Tourism and Service Management

34 Pages·2011·0.453 MB·English

by  David Solnet,Chris Cooper

Tourism & Service Management
David Solnet
Contemporary Tourism Reviews
Series Editor: Chris Cooper
(G) Published by Goodfellow Publishers Limited,
Woodeaton, Oxford, OX3 9TJ
http://www.goodfellowpublishers.com
ISBN: 978-1-906884-32-1
Copyright © Goodfellow Publishers Ltd 2011
Design and setting by P.K. McBride
2 Tourism & Service Management
About the author
David Solnet is a Senior Lecturer in Service Management at the University of Queensland
in Australia. Prior to his academic career, David enjoyed a successful 18-year career in the
hospitality industry where he held senior management roles in the USA and Australia. David
has authored over 20 peer-reviewed articles principally in hospitality and service industry
journals.
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Tourism & Service Management 3
Introduction
We live in a radically different world than that of even 20 years ago. From a business and economic
perspective, perhaps the most significant change in the world has been a change from a product, or
manufacturing-orientation to a service-orientation. Most economic consumption today involves proc-
esses, activities and personal interaction, rather than simply a purchase of a ‘thing’. Economic exchange
and therefore business management was developed based on the product orientation; of manufactur-
ing ‘things’ which were shipped to a retailer who sold them to a consumer at a retail outlet. Many of
our management and marketing principles were based on this basic pathway – production, inventory,
purchase, consumption. As the world has changed to be more service oriented, management and mar-
keting scholars have failed to keep pace.
The purpose of this review is to introduce the service management paradigm in the context of
tourism. This is done via an explanation of the evolution from a product to a service manage-
ment orientation and an evolutionary mapping of management thought. Then, an overview of
relevant service management topics is provided followed by a Case Example of service man-
agement principles in action. Finally, an overview of the emerging issues and future focused
agenda in the field of service management is provided.
Background
What do we mean when we refer to the evolution of management thought? How is it that the
world can evolve, but academic terminology and theory does not, or does so but much more
slowly? This delay is evident by the simple example of the traditional 4 Ps of the ‘Marketing Mix’
(McCarthy, 1960). These Ps’ (Product, Price, Place, Promotion) were taken for granted for years as
the necessary recipe for successful marketing. When taking an item to market, it was thought,
one must consider what to sell (Product), how much to sell it for (Price), where to sell it (Place),
and how to promote its sale (Promotion).
When service managers and marketers tried to use these 4 Ps for marketing services (e.g., what
you ‘buy’ at a bank), they found this mix insufficient. Subsequently, researchers sought to expand
the marketing mix with a series of proposed additions (see Rafiq & Ahmed, 1995). Of these, the
most frequently utilised and accepted mix is the revised 7 Ps (or the ‘extended marketing mix’)
(Booms & Bitner, 1981), which takes into account People (all people who directly or indirectly
influence the perceived value of the product or service, including knowledge workers, employ-
ees, management and consumers), Processes (procedures, mechanisms and flow of activities
which lead to an exchange of value) and Physical Evidence (environment in which the service
is delivered and in which the service provider and consumer interact).
Why is it important to understanding the evolution of management thought? Let us think
metaphorically for a moment. Very recently, anthropologists in Ethiopia unearthed pieces of
bones and other fossilised fragments. This discovery provided a series of new clues in the un-
derstanding of the development of mankind. In fact, the skeletons found have now been dated
as being 4.4 million years old – and have led to a dramatic rethinking about the development of
man and the ‘family tree’ which distinguishes man from chimp-like animals. This recent discov-
ery has elucidated the history of man’s development, and has inspired many scientists to enter
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4 Tourism & Service Management
or re-enter the discourse about mankind’s evolutionary history. Learning about our history,
clarifying old and new thought, inciting enthusiasm amongst scholars and scientists – all of
these things are helpful to the research and scholarly communities. These discoveries and the
corresponding papers and discourse help us think, criticise, rethink, communicate, test, retest
and advance knowledge! Similarly, as we understand the progression of management think-
ing – its evolution and consequences – we advance our field and improve research, theory and
practice in management!
