MARK2055 Service Marketing And Management

Your task in this assessment is to present a business report to the owner/manager of a service that you visited to give feedback on the service standard that is provided to the target market.

 

A. Your first step is to decide on the service provider where you have consumed a service product. You are to choose one experience that you have had in 2018 as a consumer of a service to analyse for this assessment task.

 

B. Secondly, you are to determine the target market of that service provider. Determine the characteristics of that target market and their wants and needs in terms of the service you are examining. Remember that you are part of that target market. What criteria would you use for segmentation, for example age, gender, income, occupation, psychographics, family life cycle or other criteria?

 

C. Thirdly, you are to critically examine how well the service operation uses the following two of the 7Ps of marketing for its local target market: Promotion and People.

 

D. Lastly, you are to make two recommendations for the service you are examining. The first should be focused on how either its Promotion or People can be improved, and the second should be about the most possible service failure that could occur to the service provider, and a creative service recovery strategy to address the failure. The service recovery strategy recommended to address the failure should be reflective of retaining existing customers and potentially gaining new customers.

Answer

Introduction

Services are a crucial aspect of our lives. There are several services that we avail on a regular basis. Services and different from products because they are intangible in nature and offer an experience (Kushwaha & Agrawal, 2015). Service marketing and management is essential for the success of any business within the service industry. This report highlights upon my experience with service provider AirBnb on my trip to New Zealand with my friends.  

Service provider description

Airbnb is a disruptive innovation that has changed the face of hospitality industry in the world (Guttentag & Smith, 2017). Airbnb offers accommodation options to travellers wherein instead of living in hotels, people can live with the locals of the area where they are travelling. On one hand, travellers get an opportunity to find accommodation at a lesser price and on the other hand, residents from different parts of the world can host travellers from around the globe and can make money. Besides being a platform that bridges the gap between guests and hosts, Airbnb offers an entirely different experience to both the parties (Oskam & Boswijk, 2016). The guests can live with the locals, learn about their culture and enhance their travel experience. Airbnb was founded in 2008 and is present worldwide.

Target market analysis

Airbnb has a massive target market. The brand’s target market can be divided in two categories. Airbnb targets any and all tourists throughout the globe and Airbnb targets all potential hosts across the world. Economically, Airbnb is best suited for tourists who would rather not spend a lot in their accommodation. In terms of hosts, any resident who has some extra space that can be rented out is targeted by Airbnb. Its target market is unique because it has no boundaries or conditions in terms of religion, demography, ethnicity or geography.

When I planned my New Zealand trip with friends, I was a traveller. We were relatively low on budget. All of us were the same age but Airbnb does not target people based on any particular demographics. Initially, Airbnb targeted solo travellers more than people travelling as a group. However, over a period of time, even the promotion strategies of the brand has changed to position itself as family friendly. Airbnb now has several listed hosts who offer their spaces to families. Therefore target market of Airbnb is solely defined by the target market desired and preferred by their listed hosts. Some people prefer having families, some prefer having bachelors while some prefer solo travellers.

Service performance analysis on two of the 7 Ps

Just like products, services have marketing mix elements. These 7 marketing mix elements or the 7 Ps provide more information about the service (Lovelock & Patterson, 2015). This section of the report aims to analyse two crucial elements of Airbnb’s service marketing mix. These include promotions and people. Promotion element of the marketing mix tells us about how a business reaches out to its consumers (Khan, 2014). Promotional strategies devised by any business aim to aware customers about the product or service as well as establish a positive brand image of their offering.

Airbnb’s promotion strategies include marketing the brand on traditional as well as digital platforms. Airbnb advertises its services by asking people to ‘Belong anywhere’. Airbnb’s television advertisements show first hand experiences of Airbnb customers and the ease of use of the Airbnb’s mobile application. Social media has been one of the most important tools for Airbnb’s promotions. Social media marketing refers to the process of promoting a product or service on social media platforms like Facebook, Instagram, Snapchat, Twitter and even Pinterest (Felix, Rauschnabel & Hinsch, 2017). Airbnb is active on all these platforms. Any news from the brand first hits Facebook and Twitter which is where the customer become aware.

One of the best forms of marketing is the word of mouth marketing that comes from customers of a certain brand. When this word of mouth marketing is conducted on online platforms, it is known as user generated content. User generated content refers to all the content about a certain brand that is available on the internet that has been generated by the users of the brand and does not come from the brand directly (Goes, Lin & Yeung, 2014). Airbnb’s user generated content on the internet is tremendous. Customers using Airbnb services share pictures on Instagram and tag the brand or use the hashtag #Airbnb. The #Airbnb currently generates over 2.5 million posts. This goes to show the strength of Airbnb’s promotions. The strategy adopted by the brand is excellent and this is not only enabling the brand to have enhanced awareness but also the brand’s positioning is such that customers feel optimistic about associating with the brand.

The next element is People. For a business within the service industry, this is one of the most important marketing mix elements. This is because services tend to be consumed and produced at the same time. Hence several aspects or elements of the service are often altered to meet the needs of individual customers. The people element for Airbnb’s marketing mix would include the hosts as well as the guests besides the customer service executives and other employees. The host that we encountered was an extremely hospitable lady who lives alone. She was a local and hence guided us in terms of the places that we must visit. She even cooked us a meal which included local delicacies of New Zealand. Airbnb allows hosts and guests to rate each other. We saw that she had a high rating at the time of booking and after meeting her, we were completely delighted.

