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  • Category:
    Marketing
  • Document type:
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  • Level:
    Undergraduate
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Service Firm Audit 4

Service Firm Audit

Introduction

All economic and industrial activities are mainly categorized as primary, secondary or tertiary activities. Services form an essential part of the economic activities and the world today seems to be dominated by the service sectors. A service can therefore be termed as an activity with some elements that are intangible and it involves some interactions with the consumers and as opposed to the products, there is no transfer of ownership of the service. Service marketing is therefore termed as the marketing which is based in value and relationship and they are at time used to markets a product or a service (Kotler 2006). This essays sets out to conduct a service firm audit for Intercontinental Hotel Group (IHG), the main aim is to conduct an in-depth investigation and analysis of Intercontinental Hotel Group (IHG) service marketing mix (7 P’s) this will be done by application of marketing and services marketing theory, in addition to the concepts that have been learnt in class. When conducting the analysis areas that the organization succeeded on will be highlighted by offering a comparison with its key competitors in the industry and areas that needs to be improved. Where applicable there will be a provision for appropriate recommendations that can be implemented ion the organization.

Discussion

Background of company

Intercontinental Hotel Group (IHG) is a British multinational hotel and the company headquarters are based in Denham, UK (Intercontinental Hotels Group 2016). IHG operates a great number of hotels in about 100 countries. IHG have brands which include but are not limited to the Holiday inn, Hotel Indigo, Holiday inn express, Crowne plaza and Candlewood suites (Intercontinental Hotels Group 2016). Some of the properties that have the company brand name are not owned by IHG, in this regard the properties are owned by other parties but IHG have been entrusted with the duty of managing as well as running the hotel and they take a certain percentage of the revenues to for their management fees. IHG fits well as a service provider in that it offers food and beverages and accommodation to their customers and based on the definition of service above the three fits well as services since there is no ownership of a tangible product in the long run. This essay will focus on one of the hotels run by IHG which is the Delhi intercontinental hotel and it is among the IHG managed property.

7 P’s of service marketing

As compared to product marketing service marketing mix adds 3 more P’s which includes people, process service and physical environment to the 4 P’s that are used in the marketing of products. The extension of the 4 P’s is mainly attributed to the high degree of contact that exists between the service providers and the customers (Lovelock & Gummesson 2004), the simultaneity of consumption and production and highly visible nature if the service process.

The product when it comes service marketing is intangible and this applies to the product at IHG. The product in this case is a luxury; the hotels have a great number of rooms as well as suites. The rooms in the hotels are large and they have spacious facilities such as the washrooms. The rooms at the hotel are well equipped and mostly with modern amenities such as a private bar, plasma TVs, air conditioners, telephones, Wi-Fi connection as well as refrigerators. The floors in the rooms are well covered. The luxury in the rooms is also depicted through the architecture that has been adopted since the hotel building has a very good art deco style. Additionally, the hotels also have some modern painting and some of the paintings have been done by the contemporary artists. This creates a lasting and exciting experience to the visitors. In addition to these, the rooms have king size beds and couches where one can rest. The windows also offer a very good view of the surrounding through the balcony which enables the customers to have a good view of the green lawns of Delhi intercontinental hotel (Intercontinental Hotels Group 2016b). In addition to the lawn, there is also a swimming pool guests usually lounges and enjoy the warm sun. the hotel have three restaurants and they serve the Indian cuisine, Asian cuisine and the continental cuisine and this enables the guests to make a selection among the three. There is also a bar which has a dancing hall for those guests who like to party. The hotel also offers room services which go further to improve the service offered at the hotel. There is ample parking and thus the guest doing not worry about the safety of their vehicles during their stay at the hotel and the parking services are offered for free to the customers.

When it comes to pricing, the prices at the hotel can be said to be higher and more so when compared to other similar suites in London and in Paris. The hotel relies greatly on price discrimination strategy and this is mainly as a result of the season. When it is peak season the hotel prices are higher as compared to the lean seasons. The food and beverage at the hotel can also be said to be of high quality and thus a premium price is charged on them. Additionally, there are a wide variety of wines in the hotel and some of them are imported and due to the taxes levied by the government thus eventually costs of the wines tends to be higher. As a matter of fact the pricing strategy of Delhi intercontinental hotel is to charge a premium from for all their services.