Terminology and Definitions
What exactly do we mean by ‘service’ and ‘services’? In fact, what seems on the surface as such simple
words are anything but! (For a clue as to the complexity of the word ‘service’, see (http://dictionary.refer-
ence.com/browse/service.) Service is simply an act (a verb), or a process which represents or facilitates
the basis of economic exchange (Vargo & Akaka, 2009); whereas services can be defined as intangible
units of output, oractivities (a noun) which in a commercial sense are offered for sale or as part of a sale
(for example, restaurant service accompanies the food to form a total experience; both food and service
are critical to the value perception of the customer).
Vargo and Lusch (2004) discuss the definition of services, suggesting that the continued debate over
its definition was more abandoned than resolved. They argue that this is a reflection of the difficulty
in attempting to make goods and services mutually exclusive. They propose a more integrated frame-
work for understanding services and offer a slightly different definition of services as the “application
of specialized competences (skills and knowledge), through deeds, processes and performances for the
benefit of another entity or the entity itself” (Vargo & Lusch, 2004, p. 326).
The sale of services often consists of many parts, including activities, processes and interactions (tan-
gible and intangible aspects) (Kandampully, 2002). Take a hotel as an example. What is a guest buying?
Is it a bed? Or is it the temporary use of a bed? Are they buying food? Beverage? The use of a meeting
room? Or, are they buying a total experience which ideally includes a seamless check-in by friendly,
welcoming, knowledgeable staff, a clean, safe and comfortable room and the convenience to eat in a
restaurant or have food and beverage delivered to their room? A customer would view the entire of-
fering as a series of services. So it is useful to commence this review by ensuring that you are thinking
about tourism in the context of service. For example, be clear that the hotel industry is not so much
about buildings, beds and food, but rather about service, and about the complexity of creating, selling
and managing customer experiences.
From the outset, it is important to note that the terms service ‘marketing’ and ‘management’ are often
used interchangeably. This review takes the position that management is a more holistic term, incor-
porating all management functions, including marketing. This review will use the term ‘management’
throughout. This review also makes frequent mention of the term ‘customers’. It is important, in the
context of tourism, to view ‘tourists’ or ‘visitors’ in the exact same context as ‘customers’. Therefore these
terms are used interchangeably.
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Tourism and Service Management
Let us quickly reflect upon the concept of ‘tourism’ as it relates to this review of service. Tourism
is often described not so much as an industry, but rather as is a ‘complex system’ – a combina-
tion of interrelated elements forming a unitary whole. Underlying this tourism system is a need
to understand how to best manage the tourist experience in order to reach satisfying outcomes
for tourists, individual businesses and destinations. The total tourist experience encompasses
many aspects, but the primary aim of a tourism system should be tourist ‘satisfaction’. Evalua-
tion of satisfaction is usually made as a tourist’s overall appraisal of the total destination ex-
perience, rather than of one single business. As a result, the management of each component
of the tourism system by tourism businesses either individually or as part of organisational
networks is particularly important.
Destination and tourism managers must have a watchful eye on all aspects of the system to
ensure the wider destination performs well for the tourist / visitor, and then each individual
business must strike the balance of satisfying tourists / visitors whilst operating profitably. A
delicate balance indeed! In fact, tourism systems would be well served to rely on the Latin
phrase ‘E Pluribus Unum’ (out of many, one), thus ensuring that individual participants under-
stand their role in the system of individual aspects / businesses within a larger destination
unit.
Before progressing into the key concepts of service management, it would be helpful to first
reflect about how tourists evaluate their tourism experiences.
Think about a tourist’s first encounter with a tourism destination. It might be an
advertisement for that destination on television or in a newspaper. Or it could be on
a website (e.g., France.com). Destination websites often contain many links to travel
packages, accommodation choices, car rental business, places to visit and things to
do within that destination. Nested within these destination-marketing activities is
a reliance on the individual performance of each organization promoted through
destination marketing offers.
Do you think that your impressions of Singapore as a satisfying tourism destination can be
influenced by your trip to Singapore on Singapore Airlines? Or a first visit to Australia on
Qantas? The UK on British Airways?
