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CHAPTER 1
INTRODUCTION OF RELATIONSHIP MARKETING

1.1 THE EVOLUTION OF RELATIONSHIP MARKETING
Although marketing practices can be traced back as far as 7000 B.C.
(Carratu,1987), marketing thought as a distinct discipline was borne out of economics
around the beginning of this century. As the discipline gained momentum, and
developed through the first three quarters of the twentieth century, the primary focus
was on transactions and exchanges. However, the development of marketing as a field
of study and practice is undergoing a reconceptualization in its orientation from
transactions to relationships (Kotler, 1990; Webster, 1992).
The emphasis on relationships as opposed to transaction based exchanges is
very likely to redefine the domain of marketing (Sheth et al. 1988). Indeed, the
emergence of a relationship marketing school of thought is imminent given the
growing interest of marketing scholars in the relational paradigm. In this paper, we
observe, that the paradigm shift from transactions to relationships is associated with
the return of direct marketing both in business-to-business (BTB) and business-to-
consumer (BTC) markets. As in the pre-industrial era (characterized by direct
marketing practices of agricultural and artifact producers) once again direct
marketing, albeit in a different form, is becoming popular, and consequently so is the
relationship. orientation of marketers.
When producers and consumers directly deal with each other, there is a greater
potential for emotional bonding that transcends economic exchange. They can
understand and appreciate each others' needs and constraints better, are more inclined
to cooperate with one another, and thus, become more relationship oriented. This is in
contrast to the exchange orientation of the middlemen (buyers and sellers). To the
middlemen, especially the wholesalers, the economics of transactions are more
important, and therefore, they are less emotionally attached to products. Indeed, many
middlemen do not physically see, feel, touch, products but simply act as agents and
take title to the goods for financing and risk sharing. The separation of the producers
from the users was a natural outgrowth of the industrial era. On the one hand, mass
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production forced producers to sell through middlemen, and on the other, industrial
organizations, due to specialization of corporate functions, created specialist
purchasing departments and buyer professionals, thus separating the users from the
producers.
However, today's technological advancements that permit producers to interact
directly with large numbers of users (for example, Levi's making custom products
directly for the users), and because of a variety of organizational development
processes, such as empowerment and total quality programs, direct interface between
producers and users has returned in both consumer and industrial markets, leading to a
greater relational orientation among marketers. Academic researchers are reflecting
these trends in marketing practice, and searching for a new paradigm of the discipline
that can better describe and explain it. As with each new shift in the focus of
marketing there are advocates and critics of the relationship focus in marketing.
However, in the same way as Kotler (1972, p. 46) observed about other shifts in
marketing, we believe that the emergence of a relationship focus will provide a
"refreshed and expanded self concept" to marketing.
Our optimism stems from at least four observations: (i) relationship marketing
has caught the fancy of scholars in many parts of the world, including North America,
Europe, Australia and Asia, as is evident from the participation in some of the recent
conferences held on this subject (Sheth and Parvatiyar, 1994); (ii) its scope is wide
enough to cover the entire spectrum of marketing's subdisciplines, including channels,
BTB marketing, services marketing, marketing research, customer behavior,
marketing communication, marketing strategy, international marketing and direct
marketing; (iii) like other sciences, marketing is an evolving discipline, and has
developed a system of extension, revision and updating its fundamental knowledge
(Bass, 1993); and (iv) scholars who at one time were leading proponents of the
exchange paradigm, such as Bagozzi (1974), Kotler (1972), and Hunt (1983), are now
intrigued by the relational aspects of marketing (Bagozzi, 1994; Kotler, 1994; Morgan
and Hunt, 1994). In the context of these developments, the purpose of this paper is to
trace the evolution of relationship marketing and to identify its antecedents.
We plan to demonstrate that while relationship focus in the post-industrial era
is aclear paradigm shift from the exchange focus of the industrial era, it is really a
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rebirth of marketing practices of the pre-industrial age when the producers and users
were also sellers and buyers and engaged in market behaviors that reduced the
uncertainty of future supply and demand assurances which could not be otherwise
guaranteed due to the unpredictability of weather, raw materials, and customers'
buying power. Our approach mirrors the activities recommended by Savitt (1980) as
the appropriate methodology for conducting historical research.
Purpose of Relationship Marketing
Relationship marketing attempts to involve and integrate customers, suppliers
and other infrastructural partners into a firm's developmental and marketing activities
(McKenna, 1991; Shani and Chalasani, 1991). Such involvement results in close
interactive relationships with suppliers, customers or other value chain partners of the
firm. Interactive relationships between marketing actors are inherent as compared to
the arm's length relationships implied under the transactional orientation (Parvatiyar et
al., 1992).
An integrative relationship assumes overlap in the plans and processes of the
interacting parties and suggests close economic, emotional and structural bonds
among them. It reflects interdependence rather than independence of choice among
the parties; and it emphasizes cooperation rather than competition and consequent
conflict among the parties; and it emphasizes cooperation rather than competition and
consequent conflict among the marketing actors. One axiom of transactional
marketing is the belief that competition and self-interest are the drivers of value
creation. Through competition, buyers can be offered a choice, and this choice of
suppliers motivates marketers to create a higher value offering for their self-interest.
This axiom of competition is now challenged by the proponents of relationship
marketing who believe that mutual cooperation, as opposed to competition and
conflict, leads to higher value creation (Morgan and Hunt, 1994). In fact, some social
psychologists have gone so far as to suggest that competition is inherently destructive
and mutual cooperation inherently more productive (Kohn, 1986).
The second Purpose of transactions marketing is the belief that independence
of choice among marketing actors creates a more efficient system for creating and
distributing marketing value. Maintaining an 'arm's length relationship' is considered
vital for marketing efficiency. Industrial organizations and government policy makers
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believe that independence of marketing actors provide each actor freedom to choose
his/her transactional partners on the basis of preserving their own self-interests at each
decision point. This results in the efficiency of lowest cost purchases through
bargaining and bidding. However, this belief is also challenged recently in economics
(Williamson, 1975). It argues that every transaction involves transaction costs in
search, negotiation and other associated activities, which add to, rather than reduce
the cost, and thus lead to inefficiencies instead of efficiencies for the firms engaged in
exchange transactions. Relationship marketers, therefore, believe that
interdependencies reduce transaction costs and generate higher quality while keeping
governance costs lower than exchange marketing (Heide and John, 1992; Williamson,
1985).
In short, better quality at a lower cost is achieved through interdependence and
partnering among the value chain actors. The purpose of relationship marketing is,
therefore, to enhance marketing productivity by achieving efficiency and
effectiveness (Sheth and Sisodia, 1995). Several relationship marketing practices can
help achieve efficiency, such as customer retention, efficient consumer response
(ECR), and the sharing of resources between marketing partners. Each of these
activities have the potential to reduce operating costs of the marketer. Similarly,
greater marketing effectiveness can be achieved because it attempts to involve
customers in the early stages of marketing program development, facilitating the
future marketing efforts of the company. Also, through individualized marketing and
adoption of mass customization processes, relationship marketers can better address
the needs of each selected customer, making marketing more effective. To what
extent is the above purpose of relationship marketing a totally new phenomenon and,
haven't these objectives always been important in marketing? If yes, how is
relationship marketing different than exchange marketing? We will try to address
these questions by first agreeing that marketing has indeed always been concerned
with retaining profitable customers and with facilitating future marketing activities.
However, marketing practices that were adopted to achieve these objectives
have changed over a period of time. The reasons for this change can be attributed to
the prevailing context and conditions of each time period and its influence on the
marketing thought. We examine, in the subsequent sections of this paper, the causes
of marketing practices during the pre-industrial, industrial and post-industrial eras.
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Shifts in Marketing's Orientation
As is widely known, the discipline of marketing grew out of economics, and
the growth was motivated by lack of interest among the economists in the details of
market behavior, especially those related to the functions of the middlemen (Bartels,
1976; Houston, et al., 1992; Hunt and Goolsby, 1988). It coincided with the growth in
the number of middlemen and the importance of distribution during the industrial era.
The first courses offered on the subject area of marketing at University of Michigan in
1902 and at The Ohio State University in 1906, therefore, focused on the inter-
relationships among marketing institutions and among various divisions of the firm in
performing the distributive task (see Bartels, 1976, pp. 22-23). Unlike mainstream
economists of the late nineteenth century, who were preoccupied with public policy
and economic effects of market institutions, early marketing thinkers had operational
interests (Bartels, 1976). Most of this centered around efficiency of marketing
channels and the services performed by them in transporting and transforming the
goods from the producers to the consumers (Shaw, 1912; Weld, 1916, 1917).
The process of marketing was thought to generate additional forms of utility
including time, place and possession utilities to the consumer (Macklin, 1924). Thus,
marketing as a discipline got organized around the institutional school of thought, and
its main concerns centered around the functions performed by wholesalers and
retailers as marketing institutions (Sheth et al., 1988). The founders of the
institutional marketing justified the need for independent middlemen role on the
grounds of specialization and division of labor, although both producers and
consumers believed that the middlemen received higher margins than they deserved.
Thus, middlemen were perceived as adding no value and creating economic
inefficiencies by having location monopolies. Other authors of that period belonging
to the institutional school of marketing thought, such as Butler (1923), Breyer (1934),
Converse and Huegy (1940), and Alderson (1954) also espoused the value and
functions of middlemen in achieving marketing efficiency. They utilized economic
theories to design effective and efficient institutional frameworks. Because of their
grounding in economic theory, institutional marketing thinkers viewed the phenomena
of value determination as fundamentally linked to exchange (Duddy and Revzan,
1947).
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Although the institutional thought of marketing was later modified by the
organizational dynamics viewpoint, and marketing thinking was influenced by other
social sciences, such as psychology, sociology and anthropology, exchange remained
and still remains the central tenet of marketing (Alderson, 1965; Bagozzi, 1974, 1978,
1979; Houston, 1994; Kotler, 1972). Formal marketing theory developed around the
idea of exchange and exchange relationships, placing considerable emphasis on
outcomes, experiences and actions related to transactions (Bagozzi, 1979). Recently
several scholars have begun to question the exchange paradigm, and its ability to
explain the growing phenomena of relational engagement offirms (e.g. Grrnroos
1990; Sheth et al., 1988; Webster, 1992). In the recent past, researchers have tried to
develop frameworks for relational engagement of buyers and sellers, often contrasting
it with the exchange mode inherent in transactions (Arndt, 1979; Ganesan, 1994;
Lyons et al., 1990). Business practice exhorts both customer and supplier firms to
seek close, collaborative relationships with each other (Copulsky and Wolf, 1990;
Goldberg, 1988; Katz, 1988). This change in focus from value exchanges to value
creation relationships have led companies to develop a more integrative approach in
marketing, one in which other firms are not always competitors and rivals but, are
considered partners in providing value to the consumer. This has resulted in the
growth of many partnering relationships such as business alliances and cooperative
marketing ventures (Anderson and Narus, 1990; Johnston and Lawrence, 1988).
Cooperative and interdependent relationships are seen to be of greater value
than purely transactions based relationship (Kalwani and Narayandas, 1995).
However, the relationship orientation of marketing is not entirely a new phenomena.
If we look back to the practice of marketing before the 1900s, we find that
relationship orientation to marketing was quite prevalent. Although history of
marketing thought dates back to only the early 1900s (Bartels, 1962), marketing
practices existed in history, even pre-history (Nevett and Nevett, 1987; Pryor, 1977;
Walle, 1987). During the agricultural era, the concept of 'domesticated markets' and
relationship orientation were equally prevalent. In short, current popularity of
relationship marketing is a reincarnation of the marketing practices of the pre-
industrial era in which producers and consumers interacted directly with each other
and developed emotional and structural bonds in their economic market behaviors.

