Chapter 1 : Developing Customer Value and Engagement Through Hospitality and Tourism
Marketing
I. Advertising in the Hospitality Sector
A. Key of success
Customers have the ability to advance or hinder your career through the purchases they make and the
comments they share with others, respectively. Successful businesses of today are highly customer-
focused and committed to marketing.
B. Customer centricity.
A company's objective is to acquire and retain profitable customers. Profitability through customer
satisfaction is the primary objective of hospitality marketing.
C. What is tourism and hospitality marketing?
Marketing is the art and science of acquiring, retaining, and expanding a customer base of profitable
buyers. The marketing mix consists of the product, price, promotion, and distribution (place).
Sometimes distribution is referred to as place, resulting in the combination known as the four Ps. In
addition to planning, research, and information systems, marketing includes an understanding of
buyer behavior.
D. The significance of marketing. All managers must understand marketing.
E. Tourism marketing.
The tourism sector consists of the hospitality and travel industries, which are interdependent and work
together to promote themselves. Government or quasi-government agencies play an important role in
the marketing of the travel industry by enacting laws designed to improve the industry and by
promoting regions, states, and nations.
F. Marketing is the process by which companies create value for customers and society, resulting in
strong customer relationships that capture value from customers in exchange, while simultaneously
creating value for society.
G. Marketing method.
The marketing procedure consists of five steps. In the first four steps, businesses work to comprehend
consumers, create value for customers, and establish solid customer relationships. In the final phase,
businesses reap the benefits of providing superior customer value. They capture value from customers
in the form of sales, profits, and long-term customer equity by creating value for customers.
II. Comprehending the Market and Customer Requirements
A. Customer requirements, desires, and needs
1. Needs.
Humans have numerous complex needs. These include physical needs for food, clothing, warmth, and
security; social needs for belonging, affection, enjoyment, and relaxation; esteem needs for prestige,
recognition, and fame; and individual needs for knowledge and self-expression.
2. Wants.
Needs are communicated through desires.
3. Demands.
People have virtually limitless desires but limited resources. They select products that provide the
greatest value for their money. When supported by purchasing power, desires become demand.
B. Market offerings.
Market offerings consist of some combination of tangible products, services, information, and
experiences.
C. Customer value and fulfillment.
Customer value is the difference between the benefits a customer receives from owning and/or
utilizing a product and the costs associated with acquiring it. The customer's expectations are based on
previous purchasing experiences, the opinions of their peers, and market data. Customer satisfaction
with a product depends on how well the product meets the customer's expectations.
D. Relations and transactions.
Exchange is the act of acquiring a desired item from someone in exchange for something else.
Marketing is the process of establishing and maintaining exchange relationships with target markets.
E. Markets.
A product's market consists of both actual and potential buyers.
III. Designing Customer Value-Driven Marketing Strategy
A. Selecting clients for service. The business must choose which market segments to serve.
1. Choosing a proposition of value. The company must also determine how it will differentiate and
position itself in the market in order to serve its targeted customers. The value proposition of a
company is the set of benefits or values it promises to deliver to consumers in order to meet their
needs.
B. A product's market consists of both actual and potential buyers. These purchasers share a need or
desire that can be met through exchange relationships.
C. Marketing administration orientations
1. Marketing concept.
The selling concept asserts that consumers will not purchase a sufficient quantity of an organization's
products unless the organization engages in extensive selling and promotion.
2. Marketing strategy.
According to the marketing concept, achieving organizational objectives depends on identifying the
needs and desires of target markets and satisfying them more effectively and efficiently than
competitors.
3. The notion of social marketing.
According to the societal marketing concept, an organization should determine the needs, wants, and
interests of target markets and deliver the desired satisfactions more effectively and efficiently than
competitors, all while maintaining or enhancing the consumer's and society's welfare.
D. Developing an integrated marketing strategy and plan.
The company's marketing strategy outlines the customers it will serve and the manner in which it will
create value for them. The marketer then creates an integrated marketing program that will effectively
deliver the intended value to target customers. By putting the marketing strategy into action, the
marketing program cultivates customer relationships. It consists of the firm's marketing mix, which is
the collection of marketing tools used to implement the firm's marketing strategy. Product, price,
place, and promotion make up the four Ps of marketing, which are the four most important
components of the marketing mix. IV. Value Capture and Customer Relationship Management
A. Customer relationship management (CRM) entails managing specific customer information and
"touch points" in order to maximize customer loyalty.
1. Customer value and satisfaction are relationship-building pillars. A customer purchases from the
firm that provides the greatest customer-perceived value, which is the customer's evaluation of the
difference between an offering's benefits and costs relative to competing offers. The customer is
dissatisfied if the performance of the product falls short of expectations. If performance meets the
customer's expectations, they are satisfied. If the performance exceeds the customer's expectations,
they are extremely satisfied or delighted. The majority of studies indicate that higher levels of
customer satisfaction result in greater customer loyalty, which in turn improves business performance.
Depending on the nature of the target market, businesses can build customer relationships on
numerous levels. Using specific marketing tools, marketers can strengthen customer relationships. For
instance, numerous businesses provide frequency. Marketing programs that reward customers for
frequent or substantial purchases.
B. Customer engagement and digital and social media platforms of today.
The digital age has spawned a bewildering array of new customer relationship–building tools,
including Web sites, online advertisements and videos, mobile advertisements and applications, and
blogs, as well as online communities and the major social media platforms, such as Twitter,
Facebook, YouTube, Snapchat, and Instagram. The modern form of marketing is customer
engagement marketing, which encourages direct and ongoing customer participation in shaping brand
conversations, brand experiences, and brand communities.
1. Consumer-generated marketing. Through the proliferation of user-generated videos, blogs, and
websites, consumers are increasingly shaping their own brand experiences. In addition to creating
brand conversations, customers are increasingly influencing product design, usage, packaging,
pricing, and distribution.
C. Relationship management with partners.
When it comes to creating customer value and establishing solid customer relationships, modern
marketers are aware that they cannot do it alone. They must collaborate closely with numerous
marketing partners. In addition to being adept at customer relationship management, marketers must
also be adept at managing internal and external partner relationships.
1. Partners within the organization. Each functional area is capable of interacting with customers,
particularly electronically.
2. Marketing partners external to the company. Through supply chain management, many businesses
are strengthening their relationships with partners along the entire supply chain.
V. Capturing Customer Value Through the creation of superior customer value, the company
generates highly satisfied customers who remain loyal and purchase more. This results in greater
long-term returns for the company. Creating customer value results in customer loyalty and retention,
market share and customer share, and customer equity.
A. Customer retention and loyalty. Losing a customer results in the loss of more than one sale. It
entails losing all of the customer's future purchases over the course of their lifetime. We refer to this
stream of purchases as the lifetime value (LTV) of a customer.
B. Increasing percentage of customers. Good customer relationship management can help marketers
increase their share of customer, or the proportion of a customer's spending on their product
categories. This is in addition to simply retaining good customers to capture customer lifetime value.
C. Increasing customer loyalty. Companies desire not only to create profitable customers, but also to
"own" them for life, earn a larger portion of their purchases, and capture their LTV.
1. What is client loyalty?
Customer equity is the discounted LTVs of all current and prospective customers. Customer equity is
created by delivering products with high customer satisfaction and perceived value.
2. Developing relationships with the appropriate customers.
The business can categorize customers based on their potential profitability and manage their
relationships accordingly. The potential profitability and projected loyalty of strangers are low. There
is little overlap between the company's products and their requirements. The relationship management
strategy for these customers is straightforward: treat them well as guests, but make minimal or no
marketing investments. Potentially profitable, but not loyal, butterflies. There is an excellent match
between the company's offerings and their requirements. However, like real butterflies, we can only
enjoy them for a brief time before they disappear. Barnacles are extremely loyal but unprofitable.
Their needs are only partially met by the company's offerings. As with strangers, marketing dollars
should not be spent on Barnacles. True friends are both beneficial and dependable. Their requirements
are well-aligned with the company's offerings. The company desires to make continuous relationship
investments to engage, retain, and expand these customers. It seeks to convert true fans into true
believers who return frequently and share their positive experiences with others.
VI. The Evolving Marketing Environment As the market evolves, so too must those who serve it.
A. Online, social media, and mobile marketing in the digital age
1. Online. Digital and social media marketing entails utilizing digital marketing tools such as Web
sites, social media, mobile ads and apps, online video, e-mail, blogs, and other digital platforms to
engage consumers via their computers, smartphones, tablets, internet-capable TVs, and other digital
devices, anywhere and at any time. Currently, it appears that every company is reaching out to
customers through multiple Web sites, newsy tweets and Facebook pages, viral advertisements and
YouTube videos, rich-media e-mails, and mobile applications that solve consumer problems and
assist them in shopping. In addition to brand websites, the majority of businesses are integrating social
and mobile media into their marketing strategies.
