Consumer Behavior y y The consumers buying behavior is more pronounced in the service industry.

The first stage of the buyer decision process is recognition of a need. When it comes to new products and services, consumers also go through 5 stages in their decision process. These 5 stages are: 1. Awareness stage consumers become aware of the new product but lack information 2. Interest stage consumers seek information about the new product 3. Evaluation stage consumers consider whether trying the new product makes sense 4. Trial stage consumers try the product on a limited basis 5. Adoption stage consumers decide to make full use of the product y 6 Levels of Guest Expectations Basic Service Expected Service What dates do you wish to stay, Mr. Smith? Desired Service Hello, Mr. Smith. Thanks for choosing us again. When are you expected this time? Unanticipated Unbelievably Good Hello, Mr. Smith. Thanks for choosing us again. I will upgrade you this time making sure it is opposite the swimming pool! What dates are you expected so that our courtesy limousine can receive you at the airport. We are delighted to have you back again.

Unbelievably Bad Service Hold on!

What dates do you wish to stay, Sir?

Hello, Mr. Smith. Thanks for choosing us again. When are you expected this time? Do you still want your favorite blue room opposite the pool? Our courtesy coach will be at the airport as usual.

Model of Buying Behavior

The Environment Marketing Stimuli Other Product, Price, Place , Promotion Economic, Technological, Social, Cultural

Buyer s Black Box Buyer s Characteristics Buyer s Decision Process

Buyer Responses Buying Attitudes and Preferences Purchase Behavior: what the buyer buys, when, where, how much Brand and Company Relationship Behavior

Characteristics Affecting Consumer Behavior

CULTURAL
SOCIAL

PERSONAL PSYCHOLOGICAL Culture Reference Groups Stage of Life Motivation Occupation Family Sub-culture Role & Status Social Class Personality Economic Status

Perception Education eliefs & Attitudes

Lifestyle

STAGE IN LIFE CYCLE Single Status

BUYING BEHAVIOR Few financial burdens. Fashionconscious. Recreation oriented. Buy basic home items, transport, fitness equipment; adventurous holidays.

Newly married with no Better off financially. High purchase of durables, children better transport, furniture and exotic vacations. First Child Second Child Home purchasing at peak. Low liquid assets. Buy toys, baby-wear, infant foods and medicines. Financial position better. Wife may work to supplement income. Buy economy deals; enrolment of elder child in piano, karate, art lessons, etc. Marketers offer bargains. Financial position still better. Parents achieving success in profession. Family holidays to expensive locations; travel by car in bigger transport; electronic toys.

Third Child

STAGE IN LIFE CYCLE Empty Nest

BUYING BEHAVIOR Own a home. Financially strong as savings mature. Enjoy recreation, self-education, and travel.
Drastic cut in income. Eat health foods. Socializing with close friends. Reunions.

Active Retirement

Solitary Survivor with part -time work Income good but unable to maintain home. Will sell and move to a smaller residence. Involvement in religious communities and charity work. Solitary survivor retired Income drastically cut. Medical expenditure increases. Investment in old home. Needs attention, affection and security.

5 Brand Personality Traits

1. 2. 3.
4.

5.

Sincerity (down to earth, honest, wholesome and cheerful) Excitement (daring, spirited, imaginative, and up to date) Competence (reliable, intelligent, and successful) Sophistication (upper class and charming) Ruggedness (outdoorsy and tough)

y y y

Customer Orientation: The purpose of a business is to create and maintain profitable customers. Customer satisfaction leading to profit is the central goal of hospitality and tourism marketing. The long-term value of the customer must be assessed in order to take appropriate actions and ensure a customers long-term support. Statistical evidence supports the idea that it is much more efficient to maintain customer relationships than to create new customers. Indeed, it is difficult to regain a customer which has been lost to the competition. This is a fundamental idea in marketing today. Importance of Marketing: Only those companies that understand their customers can survive in the highly competitive environment.

Marketing: The art and science of finding, retaining, and growing customers. Sales vs. Marketing: y y Sales is pushing out products or services to potential buyers. Marketing is pulling buyers to you through advertising, special promotions and gimmicks, most of all, getting as many people to buy, or at least start thinking about buying from you.

Needs: Human needs are complex; we classify them into categories: basic physical needs such as food and housing; social needs for belonging, affection, fun, and relaxation; esteem needs for prestige, recognition, and fame; and individual needs for knowledge and self-expression. When a need is not satisfied, a void exists. Wants: Human wants are how people communicate their needs and are shaped by culture and personality. Wants are cultural interpretations of needs. A hungry Aboriginal wants witchery grubs, lizard eggs, and bush onions. A hungry person in the United States may want a hamburger, French fries, and a Diet Coke. Wants are described in terms of objects (or actions) that satisfy needs.

