Chapter 11: Building Customer Loyalty Through Quality

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Figure 11-1

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Relationship Marketing Compared With Traditional Marketing

Relationship marketing
Orientation to customer retention Continuous customer contact Focus on customer value Long time scale High customer service emphasis High commitment to meeting customer expectations Quality is concern of all staff

Traditional Marketing
Orientation to single sales Discontinuous customer contact Focus on product features Short time scale Little emphasis on customer service Limited commitment to meeting customer expectations Quality is the concern of the production staff
2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

Customer Delivered Value

Total customer Value Total customer cost Customer Delivered Value
(Products, services, personnel, and image values) (Monetary, time, energy, and psychic costs)

Minus

Equals

(Profit to the consumer)

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Customer Satisfaction
Customer Satisfaction with a purchase depends on the products performance relative to a buyers expectations. If performance exceeds or meets expectations the customer is highly satisfied or delighted.
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Customer Satisfaction Versus Customer Loyalty

Customer satisfaction How well expectations are met Customer Loyalty
Behavior Do customers come back or intend to come back Emotional Attachment Do customer spread positive word of mouth and perform other partnership activities
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Five Levels of Relationships

Basic Reactive
The company sells the product but does not followup The company sells the product and encourages the customer to call when the have problems or questions. The companys representative checks on customer after the sales and the event to make sure things were satisfactory and to get feedback. The salesperson or others in the company phone customers from time to time to seek suggestions. The company works continuously with the customer to discover ways to develop better value.
2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Accountable Proactive Partnership

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

Three Customer ValueBinding Approaches

Financial benefits Financial benefits Social benefits Social benefits Structural ties Structural ties

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Establishing a Relationship Marketing Program

Identify the key customers meriting relationship management Assign a skilled relationship manager to each customer Develop a clear job description for relationship managers

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Establishing a Relationship Marketing Program

Have each relationship manager develop annual and long-range customer relationship plans Appoint an overall manager to supervise the relationship managers

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Internal Costs
Rework (back of the house) Facility Downtime Loss of Morale High employee turnover Loss of employee marketing

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Complaint resolution
Approximate percentages that will purchase again if they have a complaint
82% if resolved quickly 50% if resolved 15% if not resolved 9% if they don't communicate their complaint
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Managers and employees should treat complaining customers as the most important customer - and listen to their complaints
Complaints and problems create opportunities to develop loyalty Knowing customer value gives us an idea of how far we want to got fix the problem
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Managing the Perceived Service Quality

Source: Christian Gronroos

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Benefits of Service Quality

Retaining customers Avoidance of price competition Retention of good employees Reduction of costs

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Developing a Service Quality Program

1. Supply strong leadership 2. Integrate marketing throughout the organization 3. Understand the customer 4. Understand the business 5. Apply operational fundamentals
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Developing a Service Quality Program

6. Leverage the freedom factor 7. Use appropriate technology 8. Practice good human resource management 9. Set standards, measure performance, and establish incentives 10. Feed back the results to the employees
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Managing Capacity
Involve customers in the delivery system Cross-train employees Use part - time employees Rent or share facilities and equipment

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Managing Capacity
Schedule downtime during periods of low demand Extend service hours Use technology Use price

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Customers as Employees
Reservations Check - out Check-in Salad bar Honor bar - concierge floor Macaroni Grill - wine Fast food - beverages Cook Steak
Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens 2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Managing Demand
Use price to increase or reduce Use reservations Overbook Use queuing Shift demand Change salespersons assignment Create promotional events
2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

Waiting Time
Unoccupied times feels longer than occupied time Unfair waits are longer than equitable waits

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Chapter 11: Figure 11-3: Conceptual model of service quality - the gap analysis model. Source: Leonard l. Berry, A. Parasuraman, and Valarie A. Zeithaml.

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Close Gap 1 by;

1. Talking to customers 2. Talking to customer contact employees 3. Marketing information systems-customer surveys-- analysis by segment-- focus groups 4. Reducing levels of management

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Close Gap 2
1. Management Commitment-- resources, internal marketing, reward systems 2. Use of hard and soft technology 3. Shift demand 4. Is meeting customer expectations financially feasible?

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Close Gap 3
1. Training 2. Internal marketing, pride 3. Teamwork 4. Reward systems 5. Service quality audits

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458

Close Gap 4
1. Know the capabilities of the firm 2. Good communications within the firm 3. Internal marketing-- teamwork

Marketing for Hospitality and Tourism, 3e Philip Kotler, John Bowen, James Makens

2003 Pearson Education, Inc. Upper Saddle River, NJ 07458