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HTM 3103 Consumer Behavior
for Tourism & Hospitality
CHAPTER 2 : CONSUMING
HOSPITALITY SERVICES
Objectives
 This chapter focused on the consumption of services
on consumers of hospitality


How is the consumption of services different from that of other
goods?
It will be discussed with their associated characteristics
Hospitality as services
 Service industries are playing an increasingly
important role in developed economies and now
account over 70 percent of employment
 It is anticipated that the service sector will continue
to grow, led by:


Increasing living standards in western economies
Rapid technological advancement
‘As incomes continue to rise, people’s needs become less
“material” and they begin to demand more services—in
health, education, entertainment, and many other areas.
Meanwhile, labor productivity in services does not grow as
fast as it does in agriculture and industry because most
service jobs cannot be filled by machines. This makes services
more expensive relative to agricultural and industrial goods,
further increasing the share of services in GDP. The lower
mechanization of services also explains why employment in
the service sector continues to grow while employment in
agriculture and industry declines because of technological
progress that increases labor productivity and eliminates the
 service sector are places the industrial sector as the
leading sector of the economy. Most high-income
countries today are post industrializing—becoming
less reliant on industry—while most low income
countries are industrializing—becoming more reliant
on industry. But even in countries that are still
industrializing, the service sector is growing relative
to the rest of the economy. By the mid-1990s services
accounted for almost two-thirds of world GDP’
 The WORLD BANK, 2007
The nature of products, goods and services
 Products
 At the center to all forms of marketing or 4 Ps






Thereby, it has been extensively defined and evaluated
Was defined as ‘ Any bundle or combination of qualities,
processes and capabilities ( goods, services and ideas) that a
buyer believes will deliver satisfaction ‘ ( Enis and Roering,
1981)
"anything that can be offered to
a market for attention, acquisition, use, or consumption that
might
satisfy a want or need. It includes physical objects, services,
persons,
places, organization, and ideas" (Philip Kotler, 1984)
Goods and services
 Goods are tangible objects that exist in both time and
space (devices, things or objects)
 Services consist solely of acts or processed, cannot be
posed but can only be experienced, created or
participated in (deeds, performances or efforts)
‘Services encompasses any activity or benefit that one party
can offer to another, that is essentially intangible and does not
result in ownership of anything’
Philip Kotler, 1994
 Therefore, for goods, it could be owned but not for
services ( lack of ownership)
Characteristics of services
 1) Intangibility

Consumers cannot see, touch, hear, smell or taste hospitality services before purchase 
risky when consumers have to choose


Performance of services can be experienced in terms of totality



Tourism companies have tried to overcome this problem by offering the consumer videos of
holiday locations to make the experience seem more’ real’ can only experience their
performance
This means , the overall consumption is made up of more than simply tangible
products ,e.g. considering the ways in which we use a hotel, while there are a
number of tangible elements to its use (for example, the bed, the restaurant, the
bar, the food, sports & fitness facilities etc.,) NOT ONLY THAT, overall
consumption would include the atmospherics, relationships with staff and other
customers ( e.g. friendliness, during queuing or within the restaurant), our
ongoing feeling of (dis)satisfaction
Services are highly subjective  not consistent due to variability in individuals ( both service
provider and consumer) the mood, the time of the day, other factors, e.g. the internet goes
wrong , not enough staff and out of stock products
the most important factor which distinguishes products from goods
 2) Inseparability




Being produced and consume simultaneously  Lack of distinction
between delivery and use
Inseparability between consumers and service provider – Hospitality
services by their nature are based on high level of customization ,
high level of human interaction and focus on needs and wants of
consumers, e.g. imagine when you visit bars, clubs, or restaurants,
hotel concierge
This leads to the problems in standardization -- services differ from
goods in terms of it cannot be standardized  cannot gain
economies of scale in the same way what forms producing goods can
And this led to the next characteristic, which is, heterogeneity
 3) Heterogeneity (variability)
 Refers to the ability to develop uniformity and standardization
 Services are seen to be variable , while goods are more uniform
 In hospitality services, it is difficult to tell that people will perform the
same way delivering high standard of services during any two service
encounters