Demands: Demands are wants backed by buying power. People have almost unlimited wants, but limited resources. They choose product that produces the most benefit for their money. In times of recession or higher gas prices, people still travel but may shorten their stay or substitute destinations that are closer and therefore, more cost effective. The Four-P framework calls for marketing to decide: y y y y The product, its features and characteristics (Product) How much to sell or offer the product or service (Price) How to distribute the product/service or where to sell it (Place) The methods for promoting the product (Promotion)

Five Marketing Management Philosophies Manufacturing or Production Concept This concept holds that customers will favor products simply because they are available and highly affordable. In order to maintain their customers, management should focus on production volume and distribution efficiency. However, management may become so focused on production systems that they tend to forget the other needs of customers. Product Concept The product concept, like the production concept, has an inward focus. This concept holds that consumers will favor products which offer better and innovative features, quality, and performance. Selling Concept This concept believes that consumers favor those products and services that are promoted vigorously. Management should, therefore hire sales teams and allocate large advertising budgets. Again, the missing element in this approach is the customer and his or her satisfaction with the product or service. Rather than find the true cause for a slowing of business, firms often advertise to reverse a sales decline or fill gaps created by overcapacity. Marketing Concept The marketing concept believes that consumers favor those products and services that meet their needs and wants more precisely and delivering the desired satisfaction more effectively and efficiently than competitors. This concept focuses on customers needs and preferences. The company makes its profits by creating and maintaining customer satisfaction. Societal Marketing Concept Believes that customers favor those products and services which serve their own and societys good. It promotes social awareness. The underlying concept of the societal marketing approach is responsibility. Examples: Fast-food restaurants provide food with more nutritional value; resort developers consider the disposal of waste products and use of water; hotels consider energy conservation, landscaping, preventive maintenance, watersaving plumbing fixtures, and responsible alcohol service training for employees.

Marketing Environment y y y y Marketing environment is a mix of those internal (usually controllable) and external (unpredictable) factors which influence the successful sale of a product or service. Macro environment factors external factors Micro environment factors internal factors Macro environment factors:  Political  Economic  Social  Technological  Media  Competitors  Demographic  Natural Micro environment factors  Customers  Employees  Suppliers  Service agencies SWOT Analysis Strengths, weaknesses, opportunities, threats Controllable strengths and weaknesses Uncontrollable opportunities and threats

y y y y

Market Research y y y A successful marketing program is based on sound market research Market research is the gathering and analysis of information about customers, competitors, distribution channels, and other forces in the market place that influence the sale of products and services. Market Research Process:  Step 1: define the problem and research objectives  Step 2: develop a research plan  Step 3: collect the information  Step 4: analyze the information  Step 5: present the findings Sources of information  Primary: original data is collect for the specific objective in mind  Secondary: information already exists for another purpose and is recorded in reports, books, and journals. Secondary data can be found more quickly and is cheaper compared to primary data collection. 3 Important considerations in getting population sample:  Who has to be surveyed?  How many are to be surveyed?  How should the respondents be chosen? Methods in Market Research

The most popular method is the survey method using questionnaires. Questionnaires are the most common instrument used to gather primary data. Mail questionnaires cost less per respondent compared to other survey methods.

Demography is the study of human population in terms of age, gender, density, location, race, occupation, etc. The population is where the customers are and therefore, it is of importance to the marketer. Demographic changes or shifts within a population affect the consumers preferences and buying behavior. Therefore, any development that occurs within a given population serves as warning signals or cues to the marketer. Some examples of demographic shifts that affect goods and services offered by marketers are:

a.

The rise of white-collar workers who have good purchasing power at a young age will positively affect goods and services in their list of preference. Movement of urban dwellers to the rural areas due to rising cost of living in the metropolis is an opportunity for real estate developers to offer affordable houses in the rural areas. This is also an opportunity for new middle-sized hotels to look into the possibility of setting up one. Single women who are career-oriented and prefer to live independently. This change will affect size and location of condo units that will cater to the needs of this market. The rise of working women who contribute to the family income and increase in purchasing power. Familyoriented vacations, recreational activities, etc. will have an impact due to this growing segment of the workforce. A more liberal outlook of conservative Asian women towards fashion. Trends and styles will have marked differences on what the current fashion is, especially in this particular segment.

b.

c.

d.

e.

The Service Culture y y y Service culture focuses on serving & satisfying the customer, starts with top management & flows down. It means hiring employees with a customer service attitude, and working to instill the concept of service. The outcome of these efforts is employees who provide service to the customers.

Characteristics of Service Marketing y y y y Intangibility: services cannot be seen, tasted, felt, heard, or smelled before purchase Inseparability: services cannot be separated from their providers Variability: quality of services depends on who provides them and when, where and how Perishability: services cannot be stored for later sale or use.

Managing Service Quality y y y A service firm can differentiate itself by delivering consistently higher quality than competitors Expectation are based on past experiences, word-of-mouth, and service firm advertising A service firms ability to retain customers depends on how consistently it delivers value to them. Customer retention is perhaps the best measure of quality.

Resolving Customer Complaints y y y y y y Problems inevitably occur, for as hard as they try, even the best companies have an occasional late delivery, burned steak, or grumpy employee. A company cannot always prevent service problems, but it can learn from them Companies should take steps not only to provide good service every time but also to recover from service mistakes. To have effective complaint resolution, managers must empower frontline service employees. Resolving customer complaints is a critical component of customer retention. There are 2 important complaint resolution factors:  First, if you resolve a complaint, do it quickly the longer it takes to resolve, the higher the defection rate  Second, seek out customer complaints Complaints by letter should be responded to quickly, with most effective resolution being via telephone The worst thing a company can do is send out a form letter that shows no empathy to the guests problem or not respond at all Another critical area in complaint resolution is that most customers do not complain. When a customer does complain, management should be grateful. Managers must develop methods to encourage customers to complain. Customer complaints are one of the most available yet underutilized sources of customer and market information. Undoubtedly, the role of the employees or service providers in delivering excellent service all the time is very important. It is this reality that prompted Bill Marriott, a famous hotelier, to say that the first group of people you need to satisfy is composed of your employees.

y y y y y y