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1.2 THE CONCEPT OF RELATIONSHIP MARKETING
Relationship Marketing defines the framework for the Company to reach out
as well as and orient themselves to the outside markets, to the end customer as well as
to the business partners, the suppliers and vendors too. Relationship marketing is not
limited to Customers and Suppliers alone but has been extended in scope to cover he
internal employees as well as an effective way of reaching out to attracting best talent
too. If you scan any advertisement of a leading Corporate in the Newspaper, you will
see that major portion of the advertisement for recruitment is related to the
Companys background, culture and the effort to reach out to the prospective
employees. The advertisements are designed to strike a cord amongst the readers that
prompts one to apply for the job.
In the high tech age where the marketing concepts and tools have undergone
major changes with the introduction of e commerce, online selling, network
marketing, direct marketing, B2B and B2C business models, relationship marketing
has become the base on which the Business strategies as well as Marketing strategies
are built.
Business Organizations today have begun to recognize and consider the
human quotient as well as the emotional quotient of business relationships.
Relationship Marketing has evolved as a discipline that helps the Businesses to look
beyond transactions to long term business associations. Successful Relationship
Marketing strategy helps the Organization deepen and strengthen its revenue streams
on long term basis.
Relationship Marketing is a considered to be a core Corporate Philosophy on
which the Business strategy is built upon. It is reflected in all of the Marketing
disciplines including branding, advertisements, promotions, public relations as well as
through all sales channels and networks through which the Company reaches out to
the Markets and Customers.
The recent trend seen in the Organizations across the world is that they are
faced with changing times and the changing economies and business is forcing them
to change themselves too. Organizations today have no option but to change and
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evolve. The change has to do with every aspect of business and not limited to any one
aspect of its business. Those who are not able to see the trends and change themselves
are perishing. Technology has been the single most important change agent.
Technology has redefined all aspects of business. What we see today is the definitive
shift of power from the Organization into the hands of the Customer.
Customers today know their position and the power they wield. Especially the
medium of internet has brought the customers closer to the Organisation as well as to
the other Customers. Information, discussions, feedbacks and opinions are now
visible and available to one and all almost instantaneously. Social networking is a
medium that the Organizations cannot afford to ignore. This is both a boon as well as
a bane to the Organizations. Marketing Managers are learning to use this to manage
their relationship with the customers at large. Customer redressal too is another
important phenomenon that has contributed to the Customer becoming powerful in
the market place.
The fact that the information and interaction happens on live basis and the
customer reactions can be instantaneous puts a lot of pressure on the Organizations to
be on their guard all the time. Any adverse opinion shared or feedback from a dis-
satisfied customer can spearhead a word of mouth campaign that can harm the
Organisation. Therefore the internet and social network is a double edged sword as far
as the Organizations are concerned. When used effectively this medium can help the
Organization build a relationship with the customer and strengthen that relationship.
This medium helps the Organization to reach out individually to the customer which
may not be possible otherwise.
The marketing departments are able to not only communicate and address the
customer individually, with the help of technology and data mining techniques, they
are able to understand the customers needs and customize solutions as per the
specific individual needs of the customer. CRM packages and technology become the
enablers to make this happen. Banks, Airlines, Insurance as well as Services like
Pizza hut, Macdonalds are some of the businesses that have developed effective
means to recognize and communicate with individual customers and thereby build an
emotional connect with the customers.
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Product Companies have begun to use social networking sites effectively as a
platform to engage with customer on technical and product related discussions and
build a community around its products and services. Building relationships in such
situations is easier and more effective.
The dynamics in the market is changing, thanks to internet. Marketing
Managers can no longer afford to use the traditional methods of engaging and selling
to the customers. Marketing today demands a customer centric approach. Customer is
no longer an entity without a face. Todays customer is an informed and intelligent
customer who can be reached, who is visible and can be heard and a relationship with
him matters the most to the Organization.
Relationship Management holds the centre stage to designing Marketing as
well as communication strategies of the organization. It is essential for every student
to understand the dynamics of Relationship Marketing in the present context for this
subject will be the key differentiator for the Organizations in the market place.
Relationship Marketing is being spoken of as one key Business Philosophies
of the progressive Organizations who are Customer Oriented or Customer Centric.
Companies have realized that to be successful on the long term trajectory of
successful business, they need to be closer to the market, get under he skin of the
Customer, anticipate his needs and engineer products and services to satisfy the
customer and engage his loyalty.
As competition is increasing, product innovation is definitely one of the key
important elements that the Organizations need to depend upon to steer themselves
ahead in the market. Along with the technical leadership the companies necessarily
need to know how to reach out to the Customer. Engaging the Customer,
Understanding the Customer and building relationship has become the need of the
day.
No wonder that every individual today is bombarded with calls, emails,
personal visits, mailers and all sorts of marketing communications from different
companies trying to vie for your attention. From the Credit card Company, bankers to
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the shopping mall as well as the local restaurant you frequent try to engage you into a
relationship that goes beyond a single transaction.
One of the outcomes of the evolution of Relationship Marketing has been the
birth of CRM solutions. Besides CRM we have also seen the birth of new departments
and disciplines in Organizations namely Customer Service Department as well as Key
Account Management. It is very easy for students to equate RM with CRM and that
both are one and the same.
Relationship Management forms part of the vision and business ethics that the
Company envisages to imbibe as its core value system. When an Organization
chooses to build its business blocks around Relationship Management, the
Organization is marrying its Profit Making goal with Customer Relationship to build a
synergy by which all the divisions as well as the functions of the Organization look at
their function and business through the RM lens. This helps build a strong customer
orientation and culture of Customer Sensitivity across the Organization at all levels,
branches and functions. In any Organization several of its departments are involved
with the external customers. Starting with Marketing, Sales, Distribution to After
Sales Service, Quality as well as Finance Departments are involved with Customers
and their orientation towards the Customer interaction is fashioned by the RM outlook
of the Organization.
CRM on the other hand can best be described as an enabler of RM in any
Organization. CRM involves process including software and hardware components
that automates and helps manage customer engagement. While RM works at a
strategy level, CRM helps implement the Strategy. The success of CRM as a concept
is widely seen due to the aggressive marketing of CRM solutions by the IT companies
who have developed the CRM packages. This has helped the Multi National
Organizations to implement standardized process of Customer management on large
scale across geographies and markets.
Besides Software driven Packages, there are several services and schemes that
are available locally that are tailor made to suit particular industry. In a market place
where every company is vying for space in the minds of the customer what helps the
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company gain that customer loyalty is the RM outlook that comes across via the CRM
channel.
The customers belonged to the responsibility of the Marketing Department
alone. Organizations probably had too many constraints on meeting the demands and
were saddled with limited product range that did not require them to look out and
reach out to the Customer. However with evolution of technology, mass production
processes as well as expanding geographical markets, the Organizations began to
realize the need to reorient their understanding of the business and the way to manage
the business. To a large extent we can very well say that the Customer Relationship
Marketing did not originate only in the marketing department. It developed as an
Organizational approach and management thought.
Management experts and Organizations have come a long way in terms of
their outlook to the internal and external environment. Today Organizations have
begun to understand and recognize the relationship that exists between the
Stockholders, the Employees and the Customers who provide the reason as well as the
resources for the Organization to exist and grow.
There exists a mutually inclusive relationship between all the three factors.
Organizations need to manage the relationship dynamics on all the three fronts. This
understanding has further brought about the Management thought and approach to
orient and imbibe Relationship Marketing as an Organizational Philosophy. An
Organization does not recognize the customer in the market to be the only stake
holder in its relationships. The Company has ongoing relationships both internally as
well as externally at many levels and tiers. The Company strives to build excellent
and long term relationships with its strategic suppliers as well as the intermediaries
important for its business. Sales and Distribution partners including whole sales,
channel partners as well as point of sale retailers form a part of the chain which needs
to be handled via the relationship platform.
The number of relationships that the Organization is required to manage are
spread over several areas. Ongoing Relationship Management with Current
Employees as well as prospective employees becomes very important for the
Organization as the Human resource is a key resource for its business. Besides the
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employees, suppliers, as well as the Customers and intermediaries, the Organization
has a relationship that needs to be managed with the public, Government as well as
media too. Therefore it should be very clearly understood that Relationship Marketing
is a business philosophy and not a marketing strategy. Of course Marketing strategy
and plans are built around this Organizational philosophy and value of Relationship
Marketing.
Managements have successfully adapted to the concept of internal and
external Relationship Marketing and have benefited immensely from it. Internally the
concept of internal customer has yielded tremendous advantageous and brought about
efficiencies in operations. TQM, JIT, Six Sigma philosophies have been successfully
implemented thanks to the fundamental concept of internal customers and customer
satisfaction.
Apart from marketing and sales functions which are exposed to the Customers
and markets and hence need to be sensitized and oriented towards relationship
management, the Organizations have realized the need to sensitize the other
departments including Finance, HR, Technical Service, Customer Service as well as
the Product Development and legal departments towards relationship Management
with he customers. This orientation has benefited the Organizations immensely
besides changing the service dynamics for the customers.
In this modern times, we happen to be living in a fast paced high tech society.
Use of technology has become the backbone of our daily life. You are able to be in
the comfortable environments of your home or office and manage all of your
domestic chores such as banking, booking an airline ticket or buying insurance online.
You are dealing with a particular bank, Credit Card Company or an airline know their
process by yourself preferring to use them and resist any attempt to bank with a new
bank or switch the airline. Havent you been happy when the customer care executive
that you called at the credit card company waived the late fee in view of your
longstanding relationship?. You also notice that they try to call you and make
irresistible offers to keep you happy. If you are wondering as to how they manage to
get to know you better amidst thousands of customers, this is CRM helping the
Companies manage to get closer to each individual customer while serving such huge
customer base.
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Technology has given way to the development of CRM software and
processes that have made it possible for Companies to achieve multiple objectives. In
reality CRM is the tool used by RM practitioners.
Using CRM Companies establishing an interactive relationship with the
customer. CRM further helps enhance the customer interaction by providing
standardized process as well as clear cut guidelines for the customer redressal.
CRM includes IT Hardware infrastructure, Software, Communication network
as well as customization depending upon the Organization, its business and the
customer. For CRM to be successful, the customization has to be based on the
Relationship Marketing strategies and policies drawn up by the Company. Before
customizing the CRM, there has to be an effort made to get under the skin of the
customer and look at transactions and the needs of the customer through his eyes.
Only when the customer needs are anticipated and addressed can the CRM become
successful. When it comes to Relationship marketing, Organizations have realised that
an automated CRM process is not desired by one and all and that human interaction is
very much the unsaid need in every single transaction. Call centres have managed to
emerge and grow as a business solution simply because of the human element that
combines with the technological advantage.
CRM is useful tool for the Marketing professionals to get closer to their
customer. Using CRM effectively they are able to offer customised marketing to
individual customers and to a very large customer base. Companies can use the data
warehousing and data mining techniques to get to know all about the customer
including his personal details like birthdays, anniversaries as well as store details of
his past transactions, his likes and dislikes as well as his preferences etc. Using
statistical tools the data gathered can be used for extrapolation to anticipate customer
behaviour and the market trends.
In case of personalised service businesses like banking or hotel industry, this
kind of data on the customer helps the Companies customise the service delivery to
the individual. Customer retention and customer loyalty are the positive outcomes of a
successful Relationship Marketing CRM process. Organizations today have accepted
the fact that customer relationship is one area that they have got to focus upon and
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invest into. Technology has been able to make this relationship work and enhance the
value of relationship between the customer and the Organization.
Marketing as a function is no longer what it used to be a decade ago.
Marketing Managers have had to learn new ways and methods to build strategies and
reach out to the customers. Customers are not passive but are well informed,
knowledgeable and are in a position to demand what they need. The customer profiles
and characteristics have changed over the recent times. Technology has redefined the
method of communication and supply chain to reach across to the customer. The
marketing success today lies in building the Customer Chemistry. Getting to know the
Customer, building relationship with the Customer and Managing Customer
Relationships has become an important part of the Marketing function. Marketing
strategies with respect to Relationship Management are not built in isolation but
involve corporate philosophy and management vision too.
In the fast paced and competitive market, Organisations need to have their ears
and eyes open to the Customers. Only those businesses that have invested in getting to
know the customer on continual basis, built an on-going relationship, understood the
needs and anticipated the customer needs have been successful in the long run.
When an Organisation develops a focus in managing its relationship with the
Customer and listens to the Customer that Organisation is able to be in business
tomorrow. A successful marketing manager or a business manager never stops
listening to the Customer.
When a Marketing Strategy is drawn up with Customer Relationship
Management strategy as the key focus, it is important to be able to identify and
quantify or measure the outcome. The expectation out of Customer Relationship
Management can be measured and the benefits to the Organisation can be easily
identified. Such an exercise helps the Marketing Managers to draw up their budgets
and implement strategies effectively.
Sales and Marketing professionals who understand the value of their
Customers tend to spend more time at Customer site rather than in office. By getting
to know the customer closely, one gets to become a part of the Customers team and
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indirectly influence the buying decision at the Customers end. In a B to B situation,
A strong relationship with the Customer can yield quantifiable results in terms of
customer loyalty, increased revenue, savings on marketing costs, improved margins as
well as opportunities for developing and offering customised and new product or
service to the customer to meet his new requirements. When one is able to pre-empt
such requirement and provide solution, it is easier to kill competition or keep them at
bay.
Organizations have understood the value of Customer Relationship have been
able to evolve strategies to increase the Customers dependence on the products and
services by customising and investing into building specific solutions that meet the
needs of the customer. Such situation calls for engagement and leadership from the
Management as well as technical and marketing functions as a team in engaging with
the customer. The result can be a new business or product line paving way for new
markets. Investing into the Customer relationship in such situation calls for investing
the best brains and intelligence in terms of product or solution development. For a
customer to engage with a supplier in building solutions, it takes a strong relationship
built over a long period and proven capability as well as management participation. In
the end the investment pays off in terms of long term business growth as well as new
product and solutions.Fig.1 shows how a customer as a prospect become Partner of
the company.







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Figure 1.2- The relationship marketing ladder of customer loyalty

Relationship marketing is emerging as the core marketing activity for business
operating in fiercely competitive environment. On average, business houses spend six
times more to acquire customers than they do to keep them. Therefore, many firms are
now paying more attention to their relationships with existing customers to retain
them and increase their share of customers purchases.
Worldwide service organizations have been pioneers in developing customer
retention strategies. Banks have relationship managers for selected customers, airlines
have frequent flyer programs to reward loyal customers, credit cards offer redeemable
Partner
Partner someone who has the relationship of a partner
with you
Advocate
Advocate someone who actively recommends you to
others, who does your marketing for you
Supporter
Supporter someone who likes your organisation, but
only supports you passively
Client someone who has done business with you on a
repeat basis but may be negative or at best negative,
towards your organisation
Client
Purchaser
Purchaser someone who has done business just once
with your organisation
Prospect
Prospect someone whom you believe may be persuaded
to do business with you
Adapted from: Peck, H., Payne, A., Christopher, M. and Clark, M. (1999) Relationship
Marketing, Oxford, Butterworth Heinemann.
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bonus points for increased card usage, telecom service operators provide customized
services to their heavy users, and life insurance companies have personalized services
for their regular customers.
One of the most dynamic topics of the new millennium is the area of CRM. At
the core CRM is an integration of technologies and business processes, used to
satisfy the needs of a customer during any given interaction more specifically, CRM
is the process of acquiring, satisfying, retaining and growing profitable customers. It
requires a clear focus on the service attributes that represent value to the customer and
create loyalty. This encompasses developing long term relationships with customers,
allocating marketing dollars based on the customer value and driving as much
revenue from these customers over a life time. It is important to note that the term
customer has a broad definition that includes vendor, channel partners or virtually any
group or individual that requires information from organization.
CRM is a corporate philosophy that focuses on the customer, fulfilling their
every wish & meeting their every need in the hope of winning their loyalty (The
Times of India Jan 8
th
2003). It has won wide acceptance in the business world.
Throughout the world, CRM is considered the market for future, in terms of market
relevance as well as of its strategic relevance. There are enough reasons to become
familiar with the opportunities, risk, & success factors involved in the implementation
of CRM solution
In economic terms it means change from sellers market to buyers market. In
most cases, the consumer can choose to purchase a product or service from any one of
the numbers of suppliers. In addition, globalization has made product interchangeable.
But experience also shows that price is not the only factor in competition between
companies. More than even that, todays customers are in a position to formulate their
own requirements & exist for new & comfortable ways to intersect for experience,
internet-supported order processing in real-time. This means that supplier must
consider satisfying their customer all along the customer lifecycle.
The challenge of CRM lies in integrating marketing, sale & service in a way
that best serves the customer. Excellent customer relationship are based on human
performance, they are relationship between two people. Excellent employees &
18

partners, people who are in the position to treat customers with friendliness,
characterize excellence in the area.
CRM can be viewed in four principal ways. Firstly it is a contemporary
response to the emerging climate of unprecedented customer churn, waning brand
loyalty & lower profitability. Secondly CRM is central to the task of making an
organization, customer centric. Thirdly CRM is the surest symbol embracing
information technology in business. Fourthly & finally, CRM is the most certain way
to increase value to the customers and profitability to the practicing organizations.
CRM is meant for a common and equal good of the two stakeholders-business
and their customers. It calls for capturing pertinent data about the perspective and
current customers in respect of their buying patterns, shopping behavior & usage habit
of the product and services and to use the information to commence a two-way
dialogue with them.
If the essence of CRM is customer and continuity, the term CRM can as well
be an acronym for any of the following cognates marketing terms: -
Cost & Return Management (CRM)
Caring Relationship Management (CRM)
Customer Returns Management (CRM)
Creative Relationship Management (CRM)
Customer Retention Management (CRM)
Cost Reductions Management (CRM)
Continuous Relationship Management (CRM)
In more ways than one, CRM represents a logical end of the philosophy that
the business should be customer oriented. It traversed successive strain of thoughts to
reach what is now viewed as a new business paradigm. For instance, the early
marketing paradigm prevalent units the sixties, ordained marketers to satisfy customer
needs that were essentially nature created. Later in the seventies, the marketing
function served as customer wants, that were nothing but specific to the needs and
were the outcome of the marketing initiatives. Marketing thoughts of the eighties
19

devoted themselves to meet the higher, more life style oriented demand &
expectations of customers. These were the results of the social and economic
environment. The nineties witnessed the most potent force of our time, IT. Naturally
marketing thoughts focused on how to leverage on the same and serve the customers.
One of the fallout of the era is CRM. CRM thus represents the marriage between the
customer orientation and the emerging IT to produce a memorable relationship.
The organization must be prepared structurally for the implementation of
CRM solutions & management must take necessary adjustments (The Times of India
Nov 20
th
2002). Once a goal has been clearly defined, the project must remain
absolutely faithful to it. Implementation of CRM system doesnt differ substantially
from implementation of others systems. CRM project must be understood as long-
term initiative because it integrates operational units. These concerns are only
heightened by expectation of the schedule & return on investment.
Berry (1983) recommended the following five strategies for practicing relationship
marketing: -
i. Developing a core service around which to build a customer relationship,
ii. customizing the relationship to the individual customer,
iii. augmenting the core service with extra benefits,
iv. pricing services to encourage customer loyalty,
v. and marketing to employees so that they will perform well for customers.
Relationship marketing is a refocusing of traditional marketing with greater
emphasis being placed upon the creation of customer value. Customer value is the
summation of all the positive effects that a supplier has upon the customers business
or, in case of end users, their personal satisfaction. Creating and enhancing customer
value requires a detailed understanding of the customers value chain and, in
particular, whereabouts in that chain the opportunities for value enhancement lie.
1.3 PURPOSE AND OBJECTIVES OF THE STUDY
The purpose of research is to discover answers to questions through the
application of scientific procedures. The main purpose of this exploratory and
analytical research were to carry out primary & secondary study in order to examine
20

the use of the internet based services by the customers of Tourism & Hotels
(Hospitality) services organizations referred in this study.
Another purpose of this study is to establish application & importance of the Websites
as an effective relationship marketing tool for the (selected units under study) tourism
& hotel organizations in India.
The other important purpose of this research is to relate satisfaction of the
customers for the selected units under study, using Web based internet services
offered in the Tourism & hotel service relationship areas. Researcher is confident for
aiming towards analysing these discoveries within the specific purposes.
The basic objective of the study is to examine marketing strategy i.e creating
customer satisfaction, higher profitability & revenues , building brand equity and
creating & maintaining relationship through regular relationship building in service
sector with special reference to services marketing organizations and especially, the
tourism and hotel industry. Some of the major objectives related to this study are:
To understand the domain and conceptual foundations of relationship marketing in
service sector.
To study the role & importance of relationship marketing in Travel &Tourism and
Hotel sector in India.
To evaluate the role of Relationship (through interactive IT technology) via web
based Internet Business strategy in attracting, retaining, and enhancing
relationships between the marketers/service providers and the customers.
To study the various aspects of relationship marketing strategies in the selected
units under this study.
To collect the useful data from the customers through primary & secondary
survey.
To analyze the practice of relationship marketing through web based services in
the selected organization dealing in travel & tourism and hotel services in Indian
perspective.
To analysis the respondents satisfactions with selected Units under study
21