What if the person you speak to on the phone regarding destination services on a toll-free
number is less than friendly or enthusiastic?
How would a tourist react upon stopping at a Visitor Information Centre and finding that
the employees (often volunteers) are indifferent or apathetic about the region’s tourism
activities?
What if the reservation desk in the hotel, where you plan on spending your first night at
the destination, has no sign of your reservation – and they have no rooms available?
As you can see, the experience of the tourist is dependent on many component parts, many of
which exist before someone ever becomes a tourist at a destination, and destination marketers
hope that none of these links will lead to dissatisfaction with the overall tourist experience.
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6 Tourism & Service Management
Evolution of the ‘Service’ discipline
By all accounts, the economic output of most developed countries today is dominated by ‘serv-
ices’, with a generally accepted assumption that between 75-80% of gross domestic ‘product’
(GDP) is comprised of services (interesting that GDP is predominately comprised of services!).
This seems very large, until one reflects upon how and where they spend their money. The
basic categories of services are government, tourism, retail trade, healthcare, transport, utilities,
communications, finance, insurance and real-estate (Lovelock, Wirtz, & Chew, 2009). Services
were formerly named the “miscellaneous” (non-goods) economic category in the 19th century,
but have now more appropriately been labelled the “new economy” (Albrecht & Zemke, 2002)
and is dominant across much of the developed and developing world.
Much discourse has taken place over the differentiation of the terms ‘goods’ and ‘services’.
Some (e.g., Kotler, 1997) suggest that nearly any business transaction would be either a purely
tangible good, a tangible good with accompanying intangible service, a primarily intangible
service with accompanying tangible good, or a purely intangible service. Others argue that the
service and non-service distinction has become less meaningful and there are only industries,
the service components of which are greater or less than those of other industries. Many years
ago Marshall (1929) suggested that all industries provide some kind of service, although he
pointed out that there was no specific literature which addressed the management of service.
As far back as 1940, Colin Clark stated that the economics of tertiary industry had yet to be
written (Clark, 1940). Fuchs (1968) attempts to demonstrate the rise of the “stepchild” of eco-
nomic research which he calls the service (also referred to as the tertiary or residual) economy.
Fuchs highlights the lack of any theoretical base regarding the management of services, and
mentions two criteria that would lay the seed for future work in defining services theory. Firstly
that services are delivered with ‘closeness’ to the consumer, and secondly that services tend
to be absent of a tangibility. Sibson (1971) identified the fundamental evolution of product
to service economies, which, for the first time, emphasised the generalised knowledge, princi-
ples and concepts for the management of a professional services enterprise. He then made a
number of observations:
1 The economy of the developed world was moving rapidly from a production
orientation to one that would soon be dominated by service enterprises.
2 There was a genuine concern that such organisations would be unable to be managed
using existing management theory and that most management methods and
techniques used in organisations then (referring to 1971) evolved to meet the needs of
manufacturing/production oriented enterprises.
3 He suggested that no literature dealing with the characteristics, questions and problems
of managing services enterprises had ever been published (with the exception of some
articles and books dealing with administration and detailed operational questions
rather than a broad management view).
4 Finally, that there would not be a suitable workforce available to fill positions in this
sector (accurate premonition!).
The current service management discipline is often attributed to a seminal paper (Shostack,
1977) in which the author called for services marketing to ‘Break Free’ from product marketing.
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Tourism & Service Management 7
Shostack, a senior vice president of Marketing at Citibank, came to realise that the marketing
paradigms (such as the 4 Ps mentioned above) taught at university did not adequately apply
to what customers ‘buy’ at banks.
More recently, a series of articles and books by Vargo and Lusch, (see references below) have
questioned this call to ‘break free’, proposing the need for all marketing and management to
break free of the manufacturing/production orientation, by adopting instead a service orienta-
tion (focused on value creation).
