Chapter 11

Building
Customer
Loyalty
through
Quality
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 4th edition

Kotler, Bowen, and Makens

To understand service quality and make quality

management effective, we need profound
knowledge about the details and activities
connected with the emergence of a service.
This presupposes interest in service design and
service production.
Evert Gummesson

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Chapter Objectives
Define customer value and customer
satisfaction
Understand the difference between customer
satisfaction and customer loyalty
Discuss attracting new users and retaining
current customers by developing relationship
marketing
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Chapter Objectives
Know tactics for resolving customer
complaints and understand the importance of
resolving complaints
Define quality and discuss the importance of
the benefits of quality
Implement capacity and demand
management tactics
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Customer Delivered Value

Customer-delivered value is the difference
between total customer value and total
customer cost of a marketing offer
Customer satisfaction depends on the
products performance relative to a buyers
expectations
Companies must be customer centered and
deliver superior value to target customers
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Customer Delivered Value

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Customer Satisfaction
Buying decisions based on judgments formed
about the value of marketing offers
Customer expectations based on past buying
experiences
Todays most successful companies raising
expectations and delivering performance to
match
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Customer Satisfaction vs.

Customer Loyalty
Customer satisfaction measures how well a
customers expectations are met
Customer loyalty measures how likely
customers are to return and their willingness
to perform partner shipping activities for the
organization
Customer satisfaction is a requisite for loyalty
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Relationship Marketing
Creating, maintaining, and enhancing
strong relationships with customers
Basic
Reactive
Accountable
Proactive
Partnership
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Benefits of Customer Loyalty

Continued patronage
Reduced marketing costs
Decreased price sensitivity
Partnership activities
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Cost of Lost Customers

Companies must define and measure
retention rate
Company must identify causes of customer
defection and determine which can be
reduced or eliminated
Reducing customer defections by only 5
percent can result in improved profits of over
25 percent
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Resolving Customer
Complaints
A critical part of customer retention
82% of customers are likely to return if a
complaint is handled quickly, as opposed to
9% if it is not
Most customers do not complain
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Quality
Quality has emerged as an important area in
hospitality
Product features enhance customer
satisfaction and adds to the cost of a product
Freedom from deficiencies increases
customer satisfaction
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Quality
Technical quality refers to what the
customer is left with after the customer
employee interactions have been completed
Functional quality is the process of
delivering the service or product
Societal (ethical quality) means firms must
consider ethical responsibilities when
developing products
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Managing the Perceived Service

Quality

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Benefits of Quality Service

Customer Retention
Avoidance of Price Competition
Retention of Good Employees
Reduction of Costs
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Managing Capacity
1. Involve the customer in the service delivery
system
2. Cross-train employees
3. Use part-time employees
4. Rent or share extra facilities and equipment
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Managing Capacity
5. Schedule downtime during periods of low
capacity
6. Extend service hours
7. Use technology
8. Change the Configuration of the Service
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Revenue Management
Revenue management is a
methodological approach to allocating a
perishable and fixed inventory to the
most profitable customers

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Managing Demand
1. Use price to create or reduce demand
2. Use reservations
3. Overbook
4. Use queuing
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Managing Demand
5. Shift demand
6. Change the salespersons assignment
7. Create promotional events

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Class Discussion
The Five-Gap Model
of Service Quality
Question: Describe ways in which you
as a Manager could use the five-gap
model of service quality
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

The FiveGap
Model of
Service
Quality

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Close Gap 1
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

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

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?
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

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

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

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

2006 Pearson Education, Inc.

Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Best Practices
Service Guarantees by Hampton Inns
Unconditional guarantees
Specific guarantees
Implicit guarantees
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Key Terms
Customer centered
Customer-delivered value
Expected service
Freedom from deficiencies
Functional quality
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens

Key Terms
Product features
Revenue management
Societal (ethical) quality
Technical quality
2006 Pearson Education, Inc.
Upper Saddle River, NJ 07458

Marketing
Marketing
for Hospitality
for Hospitality
and Tourism,
and Tourism,
4th edition
4th edition
Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens