Master of management

Gadjah Mada University

MARKETing management

Designing and managing services

Case Study : Ritz-Carlton Hotels

Lecture : Prof. Dr. Basu Swastha Dharmmesta, M.B.A

Group 4

Anne Stam [Student Exchange]

Febrini Wulandari 08/277511/PEK/12841

Irwan Arfandi Bachtiar 08/277521/PEK/12851

Case Summary

Ritz-Carlton Hotels, California, USA

Ritz-Carlton is a brand of luxury hotel and resort with 70 properties that are located in

major cities and exclusive resort destinations of 23 countries worldwide. The Ritz-Carlton

brand is managed by the Ritz-Carlton Hotel Company LLC, a subsidiary of Marriott

International. The Ritz-Carlton Hotel Company has currently 32,000 employees. The Ritz-

Carlton headquarters are found in Chevy Chase, Maryland, a community along the border of

Washington, D.C..

Ritz-Carlton redefining again 5 New Gold Standard, is primarily intended to help

managers, owners, and leaders understand the driving principles, processes, and practices

that have generated unusual staff loyalty, world-class customer engagement, and significant

brand equity for Ritz-Carlton.

People are spending a lots of money now, they are looking for luxury,

finest, comfortable, warm, relaxed and others great facilities from

living for a while in hotels, Ritz-Carlton have to provide it as they

services.

Simon F. Cooper, president and chief operating officer, The

Ritz-Carlton Hotel Company, L.L.C., said

“Over the years we have been approached by many authors seeking to

write about our company and examine the methodology we have used to

make The Ritz-Carlton brand one of the most frequently recognized and critically

acclaimed luxury names in the world. Only when Dr. Michelli came to us with his vision for telling the

story did we agree to provide unprecedented levels of access to our Ladies and Gentlemen and

customers. We believe sharing what we have learned will provide valuable lessons to any company

seeking to improve its customer service, whether they are a small day spa or a Fortune 500

company.” 1

Main Issues

As the main idea of Ritz-Carlton business, services is being number one performance to offer

to consumer. Ritz-Carlton leaders are responsible for stewarding an icon in the luxury

market, through a constant quest for excellence, to continue its success in a changing global

economy and with changing customer needs. Even in areas of international growth,

succession planning, finding the best location for your business, or determining meaningful

quality enhancements, Ritz-Carlton offers a rich tapestry of leadership successes and

breakdowns that can help you shorten your path to greater success.

This topic is closely related to 5th point of their gold standard. Or course they still

doing exceptional services because, customer satisfaction and loyalty are logical

consequences for maintaining that high standard.

Ritz-Carlton also doing step they called three steps of service, that intends to give

more respect for the customer, but do not forget it can brings more respect from the

cstomer to the Ritz brand more.

The three steps of service are :

1. A warm and sincere greeting. Use the guest's name.

2. Anticipation and fulfillment of each guest's needs.

3. Fond farewell. Give a warm good-bye and use the guest's name.

The New Gold Standard is The Ritz-Carlton Hotel Company's legendary service. The 5

principles that identified as elemental to creating Ritz-Carlton's memorable customer

experience:2

1. Define and Refine

2. Empower through Trust

3. It's not about You1 Data accessed on http://corporate.ritzcarlton.com/en/Press/Releases/The_New_Gold_Standard_Book.htm, March 3, 2009.2 Data accessed on http://josephmichelli.com/newsletters/2008.05.html, March 4, 2009.

4. Deliver WOW

5. Leave a Lasting Footprint

Problem Statement

What is at the essence of this iconic company? What is the Ritz-Carlton experience? While

the answer reflects some variability based on the source, there is a striking consistency of

opinion.

Ritz-Carlton 5 Golden Standard, that they called to serve customer all the time, how

its woks? What is customer deserve from Ritz-Carlton services? How about human

resources in Ritz-Carlton Companies?

Analysis of Solution Alternative

A service is any act or performance one party can offer to another that is essentially

intangible and does not result in the ownership of anything. Its production may or may not

be tied to a physical product. Increasingly, however manufacturing, distributors, and

retailers are providing value-added services, or simply excellent customer service, to

differentiate themselves.

Ritz-Carlton Chicago’s services room.