The original call for services to ‘break free’ from goods included a movement by service man-
agement scholars to find a way to make service ‘distinct’ or unique from more traditional man-
agement. As such, a number of generally accepted characteristics were touted as ‘unique’ to
service. While these characteristics may no longer be accepted as ‘unique’ it is important to be
familiar with these concepts because they are still relevant to service management. The four
most commonly cited ‘distinctive features’ of services are –
Intangibility – services cannot be seen, felt, tasted or touched; they are performances
rather than objects;
Inseparability – goods are often produced, sold and then consumed, whereas services are
usually produced and consumed at the same time;
Heterogeneity – people play a critical role in service delivery; service and people are
generally inextricably linked; this creates variability between service providers and
customers which makes managing service so difficult; and
Perishability – services cannot be stored; once a service is gone, it can never be sold again
– e.g., airline seat, a dinner reservation.
(adopted from Kandampully, 2002)
Notes:
 For a critical view to these four unique characteristics, see Vargo and Lusch (2004).
 For further reading regarding the intangibility of service see Bowen and Ford (2002).
The term “Service Management” was not actually introduced into mainstream scholarship until
the early 1980s (Fisk, Brown, & Bitner, 1993; Gronroos, 1993). One of the earliest, yet still often
cited definitions of service management is that it is a total organisational approach that makes
quality of service, as perceived by the customer, the primary driving force for the operation of
any business (Albrecht, 1988).
This early definition demonstrates the peripheral nature of the concept at that time, yet clearly
indicates the underlying theme of today’s service management approach—that service
management is a comprehensive framework and effective organisations utilise this mindset
throughout the entire organisation rather than limiting it to parts of an organisation. Similarly,
Schneider and Rentsch (1987) suggest that firms that apply service management principles
would consider service as the organisational imperative.
Another founding scholar in the service management arena, Christian Gronroos, suggested in
the mid-1990’s that “service management is not a well-delineated concept…It is however used
more and more by academics as well as by practitioners…. and is more a perspective than one
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8 Tourism & Service Management
discipline or one coherent area of its own…” (Gronroos, 1993, p. 5). Gronroos highlights four
fundamental shifts in thinking between a product/goods approach and a service approach,
proposing that service management move from:
1 a product-based utility (referring to satisfaction received) to total utility.
2 short-term transactions to long-term relationships.
3 core product ‘technical’ quality to total customer – perceived quality.
4 production quality to total utility quality as the key process in management.
The reasons for the growth in services (and subsequent need for management theory) are well
defined by Gronroos (1990). He attributes the growth to increasing affluence, more leisure time,
a higher percentage of women joining the workforce, greater life expectancy, greater complex-
ity of products that require a service aspect, increasing complexities of life, greater concern
about ecology and resource scarcity, and an increased number of new products. Figure 1 pro-
vides a summary of the forces that have shaped services marketing and management over the
past 20 years.
Government Business Trends Information International-
Policy Technology insertion
Adding value through
Changes in regulation services Convergence of Transnational
Privatisation Strategic alliances computers and tele- companies
New rules protecting Quality movement communication Increased travel
customers, employees Growth in franchising Higher bandwidths Mergers
and environment Innovative hiring Wireless technology Acquisitions
New agreements on practices Ever-powerful Reduced trade
trade in services software barriers
Increased demand and competition for services
Service innovation stimulated by new technology
Increased focus on services marketing and
management
Figure 1: Factors Contributing to the Transformation of the Service Economy
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Tourism & Service Management 9
Current Discourse
As mentioned earlier, the most current thinking about whether or not service management
should be separated as a distinct field of study (e.g., should it ‘break free’ from product man-
agement?) has been significantly advanced by a number of scholars, led by Robert Lusch and
Stephen Vargo. These authors propose a new ‘logic’ (S-D, or Service Dominant) – suggesting
that it is inaccurate and counterproductive to ask for service marketing and management to
“break free” from goods marketing. Rather, they suggest, marketing and management should
break free from the goods and manufacturing-based model—that is, goods-dominant (G-D)
logic.
