Adapting Business to the New Consumer

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Table of Contents

Introduction
Understanding the new consumer
Recommendations and conclusion
References

Introduction

As technologies change, so does the consumer needs and preferences. This raises the need for businesses to ‘change with the times’ in order to retain their customers, attract new ones and remain competitive. The hospitality industry is one among the many industries that are faced with changing demands from the consumer on a daily basis.

Unfortunately, the same industry seems to be quite slow in regards to adopting the use of new technologies for purposes of marketing its products and providing services to the consumer. This report thus seeks to provide insight into some of the ways that businesses in the hospitality industry can adapt to the changing needs of the new consumer.

The report then recommends some of the viable actions that business owners and managers in the sector can adopt for purposes of ensuring that they are at par with the new consumers.

Understanding the new consumer

A business can only adapt to the new consumer if it indeed understands who the consumer is, and what his needs and desires are. As such Williams (2002) argues that businesses should be able to explore the new consumer behaviour in order to devise hospitality approaches that will serve the consumer satisfactorily.

Further, understanding consumer behaviour allows players in the hospitality industry to develop marketing strategies that will effectively market the products and services in the postmodern consumer market.

The use of technology and other modern approaches by the consumer has changed the traditional consumption approaches which assumed that a consumer analyzes products or services objectively or rationally before deciding whether to purchase them or not.

In its place, hyper reality, globalization, communication technologies, symbolism and ritual-focused perspectives are the aspects that determine consumer behaviour (Williams, 2002).

The hospitality consumer is defined as the user of hospitality services, which include restaurants, clubs, hotels and bars (Williams, 2002). Generally, the hospitality industry provides the consumer with food, drinks and accommodation when he or she is away from home. But why is it referred to as an industry?

Well, according to Evans (2000), its mere expanse, and the practical needs presented by organizations therein, seeking commercial success means that hospitality players, their activities and the money generating capacity can be grouped as an industry.

For the industry to be successful amid the changing consumer needs and preferences however requires managers, regulators, policymakers and other stakeholders to acquire knowledge regarding the issues that face the contemporary hospitality industry. Notably, the stakeholders must be ready to use managerial interventions in functional business areas such as human resources, marketing, finance, accounting, strategic management and operations management (Evans, 2009).

ICT

One of the key factors that have affected the hospitality industry is identified by Buhalis & O’Connor (2005) as information communication technologies (ICT). According to the two authors, ICT has generated a paradigm-shift that has altered the structure of the hospitality industry thereby developing new opportunities and threats.

ICT has given the contemporary consumer the new ways of identifying, customizing and purchasing hospitality products and services. It also gives players in the industry new channels of developing, promoting, managing and even distributing offers to a world wide market. In the tourism sector especially, ICT has provided players therein channels through which they can improve the competitiveness of their organizations or destinations.

User-generated content and Web 2.0 are rated among the biggest developments shaping the tourism and hospitality industry (Au, 2010). Notably, traditional word of mouth referrals have drastically declined as people choose to use the web to share dining, hotel and travelling experiences. Such can be witnessed by the wide use of photo/video sharing platforms, travel reviews and travel blogs.

Through the use of such platforms, Au (2010) observes that not only does the new consumer take the tourism and hospitality marketer’s promises at face value; he also creates his own content which he can share with other people. This in turns means that the control of messages that reach the consumer market does not lie with the marketer alone anymore, but it is shared with the consumer too.

ICT aside, the new consumer is faced with modern challenges just like was the case in the past. Such includes limited resources to spend, and the need to get maximum value for their money. In the contemporary hospitality industry, demographic factors like age, locality and ethnicity no longer reflects consumer behaviour (Fodor & Werthner, 2005).

Instead, factors such as hospitality preferences, pricing, consumer loyalty and the quality of service seems to be the main drivers of consumer behaviour (Egol et al, 2010). Regardless of the money that consumers are willing to spend on a product or service however, the underlying factor is that they should get maximum value for the same.

