The importance of market researchChapter 6

© Hudson & Hudson. Customer Service for Hospitality & Tourism

Topics Covered

o Tourism and hospitality research introduction

o Consumer research and customer loyalty

o Measuring service qualityo Critical incidents studieso Lost customer researcho Online researcho Common research errorso Effective use of market research in

decision making

‘At Your Service’ Spotlight: Simply the Best

Service with no boundaries.

o Significant research • Press visits• Product development

o Attention to media and journalists• Ski lovers as press coordinators• Media visits• Winterstart World Cup • Top treatment of journalists

o Staff• Teaching by example • Excellence cards• Ride breaks

Introduction to research in tourism and hospitality

o Market research often• Considered costly and time-consuming • Undertaken only around major developments • Contributions to day-to-day operations

overlooked• Organizations overlook existing, accessible

information• Study results ignored or not fully considered

Applied Research in Tourism & Hospitality

Table 6.1

1. RESEARCH ON CONSUMERS Identifying existing markets Identifying potential markets Identifying lapsed consumers Testing customer loyalty Developing detailed consumer profiles Identifying general trends in demographics and

psychographics Identifying changes in attitudes and behavior

patterns (generally) Identifying changes in attitudes and behavior

patterns (product specific)

2. RESEARCH ON PRODUCTS & SERVICES Measuring attitudes towards existing products or

services Identifying potential new products which may be

at the end of their product life cycle Identifying products that are considered

acceptable substitutes/alternatives Evaluating competitor’s products Evaluating consumer attitudes toward décor,

presentation and packaging Evaluating consumer attitudes about

combinations of products and services (bundles of product attributes)

3. RESEARCH ON PRICING Identifying attitudes towards prices Testing attitudes towards packages and

individual pricing Identifying costs Identifying costing policies of competitors Testing alternative pricing strategies Testing payment processes (credit cards,

electronic funds transfer, etc.)

4. RESEARCH ON PLACE & DISTRIBUTION Identifying attitudes towards location Identifying attitudes toward buildings/premises Identifying attitudes on virtual sites Identifying potential demand for product or

services at other locations Identifying cooperative opportunities for

distribution of information or services

5. RESEARCH ON PROMOTION Testing and comparing media options Testing alternative messages Testing competitor’s messages and their

effectiveness Testing new communications options (Internet,

email, Web pages social media) Identifying cooperative opportunities Measuring advertising and promotion

effectiveness

6. RESEARCH ON THE COMPETITION Measuring awareness Measuring usage Identifying levels of customer loyalty Identifying competitors’ strengths and

weaknesses Identifying specific competitive advantages

(locations, suppliers, etc.) Identifying cooperative opportunities Observing levels of customer service

7. RESEARCH ON THE OPERATING ENVIRONMENT

Economic trends Social trends Environmental issues Political climate and trends Technological development and their impact

8. RESEARCH ON A DESTINATION Measuring residents attitudes Benchmarking Measuring customer loyalty Identifying tourism activities Identifying spending patterns Branding research

Consumer research and customer loyalty

o ‘Completely satisfied’ Enterprise customerso ‘Voice-of-Customer Operating Model’ o Net Promoter Score for consumerso Competitor intelligenceo Benchmarking

• Guest satisfaction scores (GSS)

Benchmarking UK’s top 20 attractions

Table 6.2 (Source: Based on Which?, 2011)

Visitor Attraction Name Customer Score (out of 100) Rank Victoria & Albert (V&A) Museum 81 1 National Gallery 80 2 Science Museum 79 3 British Museum 79 4 Natural History Museum 79 5 Chester Museum 78 6 Alton Towers 75 7 Thorpe Park 73 8 Edinburgh Castle 72 9 Tower of London 72 10 Legoland, Windsor 72 11 Eden Project 70 12 Tate Modern 69 13 Warwick Castle 69 14 London Zoo 69 15 York Minster 67 16 Madame Tussauds 64 17 London Eye 64 18 Blackpool Tower and Circus 58 19 Pleasure Beach Blackpool 58 20

