extensive data on arrival patterns (some predictable, some random)

Solutions to queuing problems need to tackle the root causes

Service delays are often caused by multiple factors requiring multiple solutions


Using Market Segmentation to Design Queuing Strategies

Urgency of job: such as in hospital emergency units

Duration of service transaction: supermarket express lanes and banking services

Payment of a premium price: airport check-ins, aircraft boarding

Importance of the customer: priority treatment according to expenditure or usage


The Psychology of Waiting

1. Unoccupied time feels longer

2. Preprocess waits feel longer than in-process

3. Anxiety makes waits seem longer

4. Uncertain waits are longer than known, finite waiting

5. Unexplained waits seems longer


The Psychology of Waiting

6. Unfair waits are longer than equitable waiting

7. People will wait longer for more valuable services

8. Waiting alone feels longer than in groups

9. Physically uncomfortable waiting feels longer

10. Waiting seems longer to new or occasional users


Reservations/bookings

Booking systems may smooth people-processing: hotels, airlines, hairdressers, doctors

Booking systems may help with financial projections and management

Booking system operational problems may be managed through deposit taking, option periods, paying compensation for over-bookings


Information Needed for Demand and Capacity Management Strategies

Historical data on demand level and composition, noting responses to marketing variables

Demand forecasts by segment under specified conditions

Fixed and variable cost data, profitability of incremental sales


Information Needed for Demand and Capacity Management Strategies

Site-by-site demand variations

Customer attitudes towards queuing

Customer evaluations of quality at different levels of capacity utilisation

Revision for Graduation Exam Marketing for Tourism and Destination Tran Tuan Anh.

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