To evaluate the satisfaction level of the customer Before purchase, At the time of
purchase and After purchase of services through web based informations
available on the websites of the units taken under this study.
To recommend customer centric relationship marketing for Tourism & Hotel
services through electronic customer relationship.
Acquiring new customers can cost five times more than the costs involved in
satisfying and retaining current customers. It requires a great deal of effort to
induce satisfied customers to switch away from the current suppliers.
The average company loses ten percent of its customers each year.
A five percent reduction in the customer defection rate can increase profits by
twenty five percent to eighty five percent depending on the industry.
The customer profit rate tends to increase over the life of the retained customer.
To submit the final report followed by observations, findings, analysis and subsequent
recommendations based on the data and information available on the subject of study.
Good customer relationships are at the heart of business success. There are
many technological components to CRM, but thinking about CRM in primarily
technological terms is a mistake. The more useful way to think about CRM is as a
process that will help bring together lots of pieces of information about customers,
sales, marketing effectiveness, responsiveness and market trends.
Sharma stated that, the commodity trade is getting closer to its customer-via
CRM. In some markets, CRM is also known as PRM (Partner Relationship
Management). Commodity markers and traders have realized CRM helps give them
precisely the same benefits that give brand marketers and service providers. CRM
helps a commodity seller lock in repeat by differentiating his product and service.
Most of the commodity players deal with four major customer groups-dealer,
institutional buyer, influencers and final consumers. CRM can help lock in at least
the first three.
Delivery of service is a relatively new term as opposed to distribution Gupta
(1999). This is due to realization of the fact that insurance products are not just the
policy documents, but much more. Provision of after-loss service at pre-negotiated
rates in quick time could relieve the customer of much of the trauma that follows an
22

unfortunate event. It will not only bring in the real meaning to indemnity as we
know it, but also a great amount of customers delight. After all, what the customer
buys is not a policy, not even the right to make a claim after a loss, but peace of mind
from the perceived threats to his life, assets, liabilities or activities.
The thrust of the business hereafter will be not just on acquiring more
customers, but on retaining the ones already served by the companies. Universally, it
has been recognized that it takes far less to retain a customer than to acquire a new
one. Therefore, losing even one customer can prove quite costly in the long run. The
impact of customer retention on profitability can be extraordinary. For example, 80
percent or more of the profits at financial services firms typically are generated by
customer; a new customer may not become profitable for several years. According to
Frederick Reichheld (Resources, 1999), if the average company were to boost its
rate of customer retention in life or auto insurance, for example, by just 5 per cent, it
would realize an increase in customer profitability of more than 80 per cent in that
line. This phenomenon of shifting the attention away from attracting new realized
that it as important as winning new customers as is retaining profitable customers.
According to one expert, one should insure life not just once, but every time one feels
there is a change in his life profile.
According to Johri (2000), A market research has shown that a dissatisfied
customer shares his experience with at least 11 persons, each of whom in turn
conveys it to another 5 persons. A majority of the customers, who switch their
insurer, do so because of the indifferent attitude of the service provider. The satisfied
customer repeats his orders, tries out new products and passes on that information to
many others.
According to Wired Magazine, the average American works 25% harder
today than he or she did in early 1970s. Not only are people working harder, they also
spend more time in traffic and less time with their families. Leading increasingly
complex lives, theyre barraged with choices. In this environment, consumers have
come to crave better time management, value and convenience.
Meanwhile, against this background of social revolution, advances in science,
technology and healthcare are set to transform the way in which insurance is
packaged and sold to consumers. A few trends in particular have converged to
23

radically alter the insurance business. These are web services, developments in
genomic science and lifestyle choices. With the dramatic changes that developments
in these fields will bring, the challenge for insurers will be to find ways to empower
customers with ways to better manage their risks and lifestyles. Web services, for
example, are emerging that will enable personalised portals to live in mobile
environments, on sensor chips, and be embedded in different kinds of products that
will talk to you. With the ubiquitous access to information that these will provide, it
will transform the way in which insurance companies communicate and service their
customers.
Everybody wants Loyalty in their customers and business partners, in their
friends and relationships, in their sports teams and above all, in their pets (Lawrence
F. Goldman 1997). Loyalty isnt much to ask for, but it can be very elusive,
especially in the world of e-commerce. Today, buyers have more choices than ever,
and every day it seems harder to distinguish one companys products from anothers.
At the same time, the Internet has accelerated buyers decision-making processes,
making it harder for companies to build meaningful relationships with their
customers.
Lawerance (1999) states that companies find out what specific loyalty drivers
are important to customers in their industry by asking and watching. In the past,
companies relied on focus groups and surveys. Today, cutting-edge customer service,
sales force automation, telemarketing and Web site technologies can automatically
gather qualitative customer information for detailed analysis. This information can be
distilled into the customer segmentation equation, allowing quantitative measures
such as revenue, profitability or lifetime value to be crossed with loyalty drivers such
as quality, consistency and trust. By understanding each customers specific loyalty
drivers, companies can deliver personalized, meaningful service to every customer.
Frederick (2004) states that earning customer loyalty in any business requires
intense focus, careful analysis, consistent actions and investments, and a passionate
concern for customers -- but the benefits of success can change a company's overall
trajectory and potential. Companies that ignore customer loyalty in order to shore up
their short-term profit margins are choosing a far riskier and ultimately more arduous
future. The symptomatic relief they seek often merely aggravates the illness, because
24

the management tools that fix profits were not designed to examine, correct, or for
that matter even uncover the potentially much more serious flaws in a company's
value proposition. On the contrary, concentrating on immediate profit improvement
tends to undermine whatever value the company still can deliver to customers and
employees.
Companies cannot succeed or grow unless they can serve their customers with
a better value proposition than the competition. Measuring customer and employee
loyalty can accurately gauge the weaknesses in a company's value proposition and
help to prescribe a cure. Too often it is the customer who is left out of the customer
relations management (CRM) equation.
Using financial services as an example, Michael Kelly (2002) decides that it
is crucial to look at things from the customer's perspective if CRM projects are to
succeed. For the year 2000, industry analysts the Gartner Group calculated that 45
per cent of CRM projects failed. Of the top 10 reasons, it cited "limited or no input
from the customer's perspective" as being the fourth most serious contributing factor
to failure. Too often boardroom members were saying, to their detriment, "we already
know what the customer wants", when they patently didn't. Devising and carrying
through a CRM project, customer input is vital for success, for obvious enough
reasons. Where else would you expect to start on a project, with the avowed objective
of increasing customer satisfaction, than with the question of what exactly the
customer will get out of it? So every CRM project should start with these simple
questions. What is our strategy for dealing with customers? What are we trying to
understand? What does the customer want? This last question is key. The answer is
straightforward. Customers want three things from their provider. Same as it ever
was, they want value. Second, they want convenience. And third, they want to be
recognised and valued as an individual.
According to Gartner Group, customers leave a company for a variety of
reasons. Fourteen per cent move to competitors. Four per cent die. But most worrying
of all, 68 per cent leave because of poor customer service. Providing convenience to
the customer is a lofty goal, but it doesn't come without making heavy operational
demands - and, as can be seen, risks.
25

As a marketer or product manager, your goal is to sell your company's
product or service Phillip Suchet (2004). Most approach this task by making their
product visible to the largest number of people possible. This is often a flawed
approach. As more people purchase online and competition increases, you must rely
on different methods. You must know exactly who your customers are and what
segments they fit into. Are they students or seniors? What are their demographics?
Are they price-sensitive? How much information do they seek before making a
purchase? Do they buy the latest technology? What's their past purchase behavior?
You may ultimately find you have 5 to 10 different segments within your customer
base. You need to know what stage people are at with your company. Are they now
discovering you or just browsing? Are they in the process of making a purchase? Or
are they already informed satisfied customers?
Philippe Suchet 2004 Remember the joy and wonderment when you first
started using the Internet? Remember thinking it would fill your needs from the
comfort of home? If you do, you have a good memory. The idealized power of the
Internet, one of an all-knowing, all-powerful tool for the good of the consumer, is
forgotten. Instead, we think the Internet has the potential to fulfill some needs and
desires, but that potential is wasted on poorly conceived, designed, and managed Web
sites that are hard to use. Most consumer sites play to the mass market, not the
individual. Today that error is easily correctable.
"In a CRM environment, the organization needs to look at the whole
relationship with the customer," says Tower Group's Khirallah. "Insurance carriers
don't leverage their customer information. In a very large organization, there could be
a claim on auto, and yet that company will try to deal with that claim on the auto side
without taking into consideration that customer's overall value."
"Historically, if a client or policy owner would call up, we would focus on
what that particular individual's isolated problem might be and move on," reflects
Mike Morris, senior manager, strategic Projects for Beneficial Life. "We wanted to
place that particular transaction in the context of our overall history with that client- -a
view of all of their holdings or policies or financial products with us."
John 2004 "What gets measured and rewarded gets done and it also sums up
the message of the recent Smart CRM conference held in Atlanta. Co-sponsored by
26

TechTarget and the Peppers and Rogers Group, the conference's theme never drifted
far from the need to measure customer-based initiatives before they start, while
they're in progress, and after they are completed.
Almost every speaker dealt with the measurement theme in some way.
Peppers & Rogers Group co-founder and keynoter Don Peppers laid out a strategy
for calculating the worth of a company and its customers by focusing on customer
equity. A case study by the U.S. Postal Service showed the positive effect of business
intelligence in fine detail. And one of the best and most practical presentations was
made by one of Bethune's employees. Andre Harris, director of reservation quality
and assurance for Continental Airlines, showed how a basic customer element such as
the contact center could be measured and its effect on the company calculated. With a
center that seats more than 4,600 people and handles 60 million calls annually, Harris
said the airline's contact center historically "didn't listen to customers because all they
were doing was complaining." In the 1990s, under Harris' leadership, the center
instituted a "Go Forward plan" that set out to measure the performance of each agent
and customer satisfaction.
Harris found out several things before the effort was implemented. A
customer survey asked Continental flyers what they valued and didn't value in contact
center interactions. Among the answers, customers didn't care whether an agent
thanked them for calling Continental, and they didn't like that all calls were strictly
scripted. So the new program honored individual styles by promoting best practices
among "super agents," those who closed the most sales and reduced their amount of
calls that needed to be referred to supervisors.
"You have to understand customers' needs, give them accurate information,
and answer promptly," Harris. Among the results from Continental's program: a 1.2%
attrition rate over the past two years among contact center agents, a 17% increase in
bookings in 2003 over 2002, a higher proportion of e-ticketing, and a 10% jump in
average agent quality scores based on internal measurements.
Chatterjee and Prasad (2003) Customer orientation is vital for engineering
consultancy as its business dictated by relationship development because its a long
duration contact among limited and strategically important corporate house. Further,
customer orientation is the concept, which should not be viewed in isolation and
27

should be the key issue in formulation of business strategies. To ensure success, the
engineering consultancy organizations have to make sure that its front line customer
contact employees are well motivated, trained, and customer oriented. Regular
training and Internet marketing programs are imperative for the employees to be
customer oriented.
Singh (2002) stated that, focus on connecting the field sales force to
customers, leading to the emergence of sales force automation tools. Contact
management is simply capturing customer profile and status information on a single
database platform, being shared across the company. CRM is a corporate strategy
plant, which means that it can mean anything and everything depending upon which
industry your customer is in and their varying competencies. The objective of CRM
strategy includes increased revenue, which is distinct from sales force automation
(SFA) because CRM addresses revenue from all layers of a corporation, increased
productivity of staff and processes which result in revenue gains and cost reduction.
1.4 A BRIEF INTRODUCTION TO THE UNITS UNDER STUDY
Hotels organisations
Taj Group of Hotels
ITC Maurya Sheraton
Intercontinental The Grand Hotel
Ashoka Hotel
The Oberoi
The Hyatt Regency Hotel
Tourism organisations
Indian Tourism Development Corporation Limited
J & K Tourism Development Corporation Limited
Thomas Cook
Cox & Kings India Private Limited
Trade wings Tours Limited
Travel & Tours Operators
Raj Tours & Travels
28

Sita world travels
Make-my-trip.com
IRCTC
Yatra.com
Ezeego1.com
Brief introduction of all the organizations is being presented in the following pages.
















29

CHAPTER 2
RESEARCH DESIGN

The second chapter of the thesis has been dedicated to research design,
methodology and tools of research the researcher has adopted for the treatment and
analysis of the topic under study. It discusses all about methodology, techniques,
research design and processing and analysis of data. In the following pages, the
researcher has discussed the practical aspects of research methodology used for the
present study. The researcher has first of all developed upon the theoretical narration
of research and various concepts related to research.
CRM guru.com defines CRM a business strategy to select and manage
customer to optimize long term value it adds that the strategies requires a customer
centric business philosophy and culture to support effective marketing, sales and
services processes and further sales that CRM applications can enable effective
customers relationship management, provided that an enterprises has the right
leadership, strategy and culture.
According to Sheith & Parvityar, Customer Relationship Management
(CRM) is a comprehensive strategy and process of acquiring, retaining & partnering
with selective customers to create superior value to the co. & the customer.
According to Dicklee, CRM is the implementation of customer centric
businesses strategy, which drives re designing of functional activities, which demand
remembering of work processes, which is supported, not driven by CRM technology.
He argues that he used this definition because it reinforces the understanding that
CRM is a chain reaction triggered by new strategic initiatives rather than something
you can initiate at the work process or worse yet, technology level.
According to Jeniffer Prattin CRM talk says that CRM is the management
approach or model that puts the customer at the core of the companys processes and
practices. She argues that CRM leverages cutting edge technology integrated strategic
planning, up close personal marketing techniques and organizational development
30

tools o build internal and external relationship that increase profit margin and
productivity within the company.
According to Gartnerer, CRM is a business strategy with outcomes that
optimize profitability, revenue and customer satisfaction by organizing around
customer segmentation fostering customer satisfying behavior and implementing
customer centric processes. CRM technologies should enable greater customer
insight, increase customer access, more effective interactions & integration
throughout all customer channel & back office enterprise functions
According to Vikas Saraf CRM is an integration of technologies and business
processes, used to satisfy the needs of a customer during any given interaction more
specifically, CRM is the process of acquiring, satisfying, retaining and growing
profitable customers It requires a clear focus on the service attributes that represent
value to the customer and create loyalty. This encompasses developing long term
relationships with customers, allocating marketing dollars based on the customer
value and driving as much as revenue from these customers over a life time.
2.1 RESEARCH METHODOLOGY
The aim of this study were to carry out exploratory research in order to
examine the use of Interactive technology helps marketers to inexpensively engage
customers in one-to-one relationships fueled by two-way conversation via mouse
clicks on a computer, touch-tone buttons on a telephone or surveys completed at a
kiosk. Interactive technologies include interactive telephony (Call centers, Customer
relationship centers, CTI etc.) Internet (interactive websites ,customization enabled
websites, etc.) and digital technologies (Multimedia Kiosks, ATM etc.) In this study
researcher focused on Web based Internet services as a Tourism & Hotels services
marketing communication tool and to establish use of Internet bases customer
services as a Relationship Marketing (RM) tool at all the stages of the customer
interaction with the service provider.
Building Customer Loyalty on the Internet
Why does customer retention online matter? It costs 4-6 times more to attract
a new customer than to retain a current customer. Existing customers are not only less
31

costly to retain, but they also respond 4-5 times more readily to promotions and e-
mail campaigns than new customers. It is important to extract more wealth out of your
existing customer base by understanding customer needs and their lifestyles, and
building a marketing strategy based on those needs. Knowing the customer, sending
personalized messages, being there at every touch-point (planning, purchasing,
service consumption and post-stay), and providing a unique value proposition leads to
increased customer loyalty.
The approach and methodology for this study can be broadly divided into
three stages. This segmentation into three stages is merely to have a better insight into
the modalities of the proposed study. These stages, however, have not been and
intended as mutually exclusive independent segments. There have been quite a few
activities, which are common to two or the three stages. These stages are also not
expected to confirm to any strict chronological order sequence, though they
essentially represent these different phases of the study. These three stages are:
Stage I : Preliminary and Exploratory Research
As the name suggests, this stage involved the preparatory exercise involving
finalisation of information checklist(s), questionnaires, information sources etc. This
stage of preliminary and exploratory research was essentially a stage where the
parameters of the actual field study were identified and determined. This stage could
also be viewed as the pre-survey phase. The typical activities to be conducted in stage
1 were:
Various methods of collection of data and review of current literature and
research work also find place in this part of the study. Extensive literature on services
marketing, relationship marketing, tourism and hotels marketing have been consulted
and useful information and data has been drawn out of them. Research journals, daily
newspapers , Published documents, books & other aspects websites of online tour
operators, hotels and research articles on the subject have been reviewed. The
information technology tools i.e. internet has also been resorted to for gathering latest
data and information about the selected organization involved in the Tourism & hotels
Business.
Stage II: Primary Data Collection
32

This Stage involved the actual on line survey, field study and organizations
visits under study. It is significant to mention that Stage II became meaningful as the
basic data inputs as mentioned in Stage I, were collected. However, some data/
information inputs pertaining to Stage I, was collected / reconfirmed during the actual
execution of Stage II. Stage II, primarily, included the following key activities:
Actual organizations local offices visits/ observations and online collection of
the informations of different identified / potential Tourism & hotels
organization outside NCR of Delhi.
Primary data collection through qualitative, semi-structured interviews were
utilized among the following respondent segments:
1. Customers / Visitors / tourists at identified location.
2. Tour operators / travel agents at identified location.
3. Hoteliers / accommodation providers at identified location.
4. Selected senior (regional or head office) directors of marketing , relationship
manager, Tour managers, Tour operators & others from Tourism & hotels
organisations were individually met and interviewed.
5. Researcher in this study also chosen the purposive sampling method. The
regional or central head offices of hotel & tourism chains are scattered around
the India. Therefore, it would be very difficult to obtain interviews from a
random sample within a limited time period. Furthermore, senior directors of
marketing often have a busy schedule and the interviews had to correspond
with the respondents' availability and willingness to be interviewed.
The primary data and information has been obtained by administering standard
questionnaire and holding interviews and discussions with the marketing
people engaged especially in the hotel, tourism and other services sector. A
framework of the questions was drawn up based upon the objective of the
research.
The research design part of the study gives complete view of the methodology
and methods of study adopted by the researcher for the treatment of the subject
selected by the researcher. The basics of research, objectives of research, research
design and tools of research have been discussed. The study of conceptual part is
33

necessary to build the edifice of study. The researcher has examined all the aspects
and issues of research in this part of the study.
Semi-structured Interviews have also been held with marketing personnel of
hotel and tourism sector. This approach was preferable due to its suitability for an
unexplored research topic, whose subject matter deals with confidential company
information (e.g marketing strategy).Also respondents were reassured the results
would have a degree of confidentiality. The researcher has visited several times the
local offices of the selected units prominently engaged in tourism promotion and
visiting websites for statistical datas . The information obtained from them, has been
analysed properly.
Stage III: Data Analysis and Preparation of Perspective Plan
After the relevant data / information was collected etc. (In Stage I & II), next
Stage in the methodology was to synthesis and analyse the host of data / information.
Indicative structure is also to find out the following levels of analysis :
1. Respondents satisfactions for Quality Services with internet based relationship
services of selected Units under study.
2. Use of Internet as an effective relationship tool by the service provider
selected Units under study.
3. The last part of the study presents observations, analysis of data and inferences
drawn by the researcher on the basis of available information. At the end of
the study, necessary recommendations have been given with concrete
suggestions.
In the present study, the researcher had to face some limitations and
difficulties while collecting information from the officials of the organizations.
Certain classified information was not available despite best efforts. The respondents
are scattered around the different long distance locations. Therefore online data has
collected by the researcher from random sampling of 160 respondents within the
limited period .Furthermore, senior directors of the concerned departments often have
a busy schedule and the interviews and online informations had to correspond with
the respondents availability and willingness to be contacted.
34

However, certain assumptions were made by the researcher and appropriate
hypotheses were formulated by the researcher. In the meantime, some of the
marketing people were not available for comments and the queries made by the
researcher. However, their juniors provided information and answers to the queries
made by the researcher. The researcher also made attempts to verify information with
the help of company records, published statements, advertisements and annual reports
of the organizations which have been referred to in this study. The problem selected
by the researcher is of vital significance in the present times when big corporations
are laying more and more stress on the good performance of internal marketing. If
internal marketing is effective, external marketing will automatically be effective. In
the present times, companies are shifting gears from managing product & services
portfolios to managing customer portfolios. The focus today is on Customer
Relationship Management (CRM). Companies are more emphasize on keeping and
growing customers instead of finding new ones. They are compiling databases on
individual customers so that they can understand them better and construct
individualized offerings and messages for all time satisfaction. As such, the
importance of internal marketing can not be over emphasized.
The researcher has used various mathematical, statistical, economics
techniques for the development of the study and the presentation of datas. The chief
among them were his observations for case study. Observation of the behaviour and
responses of individuals, groups and organizations representatives or their
products/services or outcomes is not only an essential aspect of human life, it also
forms a basic method of systematic scientific research in behavioural sciences.
Specifically, it is particularly useful in such specialist fields as developmental
psychology, anthropology, behaviour modification, social psychology and evaluation
research. Observation can be used both in the laboratory as well as in naturalistic
(i.e., cocktail party) settings.
Indeed, in laboratory settings, careful observation of subjects may not only
throw light on the limitations of the experimental procedures but also generate ideas
for future research. As Lambert
1
points out, from the very outset, learning theorists
have recognized the relevance of observing very fine details in experimental and other

1
Lambert, W.W.: Stimulus-Response Continuity and Reinforcement Theory in Social Psychology, in
G. Lindzey (ed), Handbook of Social Psychology, Cambridge, Mass.: Addison-Wesley, 2003, p.74.
35

settings. For example, when Skinner recorded how many times a rat pressed a bar, he
was counting environmental events or the effect of the rats movement on the
environment. However, Guthrie argues that the rat could not have accomplished the
change in the environment by using his paw, his snout, his ear or one of many other
movements. That is, designating the response a bar press or an ice-cream
getting covered up the important event (i.e., whether the response was pawing at the
bar, a snout press, an ice-cream snatch or an ice-cream ran.
It is, therefore, imperative that an efficient and appropriate design must be
prepared before starting research operations. The design helps the researcher to
organize his idea in a form whereby it will be possible for him to look for flaw and
inadequacies. Such a design can even be given to others for their comments and
critical evaluation. In the absence of such a course of action, it will be difficult for the
critic to provide a comprehensive review of the proposed study. In the present study,
the researcher has taken care of these basics while preparing research design.
2.2 LITERATURE REVIEW
There is dearth of literature on the subject of relationship marketing because
relationship marketing drew the attention of the researchers lately. Till now,
emphasis has continuously been laid on internal marketing but relationship marketing
concept was not studied. The relationship marketing concept has been developed
within the framework of services marketing in the recent times. In the services
particularly hospitality organizations, there is sensitivity to the concerns of
employees who are the real service providers. Very little literature is available and
that too is hazy and scattered and diffused. However, the researcher toiled hard to
pickup information hither and thither, and developed this project study.
Prof. H. Woodruffee produced Services Marketing compendium with
emphasis on internal marketing. It gave insight to the researcher on the subject.
About the same time, G.L. Shostack published an article titled Breaking Free from
Product Marketing in the Journal of Marketing (2004) which initiated a debate on the
marketing approach to the services. Later, Lovelock, Gronross, Parsuraman and
others carried out a series of research studies in relation to the services marketing.
36

These researches proposed that in marketing of services, internal marketing and
managing quality are important.
Prof. S.M. Jha (2005) carried out vary good work on services marketing and
discussed the various issues of marketing of services with their 4Ps but discussed very
little about relationship marketing. Prof. Ramaswamy and Namakumar (1998)
published a voluminous book on Marketing Management in Indian Context. Certain
case studies of Indian companies were discussed by them which clarified the concept
of the researcher. Besides, Prof. P.K. Agarwal (2003) of IPM, Meerut produced a
very nice work on marketing management with several case studies on Indian
companies. These were read by the researcher to gain conceptual knowledge of the
subject. Similarly, the work of Prof. T.N. Chhabra and Prof. Gandhi was quite useful
to the researcher in gaining insight into subject.
Prof. R. Srinivasan of IIM Bangalore presented Case Studies in marketing in
Indian Context in 2004. These case studies proved quite useful in the conceptual part
of the research product. Prof. R. Shankar brought out a masterpiece work on
Services Marketing The Indian Perspective. It covered all aspects of services
marketing but did not study in detail the significance of internal marketing.
A new form of marketing has emerged as relationship marketing (RM),
(Dwyer, Schurr and Oh, 2003, Christopher, Payne and Ballantyne, 2002, Sheth, 2004,
Gronroos, 1999). Various other terms have been used either as substitutes for RM or
to describe some close parallel - micro-marketing, loyalty marketing, one-to-one
marketing, wrap-around marketing, customer partnering, symbiotic marketing and
interactive marketing. Gummesson (1994) supports the view that RM represents a
"new marketing paradigm" and the beginnings of a new theory. Evans and Laskin
(1994, p440) suggest: "RM is a customer centred approach whereby a firm seeks
long-term business relations with prospective and existing customers". Similarly,
Gronroos (1990a), a leader in relationship marketing research, defines: "Marketing is
to establish, maintain and enhance ... relationships with customers and other partners,
at a profit, so that the objectives of the parties involved are met. This is achieved by a
mutual exchange and fulfillment of promises". This definition attempts to incorporate
both the transactional and relational qualities of marketing.
37

Good customer relationships are at the heart of business success. There are
many technological components to CRM, but thinking about CRM in primarily
technological terms is a mistake. The more useful way to think about CRM is as a
process that will help bring together lots of pieces of information about customers,
sales, marketing effectiveness, responsiveness and market trends.
Sharma stated that, the commodity trade is getting closer to its customer-via
CRM. In some markets, CRM is also known as PRM (Partner Relationship
Management). Commodity markers and traders have realized CRM helps give them
precisely the same benefits that give brand marketers and service providers. CRM
helps a commodity seller lock in repeat by differentiating his product and service.
Most of the commodity players deal with four major customer groups-dealer,
institutional buyer, influencers and final consumers. CRM can help lock in at least
the first three.
Delivery of service is a relatively new term as opposed to distribution Gupta
(1999). This is due to realization of the fact that insurance products are not just the
policy documents, but much more. Provision of after-loss service at pre-negotiated
rates in quick time could relieve the customer of much of the trauma that follows an
unfortunate event. It will not only bring in the real meaning to indemnity as we
know it, but also a great amount of customers delight. After all, what the customer
buys is not a policy, not even the right to make a claim after a loss, but peace of mind
from the perceived threats to his life, assets, liabilities or activities.
The thrust of the business hereafter will be not just on acquiring more
customers, but on retaining the ones already served by the companies. Universally, it
has been recognized that it takes far less to retain a customer than to acquire a new
one. Therefore, losing even one customer can prove quite costly in the long run. The
impact of customer retention on profitability can be extraordinary. For example, 80
percent or more of the profits at financial services firms typically are generated by
customer; a new customer may not become profitable for several years. According to
Frederick Reichheld (Resources, 1999), if the average company were to boost its
rate of customer retention in life or auto insurance, for example, by just 5 per cent, it
would realize an increase in customer profitability of more than 80 per cent in that
line. This phenomenon of shifting the attention away from attracting new realized
38

that it as important as winning new customers as is retaining profitable customers.
According to one expert, one should insure life not just once, but every time one feels
there is a change in his life profile.
According to Johri (2000), A market research has shown that a dissatisfied
customer shares his experience with at least 11 persons, each of whom in turn
conveys it to another 5 persons. A majority of the customers, who switch their
insurer, do so because of the indifferent attitude of the service provider. The satisfied
customer repeats his orders, tries out new products and passes on that information to
many others.
According to Wired Magazine, the average American works 25% harder
today than he or she did in early 1970s. Not only are people working harder, they also
spend more time in traffic and less time with their families. Leading increasingly
complex lives, theyre barraged with choices. In this environment, consumers have
come to crave better time management, value and convenience.
Meanwhile, against this background of social revolution, advances in science,
technology and healthcare are set to transform the way in which insurance is
packaged and sold to consumers. A few trends in particular have converged to
radically alter the insurance business. These are web services, developments in
genomic science and lifestyle choices. With the dramatic changes that developments
in these fields will bring, the challenge for insurers will be to find ways to empower
customers with ways to better manage their risks and lifestyles. Web services, for
example, are emerging that will enable personalised portals to live in mobile
environments, on sensor chips, and be embedded in different kinds of products that
will talk to you. With the ubiquitous access to information that these will provide, it
will transform the way in which insurance companies communicate and service their
customers.
Some critics of RM suggest that it is really no more than a series of
transactions over time. Strong rebuttal comes from Czepiel, who argues that a
relationship possesses "mutual recognition of some special status between exchange
partners (Czepiel, 1990, p13). Barnes (1995, p1394) adds to this by saying that "a
succession of interactions does not necessarily lead to a relationship any more than
39

repeat purchasing constitutes loyalty". True marketing relationships, like others
humans relationships, should be characterised by the deeper feelings of trust, concern
and commitment.
In the current competitive market place hotel & tourism companies have found
it necessary to win the loyalty of the reduced number of customers. As such they need
to reorient their thinking away from merely attracting customers to retaining
customers. This is due to the need to reduce the cost of acquiring customers. It is
between five and ten times as expensive to win a new customer than it is to retain an
existing one (Rosenberg and Czepiel, 1994; Barnes and Cumby, 2003; Liswood
1999). Buttle (1996) notes that there are the direct costs of the successful conversion
of a prospect into a customer (selling costs, commission, product samples, credit-
checking costs, administrative costs, database costs) as well as the costs of
unsuccessful prospecting. Thus, keeping customers loyal is a sensible business
strategy. Even with successful campaigns, companies still face the risk of
customers defecting, i.e. stop coming back. Defection rates affect retention rates,
which is a central issue in relationship marketing. Price Waterhouse calculated that a
2% increase in customer retention is equivalent to a 10% reduction in costs (Caterer &
Hotelkeeper, 2000). As such an awareness of the lifetime value of customers is
growing. A transaction-orientated view of the customer would consider the sales
value and margin earned from a single sale, while a relationship-orientated view
considers the revenues and contributions earned from a long-term relationship with a
customer. Gilbert (2001) argues that the life-time value of retaining customers enables
the costs of conversion of the prospect to be set against the revenues earned over the
longer term. Sales and profits will also improve in direct proportion to the length of
time a relationship lasts. In addition, existing customers tend to make more frequent
visits, may broaden the base of their own purchases over time, and influence
others through word-of-mouth advertising (Haywood, 2000).
According to Connolly and Olson (2000), Information and Communications
Technology is the single greatest force affecting change in the hospitality industry.
Buhalis (1998) attributes this trend to both the rapid advances in technology as well as
the increasing demands of the customers who look forward to flexible, specialized,
accessible and interactive products and communication with principals. The ICT
40

based products and processes help the hotels to enhance the operating efficiency,
improve the service experience as well as provide a means to access markets on a
global basis. While ITs were used in the hotel industry from the late seventies in the
form of Computerized Reservation systems and Global distribution systems, it was
only in the 90s that the ITs began to make a difference in the hospitality sector
(Cooper et al, 1998). However, as in the case of other sectors, the rate of adoption of
ITs has been found to be quite uneven across the hotels. The variations in the rate of
adoption of new technologies have been studied from different perspectives over the
years. A large number of studies [eg. Rogers (1995), Tornatzky and Fleischer (1990)]
have focused on the intention to adopt variable to indicate the difference in adoption
levels. This variable effectively describes a firms intention to adopt or not adopt a
new technology. This construct however does not necessarily look at the enterprises
propensity to adopt. The propensity to adopt is reflected in the time taken by an
enterprise before adopting a technology. The propensity of adoption has also received
sufficient research attention over the years [eg. Rose and Joskov (1990), Nambisan
and Wang (2000)].
Customer satisfaction was explained by the expectation disconfirmation theory
in the late 1980s. This theory suggests that satisfaction is determined by the intensity
and direction of the gap between expectation and perceived performance. An
individual is more likely to be satisfied if the service performance meets
(confirmation) or exceeds (positive disconfirmation) his/her expectations (Oliver, R.
L. and DeSarbo, W. S. Response Determinants in Satisfaction Judgements, Journal
of Consumer Research(14), March 1988, pp. 495- 507.) On the other hand, he/she is
more likely to be dissatisfied if the service performance falls below his/her
expectations (negative disconfirmation). By proposing expectation disconfirmation as
the sole determinant of satisfaction, this theory does not account for the fact that the
confirmation of high expectations is more likely to lead to satisfaction than the
confirmation of low expectations. To resolve this drawback, ( Tse, D. K. and Wilton,
P. C. Models of Consumer Satisfaction Formation: An Extension, Journal of
Marketing Research (25), May 1988, pp. 202-212.) included actual service
performance as an additional determinant of satisfaction. The rationale being that if
actual perceived performance is expected and turns out to be low, it may still
negatively affect satisfaction and override the impact of confirmation or positive
41

disconfirmation to result in dissatisfaction. The authors found actual performance to
be the dominant determinant of satisfaction. More recent research (e.g. Suh, K., Kim,
S. and Lee, J. End Users Disconfirmed Expectations and the Success of Information
Systems, Information Resources Management Journal, Fall 1994, pp. 30-39. AND
Spreng, R. A., MacKenzie, S. B. and Olshavsky R. W. A Reexamination of the
Determinants of Consumer Satisfaction, Journal of Marketing (60: 3), 1996, pp. 15-
38. proposed the usage of desires rather than expectations as the comparison standard
in the disconfirmation process. The formation of desires is not based on realistic
prediction of actual performance, but rather on inner emotional needs or wants that
are not necessarily constrained by rational cognitive understanding of the situation
(such as practical feasibility). An individual may desire/want a certain service to be
good but nevertheless expect it to be poor from his/her past experience and
understanding of the actual environment. Under the desire disconfirmation theory,
low performance, though may meet the individuals expectations, can fall below the
desired performance (negative disconfirmation) and is hence more likely to lead to
dissatisfaction. Although promising, the desire disconfirmation model has not been
properly operationalized and tested. It is also not clear which comparison standard,
expectation or desire, is more dominant in determining satisfaction.
Until recently, most firms focused primarily on production, purchase and
marketing. Their main concern was to provide products that satisfied their customers
first needs. In the past, such an approach was sufficient for most firms to survive and
generate revenues. Nowadays, however, customers are more demanding more
knowledgeable, and require more attention. Increasingly, firms are shifting their focus
to the customer, hence the rising importance of customer relationship management
(CRM). With the rapid growth of electronic business and proliferation of Internet-
based services, a new concept is born: eCRM. It encompasses all the processes
needed to acquire, build and maintain customer relationship through e-business
operations. Important CRM concepts such as customization, personalization, making
the customer less passive and more active, many-to-many marketing are either
enabled or made easier to implement with eCRM tools. In fact, CRM remains just a
philosophy devoid of concrete actions if not for these enabling tools. For instance, it is
hard to imagine how to make it possible for customers to interact with each other
without an online believed to be more convenient, more interactive, more efficient
42

and providing a higher degree of customization. More importantly, the online channel
is cheaper than the regular channels for both the firm and the customer. The main
driver for eCRM adoption seems to be a commonly shared belief that it improves
customer loyalty and retention ( H. Rosenbaum and B.Y. Huang, A framework for
web-based ecommerce customer relationship management. in Proceedings of the 8th
AMCIS Conference. 2002.) through the enhancement of customer satisfaction.
Researchers and practitioners alike are claiming positive effects of eCRM on
customer satisfaction. However, no empirical evidence has been provided for these
claims. In fact, a survey conducted by InfoWorld suggests that 77 percent of eCRM
projects fail to meet company goals ( M. Apicella, Solid CRM is difficult, but not
impossible, in Info World. 2001. p. 55-56) and numerous studies cite the low rate of
success of eCRM applications (K. Melymuka, You can avoid CRM's pitfalls, in
Computerworld. 2002..) Even worse, Gartner ( A. Bednarz, Gartner: CRM
deployment plans holding steady. 2001)predicts that by 2006, more than 50% of
eCRM implementations will be considered as failures from a customers point of
view. Feinberg and Kadams survey suggests that eCRM failure may be due to the
implementation of features that executives believe affect customer satisfaction, but in
reality do not have any effect at all.
The researcher also studied various journals and research articles on marketing
produced by Indian and foreign authors but very few covered the significance of
internal marketing. Here, the researcher has made a moderate attempt to discuss
relationship marketing with the help of case studies of Cox & Kings, The Taj Hotel,
Thomas Cook (India) and ITC Welcome hotel Maurya Sheraton and others. The
researcher hopes that the maiden attempt made by him would gather momentum for
further studies on this subject.
The role of an Internet website has changed from a simple indication of
presence on the World Wide Web (WWW) into a vital marketing and customer
communication tool. Today, a website represents a new platform for customer
interaction (Bradshaw and Brash 2001, Pitt et al. 2002, Zineldin 2000). Recent
research indicates that certain features on a website can create and maintain customer
satisfaction. These are so-called electronic CRM (e-CRM) features (Khalifa et al.
2002, Khalifa and Shen 2005). Electronic Customer Relationship Management (e-
43

CRM) is a body of knowledge that deals with the application of CRM principles in
the new e-commerce context. E-CRM features range from advanced applications,
such as database-driven product customisation tools, to simple ones, like a line of
contact information on a HTML page (Feinberg et al. 2002, Romano and Fjermestad
2002). E-CRM features in tourism are highlighted in several studies as a promising
research topic (Buhalis 1998, 1999, 2000, Buhalis and Licata 2002, Wang et al. 2002,
Wan 2002). Generally, in e-commerce, companies tend not to use the Web and e-
CRM features in an optimal way (Feinberg et al. 2002). This also applies to
companies in the tourism industry (Nysveen and Lexhagen 2001, Buhalis and Main
1998). Hence, there is little or no consent as to exactly which e-CRM features
promote customer satisfaction in an online service setting (Feinberg et al. 2002).
Consequently, tourism enterprises, small ones in particular, may face a danger to
spend on costly web-based solutions without knowing the returns.
2.3 RESEARCH HYPOTHESIS
For a researcher hypothesis is a formal question that he intends to resolve.
Ordinarily, when one talks about hypothesis, one simply means a mere assumption or
some supposition to be proved or disproved. Thus, a hypothesis may be defined as a
proposition or a set of propositions set forth as an explanation for the occurrence of
some specified group of phenomena either asserted merely as a provisional conjecture
to guide some investigation or accepted as highly probable in the light of established
facts. Hypothesis must possess the following characteristics:
i. Hypothesis should be clear and precise. If the hypothesis is not clear and
precise, the inferences drawn on its basis cannot be taken as reliable.

ii. Hypothesis should be capable of being tested. In a swamp of un-testable
hypotheses, many a time the research programmes have bogged down. Some
prior study may be done by researcher in order to make hypothesis a testable
one. A hypothesis is testable if other deductions can be made from it which,
in turn, can be confirmed or disproved by observation.
1



1
C. William Emory, Business Research Methods, p.33.
44

iii. Hypothesis should state relationship between variables, if it happens to be a
relational hypothesis.

iv. Hypothesis should be stated as far as possible in most simple terms so that the
same is easily understandable by all concerned. But one must remember that
simplicity of hypothesis has nothing to do with its significance.

v. Hypothesis should be limited in scope and must be specific. A researcher
must remember that narrower hypotheses are generally more testable and he
should develop such hypotheses.

vi. Hypothesis should be consistent with most known facts i.e. it must be
consistent with a substantial body of established facts. In other words, it
should be one which judges accept as being the most likely.

vii. Hypothesis should be amenable to testing within a reasonable time. One
should not use even an excellent hypothesis, if the same cannot be tested in
reasonable time for one cannot spend a life-time collecting data to test it.

viii. Hypothesis must explain the facts that gave rise to the need for explanation.
This means that by using the hypothesis plus other known and accepted
generalizations, one should be able to deduce the original problem condition.
Thus, hypothesis must actually explain what it claims to explain; it should
have empirical reference.
In the present research study, proper research design has been followed and necessary
hypotheses have been formulated as and when required while analyzing & preparation
of proposed plan for analysis in Stage III of proposed research methodology by the
researcher. In social science, where direct knowledge of population parameters is
rare, hypothesis testing is the often used strategy for deciding whether a sample data
offer such support for a hypothesis that generalization can be made. Thus, hypothesis
testing enables us to make probability statements about population parameters. The
hypothesis may not be proved absolutely, in practice it is acceptable if it has
withstood a critical testing. Before we explain how hypotheses are tested through
different tests meant for the purpose, it will be appropriate to explain clearly the
45

meaning of a hypothesis and the related concepts for better understanding of the
hypothesis testing techniques.
Quite often a research hypothesis is a predictive statement, capable of being
tested by scientific methods, that relates an independent variable to some dependent
variable. The researcher assumed that employees are not aware of the concept of
enlightened internal marketing. However, there were certain assumptions in the mind
of the researcher with regard to the present study conducted for private sector
organizations particularly the organizations referred as case studies in the present
project.
2.4 DATA COLLECTION
The present study, being a mixture of various research design, makes use of
both the primary as well as secondary data. The entire analysis of the study was
undertaken through a combination of desk research and field survey. Various
stakeholders were interviewed during the course of the study and a detailed
questionnaire survey was undertaken to gauge the perceptions of the respondents. The
researcher has resorted to both types of data in his study. The researcher has laboured
hard to gather reliable and most appropriate information for the purpose of
development of this thesis and for the purpose of analysis of information and their
interpretation. Facts, information or premises, systematically collected and formally
presented for the purpose of drawing inferences, may be called data. Statistically
information collected, compiled and presented for the purpose of establishing
appropriate relationship between variables may also be included in the data which,
whether statistically processed or not, play a very vital role in the research and
analysis of management problems, as they do in any other area of investigation. This
is the rationale of data collection in research.
In the present study, the researcher has used both the methods for collection of
primary and secondary data but his main thrust was on face to face discussion with
officials, employees and customers. Company records were also utilised for the
purpose of data collection. These proved quite useful to the researcher.
The researcher has made extensive use of online & field survey method in this
study. Researcher visited the offices of the organizations referred as Units under
46

study i.e. Cox & Kings, Taj Place Hotel, ITC Welcome Maurya Sheraton and Thomas
Cook India Ltd., Inter-continental Hotel, ITDC & J&K tourism offices on several
occasions with his supervisor as well as relations working in these organisations. Data
is also collected online from the managers and by visiting websites of the other
organization engaged in the Tourism & hotels business. As the secondary data consist
of data form secondary sources, they are obtained either personally or by e-mail and
presented and interpreted.
The researcher is of the opinion that data collection is the process of obtaining
valuable and reliable information for purposes of research. As the secondary data
consists of data from secondary sources, they may be obtained either personally or by
e-mail and visiting websites and is presented and interpreted. On several occasions,
the researcher made use of interviewing technique and conducted certain interviews
personally & telephonically of officials, managers & file employees of Hyatt Hotel,
The Grand, Ezeego1, Yatra.com, Raj Travels, Sita world tours, ox & Kings India P.
Ltd., Thomas Cook India Ltd., The Taj Hotel and the Maurya Sheraton, Inter-
continental hotel, Make my trip , ITDC, J&k tourism officials etc. Resercher also met
customers of the different locations related to the Tourism & hotel sectors. The
responses given by them, were recorded.
The questionnaire was also administered to a sample size of about 300
respondents connected with the marketing department of the above organizations, but
hardly 37% of them responded online, 32% through personal interviews and 24%
through personal contacts and 7% were either left out unanswered or answered
negligibly.
The data & the relevant informations was processed, analyzed, edited,
presented & tabulated from the survey datas. Researcher has used various theories,
formulate the hypotheses & statistical tools. In this study the frequency of all
variables was then computed for the various proposed analysis for achieving the
objective of this study on relationship marketing in service sector.
Researcher has analyzed in this study various ways of relationship building
with the customer of tourism & hotels organizations engaged in hospitality & travel
business. Customer satisfaction was analyzed for attracting & retention relationship
47

with the service provider at all the stages of sales where customer is involved.
Researcher mainly focused on Internet Based Services offered by tourism & hotels
organizations in India as the most effective media of Relationship Marketing. This
study also evaluated the current use of Internet by the tourism & hotels industry as a
Relationship marketing tool between them and the customers, visitors, tourists.
Relationship marketing play a crucial role in internet era because of the following
exclusive advantages over other means of relationship building with the customer:
Assessing the right customer needs
Providing satisfying services
Getting customized business
Knowing the customer profile
Targeting one to one basis
Deliver value to the customer requirements
Maintaining relationship
Ability to carry interactive business
24 hours*365 days services
Remote submission of application
Various relationship areas of customer touch areas and services characteristics were
formulated by the researcher based on the survey, which satisfy the expectation of the
customer during tourism and hospitality relationship. These desired areas were also
considered & analyzed in this study.
DATA ANALYSIS & RESULTS
2.4.1 Stage-1 Analysis: Respondents satisfactions with selected Units under
study
To identify the important internet services & features for the comparability
with the desired marketing mix by the customer required at each of the three stages of
the transaction cycle i.e before Purchase, at purchase & after purchase , researcher
has performed an extensive review of the literature and conducted a belief elicitation
with internet users i.e mostly online-shoppers (described in the methodology section).
48

Pitkow and Recker present the advantages of online surveys. The methodology
consisted of three stages:
1) belief elicitation,
2) survey of the beliefs and satisfaction of customers at the attraction phase,
3) survey of the beliefs and satisfaction of the same customers at the retention
phase
Researcher has assumed in this study that all the respondents are using internet
for on line shopping and knew about features of internet based services. These
responses are recorded from the Customers of Travel, Tourism & hospitality
segement who were contacted, interview & online responses during this study. During
the interviews, the participants were asked to identify all important
expectations/desires that they considered seriously in forming their satisfaction with
the Internet based services rendered by the service provider at all the stages of sales.
Based on the survey following expectations / desires are identified and to categorize
under before-Purchase , at-Purchase and after-Purchase.
The before-Purchase internet features are those related with activities that
customers perform prior to placing an order, e.g., membership registration and
information gathering. In the at-Purchase stage, internet supports activities associated
with product selection and ordering, e.g., comparative shopping and order placement.
The After-Purchase internet features, on the other hand, are those related to after-sale
services, e.g., problem solving and order tracking.
Before- Purchase- Personal identification (ID),Mobile Interface, geographical
report, Languages, Links to other related search engines, time tables, Best price,
comparative table ,Site customization, Customer education, Alternative channels,
Loyalty programme, Membership, Search capability, Alerts, mailing list, Company
profile, Chat, Bulletin Board, Product & Services information, Promotion offers, user
friendliness, Web page loading speed, Reliability of site, Map reading & contact
details,
At- Purchase-Payments options & method , Purchase conditions, Competitive
shopping, Dynamic pricing Reservations, Cancellation of booking, change of
traveling schedule, Refund options, Acknowledgements & Receipts, Print options,
49

Premium services (Tatkal), Availability of services ,Accommodations & stay,
Amenities & Conveyances , Auctions bids ,Product customization,
After- Purchase- Service support , Problem solving, Feed back channels,
Order Tracking, On line community, Web centre , FAQ, Complaining ability,
Customer safety, Refunds, Disputes settlements , Follow-up services
The Respondents were also asked to identify most important features that
influenced their satisfaction with online shopping and to finally categorize them under
before-purchase, at-purchase and after-purchase for analysis. Based on the data
collected and the results of the belief elicitation process, we ended up with the final
list of formative items represented below for the analysis purposes.
Table2.1 List of Formative Items
S.No Items
1 Pricing
2 Search application
3 Alerts
4 Alternative Channels
5 Loyalty Programme
6 Site Customization
7 Payments Methods
8 Sales Conditions
9 Competitive Shopping
10 Order Tracking
11 Problem Solving
12 Feed back Channels
13 Wed -Center
14 Product Customisation
15 Online Community
16 Online Purchase
17 Sales Conditions

Research Model
The dynamic nature of satisfaction discussed above should be even more
salient for novelties such as internet. We therefore build a temporal model of
satisfaction (Fig.2.2) distinguishing between two phases of the customer lifecycle:
attraction and retention.
50













Fig.2.2 Research Model

The attraction phase refers to activities related to getting the attention of potential
customers and turning the attention into action, i.e., purchase. As for the retention
phase, the internet activities focus on keeping the current customers patronage and
developing long-term relationships. From a system perspective, the attraction and
retention phases correspond to the pre-usage (at-adoption) and usage (post adoption)
stages. Consistent with prior studies , we also expect the determinants of satisfaction
to differ depending on the adoption stage. Therefore the significance and relative
importance of internet features for satisfaction formation vary depending on their
relevance to the customer lifecycle phase.
Although distinct, satisfaction at attraction and satisfaction at retention are
nonetheless significantly related. According to the adaptation level theory , the
Attraction Phase
Retention Phase
Before Purchase Before Purchase
Internet
At-Purchase
Internet
Online
Customer
satisfaction
Online
Customer
satisfaction
At
Purchase
After
Purchase
Internet
After
Purchase
Internet
H
2a

H
2b

H
3a
H
3b

H
1

H
4a

H
4b

51

perception of a new experience is regarded as a shift from the individuals prior
baseline or reference levels. New cognitions tend to remain close to the prior
cognitions (homeostatis), adjusted appropriately for any new positive or negative
stimuli . Therefore, initial satisfaction serves as an anchor for later evaluations.
Indeed, several studies show that subsequent judgments are likely to be affected by
prior judgments, as one tends to reduce the cognitive effort required for performing
the re-evaluation. Accordingly, we hypothesize that:
H1=Online customer satisfaction at the attraction phase is favorably related to
online customer satisfaction at the retention phase.
While we use the customer lifecycle framework to conceptualize satisfaction,
we rely on the transaction cycle to classify internet services features. Our research
model identifies three types of internet, i.e., before-purchase, at-purchase and After-
purchase internet. This classification of internet features is consistent with prior
research that distinguished between satisfactions at different stages of the transaction
cycle. At-purchase satisfaction, for instance, occurs through the personal interaction
with the sales personnel and the capability of the selling parties to meet the individual
needs of customers . In the online context, however, it is rather the interaction with
the website that largely determines the at-purchase satisfaction. During the after-
purchase stage, satisfaction with after-purchase service is based on the quality of the
service itself and the interpersonal experience with the after-purchase service
personnel . To identify the important internet an interactive eCRM technology
features required for each of the three stages of the transaction cycle, we performed an
extensive review of the literature and conducted a belief elicitation with online
shoppers (described in the methodology section) as per the results.
All Internet features i.e customer Touch Points or electronic touch points
discussed above constitute system, information or Service Quality attributes. Based
on the Internet services success model, such attributes have significant effects on
satisfaction . We therefore hypothesize that:
H2a(b)=Before- Purchase internet based customer services has a favorable
effect on online customer satisfaction at the attraction (retention) phase.
52

H3a(b)=At-Purchase internet based customer services has a favorable effect
on online customer satisfaction at the attraction (retention) phase.
H4a(b)=After-Purchase internet based customers services has a favorable
effect on online customer satisfaction at the attraction(retention) phase.
Although, we expect all Electronic Relationship Marketing features to have
significant effects, we anticipate the magnitude of these effects to vary from the
attraction phase to the retention phase. This temporal variation reflects the changing
needs of customer from phase to phase. Furthermore, the beliefs and attitudes of
customers may change with time as they gain first-hand experience with the eCRM
system.
In this study researcher used the 200 personally collected & 100 online
responses for reflective items construct and formative items developed through the
belief elicitation process for the remaining constructs.
All items were measured on a 5-point scale (Liker scale based) with values
ranging from 1=strongly disagree to 5=strongly agree. The resulting survey was then
administered electronically to online shoppers of units under study & several Internet
retailers of Tourism & hotels services, twice.
The first survey (attraction phase survey) was administered to the new online
customers, upon their membership registration. The second survey (retention phase
survey) was administered to the respondents of the first survey six months later.
Of the approximately 850 persons were on the mailing list, only 300 usable
responses answered both surveys. Yielding a response rate 18% of the respondents
were women and 72% were men. Table 2.2 represents demographic information of
the respondents.



53



Table-2.2 Respondents Demographic Information
2.4.2 Data Analysis
The data analysis was done as per the formative list of items in the Table-2.2
in a holistic manner using the Partial Least Squares procedure (PLS), because it
allows for the simultaneous usage of reflective and formative measurements and is
able to model latent constructs under conditions of non-normality and small to
medium sample sizes . We conducted tests of significance for all paths using the
bootstrap re-sampling procedure and the standard approach for evaluation that
requires path loadings from construct to measures to exceed 0.70. For checking
internal consistency of the reflective measures, we relied on composite reliability
measures () and on the average variance extracted (AVE).. We tested the
discriminant validity by comparing the square root of the AVE for a particular
Category %(age)

Age
Less than 20 years 16
20-35 years 55
35-50 years 28
Greater than 50 years 1


Education
High School 5
Bachelor 66
Master 20
Higher than Master 9

Annual
Income
Less than Rs.3,00,000 25
Rs.3,00,000 5,00000 38
RS.5,00000 7,00000 27
Greater than Rs.
7,00,000
10
No. of
Purchases
within 6
Months
1 purchase 33
2 purchases 43
3 purchases 20
Over 3 purchases 4
54

construct to its correlations with the other constructs and by examining cross-
loadings of the constructs. In contrast, formative measurement assumes causality
flowing from the measures to the latent construct, where the indicators jointly
determine the conceptual and empirical meaning of the emergent first-order factor .
Researcher recommends in this particular case to use the weight of each item to
assess how much it contributes to the overall factor.
Results
Table-2.3 presents the weights of the formative measures and the loadings of
the reflective measures to their respective constructs along with standard errors and t
statistics. All reflective items are significant at the 99% level with high loadings (all
above 0.70 and most above 0.80), therefore demonstrating convergent validity. The
composite reliability scores of all constructs are higher than the recommended value
of 0.80, indicating internal consistency . For formative items, the magnitude and
significance of the weight indicate the importance of the contribution of the associated
variable to customer satisfaction.
1. The square roots of the AVE scores (0.952 for attraction satisfaction and
0.844 for retention satisfaction) are all higher than the correlations
between these two constructs (0.511), demonstrating discriminant validity.
2. Furthermore, all items loaded higher on their respective constructs than on
others, providing additional evidence for discriminant validity.







55

Table -2.3 Measurement Model
Constructs Items Weights Loading
Std.
Error
T-
Statistics
Before-
Purchase Consumer Education 0.419 0.0579 7.2437
(Attraction
Stage) Search Capabilities 0.327 0.0798 4.1018
Internet Site customization 0.295 0.0452 6.53
Alternative channels 0.295 0.0742 3.9604

loyalty program
membership 0.124 0.0429 2.8997
Alerts 0.011 0.038 0.2763
At -purchase Product customization 0.779 0.0419 18.6002
(Attraction
Stage) Comparative shopping 0.288 0.0709 4.0556
Internet Dynamic pricing 0.24 0.062 3.8745
Payment methods 0.19 0.0519 3.6619
Sales conditions 0.144 0.0691 2.0788
After-purchase Problem solving 0.604 0.071 8.5174
(Attraction
Stage) Order tracking 0.369 0.0675 5.463
Internet Feedback channel 0.31 0.0871 3.5549
Web center 0.244 0.0777 3.141
Online community 0.214 0.0798 2.6862
Online Purchase 0.193 0.0804 2.4041
Internet
Shopping Satisfaction 1 0.947 0.0058 162.34
Satisfaction Satisfaction 2 0.942 0.0089 106.03
(Attraction
Stage) Satisfaction 3 0.967 0.0029 328.49
=0.96
56

Table-2.3 (Cont.): Measurement Model
Constructs Items Weights Loading
Std.
Error
T-
Statistics
Before-purchase Alerts 0.429 0.048 8.9436
(Retention
Stage) Search capabilities 0.369 0.053 6.9579
Internet Site customization 0.316 0.0588 5.3659
Consumer education 0.199 0.0462 4.303
Alternative channels 0.137 0.0555 2.4608

Loyalty Program
membership 0.127 0.0522 2.4272
At-purchase Product customization 0.568 0.0596 9.5359
(Retention
Stage) Comparative shopping 0.328 0.0789 4.1591
Internet Dynamic pricing 0.292 0.1009 2.8947
Payment methods 0.258 0.0789 3.2638
Purchase conditions 0.2 0.1206 1.6556
After -purchase Problem solving 0.448 0.0474 9.4349
(Retention
Stage) Web center 0.327 0.0407 8.0488
Internet Order tracking 0.303 0.0437 6.9351
Online community 0.173 0.0469 3.6769

Online Purchase of spare
parts 0.125 0.0407 3.0619
Feedback channel 0.095 0.0299 3.1741
Internet
Shopping Satisfaction 1 0.927 0.0057 163.02
Satisfaction Satisfaction 2 0.868 0.0131 66.51
(Retention
Stage) Satisfaction 3 0.717 0.0263 27.44
=0.87
57

3. These results support the distinction between attraction satisfaction and
retention satisfaction, justifying the usage of a temporal model for
explaining satisfaction formation.































58















Fig. 2.3 PLS Analysis Results

Fig.2.3 presents the results of PLS analysis of the structural model, including the
overall explanatory power (R2 is indicated below each dependent construct) and path
coefficients.
1. The model explains 53.4% of the variance in Internet customer satisfaction at
the attraction phase and 67.7% of satisfaction at the retention phase,
indicating good explanatory power.
2. Furthermore, all path coefficients are significant at the 99% level, providing
strong support for all the hypothesized relationships. At the attraction phase,
all three determinants of overall satisfaction (i.e., Before-purchase, at-purchase
and after-purchase Internet Relationship are significant, but with different
Attraction Phase
Retention Phase
Before Purchase Before Purchase
Internet
At-Purchase
Internet
Online
Customer
satisfaction
Online
Customer
satisfaction
At
Purchase
After
Purchase
Internet
After
Purchase
Internet
0.11
0.101
0.64
0.11
0.11
0.22
0.50
R2=53.4% R2=67.7%
59