This is due to : variability in each individual
 For the service provider : service minded or not, ability to deliver a high
standard service , time of the day
 For the consumers , change in perception how they perceive and
expectation of what is good service
: the mood( both service provider and consumers)

therefore , each consumer is likely to receive a different service experience
Therefore, it is very difficult for the hospitality and tourism provider to
give the same level of service at every consumption time
 4) Perishability


Services cannot be stored, unlike goods  unused capacity is lost
forever
Demand is very difficult to manage  demand fluctuations ( peak
and off-peak time period)
E.g. Restaurants usually has its peak time in the evening while in the
afternoon is off-peak ( very quiet) , this can lead to very different
experiences towards consumers  therefore, some restaurants offer a
set menu during lunch and afternoon and just a’ la carte for dinner
 targeting at business travellers and students on holiday during
weekdays, leisure travellers during weekends , For some spa outlets,
offering special rate at different time of the day ( For off-peak time,
offering a special rate to attract more consumers in order to manage
demand better)

 5) Lack of ownership
 Both before and after consumption
 Before : consumers only has access to it when buy the
service
 After : consumers never owns anything at the end of the
transaction, except ,’experience’ which often leads to a
feeling of satisfaction ( if the overall experience was
good) – this means that, the purchase of service will have
a considerable emotional significance for the consumer
Consuming services: the moment of truth
 The moment of truth : the point at which consumers
come into contact with the service provider
(interpersonal interaction between consumers and
the service provider)


This is the critical success factor for service firms
The moment of truth is a combination between expectation (of
consumers whether it can be fulfilled or not), experience and
knowledge in an interaction between consumer and staff
Consuming services: dimensions which impact
on CB
 Time
 Within hospitality, consumers go through a number of
members of staff many times during the course of service



e.g. For the hotel stay – it can be many days or couple of weeks.
All these interactions will offer the consumer different experiences
over a long period of time.
Peak time and off peak time can also affect the level of service
provided , e.g. not enough capacity or staff
In sum, Individual encounters within ‘ overall services’ are the
key to whether individuals have a good or bad experience
 Physical proximity

In terms of physical proximity, service encounter can be classified
into 3 types :
Face-to-face ; e.g. occur in a reception areas – enabling a great
degree of customization
 Remote ; e.g. automated, quick check-out billing systems in many
busy airport hotels and business hotels ( guest check their own bills on
in-room televisions, carry on their own luggage to the exit and pay by
credit card at the machine in the hallway) -- the richness of
experience and high level of customization were much lessened
 Remote personal encounter ; e- commerce – e.g. hotel reservation
online, 24 hours online chat live ( customer service) -- problems in
not enough staff, cannot answer highly customized questions and
system failure

 Participation
 Closely related to aspects of customization and physical
proximity, in that, increasingly customers are required to coproduce the service
 This can lessen the impact of demand fluctuation during peak
time , customer can avoid bad experiences , e.g. long waiting
queue by automated check out mentioned earlier
 Degree of involvement
 Different degrees of engagement by customers by different
types of services
 Degree of customization
1)
2)
The degree to which a customer interacts with the service (
depends on the degree that a customer can intervene in the
service)
The degree to which a service is altered for specific customers (
depends on the degree to which a service can be customized)
 The higher the better
 However, depends on number of variables , e.g. the
degree of knowledge customers have, the confidence
customers have in the service provider, and the risks
involved

E.g. if we consider booking a holiday, our knowledge is often limited
to what the service provider gives us, as a result we tend to accept
their ‘expert’ knowledge and would be unlikely to take risks
 Service providers
 ‘People’ or Hospitality staff are critical in creating customer’s
experience for service
 The employee is seen by consumers as a representative of an
organization or service firm, e.g. restaurants are judged by the
performance of the host, the server , and the billing staff
 These are in turn directly affected by such factors as expertise,
attitude, and demography (e.g.age, sex, income, nationality,
etc.,)
 Each individual is different, therefore, service industry always
experience inconsistency in delivering good service
 Setting
 Encouraging approach or avoidance responses among
consumers
 Therefore, in Hospitality, physical design, atmospherics, on
going activities are often important