COLEGIO DE STA. ANA DE VICTORIAS, INC.

Osmeña Avenue, Victorias City, Negros Occidental, 6119

MODULE 3
LEARNING MODULE
BLENDED FLEXIBLE LEARNING
Tourism and Hospitality Service Quality Management (THCC 216)

AN OVERVIEW

INTRODUCTION

The world economy is increasingly characterized as a service economy. This is primarily

due to the increasing importance and share of the service sector in the economies of most
developed and developing countries. The growth of the service sector has long been considered
an indicator of a country’s economic progress. 
Economic history tells us that all developing nations have invariably experienced a shift
from agriculture to industry and then to the service sector as the mainstay of the economy. This
shift has also brought about a change in the definition of goods and services themselves. No
longer are goods considered separate from services. Rather, services now increasingly represent
an integral part of the product. It is this interconnectedness between goods and services that is
represented on a goods-services continuum. This module will further discuss the concept,
features, and classification of service marketing. Furthermore, this will give you an overview of
the service marketing mix: place, price, process, people, place, physical evidence, price, and
product.

LEARNING OUTCOMES
At the end of this module, you should be able:
1. To identify the meaning and features of services.
2. To classify the different characteristics of service marketing.
3. To distinguish the different service marketing mix.

LEARNING RESOURCES

3G E-learning., (2019). Quality Service Management in Tourism and Hospitality, 3 G E-

learning LLC, USA

LEARNING INPUTS

LESSON 9 DEFINITION AND FEATURES OF SERVICES

Concept of Service Marketing

 COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119

Service marketing is marketing based on relationship and value. It may be used to market
a service or a product. With the increasing prominence of services in the global economy, service
marketing has become a subject that needs to be studied separately. Marketing services is
different from marketing goods because of the unique characteristics of services namely,
intangibility, heterogeneity, perishability and inseparability.

In most countries, services add more economic value than agriculture, raw materials, and
manufacturing combined. In developed economies, employment is dominated by service jobs
and most new job growth comes from services. Jobs range from high-paid professionals and
technicians to minimum-wage positions. Service organizations can be of any size from huge
global corporations to local small businesses. Most activities by government agencies and non-
profit organizations involve services.

Meaning of Services

The American Marketing Association defines services as activities, benefits, or

satisfaction that are offered for sale or provided with sale of goods to the customer, that is, pre-
sale and after-sales services. Berry states, ‘while a product is an object, devise or physical thing,
a service is a deed, performance, or an effort’.

Features of Services:

1. Intangibility:

Services are intangible in that they do not have a physical shape. So, a consumer cannot
touch or see it but can derive the benefits after buying it. This intangibility makes the task of
decision-makers more complex. While motivating the prospects they cannot display the positive
or negative aspects of services. The consumer also finds it difficult to measure service value and
quality. To overcome this, consumers tend to look for evidence -- of quality and other attributes.
They also consider physical evidence and qualifications or professional standing of the
consultant. Services by nature are abstract. Therefore, services carry with them a combination of
intangible perceptions and benefits. Thus, it is right to mention that due to intangibility, the
managing of services becomes much more complicated.
A physical product is visible and concrete. Services are intangible. The service cannot be
touched or viewed, so it is difficult for clients to tell in advance what they will be getting. For
example, banks promote the sale of credit cards by emphasizing the conveniences and
advantages derived from possessing a credit card.
2. Inseparability
Services often cannot be separated from the person of the service provider. Moreover, some
services must be created and dispensed simultaneously. For example, dentists create and
dispense almost all their services at the same time. From the marketing point of view, direct sale
is the only channel of distribution of services. This feature of services also limits the scale of
operation of a service firm. The goods are produced at one point and then distributed by others at
other points. In services, we find the selling processes contributing to its creation. Thus, goods
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119

are produced, sold and then consumed, whereas services are sold and then produced and
consumed.
Personal services cannot be separated from the individual. Services are created and
consumed simultaneously. The service is being produced at the same time that the client is
receiving it; for example, during an online search or a legal consultation. Dentist, musicians,
dancers, etc. create and offer services at the same time.
3. Heterogeneity (or variability)

Services involve people, and people are all different. There is a strong possibility that the
same inquiry would be answered slightly differently by different people (or even by the same
person at different times). It is important to minimize the differences in performance through
training, standard-setting and quality assurance. The quality of services offered by firms can
never be standardized.

A service firm can't standardize its service. Each unit of - the service is somewhat different
from the other units of the same service. For example, an airline does not provide the same
quality of service on each journey. The primary reason for such inconsistency is the effort to
satisfy the customer's needs to the fullest. This requires the interaction of customers and service
providers. They should do everything to ensure the consistent quality of the service.

4. Perishability

Services have a high degree of perishability. Unused capacity cannot be stored for future use.
If services are not used today, it is lost forever. For example, spare seats in an airplane cannot be
transferred to the next flight. Similarly, empty rooms in five-star hotels and credits not utilized
are examples of services leading to economic losses. As services are activities performed for
simultaneous consumption, they perish unless consumed. Services are highly perishable and they
cannot be stored. In the context of services, if we fail to sell the services, it is lost forever. For
example, a vacant seat in an aircraft or an unbooked room in a hotel etc. are opportunities lost
forever. This makes it essential that decision-makers should minimize the risk by utilizing their
professionalism. The strategies include peak-load pricing, motivating non- peak period
consumption etc.

5. Changing demand

The demand for services has wide fluctuations and may be seasonal. Demand for tourism is
seasonal, other services such as demand for public transport, cricket field and golf courses have
fluctuations in demand.

Generally, the demand for services is fluctuating in nature. Demand for certain services that
may be high during peak seasons may be low during off-seasons. Most service organizations
have capacity constraints. So a simultaneous attempt to achieve a closer match between demand
and supply is sought. The combination of perishability and fluctuating demand offers challenges
to service company executives in planning, pricing, and promotion of services. Management
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
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experts would like to add some more features to services while distinguishing them from
products. These are:

A. Lack of entry barriers: The introduction of new changes in various services is not
patentable i.e. the innovativeness of one firm can easily be adopted by another. Also,
services are not generally capital intensive, and thus entering a service sector is not at all
difficult.
B. Minimum opportunities to achieve economies of scale: Most services operate from
multiple locations so that they can cater to the surrounding geographical area. This
prevents the service provider from producing service at one place as is done in the case of
producing tangible goods. Thus, opportunities for achieving economies of scale are
difficult.
C. Customer Contact - The customer is very much a part of the service process. A service
can be classified as high or low contact depending on the percentage of time the customer
spends in the delivery system relative to the total service time. In high contact services,
the customer influences the timing of demand and the nature of service by direct
participation in the process.

6. Pricing of services
The quality of services cannot be standardized. The pricing of services is usually determined
based on demand and competition. For example, room rents in tourist spots fluctuate as per
demand and season and many of the service providers give off-season discounts.

7. Direct channel
Usually, services are directly provided to the customer. The customer goes directly to the
service provider to get services such as a bank, hotel, doctor, and so on. A wider market is
reached through franchising such as McDonald’s.

LESSON 10 PROBLEMS IN MARKETING SERVICES AND CLASSIFICATION OF SERVICE

Problems in Marketing Services:

1. A service cannot be demonstrated.
2. Sale, production, and consumption of services take place simultaneously.
3. A service cannot be stored. It cannot be produced in anticipation of demand.
4. Services cannot be protected through patents.
5. Services cannot be separated from the service provider.
6. Services are not standardized and are inconsistent.
7. Service providers appointing franchisees may face problems of quality of services.
8. The customer perception of service quality is more directly linked to the morale,
motivation, and skill of the frontline staff of any service organization.

Classification of Services
There have been several approaches to the classification of services. The intention behind
this classification is to provide service managers with a means of identifying other companies
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119

who, though operating in different types of services, share certain common characteristics.
Lovelock classifies services based on five crucial factors. They are:

 Nature of the service act.

 The relationship of a service organization to customers.
 The extent of customization and judgment.
 The nature of supply and demand for the service
 The process of service delivery
A simple form of classification of services is into:
A. Business and professional services.
The services include banking, insurance, advertising, consulting, market information, budgeting,
legal, medical, accounting etc.
B. Non-business services
The services include leisure, entertainment, recreation, education, counseling,etc.
Helen Woodruffe classifies services into the following five categories:
1. End-user
According to the end-user of services, it may be classified into:
 Consumer services- such as leisure, hairdressing, personal service.
 Business services-advertising agencies, printing, accounting, consultancy
 Industrial services- plant maintenance, repair service, project management

2. Service tangibility
The degree of the tangibility of service can be used to classify services:
 Highly tangible services - car rentals, vending machines, - telecommunications.
 Services linked to tangible goods - car service, repair of domestic appliances
 Highly intangible services - consultancy, legal service

3. People-based services:
Services can be classified based on the extent of consumer contact:
 People-based services -education, healthcare, etc. where high contact is necessary.
 Equipment based services - only low customer contact is required for such services: car
wash, cinema, and vending machines.