magnitudes. Before-purchase Internet Relationship , with a path coefficient of
0.50, is the dominant driver of online customer satisfaction.
3. One plausible explanation of the importance of before-purchase internet at the
attraction phase is that at this phase potential customers are mainly concerned
with the decision of whether or not to become a customer and new customers
are probably still evaluating their decision. Therefore, before-purchase internet
features for educating the customers, providing resources for making informed
decisions (e.g., search capabilities) and facilitating the decision-making
process (e.g., site customization, alternative channels) are more salient. These
features aim at reducing the risk for the customers and gaining their trust.
4. An additional explanation for the dominance of the before-purchase internet
features at the attraction phase is that new customers are not yet sufficiently
familiar with the at sales and after-purchase internet features to appreciate
their importance. At the retention phase, before-purchase internet loses its
importance (path coefficient reduced from 0.5 to 0.11), while after-purchase
internet becomes dominant (path coefficient increasing from 0.118 to 0.645).
5. A possible interpretation of this result is that with repeat purchase, the before-
purchase and at-purchase internet activities become familiar and routine. They
are taken for granted. The after-purchase internet activities, on the other hand,
remain contingent on emergent needs rising from the customers use of the
product. Problem solving capabilities, access to required knowledge and
interactions with web center representatives or other customers help to satisfy
these dynamic needs. The change in the relative importance of the
determinants of satisfaction from the attraction phase to the retention phase
provides additional support for the temporal conceptualization of satisfaction
as well as for the usage of the transaction cycle framework to categorize
internet relationship features.
6. The significance of the relationship between attraction satisfaction and
retention satisfaction confirms the claim that prior judgments influence
subsequent ones . However, compared with the significance and magnitude of
the other determinants, the relatively small magnitude of the effect of
attraction satisfaction on retention satisfaction (0.101) highlights the necessity
of a temporal model. The examination of the weights of the formative
measures of the satisfaction determinants reveals the relative importance of
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specific internet features in satisfaction formation. At the attraction phase,
customer education is the dominant before-sales internet feature with a weight
of 0.419. Shopping for a computer is not an easy task for the average
customer. A web site that provides guidance on how to shop for a computer
helps the customer to make a better purchase decision and to therefore be
happier with the outcome. Also, education balances the customers skills and
the challenges of online shopping, leading to a smoother and more enjoyable
online experience.
7. The second important before-purchase internet variable is the web sites
search capabilities with a weight of 0.327. This feature is especially important
when the customer has to consider a large number of criteria in selecting the
product. Its importance highlights the necessity to support the customers
decision-making process in the attraction phase. Of similar importance is
website customization (0.295). Its magnitude highlights the importance of
one-to-one web sites that are constantly customized or even personalized
based on a dynamic customer profile. One of the advantages of internet
relationship marketing is the customization of the volume of information
available to the browsing customer. Such customization enables the customer
to be more efficient and to make better-informed decisions.
8. Offering alternative channels, with an equal weight to site customization
(0.295), is also perceived to be important. Alternative channels can be both
online and offline. Although the Internet retailer may favor some channels for
their efficiency, it is important to leave it to customers to choose their
preferred channel, as this is another form of customization. Loyalty program
membership, although not perceived to be as important as the other before-
purchase internet features, is nevertheless significant with a weight of 0.124.
An increasing number of Internet vendors encourage their customers to enroll
into loyalty programs by providing them with attractive membership perks,
e.g., special terms, discounts, gifts, etc. Such programs enable the vendor to
learn more about the online behavior of registered members (e.g., click stream
analysis) and hence achieve better customization. The only before-purchase
internet feature that is not significant is alerts. In fact, out of all features
identified through the belief elicitation process alerts is the only one that does
not have a significant effect on satisfaction. Furthermore, its lack of
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significance is limited to the attraction phase only. In fact, it becomes the most
important before-sales internet feature at the retention phase. A possible
explanation for these results is that alerts are more useful for repurchase
activities rather than for making the initial decision of becoming a customer.
For the at-purchase stage, product customization emerges as the most
important driver of satisfaction with a weight of 0.779. This finding is
consistent with the essence of internet: maintaining a one-to-one relationship
with the customer by among other things offering a solution that suits the
customers specific needs rather than a standard product. This can be achieved
by enabling order building instead of order taking. In the context of computer
products, some websites, e.g., Dells, assist the customers in building unique
computer solutions by allowing them to select the components that better
serve their needs without restricting their choices to standard computer
packages. The second important variable is comparative shopping with a
weight of 0.288. The importance of this internet capability is especially salient
for computer products, where several alternatives need to be compared in
terms of multiple criteria.
9. The respondents also perceive dynamic pricing as a significant internet
satisfaction factor with a weight of 0.24. This result reemphasizes the
importance of extending customization from product selection to pricing as
well. Next in terms of importance are payment methods and sales conditions
with weights of 0.19 and 0.144 respectively. For the after-purchase stage,
problem solving is the strongest satisfaction factor with a weight of 0.604. The
magnitude of the problem solving effect highlights the necessity to provide
immediate solutions to customers problems and suggests the need for real-
time interactivity. While some simple problems can be solved with
information provided by online manuals and FAQs, more complex problems
may require expert systems or synchronous interactions with customer service
personnel or even other customers. The second important variable is order
tracking with a weight of 0.369. With this feature customers do not passively
wait to be informed of the status of their orders and can actively seek the
information online. Such capability is at the essence of CRM in that it helps to
strengthen the relationship between the customer and the merchant by making
it less passive and more active. Next in magnitude is feedback channel with a
62

weight of 0.31, highlighting the need for two-way communications. The
importance of providing multiple channels of interaction is reemphasized in
the significance of web center (0.244) and online community (0.214). While
web centers can provide personalized attention and hence contribute to one-to-
one marketing, online communities play a critical role in implementing many-
to many marketing, where the customers are involved in providing value to
each other. Through an online community, the customers can share
experiences and exchange valuable information for solving problems and
making a more effective use of the product.
Finally, online after sales services is also perceived as a significant factor with a
weight of 0.193. Although the temporal model of satisfaction demonstrates a change
in the magnitude of the effects of the three categories of internet, i.e., before-purchase,
at-purchase and after-purchase, the relative importance of specific internet
relationship features within each category does not change much from the attraction
phase to the retention phase. There are, however, a few exceptions, notably, the
decrease in importance of customer education and the change in significance of alerts.
While customer education is the most important variable for before-sales internet
services at the attraction phase, it is of moderate importance in the retention phase.
This is an expected result. Customer education is essential for the initial purchase
decision, but routine for repurchase. Alerts, on the other hand, are not significant in
the attraction phase where the customer may not be confident about what to expect
from the vendor. With experience, the customer forms more concrete expectations
and can therefore define better his/her requirements in setting up the alerts.
CONCLUSION
1. In this research, researcher investigate the relationship between internet and an
important surrogate of electronic relationship success: online customer
satisfaction as effective relationship marketing tool of the units under study
particularly hotels & tourism units.
2. More specifically, researcher develop, operationalize and empirically test a
temporal model explaining the relationship between three categories of
internet relationship stages (i.e., before-purchase, at-purchase and after-
63

purchase internet) and online customer satisfaction at two phases of the
customer lifecycle, i.e., attraction and retention.
3. This research presents important theoretical and practical contributions. On the
theoretical side, we demonstrate the necessity of the temporal
conceptualization of online customer satisfaction through internet facilities for
effective relationship between the service provider and customer in order to
account for the variability of the satisfaction drivers from the attraction phase
to the retention phase.
4. Researcher also shown the suitability of the transaction cycle framework for
categorizing electronic marketing relationship.. The results of a longitudinal
survey of the online customers of hardware retailers provided strong support
for the model and revealed the dominant role of before-sales internet of
companies web-links in satisfaction formation at the attraction phase and the
prevalence of after-sales relationship at the retention phase. On the practical
side, a belief elicitation process identified specific features for each of the
three relationships stages.
5. The survey results elucidated the relative importance of these features in
satisfaction formation, giving insights to practitioners. The practical
implications can be summarized as three paradigm shifts. The significance and
magnitude of the effects of product customization, website customization and
dynamic pricing reflect the perceived importance of online relationship
marketing activities that are intended to support the one-to-one paradigm shift:
transforming the relationship between the firm and the customer from a one-
to-many mode into a one-to-one mode.
6. Other marketing relationship drivers of customer satisfaction include alerts,
search capabilities, order tracking and problem solving. They represent
another transformation of the relationship between the firm and the customer:
from passive to active. Another significant variable, i.e., online community, is
intended for yet another paradigm shift: many-to-many marketing, where the
customers are involved in providing value to each other.
In future research, other proxies of internet success through electronic
customer relationship management (e.g., continued usage: re-sales, firm profitability)
should be studied. Of particular interest is the mediating role of satisfaction. In fact,
64

satisfaction is considered to be an immediate goal of relationship marketing that is
assumed to determine the medium-term goals (e.g., customer retention and loyalty)
and subsequently firm performance, e.g., profitability. These complex relationships
require further investigation.
2.5.2 Stage-2 Analysis: Use of Internet by the selected Units under study.
This section of the analysis is proposed in order to find out the current use of
the internet, as a marketing tool, by the hotel & tourism industry involved in the
destination management business. In order to justified, researcher also interpreted the
responses on numbers of web features recorded during personal visits and verified
from the organizations web site home page (attached herewith) as shown in the
Table-2.4 below. Please note that downloaded web pages are showing the limited
features of the units. To verify all the web features researcher is recommending to
open the web link of the units on-line.
Table 2.4 Highest Number of Web Features
Units Under Study
(DMOs)
Features Rank
IRCTC 38 Rank 1
makemytrip.com 34 Rank 2
Yatra.com 30 Rank 3
Taj Palace Hotel 27 Rank 4
Cox & King 27 Rank 4
Thomas Cook 25 Rank 5
Maurya Sheraton Hotels 25 Rank 5
Trade wings tours Ltd. 24 Rank 6
Sita World Travels 20 Rank 7
Exeegol.com 20 Rank 7
J&K tourism 19 Rank 8
Haytt Regency 19 Rank 8
Inter-Continental Hotels 18 Rank 9
The Oberoi 18 Rank 9
65

Raj Tour & Travels 17 Rank 10
Ashoka Hotels 17 Rank 10
ITDC 17 Rank 10
In stage-1 combined finding, researcher already elucidated the relative importance of
the Respondents satisfaction over the use of internet as the effective interactive
marketing technology for long term relationship between the DMOs & the visitors,
tourists, travelers and other customers. Hundreds of hotel & tourism organizations
particularly selected units under study have established themselves on the Web with
their own web sites with lots of features or via a link from a third party such as
Travel-Web (URL: http://www.travelweb.com). Using the evidence from many of
these sites this study reveals the current strengths and weaknesses of the use of the
internet as a relationship marketing tool by units under study.
The data was gathered using the Google & Yahoo web sites , which gives a listing of
hotel & tourism web sites, was regularly accessed by the researcher for secondary
informations. A critical examination of the web sites of the Units under study was
made using a check list chart. The sample was made up of the whole population of
the DMOs situated in various locations in India . Total 124 hotels were selected for
web search by the researcher.
Table -2.5
Hotels considered in various locations for web research
Delhi Mumbai Hyderabad Chennai Banglore Jaipur Agra Total
22 32 07 07 41 11 8 124
(See List of hotels in axxexure-2)
In addition, qualitative, informations were drawn by the researcher from
the total 200 responses recorded for the Stage-1 analysis were utilised to analyze to
what extent the respondents organisations use of web bases services (internet) as a
relationship marketing tool for them .
66

This approach was preferable by the researcher due to its suitability for an
unexplored research topic, whose subject matter deals with confidential company
information (e.g. marketing strategy). Also, respondents were reassured the results
would have a degree of confidentiality.
The managers interviewed shared the opinion that the Web could serve as a
marketing tool to establish, maintain and enhance long-term relationships with
customers and third parties. They also believed that their web sites are a cost-
effective, strategic link between their companies and the customers.
Interviews: Results and Data Analysis
Fifteen of the leading units were selected and their senior directors of
marketing interviewed. This section complements the web survey findings.
All the selected hotel interviewed have computerised database systems to store
guests' history records. The managers stated that the main sources of
customer information are :
room registration cards,
in-house guests,
in-house dining programmes,
in-house contests and
health club registration cards.
In their relationships with customers, the managers admitted that their priority
is customer retention. The channel members are seen as the key elements in bringing
new business to the hotel chains.
The managers interviewed shared the opinion that the Web could serve as a
marketing tool to establish, maintain and enhance long-term relationships with
customers and third parties. They also believed that their web sites are a cost-
effective, strategic link between their companies and the customers.
It was clear that selected hotel have attempted to take maximum advantage of
the capabilities of the Web as a relationship marketing tool. When asked about the
67

various web mechanisms which they currently do not offer, the managers commented
that they will possibly develop them some time in the future based upon customer's
demands and the available Web technology. The Web research identified the current
use of the following Web mechanisms by the units under study and additional
selected hotels of India:
Information
The Web, as discussed, has the potential to be a strategic information centre
for the hotel industry offering the following features: electronic brochure, corporate
information (press releases, financial reports, company history, company milestones,
product and service information), on-line directory (a listing of hotel properties
available which is often categorised by geographical location), property information
(facilities available, amenities, transportation services, attractions, travel directions,
etc.), what's new, virtual hotel tour as an experience of 'walking through' the hotel
property, special promotions, and language localisation selection by
browser. Approximately 60% of the 124 hotels surveyed are providing two or three
such features. Slightly more than 35% are already providing four or more features.
Thus, it is evident that a great majority of the hotel chains are aware of; and have
exploited, the potential of the Web as a strategic information centre. However,
surprisingly, there is still a small minority of the hotel chains (about 3%) that are not
providing any information about themselves on-line. The most commonly provided
features are :
On-line directory (93.0% of the chains)
Property information (89.4% of the chains).
Providing corporate information (37.3%),
What's new (26.8%),
Special promotions (40.8%) and
Language localisation (18.3%).
The provision of electronic brochure and virtual hotel tour are still limited to just
0.7% and 4.9% of the hotel chains respectively.

68

Reservation
The Web offers the hotel industry a distribution channel that enables customers
world wide to book hotel rooms. The web hotel reservation capability currently
includes the following features:
on-line search,
on-line availability check,
on-line reservation form,
on-line reservation retrieval,
on-line cancellation,
real-time processing,
create/modify profile, and
e-mail reservation.
The majority of hotel under study have taken advantage of the Web as a
reservation medium. However, only one of the hotel is still not giving their customers
the opportunity to book hotel rooms via the Web. This is surprising as a survey by
HIMG has shown that business travellers have expressed a strong interest in booking
hotel rooms via the Web (Caterer & Hotelkeeper, 1996).
The most commonly available reservation feature is an on-line reservation
form. Although present technology does allow real-time processing of reservations,
only 21.1% of the hotel chains offer such capability. This means that customers of the
remaining 78.9% of hotel chains may have to wait two or more days for the replies to
their reservation requests. If the attraction to using the Web is the promise of
interactivity, customers may be disappointed. A significant proportion of the hotel
chains has also offered more advanced features, such as:
On-line search (21.1%),
On-line availability check (19.7%),
On-line reservation retrieval (15.5%)
Cancellation (16.2%).
69

A small 2.1% has taken a step ahead of the rest by allowing customers to create and
modify their profiles on-line. In this manner, the Web is acting as a strategic
extension of hotel databases.
Loyalty Programmes
Hotel chains could also extend their loyalty programmes on-line by having
special features for their potential and existing frequent guests; such as general
information, on-line enrolment, restricted frequent guest area, on-line account
review, create/modify customer profile, exclusive e-mail address, special Web offers,
and request rewards on-line. A high proportion (75%) of the hotel chains offer no
loyalty programme features at all. Although 25% have some kind of loyalty
programme, only 19.7% of them provide general information on their programmes.
A small proportion has also offered advanced features for their frequent
guests, such as on-line enrolment, special Web offers, on-line account view,
create/modify customer profile and request rewards on-line. A restricted frequent
guest area, which is accessible only by password, is provided by 1.4% of the chains,
and an e-mail address for the exclusive use of frequent guests is also offered by 1.4%.
Newsletter
Hotel chains could keep their customers and employees up-to-date with the
latest developments using electronic newsletters, which are of two types- Web
newsletter and e-mail newsletter.
A huge majority (93%) of the hotel chains do not have both the Web
newsletter and e-mail newsletter. A small proportion (2.8%) of the chains offers Web
newsletter, and only 3.5% offers e-mail newsletters. Special Gestures. The Web
offers hotel chains the ability to personalise the experiences of customers who visit
the Web sites. Hotel chains could include features such as the set up of a personal
Web page, address Web visitor by name, welcome message, and guest book. The
potential of the Web to personalise customers' on-line experiences is still largely
untapped by the hotel chains. The most commonly offered features are the welcome
message and guest book. A small minority of chains have personalised customers' on-
70