However, she shared that her previous experience with Airbnb was not that great as three young boys had come to stay with her who came home drunk and night and started playing loud music. She contacted Airbnb as she wanted to cancel the rest of their stay but unfortunately the service executive told her that only guests can cancel their stay. This was a major flaw in their services. She gave a 1 star rating to those boys but they are active Airbnb users and hence their average was not impacted much.

Before the trip, we had some last minute changes and had to extend our stay, we contacted Airbnb’s service centre and they happily obliged. Customer service continues to be one of the most important elements leading to customer retention (Aryee et. al., 2015). Airbnb does an excellent bit in keeping its customers happy.

Recommendations

The first recommendation to Airbnb is regarding its promotion strategy. The promotions done by Airbnb are excellent however they lack customer engagement. With the advent of social media, brands can really put efforts at increasing their level of customer engagement. Enhanced customer engagement leads to improved levels of brand awareness, association and loyalty (Jakkola & Alenxander, 2014). Airbnb can create online competitions using the platforms of Twitter and Facebook where customers can participate and even win Airbnb vouchers. The brand can also recognize its loyal customers who are generating content on social media and reward them. Customer engagement will always create a positive outlook towards the brand (So, Sparks & Wang, 2016).

Service failure is inevitable in the service industry. However, service recovery is what really matters if a service failure has been encountered (Xu, Liu & Gursoy, 2018). Airbnb’s most possible service failure would be loss of hosts owing to bad behaviour on account of guests. It is important to note that Airbnb hosts are offering their place to absolute strangers solely because they trust the Airbnb brand. Hence it becomes the responsibility of Airbnb to ensure that guests living with the hosts do not misbehave. Airbnb currently has a star rating system for guests and hosts. Besides this, when any erratic behaviour is witnessed, Airbnb should immediately step forward and take an action. Airbnb should also call customers at the time of booking and explain the rules decided by the host beforehand. Along with that, guests who misbehave with hosts must be asked to vacate the house immediately. The guests must be offered assistance in finding other abodes but if a host in uncomfortable then the guests must leave. Airbnb must also have close associations with local police and hospitals of the area so that they can be called immediately when required.

Service recovery strategies adopted by the business form a base for retaining customers in the longer run (Holloway & Wang, 2015). The customer care representatives or the front officers for any service have the most important role to play in case of service failure (Boshoff, 2017). Therefore Airbnb employees working in customer service centre must be active and restorative.

Conclusion

Services are a part of our everyday lives. Services offer an experience rather than a tangible product. This makes it all the way more important for marketers to promote, produce and recover their service in an effective manner. Our experience with Airbnb’s service exceeded our expectations. The brand has offered a superb solution for all accommodation problems of tourists.

In order to improve further upon its promotion strategies, the brand must indulge in more customer engagement strategies such as online quizzes and contests. Also since the brand is bridging the gap between hosts and guests, the hosts must be given the facility that if they are uncomfortable with the guests then the guests would have to vacate the premises. The service failure caused by misbehaving guest seems probable and hence the brand must be ready with recovery options.

References

Aryee, S., Seidu, E. Y., Sacramento, C. A., & Martinaityte, I. (2015). Proactive customer service performance: Test of a team-level model. In Journal of Academyf Management Proceedings, 201(1), 110-112. Briarcliff Manor, NY 10510: Academy of Management.

Boshoff, C. (2017). An assessment of consumers' subconscious responses to frontline employees' attractiveness in a service failure and recovery situation. South African Journal of Economic and Management Sciences, 20(1), 1-13.

Felix, R., Rauschnabel, P. A., & Hinsch, C. (2017). Elements of strategic social media marketing: A holistic framework. Journal of Business Research, 70, 118-126.

Goes, P. B., Lin, M., & Au Yeung, C. M. (2014). “Popularity effect” in user-generated content: Evidence from online product reviews. Information Systems Research, 25(2), 222-238.

Guttentag, D. A., & Smith, S. L. (2017). Assessing Airbnb as a disruptive innovation relative to hotels: Substitution and comparative performance expectations. International Journal of Hospitality Management, 34 (2), 1-10.

Holloway, B. B., & Wang, S. (2015). 6. Service failure and recovery: implications for relationship marketing. Handbook on Research in Relationship Marketing, 123(10.4337), 978-999.

Jaakkola, E., & Alexander, M. (2014). The role of customer engagement behavior in value co-creation: a service system perspective. Journal of service research, 17(3), 247-261.

Khan, M. T. (2014). The concept of'marketing mix'and its elements (a conceptual review paper). International journal of information, business and management, 6(2), 95.

Kushwaha, G. S., & Agrawal, S. R. (2015). An Indian customer surrounding 7P? s of service marketing. Journal of Retailing and consumer services, 22, 85-95.

Lovelock, C., & Patterson, P. (2015). Services marketing. Pearson Australia.

Oskam, J., & Boswijk, A. (2016). Airbnb: the future of networked hospitality businesses. Journal of Tourism Futures, 2(1), 22-42.

So, K. K. F., King, C., Sparks, B. A., & Wang, Y. (2016). The role of customer engagement in building consumer loyalty to tourism brands. Journal of Travel Research, 55(1), 64-78.

Xu, X., Liu, W., & Gursoy, D. (2018). The Impacts of Service Failure and Recovery Efforts on Airline Customers’ Emotions and Satisfaction. Journal of Travel Research, 0047-0049