4. Expertise / Professionalism
Based on the expertise and skills required, services may be classified into:
 Professional Services - legal, medical, accounting, and consultancy.
 Non-professional Services - daycare, baby-sitting.

5. Profit Orientation
The overall business orientation is a recognized means of classification:
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
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 Commercial Services - banks, insurance, hotel, and catering services.

 Non-commercial services - charities, public sector leisure facilities.

LESSON 11 OVERVIEW OF SERVICE MARKETING MIX

The service marketing mix is a combination of the different elements of service marketing
that companies use to communicate their organizational and brand message to customers. The
mix consists of the seven P’s i.e. Product, Pricing, Place, Promotion, People, Process, and
Physical Evidence. The service marketing mix, also known as the extended marketing mix, treats
the service that the business offers just as it would treat a product. While the first four P’s are
involved in product marketing too, the remaining three P’s focus mainly on service delivery and
enhancing customer satisfaction.

 The Product in Service

A product is anything that can - be offered to a market for attention, acquisition, use, or
consumption. A product might satisfy a human want or need. The term, product includes
physical objects, services, concept ideas, place or persons. Customers are not purchasing goods
or services but are buying specific benefits and values in the form of an offer to meet their
particular needs. Service offers have been classified into the following three groups.
A. Tangible goods with accompanying services such as computers, washing machine etc.
B. A major service with accompanying minor goods and services such as hotels, resorts etc.
C. Pure services such as consultancy, teaching etc.
The service product has four dimensions. These are:
a. The basic or core service, for example, serving food in a restaurant.
b. The expected service - this includes the minimum expectations that a customer has from a
service, for example, a customer expects prompt service and comfortable seating in
addition to good food from a restaurant.
c. The augmented services - here the service provider offers benefits over and above those
that the customer expects.
d. The potential service - this contains all potential features and benefits that may be added
to increase the utility of the service to the buyers. For example, a computer can be
upgraded to function as a multimedia unit for entertainment or making presentation.

 Price in Services
Price is a key element in marketing mix. It must be aimed at achieving organizational goals
and customer acceptance. The price of the service is the value attached to it by the service
provider. It must correspond with the customer’s perception of value and quality. If the service is
priced too high, customers who may not accept it will see it as poor value for money. If the price
is too low, the service may be perceived as poor as inferior quality. Customers differ in their
needs, styles and spending power. Therefore, many service providers offer a wide range of
services at various prices to meet the needs of different target customers. Some service firms
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119

follow differential price policy to correspond with changes in demand at different points of time.
For example, a hotel may offer services at lower prices during off peak seasons.
The pricing decisions of a service firm are influenced by several - factors. The type of service
organization, the demand-supply position in the market, the level of competition, the stage in the
life cycle may all have an - impact on pricing decisions. However, organizational objectives have
a dominant role in pricing decisions for long- term survival and excelling competition. Some
service organizations like those owned by public sector have constraints over the prices they can
charge to customers. Here pricing is dependent more on providing social benefits to customer
rather than making profits. The factors affecting pricing policy include the following:
 Costs of providing the service
 Prices charged by competitors
 Demand levels and price elasticity of demand
 Marketing with other product mix
 Service quality and positioning

 Promotional of Services
Promotion is used to communicate information about products and services to target market
audiences thereby facilitating the exchange process. It helps-jo create awareness among the
customers and enables them to select the service provider.
Promotional programmer in a service firm should have three goals: to portray the service
benefits in as appealing a manner as possible, to differentiate its offerings from those of its
competitors, and to build a good reputation to the service firm. Since the service firm is
marketing intangibles, reputation is very important. Promotional programmers can stress
dependability of the service - its efficient delivery and consistent high quality. The promotional
measures of a service firm include personal selling advertising, sales promotion, public relations
and mailing offers. Personal selling is resorted to by many service providers to develop a close
relationship with customers.
Advertising is commonly used in many service firms like banking, insurance,
entertainments etc. to communicate about their products and services. However, a combination
of these programmers will be the most effective promotional tool in creating favorable response
from target audience.

