Executive Summary
Service marketing is getting very competitive in the current market. Players in this industry are faced with several challenges in the market. The main challenge that firms in this industry face are the ability to maintain customer satisfaction. The visit made by the researcher to a restaurant led to dissatisfaction due to the inability of the management to segment the market. Theories such as Maslow’s hierarchy of needs may help in segmentation and understanding the needs of specific market segments.
Market Segmentation using Maslow’s Theory of Needs
According to Anderson (2011, p. 89), the world is increasingly getting competitive. Firms are under pressure to perform. Marketing has changed its focus from an inward out approach to an outward in marketing strategy. Customers in the current society know what they want. They are keen to note any little form of dissatisfaction from the services they get from various firms. These customers insist on getting value out of the services they purchase. One of the most important factors that firms in the service sectors must consider is the segmentation of the market (Daft 2009, p. 56). Different segment markets will act differently to different factors. When segmenting the market, it is important to employ some of the relevant theories in the field of service marketing. According to Maslow’s Hierarchy of needs, it is important to ensure that all the needs of the customers are met based on their hierarchy in the market. Using this theory, service providers should target every market segment using their hierarchical needs (Evans 2012, p. 78). This will help a firm ensure that consumers at every stage are satisfied. The restaurant I visited failed to make use of Maslow’s theory of needs.
The management of this restaurant did not make an effort to segment its market. It gave general market coverage, giving importance to product and production strategy of marketing other than the contemporary social marketing (Coulter 2009, p. 64). The restaurant believed that once there was a product, the customers would have no choice but to purchase the product. That worked for them to an extent, because I was forced to purchase the product for a lack of an alternative. However, this strategy does not help in ensuring sustainability. A customer will visit, but after getting the experience, he or she will never make a repeat visit to the firm (Hooley 2008, p. 28). This is even made worse by the fact that such a customer will spread negative evangelism against the firm.
Strengths and Weaknesses of the Firm
Based on the experience from the hotel, it is clear that this firm has some strengths and weaknesses that play off in its operations. The first strength of this firm is the beautiful decoration it has adopted in its exterior part of the facility. A traveler passing by will be easily attracted by the facility due to the beautiful lighting system they have installed. At night, one would be convinced that this hotel passes for a three-star hotel. The size of the hotel is also relatively big, a sign that it can expand given the opportunity. Some of the workers of this firm also give it a considerable amount of strength in its operations. The courtesy of the employee that served the researcher made him lose the memory of other negativities experienced when entering the restaurant. The responsiveness of the employee was a clear sign that he/she had the customer’s interests at heart. That reassuring demeanor helps in attracting the customers.
Despite the above strengths, this restaurant has some obvious weaknesses. The first weakness is with the management. The management of this firm has failed to give a clear direction on how the restaurant should approach the market. It has failed to state clearly which market segment the restaurant wishes to target. This is witnessed in the arrangement of the facility. The external part of this hotel leaves no doubt that the target market for this restaurant is the middle class. The size and location also speak the same thing about this firm targeting this class, and so is the behavior and dress code of the employees. However, the internal facilities show otherwise. There is poor maintenance of the internal structures of the restaurant, from the seats to the tables, and even the walls and floors clearly show that there is a need for renovation.
The firm’s main weakness comes in the inability to offer value to its customers. Most of the meals on the main menu are not available. The management offers a general meal with ingredients that one finds very strange. Within the hotel, the level of hygiene is very poor, and the employees lack a clear sense of direction. The hotel operates in a way that clearly shows that no one is concerned with maintaining a clean environment where customers would feel comfortable taking a meal (Kratschmer 2011, p. 48). The fact that this firm has failed to segment its market is another weakness portrayed during the visit. According to Gerber (2008, p. 89), most of the middle class and upper-class members of the society do not mind paying an extra fee for the products they purchase as long as they are convinced that that the product is of their class. However, this firm seemed to base its marketing strategy on pricing. The service offered was poor, but this was compensated by the low pricing charged. This gives a member of the middle class the impression that this is a restaurant for the poor.