A DINESERV interview

 Table 6.3

The restaurant 1 Has visually attractive parking areas and building exteriors 2 Has a visually attractive dining area 3 Has staff members who are clean, neat, and appropriately dressed 4 Has a décor in keeping with its image and price range 5 Has menu that is easily readable 6 Has a visually attractive menu that reflects the restaurants’ image 7 Has a dining area that is comfortable and easy to move around in 8 Has rest rooms that are thoroughly clean 9 Has dining areas that are thoroughly clean

10 Has comfortable seats in the dining room 11 Serves you in the time promised 12 Quickly corrects anything that is wrong 13 Is dependable and consistent 14 Provides an accurate guest check 15 Serves your food exactly as you ordered it 16 During busy time, has employees shift to help each other maintain speed and

quality of service 17 Provides prompt and quick service 18 Gives extra effort to handle your questions completely 19 Has employees who can answer your questions completely 20 Makes you feel comfortable and confident in your dealings with them 21 Has personnel who are both able and willing to give your information about

menu items, their ingredients, and methods of preparation 22 Makes you feel personally safe 23 Has personnel who seem well trained, competent, and experienced 24 Seems to give employees support so that they can do their jobs well 25 Has employees who are sensitive to your individual needs and wants, rather

than always relying on policies and procedures 26 Makes you feel special 27 Anticipates your individual needs and wants 28 Has employees who are sympathetic and reassuring if something is wrong 29 Seems to have the customers’ best interests at heart

Benchmarking fast-food restaurants

 Figure 6.1 (Source: Adapted from Min and Min, 2010)

Service Image

Cleanliness

Service Responce

Employee Courtesy

Quality of Prior Service

Menu Selection

Healthy Food

Variety of Food

Word of Mouth

Reputation

Safety

Location

Proximity to Residence

Proximity of Workplace

Proximity of Highway

Accessibility

Amenity

Store Operating

Hours

Drawing Power

Taste of Food

Competitive Price

Attributes Attributes Attributes Attributes Attributes

Criteria

Goal: Competitive benchmarking of fast-food restaurants

Alternatives

McDonald’s Wendy’s Burger King Subway Arby’s Hardee’s

The Gaps Model of Service Quality

Figure 6.2 (Source: Parasuraman, et al., 1985)

Expected service

Personal Needs

Group Needs

Past experience

e External Communication

Perceived service Gap 5

Customer Satisfaction

Service delivery

Service quality standards

Gap 3

Perceived customer expectations by management

Gap 2

Gap 1

Gap 4 Word of Mouth

For Marketer For Consumer

Measuring service quality o Importance–performance analysis (IPA)

• Relative importance of attributes versus actual performance

o SERVQUAL • Difference between consumers’ expectations and

perceptions of service quality • 22 item scale, five dimensions• has been adapted to serve different industry sectors

o Comment cards• performance-based measure and diagnostic tool • feedback at time of service experience• may be more effective than SERVQUAL or IPA

o Mystery shopping• participant observation • A common market research technique • Rich information about service experience as it unfolds

IPA attribute ratings for ski destination

 Figure 6.3 (Source: Hudson and Shephard, 1998)

Figure 11.3: Importance

Performance of Attributes

3.00 2.50 2.00 1.50 1.00

4.00

3.75

2.75

2.50

2.25

2.00

1.75

1.50

1.25

C: Low Priority

Information on Ski Slopes

A: Concentrate Here

Hot Water

Separate Snowboarding Areas

Live Bands in Bars

Off-Piste Skiing

3.25 2.25 1.25 1.75 2.75

3.00

3.25

3.50

3.50

D: Possible Overkill

B: Keep up the Good Work

Impo

rtan

ce o

f Attr

ibut

es

Advantages and disadvantages of mystery shopping

 Table 6.4 (Source: Adapted from Hudson, Hudson & Miller, 2004)

Advantages Disadvantages

Offers deep insights into feelings and motivations behind service/practice (Palmer, 2000)

Raises ethical issues by observing people without their knowledge (Jorgenesen, 1989)