Consumer categories

In the contemporary market place, Egol et al (2010) divides the new consumer into the following categories:

Shopper 2.0- This is the technology savvy consumer who searches for services online. Consumers in this category are sensitive to prices, like using coupons and are the least loyal;
Deal hunters: Consumers in this category are highly sensitive to price. Although they are also technology savvy, they do not have as much affinity for online purchasing but would rather research the best deal and later use the same to get good bargains from physical hospitality outlets;
Online window-shoppers- Just as the name suggests, they do their window shopping online. Such are more likely to settle for services with the best price and are thus less loyal;
Channel surfers- They are more loyal but more attentive to the quality of the services they receive. This means that a channel surfer can switch restaurant just as soon as he is not satisfied with the quality of services offered therein. He will keep changing until he/she gets satisfactory services;
Loyalists- such end up attending the same hospitality joints even when there are changes in prices. They do not however take compromised quality of service too well.

Managerial challenges

The above categories do not make the managerial challenge in the hospitality and tourism industries any lighter. According to Evans (2009), managers in the hospitality industry need to understand the challenges that face them in regards to the new consumer in order to respond to the same effectively.

First, managers must acknowledge that services in the tourism and hospitality industry are heterogeneous, perishable inseparable and intangible. More to this, some services in the hospitality industry are seasonal and interdependent.

Intangibility is a challenge that arises because the tourism and hospitality industry usually offers services that cannot be touched. As such, the only way the consumer can gauge the value of the service is by experiencing it.

Notably however, modern day marketing includes the use of virtual tours to the hotels, where the consumer is allowed to view the rooms and other amenities therein. There are also other technology-based tools which can be used to encourage interaction between the staff in the tourism and industry sectors and the consumer.

The inseparability nature of the production and consumption processes of services in tourism and hotel sectors also pose a major challenge to managers (Evans, 2009). In service provision, the consumer is always at hand to judge how a service is delivered. This means that managers need to lay special emphasis on proper recruitment and training of the right staff to handle the consumer.

Although a hotel ambience and the food may be of high quality, if the waiter delivers the food in a not-so-courteous manner, the customer is bound to take notice and this could be costly to the hotel in terms of lost customers.

Interdependence in the tourism and hospitality industry arises because not any part of the service provision can stand by its own, without input from other departments. In restaurant service for example, the ambience in the hotel need not only look good, but the waiters must be there to take orders.

In order to serve consumers in a timely efficient manner, the waiters would need to collaborate with the kitchen department and the bartender. Any disconnection in service provision would be noticed by the consumer, who can opt to go to another hotel where there are prompt and efficient services.

When the new consumer purchases a service, he/she is given access to use facility for a limited period of time. This means that unlike products where one buys and becomes the owner after completing the purchase process, a service consumer does not own anything tangible.

This then means that the only reminder of the purchased services that they may have in future will only be in their memories (Williams, 2002). In such a case, managers need to ensure that the service provision is of high quality in order to encourage repeat customers in future.

Opinion

In order to adapt business in the tourism and hospitality industry to the new consumer, stakeholders in the industry must be ready to employ new technologies in order top generate opportunities and also handle the challenges that are posed to players in the industry by emerging trends in consumer behaviour. Most importantly, players in this industry must be ready to adopt ICT in the development of customer centric strategies.

When used properly, ICT can also be used to build partnership with other non-competitive stakeholders hence driving profitability in the participating organizations. As Buhalis & O’Connor (2005) notes, adopting the use of ICT in the service industry will not only allow business managers to focus on the consumers, but will also enable them meet organizational needs as well as their distribution strategies.

Recommendations and conclusion

First, Chief Executive Officers in charge of businesses in the Tourism and hospitality industry should adopt consumer centric approaches to service delivery. Because every consumer has different needs and expectations, the CEO would need to ensure that the management of the business he or she is in charge of orient staff on the need to treat consumers promptly and efficiently.