 Place Decisions in Services

In services, place decisions basically consist of deciding where to locate the service facility and
what channels of distribution to use for delivering the service. The inseparable nature of services
makes it necessary that it must be accessible and available to customers in order to facilitate the
exchange process. It cannot be stored until a later date; it must be available for consumption at
the point of production. Distribution or the place element of the marketing mix is concerned with
two main issues, namely, accessibility and availability of services. Accessibility refers to the ease
and convenience, with which a service can be purchased, used or received. Availability refers to
the extent to which a service is obtainable or capable of being purchased, used or received. Both
criteria must be satisfied in order to achieve successful services marketing.
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A key decision with regard service distribution is location. There are several factors, which
influence the decision of service location. These are
 Service inseparability
 Service perishability
 The role of the consumer as co-producer of the service
 Customer needs and wants
 Importance of geographical location as part of the service
 Target markets

 People in Services
Services are people- oriented and highly interactive in nature. They involve considerable
interaction between the service provider and customers. Therefore, employment of right kind of
personnel in service firms is of utmost importance. The inseparable nature of services means that
the human element forms an integral part of the service package. People being an element of
services marketing mix applies not only to the service personnel but also to the customers who
play an active role in the service delivery. In many services, customers form an important part of
the service. For example, in education the students are very much part of the learning
programmer. The participation of customer is essential to derive the full benefits of services.
People are the key to a successful service encounter and this can happen only if the employees
develop an obsession with the customers. "The organization's staff are its prime resource, and
human resources management is the professional approach to finding and developing the right
people." Central to successful service delivery is the management or the customer provider
interface. Employees need to understand their role in service exchange, and human resources
management provides the programmers and strategies to ensure the highest standards of
customer care.

 Service Process Design

Service process means the way in which services are created and delivered. Services are not
purchased and owned in the same way as physical goods. A service is created or performed
rather than physically handed over. The performance process involves interaction between
service provider and customers. Therefore, the service process is an integral part of service
offering and also the consumer satisfaction.

There are four objectives of setting down clear outlines or blueprints for service delivery
processes. These are:

 To ensure that service is carried out in the fastest, most efficient and cost-effective
manner possible,
 To enable service quality to be monitored and benchmarks to be put in place thus
allowing accurate measurement of both quality and productivity.
 To facilitate staff training and enable individuals to carry responsibility for individual
stages of the service transaction and delivery.
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 To reduce the amount of divergence thus enabling accurate budgeting an manpower

planning etc. to take place.

While designing a service delivery process the following factors are to be considered:

 The extent of customer involvement or participation in the service process.

 The location of the service points - i.e, whether the services are delivered at the service –
provider’s premises or at the place of customers.
 The nature of the service itself – i.e, its intangibility, perishability, etc.
 The degree of standardization- i.e, whether services are delivered in a standard format or
whether customization is done for services.
 The complexity of the service as measured by the number steps or activities in the service
delivery process.

 Physical Evidence in Services

Physical evidence or appearance is an important element of service marketing mix. Since
services lack tangibility the consumers require evidence to prove- that they exist in the same
form as being claimed by the service provider. Some services are product based and service
providers will focus on ensuring that any accompanying goods, which form part of the service,
are of appropriate quality and standard. Services, which are highly intangible like consultancy
and financial advice, are more difficult for the consumer to assess. In the absence of any tangible
products, consumers will look for other ways of evaluating the service. In this context physical
evidences like the tangible aspects of the service, the physical surroundings, location, decor and
layout of the organization help the service firms for marketing the services efficiently.

The perception of customers with regard -to physical evidence includes two main types:
essential evidence and peripheral evidences. Essential evidence is integral to the service offering
and includes the tangible aspects or benefits. Thus, a computer in a bank or a teacher in a
management institute is essential evidence of these service providers. This type of evidence will
not normally be exchanged or owned by the customer. ln all cases, the quality and standard of
the essential evidence will be a major influence in the customer's purchase decision.

Peripheral evidence, unlike essential evidence, can be given away or exchanged during
service transactions. Thus, a bank passbook in a bank or course material in an academic
institution are peripheral evidence of the service providers. Peripheral evidence plays an
emotional role in consumer evaluation of a service before, during and after purchase.
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119

MODULE 3
OUTPUT
Tourism and Hospitality Industry Service Quality Management (THCC 216)

NAME: COURSE & YEAR:

CLASS SCHEDULE: DATE SUBMITTED:
MARKETING MIX

Choose 1 tourism and hospitality related service business that you are familiar with and give 5
examples of each marketing mix. Discuss if their current marketing mix can help them execute
or make profitable marketing strategies. You may include suggestions. Follow the format
below.

Name of the establishment:

 Product
1.
2.
3.
4.
5.

Discussion:

 Price
1.
2.
3.
4.
5.

Discussion:

 Physical Evidence
1.
2.
3.
4.
5.

Discussion:
 COLEGIO DE STA. ANA DE VICTORIAS, INC.
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 Process
1.
2.
3.
4.
5.

Discussion:

 People
1.
2.
3.
4.
5.

Discussion:

 Place
1.
2.
3.
4.
5.

Discussion:

 Promotion
1.
2.
3.
4.
5.

Discussion: