Unit 3 Product Marketing vs. Services Marketing

The focus of the marketing concept is to satisfy customers' demands, and these demands can be in the form of physical products and/or services. It is common for people to refer to products as objects, devices or things and services as actions, performances or experiences. Marketing was initially developed in connection with the physical products, but with the growing interest in consumers for services today, selling services have become an increasingly important component of the marketing concept. In Australia, Canada, France, Japan, Norway, and the United Kingdom, 60 percent or more of the gross domestic product (GDP) comes from services, and the service sector comprises of approximately 85 percent of the GDP in Hong Kong. The core outputs for many hospitality organizations are primarily performances or experiences (i.e. services), it does not mean that absolutely no tangible elements are tied to the process. For instance, the food and beverages will be considered the tangible element we experience when dining out in a restaurant.

The hospitality industry directly can’t adopt the marketing practices of those firms with physical products as their primary outputs, because there are four characteristics, intangibility, inseparability, variability and perishability, that set services apart from physical goods. There are four characteristics of services that make service marketing distinctively different from product marketing.

Characteristics of Services

Service Characteristics of Hospitality Marketing

Service characteristic	What it means?	Hospitality example
Intangibility	• Services cannot be conceptualized or perceived by five senses before purchase.	• Customers will have no way to evaluate their meals at a restaurant until they have experienced the food and service. •.-----------------------------------------------------------------------------------------------------------------------------
Inseparability	• Providers are part of the service experience because providers and customers must be present simultaneously for the transaction to occur. • Customers themselves may be part of the service experience because of their greater involvement in the production process. • The presence of other customers may become part of the service experience.	• The attitude of a flight attendant will influence customers' ratings on their overall experience with the airline. • Customers that use automated check-in- and check-out service provided by hotels must understand the system in order to have a satisfactory experience. • The presence of loud customers in a restaurant will influence the experiences of other customers. •-------------------------------------------------------------------------------------------------------------------------------------
Variability	• Quality of services is likely to vary (i.e. lack of consistency) because of the provider, location, timing, etc.	• • Service quality in a restaurant during peak and non-peak demand periods may vary. •-----------------------------------------------------------------------------------------
Perishability	• Services are not durable and only last for a short while; they cannot be stocked as inventory for future sales or use.	• Hotel rooms that are not sold today cannot be saved for tomorrow (i.e. lost revenues for today cannot be recaptured tomorrow). • ------------------------------------------------------------------------------------------------------------------------------------

Concluding example: Ritz-Carlton Hotels certainly understand the importance of increasing the tangibility of their services. For instance, their front-line staff are always dressed in professional apparel and its physical buildings are decorated in such a way to convey a high level of service. Additionally, well designed promotional materials are used to create a tangible impression for the guests. Ritz-Carlton also put tremendous efforts in personnel selection and training in order to manage the efficiency and consistency of their services. Apart from that, the company has formulated 20 standards of service that frame management's expectations of employees. These standards provide guidance to its employees' day-to-day behaviors, which are crucial for managing the interactions between the staff and guests. Due to the perishable nature of services, hotels cannot just add or delete rooms for upcoming high or low demand periods. As a result, Ritz-Carlton offers various promotional packages during low demand periods in order to attract more guests.

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Macro-Environmental Forces	\|	Unit 4 Market Research

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