Services Marketing in the Hospitality Economy

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Services Marketing in the Hospitality Economy: An exploratory study

Fotis C. Kitsios
Technical University of Crete, Dept. of Production Engineering and Management, Chania, Greece

Paper prepared for presentation at the 98 th EAAE Seminar ‘Marketing Dynamics within the Global Trading System: New Perspective s’, Chania, Crete, Greece as in: 29 June – 2 July, 2006

Copyright 2006 by [Fotis C. Kitsios]. All rights reserved. Readers may make verbatim copies of this document for non - com mercial purposes by any means, provided that this copyright notice appears on all such copies.

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Services Marketing in the Hospitality Economy: An exploratory study Fotis C. Kitsios
Technical University of Crete, Dept. of Production Engineering and Management, Chania, Greece

Abstract. Meeting the challenges of an unstable and unsettled environme nt is not easy. The recent impacts on the hospitality services economy of changing technology, mergers of institutions, increasingly dema nding consu mers and increased competition have created an atmosphere of volatility and rapid change. In order to survive in this demanding market place, service organisations have only one choice, to successfully develop and launch new services. However, the failure rate of new service projects is high, because the knowledge on how new services should be developed is limited. Unfortunately, unlike tangible new product developme nt practices which have the benefit of extensive research into how successful new products are developed, the service sector has only recently begun to explore ways to ensure the success of new services. Therefore, this study focuses on a better understanding of how successful new hotel services are developed and investigates the factors, which have impact on success or failure in new service development (NSD) in the hotel sector. The results of the exploratory study are sum m arised in a conceptual model for further research. Key words : Innovation process, services marketing, new product developme nt, new service develop men t, critical success factors, hotels - tourism

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Introduction

Within the rapidly changing business environment there has been a resurgence of interest among marketing researchers regarding the role of innovation in gaining competitive advantage. The literature to date has focused on manufacturing innovation. However, services innovation literature has grown significantly over the last decade, reflecting the increased contribution of service industries to the national economy. But the limited literature on new service development (NSD) remains fragmente d. The majority of NSD research has concentrated on the financial service sector, and one of the largest industries world - wide, the hospitality industry, has not been specifically investigated. Success factors for new services are in general similar to those for new product development, only the potency of the factors differ (Cooper and de Brentani, 1991). This can be explained by the nature of services, which are intangible, heterogeneous, perishable, and where production and consum p tion are inseparable (Zeithaml and Bitner, 2000). The success rate of new service projects is on average 58% (Griffin, 1997). In other words four out of ten new services fail in the market place. The empirical studies, which have investigated the success factors at the project level, indicated that success or failure is not the result of managing one or two activities very well, it is the result of a holistic approach, managing several aspects competently and in a balanced manner (Johne and Storey, 1998). The critical dimensions that influence new service perform ance can be categorised into four clusters: (1) product - related, (2) market - related, (3) company related, and (4) process - related (de Brentani, 1999). This article reports on exploratory research into potential characteristics that distinguish between success or failure of new hotel services in...
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