Experience is natural and not contrived for the sake of the observer (Bootte and Mathews, 1999)

Based on assumptions that need to be made explicit and addressed (Savage, 2000)

Serves as a management tool for improving standards in customer service by providing actionable recommendations (Erstad, 1998; Cramp, 1994)

Information collected may be biased as a result of arbitrary or careless selection of observation periods, or the observers own prejudices (Smith, 1995)

Ideal for investigating services (Crano and Brewer, 1986; Grove and Fisk, 1992)

In the long term, advantages for improving customer service can wear off if not integrated with other measures of service delivery process (Wilson, 1998)

Serves as a management tool for enhancing human resource management (Erstad, 1998)

Can be very costly and time-consuming (Grove and Fisk, 1992)

Snapshot: Checking out the Competition

You can never be too old to learn new things from just about anyone.

o Mystery shopping • Gather information on industry rivals • Stay current, competitively priced• Improve customer service and guest communication• Enhance staff training and understand nuances of staff-guest

interactions

o Websites and publicationso Stay abreast of trends o Learn what competitors are doingo Business in remote settings

o Social media • Brand Karma Photo courtesy of Ben Hall

Critical incidents studieso Critical incident technique (CIT) o Qualitative interview procedures, verbatim accounts:

• Consumer evaluation of services• Service failure and recovery• Employee and customer participation in service

delivery • Service experience

o  Four main benefits of CIT• Sound information easily translated into action• Useful when the service is new, little information

exists• Useful for assessing cross-cultural perceptions

Tracking service quality

 Figure 6.4 (Source: Adapted from Hudson, Hudson & Miller, 2004)

X-Axis Key: various stages of the Holiday Experience

1. Brochure 2. Waiting to go 3. Journey 4. Meeting the representative 5. Transfer to accommodation 6. Arrival accommodation 7. Accommodation 8. Welcome 9. Resort activities 10. Skiing/snowboarding 11. Company magazine 12. Departure 13. Transfer to airport

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1 2 3 4 5 6 7 8 9 10 11 12 13

Mean Expectations Mean Performance

Lost customer research

o Few organizations have effective strategies for evaluating customer attrition

o Research targets customers who have dropped the company’s service

• Makes inquiries about reasons for leaving • Identifies failure points and common problems • Calculates the cost of lost customers.

o NBRI study – root cause driving down customer loyalty and customer satisfaction (68 %) identified as ‘wait time’

Online researcho Electronic and online surveys

• Computers placed in high-traffic locations • Customers asked to complete online surveys• Input tabulated, available instantly• Can be accessed by corporate and front-line staff

⁻ Instant service recovery⁻ Long-term service improvement

o Virtual focus groups o Online ‘chat’ sessions

• Pre-recruited respondents in guided online discussion⁻ Time- and cost-saving benefits

o Virtual worlds e.g. Second Lifeo Social media and crowdsourcing e.g. Brand Karma

Common research errorso Not enough qualitative information

• Especially important for launching new service or product

o Improper use of sophisticated statistical analysis

• Errors in collection, tabulation, or analysis of data

o Failure to have a representative sample • Inaccurate estimates of the thoughts and

behaviors of larger population o Problems with interpretation

• Skill and dexterity is required on the part of the researcher

Effective use of market research

o Research can play a critical role in development• Practical decision-making at a strategic level• Academic understanding of industry development • Feasibility studies for new projects

o Successful research contingent on 3 conditions:• Sufficient resources • Research results stand, even when they conflict

with preconceived views• Results should be implemented e.g. Courtyard by

Marriott

Case Study:Driving complete customer satisfaction

o Enterprise Service Quality index (ESQi)• Phone survey with two questions• Results collected, analyzed quarterly• Branch by branch comparisons• Promotions based on rankings• ”Brand Integrity Audits”

o ‘Completely satisfied’ 3 times more likely to rent againo 3 satisfaction priorities:

• Attitude, helpfulness of staff• Speed of transaction• Ceanliness of the car

Going ”above and beyond” to satisfy customers.