Opportunities and Threats that this Firm Faces
In the normal operations of a firm, there will always be opportunities that a firm will face. This restaurant faces several opportunities that can enhance its success within this industry in this region. One of the most conspicuous opportunities that this firm has in the market is the security in this region. The researcher noted that this place is very secure both during the day and at night. Business units in this place did not have to struggle to look for the top of range security facilities to protect their properties. This means that the expenses that would have been spending on hiring security apparatus can be channeled to other developmental projects (Norton 2011, p. 78).
Another opportunity that was evidenced in this region was the willingness of the government to offer incentives to local businesses as a way of stimulating their growth. These incentives include tax-free operations for a specified period, subsidized loans, and free seminars offered to entrepreneurs to enhance their management skills. The local community is very friendly, and this means that they can be relied upon when the firm is in a need of their support. The rate at which this small town is developing also means that there is possible room for expansion for this firm (Cavusgil, 2012, p. 82). Technological advancements in the hospitality industry offer this firm an opportunity to increase the scope of its market beyond the locals.
Even though the above opportunities offer the firm an attractive future, some threats make this future appear uncertain. One such threat is the level of competition in the market. Upon getting dissatisfaction from the hotel, the researcher went to another hotel nearby which managed to offer a service considered satisfactory. Since that day, this customer has consistently avoided the restaurant, opting to go to others with better services. As more restaurants get attracted to this market due to its growth, the level of competition gets a notch higher. This means that this firm has to find mechanisms for dealing with this threat (Ferrell 2011, p. 117). Another threat that may force this firm out of the market is the new laws and regulations that local authorities have put in place. The law is becoming strict on the need to ensure that all business facilities that offer food and related products maintain a given level of hygiene within their facility. This regulation may push this restaurant out of the market given its current status. The pressure from the suppliers is also posing another threat to this firm. Suppliers for various raw materials used by this hotel are currently demanding more money for the products they deliver. It is difficult for these restaurants to transfer all the added costs to the customers. This forces the restaurants to find a way of absorbing the pressure. As a result, profitability is reduced.
Conclusion
A customer always has a set of expectations when going to purchase a product. This customer can either be satisfied or dissatisfied; this will depend on the service quality that is offered. When the service quality meets the expectation, the customer will be satisfied. When the value offered falls below the expectation, the customer will be dissatisfied. When this value goes beyond expectation, the customer will be thrilled. In this case, the restaurant offered quality below expectation, leading to the dissatisfaction of the customer. This resulted in a scenario where the customer not only swore never to make a repeat visit but also advised friends (other potential customers) to avoid the place. The firm should consider the following recommendations:
- The management should consider applying Maslow’s theory of the hierarchy of needs to segment the market;
- The management should improve its cleanliness and conduct a massive renovation of internal facilities of the restaurant;
- The management should ensure that employees are motivated and that they understand the new code of conduct in this industry.
List of references
Anderson, M 2011, Bottom-Line Organization Development: Implementing and Evaluating Strategic Change for Lasting Value, Elsevier, Burlington.
Cavusgil, T 2012, International Business: The New Realities, Pearson, London.
Coulter, M 2009, Strategic Management in Action, Pearson Higher Education, New York.
Daft, R 2009, Organization Theory and Design, Cengage Learning, New York.
Evans, D 2012, Social media marketing an hour a day, Wiley, Indianapolis.
Ferrell, C 2011, Marketing Strategy, Cengage Learning, New York.
Gerber, K 2008, Marketing communication, Pearson Education, Cape Town.
Hooley, G 2008, Marketing Strategy and Competitive Positioning, FT Prentice Hall, Harlow.
Kratschmer, P 2011, Organizational Culture is Highly Resistant to Change: Discuss, GRIN Verlag, New York.
Norton, D 2011, “Marketing Strategies”, Harvard Business School, Vol. 1, no. 4, pp 11-91.