2. Social media. People are able to connect and share important information and moments of their
lives through online social media. They therefore provide an ideal platform for real-time marketing.
Using geo-fencing, marketers can reach out to tourists walking by their restaurant while carrying a
smartphone to consumers searching for a restaurant for dinner tonight.
3. Mobile. Smartphones account for 52 percent of online traffic, and this number is growing.41 Four
out of five smartphone users use their devices to shop, including browsing product information
through apps or the mobile web, conducting in-store price comparisons, reading online product
reviews, and more. Online purchases made via mobile devices are expanding more rapidly than
overall online sales. Marketers utilize mobile channels to encourage immediate purchases, facilitate
shopping, enhance the brand experience, or all of the above.
B. Sustainable marketing is the call for increased environmental and social responsibility.
Marketers are reevaluating their relationships with social values and responsibilities, as well as with
the planet that sustains humanity. As the global consumerism and environmentalism movements
mature, contemporary marketers are required to implement sustainable marketing practices.
C. Rapid globalization.
At the same time that they are redefining their customer relationships, marketers are also reevaluating
their relationships with the larger world. Global competition affects the majority of businesses,
regardless of size, in the present day.
D. Co-creation.
Co-creation entails interaction between the hospitality or travel company and the guest to produce
customized experiences. Interactions may be either passive or active.
E. Sharing-based economy.
Recent growth in the sharing economy can be attributed in part to individuals sharing their talents,
time, and tangible assets to earn additional income and the Internet's ability to connect them with
customers. The hospitality and travel industries will face both threats and opportunities as the sharing
economy continues to expand.
Chapter 2: Application of the Services Marketing Concept to Hospitality and Tourism
Marketing
I. The Culture of Service.
The service culture is centered on customer service and satisfaction. The service culture must emanate
from the top management down.
A. Indicators of service marketing
1. Intangibility.
Services, unlike physical products, cannot be seen, tasted, felt, heard, or smelt prior to purchase. To
reduce the uncertainty caused by the intangible nature of a service, buyers look for tangible evidence
that will provide information and inspire confidence.
2. Physical evidence.
The improper management of tangible evidence can harm a business.
3. Inseparability.
In the majority of hospitality-related transactions, both the service provider and the customer must be
present. Customer-facing personnel are a component of the product. Additionally, inseparability
implies that customers are integral to the product. Customers and employees must comprehend the
service-delivery system, which is the third implication of inseparability.
4. Variability.
The quality of a service is dependent on who provides it, when it is provided, and where it is
provided. Services are simultaneously produced and consumed. During periods of peak demand, it is
difficult to deliver consistent products due to fluctuating demand. Due to the high degree of contact
between the service provider and the customer, product consistency depends on the skills and
performance of the service provider at the time of the interaction.
5. Perishability.
Services are not capable of being stored. To maximize revenue, service providers must manage
capacity and demand because unsold inventory cannot be carried forward.
II. Profit chain for services.
The service profit chain is a model that illustrates the connections between employee satisfaction,
customer satisfaction, customer retention, and value creation and profitability. The chain has five
links: internal service quality, satisfied and productive employees, increased service value, satisfied
and loyal customers, and healthy service profits and growth.
III. Management Techniques for Service Organisations
A. Service differentiation management.
Developing a differentiated offering is the solution to price competition. Innovative features that
distinguish one company's offer from those of its competitors may be included in the offer.
B. Managing quality of service.
The quality of hospitality products is determined by how well they meet customer expectations.
C. Manage service efficiency.
Service productivity can be increased by better training current employees, hiring new ones,
industrializing the service, and harnessing the power of technology.
D. Resolving complaints from customers.
Resolving customer complaints is essential to retaining customers.
E. Employee management as part of the product.
Employees are an integral component of the hospitality industry's product and marketing mix. The
marketing and human resource departments must collaborate closely. Internal marketing to employees
requires the effective training and motivation of customer-contact employees and service personnel.
F. Managing risk perception.
People's perception of a high risk when purchasing hospitality products increases their loyalty to
companies that have previously provided them with consistent products.
G. Managing demand and capacity.
Because services are perishable, capacity and demand management is a crucial aspect of hospitality
marketing. First, services must modify their operating systems to permit the enterprise to operate at
maximum capacity. Second, they must keep in mind that their objective is to satisfy customers.
According to research, the number of customer complaints rises when service organizations exceed 80
percent of their capacity.