As Buhalis & O’Connor (2005) notes, the new consumers who are technological savvy have been empowered by the internet with insight regarding the value that they should expect not only for their money, but for their time too. This then means that the CEO, his managers and staff members could be faced by a consumer who is demanding, sophisticated and experience.

It is up to the hospitality staff therefore to work jointly in order to satisfy the needs, expectation, motivations and desires of the client in the hope that they can come back for a return visit or refer their friends to the facility (Yeoman et al., 2007).

With most consumers having to spend their time juggling between different activities, the CEO needs to realize, just how important quick service delivery to the consumer is. Chances are that a good prepared meal will be less appreciated if the consumer receives it two hours after placing an order.

The same thing applies to virtual bookings. A new consumer will feel more valued if he is promptly ushered to their hotel rooms if they had booked the same online. Having to wait for service delivery is considered an inconvenience that fewer consumers are willing to put up with.

CEOs also need to oversee the development of technology-driven service provision platforms, whereby consumer’s individual needs can be accessed. Having established elsewhere in this report consumers in the tourism and hospitality industry have diverse needs and interest, it beats logic that service provision should be targeted towards a mass market.

One of the ideal ways suggested by Buhalis & O’connor (2005) is the customer information prior to the visit, during and after should be collected in order to gain understanding about the choices that they make, the concerns that they have and the factors affecting their coming back for the same service again.

Relationship management should also be encouraged among staff members who interact with the consumer in order to record the requirements and preferences voiced by the consumer for future service improvement. The staffing system also needs to be geared towards identifying moods, context and location of the new consumer hence providing them with the appropriate services (Morgan et al., 2009).

The staff should also be trained on ways of providing proactive services such as advice to consumers. This is especially vital when the new consumer asks about the staff opinion on food items on the menu, accommodation options and other services.

In the same manner, the CEO should encourage the staff in the tourism or hospitality industry he is heading to be trained in reactive service provision. This happens when external factors have affected the quality or timing of service provision.

CEOs must also oversee a system that promises what it can deliver. According to Buhalis & O’Connor (2005), there is nothing as dissatisfying to the tourism and hospitality consumer than realizing that the promises made by online marketers are not real. When such is the case, consumers not only feel swindled off the real worth of their money, but also feel that they have wasted time.

Overall, the CEO needs to learn the art of combining the available resources (staff, assets and skills) so as to create competitive advantage (Morgan et al., 2009) for the organisation that he or she is heading. Most importantly, the CEO must communicate the need of creating value in service provision and passing it to the consumer manager, who should in turn communicate the same to the staff.

References

Au, A. (2010) Adoption of the Web 2.0 by Tourism Businesses in NSW. Tourism NSW. 1-51.

Buhalis, D & O’Connor, P. (2005) Information communication technology revolutionizing tourism. Tourism recreation research, 30(3), 7-16.

Egol, M., Clyde, A., Rangan, K. & Sanderson, R. (2010). The new consumer frugality: adapting to the Enduring shift in the US consumer spending behaviour. Web. Booz and Company. 1-12. Available from: https://www.strategy-business.com/media/file/00023.pdf .

Evans, N. (2009) Tourism: A Strategic Business Perspective. [Online], The SAGE Handbook of Tourism Studies. SAGE Publications. Web.

Fodor, O. & Werthner, H. (2005) Harmonise: A step towards an interoperable e-tourism marketplace. International journal of electronic commerce, 9(2), 11-39.

Morgan, M., Elbe, J. and de Esteban C. J. (2009) Has the experience economy arrived? The views of destination managers in three visitor-dependent areas. International Journal of Tourism Research, 11, 201-216.

Williams, A. (2002) Understanding the hospitality consumer. New York, Butterworth-Heinemann.

Yeoman, I., Brass, D. and McMahon-Beattie, U. (2007) Current issue in tourism: the authentic tourism. Tourism Management, 28, 1128-1138.

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