Promotions

The Delhi intercontinental hotel makes use of a promotional strategy that is a mix of standardization and customization. In respect to these, the hotel tends to rely greatly on the advertisements and promotion that are done by IHG brand in general. But at the same time they undertake advertisements and promotions at the local level with the aim of attracting local guests. The hotel also promotes itself as being among the best luxury hotels in Delhi and based on this customers have the urge to make and experience the services offered at the hotel. In line with their promotion the hotel have promotional tagline that they use on their promotions which is “luxury redefined”. As a promotional strategy the hotel also sponsors some wine and food festivals and this goes a long way in promoting themselves to their customers. The main target market for the hotel is the up-market customers from all contents in the globe and mostly the middle and upper class since they can easily afford the prices charged y the hotel and they desire the luxury experience. As a way of attracting a greater number of customers the hotel have also partnered with travel agents and when guest’s reserves for rooms through the agent’s lower prices are charged.

When it comes to services, place determines where the service product is to be located (Lovelock & Gummesson 2004). This seems to be an important aspect to consider when developing a luxury hotel such as Delhi intercontinental hotel. The location of hotel is of great importance and this is an aspect that IHG considers when managing the hotels (Mundt, Sharp & Dawes, 2003). IHG has a key global strategy that outlines that they have choose and manage properties that are located in the prime areas. When good and reputable hotels are located in a bad location they are likely to fail (Loveloc & Jochen 2004). In consideration of the Delhi intercontinental hotel it is located in a very prime area and it is surrounded by green environs making the atmosphere conducive for guests in need of relaxation. The hotel is also near a railway station and hotel and this offers some level of convenience to the guests. However, even if the Delhi intercontinental hotel is in a good location hotel such as Aman and Four seasons seems to be in better locations. In respect to these, Delhi intercontinental hotel need to consider this aspect and focus on moving to better location so as to compete well with its close competitors in the industry.

People are seen as essential ingredient when it comes to the provision of service. The recruiting on training of the right kind of employees translates into creating a competitive advantage for the organization. Customers usually make judgments about the services provided based on the people working on behalf of the organization (Loveloc & Jochen 2004). The employees at Delhi intercontinental hotel have played an essential role in the success of the hotel over the years. They do so by ensuring that they serve the guests well, cook food well and respond to the orders of the customers on time and make themselves appealing to them and have good customer service. The employees at Delhi intercontinental hotel have a significant role to play on that they have to create a lasting experience for the customers. The hotel also allows their guests to order food from their rooms at any times and this seems not to be the case with their counterpart’s in America and Europe. This has been made possible by the staffs who work in the kitchen. The employees are also friendly and hospitable and this is mainly as a result on constant training from the management team (Shawn & Rebecca 2004). IHG recognizes the important role that is played by skilled staff in a service organization and thus they engage and invest in training and development of the employees to keep up with the emerging trends in the industry. To ensure high quality food expatriate staffs are employed to work in the positions of chefs while other positions are held by natives.

Process service

This element of the marketing mix focuses more in the systems that are in place to help in delivering of the service. Processes in the service organizations are of great importance as they are for the organizations that focus more on manufacturing (Lovelock & Gummesson 2004). With the wrong and incorrect processes hotel such as the Delhi intercontinental hotel can fail to achieve the required level of effectiveness and efficiency. Efficiency in this case is termed as the ability of an organization to achieve a number of operations tasks and most probably though the use of the lowest cost possible. Effectiveness on the other hand refers to the serving of the customers through the best possible means. Delhi intercontinental hotel aims at creating satisfied and delighted customers and this can only be achieved through the use of the right processes. Delhi intercontinental hotel makes use of their processes as a source of competitive advantage over its close competitors in the market. Delhi intercontinental hotel make use of processes even in the small and insignificant tasks. The operations management in IHG hotels such as Delhi intercontinental hotel is inclined on processes.