Vargo and Lusch commenced the discourse questioning the ‘dominant logic’ of basing all mar-
keting and management concepts on a ‘goods’ paradigm and terminologies (see for example,
Lusch, Vargo, & O’Brien, 2007; Vargo & Akaka, 2009; Vargo & Lusch, 2004, 2008). They argued that
the notion of separating goods from service management is grounded in a flawed perspec-
tive – one that defines service residually (i.e. once goods are categorized, then services are
anything that do not fit into the goods category). These scholars argue for a new approach,
one that erases the distinction between goods and services and instead defines all economic
exchanges on a refined notion of service (i.e. the benefit a party can gain from the application
of an organization’s resources and capabilities). Modern marketing and management emerged
from “goods-dominant logic”. Such an approach today, particularly in tourism is inadequate,
ineffective and inappropriate!
Further information on the Vargo and Lusch ‘Service-Dominant Logic’ discourse can be found on
http://www.sdlogic.net/publications.html
The evolution of service management as an academic discipline was detailed by Fisk, Brown
and Bitner (1993) and Berry and Parasuraman (1993). These two works explain how an aca-
demic field does not magically appear one day. Rather, researchers make decisions about what
to study based on how institutions and industry agree to fund projects and conference at-
tendance. Collaboration and networks develop and over time, with exponential interest from a
range of related areas, a field starts to develop. Fisk et al. (1993) proposed the following analogy
for the evolution of a new discipline, in this case, services marketing.
Crawling out period (pre-1980), a time of discovery and risk taking, capturing the embryonic
beginnings of the service literature; scholars chose to pioneer this blossoming area, however
they put themselves into a difficult position of developing new knowledge with no
research model or framework; mainly conceptual works, with minimal opportunities to
publish in top journals.
Scurrying about period (1980-1985), a time period where interest and enthusiasm for
service and services marketing was gaining significant momentum; during this period,
the debate between ‘services’ and ‘goods’ began to wane, which paved the way for the
next stage; a major growth in academic publications around service management and
marketing, including top journals.
Walking erect period (1986 – present), this period was marked by explosive growth in
numbers of publications as well as corresponding growth in empirical and theoretical
rigor in the content; research and discourse on managing quality, designing and controlling
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10 Tourism & Service Management
service processes, managing supply and demand, and many others; the focus by now had
become increasingly cross-functional, as many issues being researched have roots and solutions
that span across many boundaries.
To highlight the growth of the Service Management discipline, the list below provides a sample
of the journals which publish substantially in service management and marketing.
Table 1: Sample list of key journals and texts in Service Marketing and Management:
Specifically service-related academic journals
Journal of Service Research (http://jsr.sagepub.com)
Journal of Service Management (http://info.emeraldinsight.com/products/journals/
journals.htm?id=josm)
Managing Service Quality (http://info.emeraldinsight.com/products/journals/journals.
htm?id=msq)
Journal of Services Marketing (http://info.emeraldinsight.com/products/journals/journals.
htm?id=jsm)
Service Industries Journal (http://www.tandf.co.uk/journals/titles/02642069.asp)
Other academic journals which regularly publish service research
Journal of Retailing (http://www.elsevier.com/wps/find/journaldescription.cws_
home/620186/description#description)
Journal of the Academy of Marketing Science (JAMS) (http://jam.sagepub.com/)
Journal of Business Research (http://www.elsevier.com/wps/find/journaldescription.
cws_home/505722/description#description)
European Journal of Marketing (http://info.emeraldinsight.com/products/journals/
journals.htm?id=ejm)
Sample of service management texts
Fitzsimmons, J.A., Fitzsimmons, M.J. (2008). Service management: Operations, Strategy,
Information Technology. McGraw-Hill/Irwin, Boston (6th ed).
Gronroos, C. (2000). Service Management and Marketing: A Customer Relationship
Management Approach. John Wiley & Sons, Ltd. West Sussex. (2nd ed.).
Johnston, R. (2008). Service Operations Management: Improving Service Delivery. Prentice
Hall, New York (3rd ed).
Kandampully, J. (2007). Services Management: The New Paradigm in Hospitality. Prentice
Hall, New Jersey (2nd ed).
Top of Form
Lovelock, C., Wirtz, J., Chew, P. (2009). Essentials of Services Marketing. Prentice Hall,
Singapore.
Zeithaml, V.A., Bitner, M.J. (2009). Services Marketing: Integrating Customer Focus Across
the Firm. McGraw-Hill Irwin, Boston.
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