In category index, Ritz-Carlton services is refers to Major Service with Accompanying

goods and service (others is Pure Tangible Good, Tangible Good with Accompanying

Services, Hybrid, Major Services with Accompanying Minor Goods and Services, and Pure

Service). Ritz-Carlton also provide services with everything that near to that goods or

services, such as mini-bar to serve beverages, mini-bookstore, travel agency, casino,

laundry, and others. But in this case, focus is in the services, how to serve the best for

consumer as their expectations, Ritz-Carlton assumed, survey and brand images is in deluxe

classification near under Four Season Hotel Brands.

The Ritz-Carlton is well-known for providing consistent service throughout all of its

properties. They also established its Gold Standards for customer service leading the

company to repeatedly outperform its competition and increase customer loyalty.

At the Ritz-Carlton Leadership Center, the company's goal is to emulate its winning

service and become the preferred provider of training and organizational change for all

industries, not just hospitality.

Ritz-Carlton division, part of HRM success, Malcolm Balridge Award winner twice

Human Resources is another phase to getting work to makes satisfying services.

Employees are called passionate advocates at the Ritz; they exhibit personality traits that

hiring managers specifically seek out when recruiting and interviewing candidates. To

ensure that interviewees are sincerely positive people, managers use two-part interview

questions that weed out those who are insincere.

Once through the interviewing and hiring processes, new employees begin

orientation, which lasts two days and covers topics ranging from the importance of

grooming to total quality management. This focus led to the development of a Quality

Selection Process (QSP) in partnership with Talent Plus, an international psychological

selection and human resource consulting firm. Companies drop the ball with employee

investment. They have a commitment to the customer, but they have to find ways to have

the same level of commitment with Ritz-Carlton most valuable resource, its their

employees.

Recommendation

Ritz-Carlton is a huge business in hotel services, but

their services can be improved more bigger, so there is

some recommendation to reach the goals or at least to

increasing their services, marketing strategy, profit and

brand images. Services is the necessary things to be

provided by Ritz-Carlton.

Services have four distinctive characteristics that greatly

affect the design of marketing programs: intangibility,

inseparability, variability, and perishabilty. Ritz-Carlton is define in all in the design of

marketing programs. First, Intangibility for Ritz-Carlton is consumer can not feels, give

values and comment before they use and purchase the hotels services. Inseparability for

Ritz-Carlton? although they are provide services for rest and holiday, but they are also buy

and manufactured their goods such as shampoo, soap, tooth paste, sheet, parfumes, etc.

because the client is also often present as the service is produced, provider-client

interaction is a special feature of services marketing. And Because the quality of services

depends on who provides them, when and where, and to whom, so the business must be

have Variability characteristic, such as new programs and celebrating days expo, for

examples Ritz-Carlton held pets day, consumer can bring their pets to the hotels and living

for a while. Finally, last characteristic is Perishability, Ritz-Carlton can not avoiding this to be

happened, services cannot be stored, so their perishability can be a problem when demand

fluctuated. Several strategy can produce a better match between demand and supply in a

service business. On the demand side: Differencial Pricing, Nonpeak Demand,

Complementary Services and Reservation Systems. And the supply side: Part-time Employee,

Peak-time Efficiency, Increased Consumer Participation, Shared Services and Facilities for

Future Expansion.

What customers want is personalized service, fast access to knowledge, and hassle-

free interactions. That, starts with employees. As Melissa Young, a pastry chef at the Ritz-

Carlton in Washington, D.C., joined the discussion it became obvious to me that Ritz-Carlton

employees stop at nothing to make that service happen. Young told us about a time when

the front desk informed her of a family who was about to arrive at the hotel. They drove all

evening in a blinding rain storm and arrived later than expected. Young sent up champagne

and strawberries for the adults and an

assortment of juices and warm cookies

for the children. "To see the excitement

in the kids was priceless," Young said.

"It's amazing to love what you do. The

positive energy starts from day one and

continues every day. It's great to be part

of a winning team."3

In the other hand, managing service quality can be good activities, also to see

customer expectations from many sources, such as past experiences, word of mouth, and

advertizing. In general, customers compare the perceived service with the expected

service.If the perceived service falls below the expected service, customers are

disappointed. Succesful companies add benefits to their offering that not only satisfy

customers but suprise and delight them. Delighting customers is a matter of exceeding

expectations.

Based on the service-quality models, researchers identified the following five

determinants of service quality, in order to importance:4

1. Reliability

2. Responsiveness

3. Assurance

4. Empathy

5. Tangibles

3 Data accessed on http://www.1to1media.com/view.aspx?DocID=30068&m=n, March 4, 2009. 4 Kotler, Phillip & Keller, Kevin L. Marketing Management 13th Edition. New Jersey : Pearson Pretice-hall International Edition.