Physical environment

The physical environment and infrastructure play an important role when it comes to service delivery and service marketing. For a luxury hotel such as Delhi intercontinental hotel, the physical infrastructure and the physical environment are of great importance since they are seen as essential parts of the service experienced by the guests. When a luxury hotel offer high quality of physical infrastructure and environment is seem as a value proposition that it offers to their customers (Kaplan & Haenlein 2006). The physical environment and infrastructure also acts as good sources of a hotel competitive advantage. A hotel property commands premium due to the surrounding environment at the property. In this regard, Delhi intercontinental hotel properties are built with Art Deco style. Though the hotel cannot be termed as a heritage one it was built back in the late 60s.

Recommendations

Physical environment

In regard to the physical environment, a lot need to be done at Delhi Intercontinental hotel. This is based on the fact that a great number of the key competitors of the hotel tend to have better properties and they are also located in better locations. For instance the Aman hotel and the Four Seasons hotel are within a one kilometer radius of the Delhi intercontinental hotel. Thus in this case some customers may prefer to make use of the services offered at the two hotels since they have better architecture.

Though the processes at Delhi intercontinental hotel cannot be termed as the worst a lot of improvement needs to be done and thus can be achieved through a better and efficient supply chain management. For instance in regard to the food and beverage costs, the hotel can have a closer and keener look on the suppliers and make their selection more carefully (Lovelock & Gummesson 2004). Through this Delhi intercontinental hotel can establish strategic alliance with them and this seems to be a similar strategy that has being adopted by companies such as Tesco and Wal-Mart and this will increase the efficiency of their operations.

Delhi intercontinental hotel also needs to make improvements to the people aspects in service marketing. Thus, the hotel needs to increase the training of their employees with the aim of attaining a common standard as well as the same level of service at all times. In relation to these they can borrow greatly from McDonald which has been able to achieved standardization in service delivery all over the globe (Kaplan & Haenlein 2006).

Delhi intercontinental hotel can improve their pricing strategy since it is evident that the hotel makes use of price discrimination. In respect to these, the hotel need to adopt another price discrimination strategy by charging guest who make last minute reservation higher prices than those guest that make reservations beforehand. This is based on the notion that customers making last minute reservations have lower price elasticity of demand as compared to those that make reservations earlier (Lovelock & Gummesson 2004). This strategy is likely to lead to an increase in revenues generated by the company.

Conclusion

In conclusion, it is evident that Service marketing is the marketing which is based in value and relationship and they are at time used to markets a product or a service. Based on the service marketing audit of Delhi intercontinental hotel it is evident that the management team has considered all the 7 P’s of service marketing and this has enabled them to succeed over the years that they have been in operation. But at the same time, there seems to be a need for improvement in regard to pricing, people, process and the physical environment. Therefore, the management team at Delhi intercontinental hotel needs to take note of the recommendations and implement them. These will likely lead to greater revenues and they will act as a great source of competitive advantage against their close rivals in the market.

References

Intercontinental Hotels Group 2016a, About Us, viewed 9 September 2016, https://www.ihgplc.com/en/about-us

Intercontinental Hotels Group 2016b, Industry and Market trends,
viewed 9 September 2016, https://www.ihgplc.com/about-us/industry-and-market-trends

Kaplan, A & Haenlein, M 2006, ‘Toward a parsimonious definition of traditional and electronic mass customization’, Journal of Product Innovation Management, vol. 23, pp. 168–182.

Kotler, P & Keller, L 2006, Marketing Management, Pearson Prentice Hall, New Jersey.

Loveloc, C & Jochen, W 2004, Services Marketing: People, Technology, Strategy, Prentice Hall, Upper Saddle River, NJ.

Lovelock, C & Gummesson, E 2004, ‘Whither Services Marketing?: In Search of a New Paradigm and Fresh Perspectives’, Journal of Service Research vol. 7, no. 1, pp. 20-41.

Mundt, K., Sharp, B & Dawes, J 2003, An Investigation of Multi-product Loyalty in Financial Services, Aust and NZ Marketing Academy Conference 2003 Proceedings, University of South Australia, South Australia.

Shawn A & Rebecca, A 2004, Training and Development. The HR Answer Book, AMACOM, America.