line experience by offering features such as set up personal Web page (2.1%) and
address Web visitor by name (2.8%).
Feedback
Hotel chains could employ the Web as an interactive marketing tool.
Customers could give direct feedback via the Web. This could be done by filling up
an on-line form or by e-mailing their comments, complaints or suggestions.
Approximately three-quarter of the hotel chains provide one or both of the feedback
mechanisms. 54.9% of the chains offer e-mail feedback, while only 23.9% of them
offer on-line feedback form. There still exists quite a substantial proportion of hotel
chains which are not taking advantage of this capability of the Web at all.
Customer Service
Hotel companies could utilise the Web to provide enhanced customer service.
A Web site guide could assist customers in exploring the hotel web site. A hotel chain
could post on its web site a series of frequently asked questions (FAQs), from which
customers might be able to find answers to common queries. Printable property and
meeting fact sheets could also be available for customers wishing to make hard copies
of on-line information. Customers could be encouraged to book their meeting
facilities by the provision of meeting planning worksheets. They could also make on-
line requests for hotel brochures, general information and information on meeting
facilities. Furthermore, hotels are also integrating the Web, and the Internet itself;
into their products. For example, Inter-Continental Hotels and Resorts (URL:
http://www.interconti.com) offer guests, at one of its international properties, the
ability to purchase a card which allows them one hour of Web surfing via their
television remote controls. Only approximately half of the hotel chains offer
customer service features. The most commonly available features are on-line request
for brochure/information and destination guides. The rest of the features are still
mainly confined to a small minority of the hotel chains.
Public Relations
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The interactive nature of the Web facilitates the building, maintenance and
enhancement of relationships between the hotel chains and the influence markets or
the general public. A hotel chain could e-mail updates on the company's latest
developments to the press. 5.6% of the hotel chains offer on-line request for
photos/information, while 0.7% of them offer e-mail updates on latest developments.
The potential of the Web as a public relations tool is still largely ignored, with only a
small proportion (7%) of the hotel chains adopting the Web in this way.
Value-added Service
Here, a hotel chain could, potentially, provide a currency converter service,
weather reports, information on business and travel, news and current affairs, links to
travel partners, and links to other web sites (for e.g. local attractions). These features
could serve to add value to the customers during their on-line interactions with the
hotel chains. A large majority of the hotel chains (65%) do not provide any value-
added service at all. The more commonly available features are links to travel
partners, weather reports, information on business travel and currency converter.
Web Site for Employees
Hotel chains could employ the web as an internal marketing tool to build long-
term relationships with its employees. A web site for the exclusive use of employees
could be maintained and employment opportunities within the chain posted. An on-
line job application form could facilitate employees in their application process. The
Web site could also serve as an information centre, providing information such as
mission statement, company policies, procedures, results, etc. It is evident that the
potential of the Web as an internal marketing tool is still largely not exploited by the
majority of the hotel chains, with only 10% offering their employees one of the above
features.
Channel Members
The Web offers the hotel chains an interactive communication tool to develop
long-term relationships with the channel members. However, only a small 0.7% of
the hotel chains exploit this capability of the Web, in the form of a web site dedicated
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to channel members only. Potentially, hotel chains could post on their web sites
information such as room availability and rates and last-minute offers.
Customer Research
Continuous customer data collection and the tracking of customer expectations
could also be facilitated by the Web. Customised or incentivised surveys could be
carried out cost-effectively. However, the finding shows that only 4.2% of the hotel
chains utilise the Web to carry out research, by asking customers to fill up on-line
surveys.
Conclusion
1. The World Wide Web, as an interactive communication medium, is still in its
maturing stage. In the present study it is mostly the larger hotel chains which
have begun to explore its potential to develop long-term relationships with
customers.
2. The smaller hotel chains are still not doing so, probably because they are
lacking in financial and marketing resources, or only want to cater to a more
localized or nationalized market. This will allow a competitive advantage to be
developed by the larger hospitality organizations. Thus, the Web still has a
long way to go in terms of its development as a RM tool, which is very much
dependent upon customers' demands, hotel companies' willingness to let their
web sites assume a bigger marketing role, and the available technology.
However, there seems to be widespread confidence within the hotel industry
of the future of the web as a marketing mechanism. Hotel companies should,
as proposed by table 1, adopt RM as a strategy guiding the development of
their web sites.
3. Both RM and the World Wide Web combined together present a powerful
competitive advantage for hotel companies at a time when there is increasing
competition over a reduced customer base. As such, no hotel company can
afford to ignore the full potential of the Web as a strategic mechanism to
facilitate the practice of RM. This means that the application of the Web as a
RM tool is the next logical step forward for the whole of the hotel & tourism
industry.
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Hence, the conclusions were drawn on the basis of available information in
both the studies. There may have been some bias in responding to the answer.
However, proper care has been taken into consideration to analyse the information on
the basis of best possible data.
Thus, this part of the study is concluded with the concluding remarks that
effective research methodology is a necessary adjunct between the work done by the
researcher and the conclusions drawn by him for the purpose of putting forth the
recommendations and suggestions to the management of the organizations under
study. It may, thus, be concluded that a solid research methodology is the root of
successful research work and the researcher has adhered to it.















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Chapter - 3
RELATIONSHIP MARKETING IN SERVICE SECTOR

SERVICE SECTOR IN INDIA
Service Sector in India today accounts for more than half of India's GDP.
According to data for the financial year 2006-2007, the share of services, industry,
and agriculture in India's GDP is 55.1 per cent, 26.4 per cent, and 18.5 per cent
respectively. The fact that the service sector now accounts for more than half the GDP
marks a watershed in the evolution of the Indian economy and takes it closer to the
fundamentals of a developed economy.
Services or the "tertiary sector" of the economy covers a wide gamut of activities
like trading, banking & finance, infotainment, real estate, transportation, security,
management & technical consultancy among several others. The various sectors that
combine together to constitute service industry in India are:
Trade
Hotels and Restaurants
Railways
Other Transport & Storage
Communication (Post, Telecom)
Banking
Insurance
Dwellings, Real Estate
Business Services
Public Administration; Defence
Personal Services
Community Services
Travel & Tourism Services
Other Services
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There was marked acceleration in services sector growth in the eighties and nineties,
especially in the nineties. While the share of services in India's GDP increased by 21
per cent points in the 50 years between 1950 and 2000, nearly 40 per cent of that
increase was concentrated in the nineties. While almost all service sectors participated
in this boom, growth was fastest in communications, banking, hotels and restaurants,
community services, trade and business services. One of the reasons for the sudden
growth in the services sector in India in the nineties was the liberalisation in the
regulatory framework that gave rise to innovation and higher exports from the
services sector.
The boom in the services sector has been relatively "jobless". The rise in
services share in GDP has not accompanied by proportionate increase in the sector's
share of national employment. Some economists have also cautioned that service
sector growth must be supported by proportionate growth of the industrial sector,
otherwise the service sector grown will not be sustainable. In the current economic
scenario it looks that the boom in the services sector is here to stay as India is fast
emerging as global services hub.
In the present Chapter the researcher has discussed the various characteristics
of the Service Sector and its different kinds. The role of Relationship Marketing is
Service Sector has also been elaborately discussed with evaluation of current
relationship marketing practices in Service Sector. This chapter has developed on the
following sub-headings.
3.1 CHARACTERISTICS OF THE SERVICE SECTOR
3.1.1 What is services marketing?
A service is the action of doing something for someone or something. It is
largely intangible (i.e. not material). A product is tangible (i.e. material) since you can
touch it and own it. A service tends to be an experience that is consumed at the point
where it is purchased, and cannot be owned since is quickly perishes. A person could
go to a caf one day and have excellent service, and then return the next day and have
a poor experience.


76

Activities, benefits and satisfactions, which are offered for sale or are provided in
connection with the sale of goods-AMA
Services include all economic activities whose output is not a physical product or
construction, is generally consumed at the time it is produced, and provides added
value in forms (such as convenience, amusement, timeliness, comfort or health) that
are essentially intangible concerns of its first purchaser - Quinn ,Baruch and Paquett
Marketing a service-base business is different from marketing a product-base
business. There are several major differences, including:
1. The buyer purchases are intangible
2. The service may be based on the reputation of a single person
3. It's more difficult to compare the quality of similar services
4. The buyer cannot return the service
5. Service Marketing mix adds 3 more p's, i.e. people, physical environment,
process service and follow-through are keys to a successful venture. The major
difference in the education of services marketing versus regular marketing is
that instead of the traditional "4 P's," Product, Price, Place, Promotion, there
are three additional "P's" consisting of People, Physical evidence, and Process.
Service marketing also includes the service escape referring to but not limited
to the aesthetic appearance of the business from the outside, the inside, and the
general appearance of the employees themselves. Service Marketing has been
relatively gaining ground in the overall spectrum of educational marketing as
developed economies move farther away from industrial importance to service
oriented economies.
3.1.2 Components
The service sector consists of the "soft" parts of the economy such as
insurance, government, tourism, banking, retail, education, and social services. In
soft-sector employment, people use time to deploy knowledge assets, collaboration
assets, and process-engagement to create productivity (effectiveness), performance
improvement potential (potential) and sustainability. The tertiary sector is the most
common workplace. Typically the output of this time is content (information),
77

service, attention, advice, experiences, and/or discussion (also known as "intangible
goods"). Other examples of service sector employment include:
Franchising
Restaurants
News media
Leisure industry/hotels
Consulting
Healthcare/hospitals
Waste disposal
Real estate
Personal services
Business services
Public utilities are often considered part of the tertiary sector as they provide
services to people, while creating the utility's infrastructure is often considered part of
the secondary sector, even though the same business may be involved in both aspects
of the operation. The life of services marketing has undergone three stages:
The Crawling Out stage (Pre-1980)
The Scurrying About stage (1980-1985)
The Walking Erect stage (1986- till today)

3.1.3 The Crawling Out Stage- (I) (Pre-1980)
A period of high risk: If services marketing proved to have a case, the sub-
discipline would grow. If it was shown that services marketing was a mere extension
of goods marketing, the discipline would have no solid base and would disappear. The
objective is to prove the right of services marketing to exist
3.1.4 The Crawling Out Stage (II)- (Pre-1980)
Views of goods-nurtured marketing academics is If services marketing
becomes a sub-discipline with its own stance, this could challenge the universality of
marketing theory and the coherence of marketing as a separate discipline Why do
78

we need to pay special attention to the marketing of services, when they are just an
aid (an important though) to the production and marketing of goods?
Views of service practitioners is You cannot market a bank account by
applying same rules that are used for the marketing of a can of Campbells soup The
logic that services are lust like goods resembles the logic that apples are like oranges
except for their appleness
3.1.5 The Scurrying About Stage (I) (1980-1985)
The characteristics: A notable increase in the interest of practitioners and
academics in the case of services marketing .The debate on the uniqueness of services
marketing was partly won. The objectives is to reinforce, even further, the argument
that, despite similarities, the marketing of services necessitated a different
management approach. To prove empirically the necessity mentioned above.
3.1.6 The Scurrying About Stage (II) (1980-1985)
The outcome is a significant growth of the empirically based knowledge on
the special nature of services, Service quality, Service encounters (the customer-seller
dyadic interaction at the point of sale), Service design and New service development
3.1.7 The Walking Erect Stage (I) (1986-2003)
The characteristics are Very little, is any, further discussion is made on whether or not
services require a different marketing management approach: the debate is won. The
objective is to conduct empirical research in new areas of inquiry in services
marketing
3.1.8 The Walking Erect Stage (II) (1986-2003 onwards )
The outcome is the empirical orientation and rigorousness of research on
services marketing increase . New areas of inquiry are empirically investigated like :
Customer retention
Relationship marketing
Branding services
Internationalisation of services
Direct services marketing
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Franchising in services
Services marketing is a respected sub-discipline of marketing
Gone are the days when the perception of services remained confined to work
with only service motto, without charging any fee or without accepting any
obligation. The time cycle coiling more dynamism in its nature necessitates a change
as willingly or unwillingly, we dont venture to go against the wind. The mechanised
system of development has now paved ways for socio-economic transformation which
has made possible an increase in the level of disposable income. When we earn more,
we like to spend more. We evince interest in utilising our leisure time and availing
the modern amenities and facilities. We cant deny the fact that the imbalance in the
demographic structure has complicated the task of policy makers, specially, in terms
of creating and expanding the job opportunities. There is no doubt in it that the goods
manufacturing organisations have been contributing a lot to the process but the
service generating organisations find it difficult to cope with the mounting problem
aggravated by the developed countries of the world. In the Indian perspective, the
service sector has not been contributing substantially to the process of socio-economic
transformation.
In the 21
st
century, the business environmental conditions are likely to be more
volatile. The multi-dimensional developments in the information technologies,
activated and energised by the developed countries, have made ways for
sophistication in almost all the areas. It is against this background that leading service
generating organisations of the world have been found believing in making things
happen. The invention and innovations have been paving avenues for a qualitative
transformation in almost all the areas. This has been successful in increasing the level
of expectations of customers. The globalisation and liberalisation has opened new
vistas for the development of service generating organisations. The intensity of
competition is found moving upward. The organisations active in enriching their
strength have been found establishing an edge and compelling the weak organisations
to make a final good-bye. This makes it essential that even in the Indian condition,
the service generating organisations put in sincere efforts to make themselves stronger
and stronger, if they have to survive and thrive. They have to explore profitable
avenues and profitable avenues and practise innovating marketing since quality or
80

world class service with innovative marketing would help them in proving their
excellence nationally and internationally competitive.
*

As our knowledge of the characteristics of services grows, so does our ability
to deal with them from both an economic and marketing perspective. Services are
intangible, inseparable, variable and perishable. Each characteristic poses problems
and requires strategies to deal with those problems. Therefore, a need was felt to
discuss services characteristics and their marketing implications in detail.
A service is the action of doing something for someone or something. It is
largely intangible (i.e. not material). A product is tangible (i.e. material) since you can
touch it and own it. A service tends to be an experience that is consumed at the point
where it is purchased, and cannot be owned since is quickly perishes. A person could
go to a caf one day and have excellent service, and then return the next day and have
a poor experience. So often marketers talk about the nature of a service as:

Fig.3.1 Service characteristics
Intangibility means that unlike goods, services cant be seen, touched and
felt, tasted or smelled or even heard before they are purchased.
Inseparability suggests that services are produced, distributed, and consumed
simultaneously. In the case of manufactured goods, production takes place in the

*
Sheth, J.N. & Parvatiyar, Atul, Relationship Marketing, Response Books, New Delhi, 2005.


INTANGIBLE


PERISHABILITY SERVICES
CHARACTERISTICS
INSEPARABILITY

HETEROGENEITY
81

production unit, thereafter the goods are kept in inventory and transported to the
distribution outlet from where the consumers pick them up for consumption.
Heterogeneity means that services delivered generally vary in quality, time
consumed in delivery, and the extent of services provided. Since people deliver most
services, they are variable. It refers to the potential for high variability in the
performance and the quality of services, caused by the interaction between the service
employee and the customer
Perishability means that services cannot be saved, stored, resold or returned
services cant be stored. For an Airlines, in a particular flight, vacant seats remain
unsold, or in a hotel un-booked rooms remains vacant whereas in the case of
manufactured goods, unsold items can be put into inventory and can be sold the next
day.
Customer Participation suggests that service production is not a one- sided
activity. Customers are co-producers of services. The production quality of the
service greatly depends upon the ability, skills and performances of the employee as
well as the ability and performances of the customers. In the service interaction,
although the employee and the customers are not equal part of production, the role of
the customer cannot be over emphasized. Services firms should make the customer
aware of the service packages and the production process through proper
communication media.
No Ownership means services consumers will have experiences but not get
ownership of the property. Since services are intangible and perishable ,the question
of ownership doesnt arise. But this characteristic will add to the problems of the
services marketer. Because selling an experience where nothing remains after
consumption, except the memory of it is not an easy selling.
The Expanded Marketing Mix for Services: 3 More Ps (in addition to four
marketing Ps-Price, Product, Promotion and Place)
3.1.9 People
All humans who play a role in service delivery and who influence the
perceptions of customers (Zeithaml and Bitner, 1996), Service delivery employees
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(front-line staff ) , the general staff of the service company, the customer, customers
that are present in the servicing and delivery process. People are the most important
element of any service or experience. Services tend to be produced and consumed at
the same moment, and aspects of the customer experience are altered to meet the
'individual needs' of the person consuming it. Most of us can think of a situation
where the personal service offered by individuals has made or tainted a tour, vacation
or restaurant meal. Remember, people buy from people that they like, so the attitude,
skills and appearance of all staff need to be first class. Here are some ways in which
people add value to an experience, as part of the marketing mix - training, personal
selling and customer service.
3.1.10 Training
All customer facing personnel need to be trained and developed to maintain a
high quality of personal service. Training should begin as soon as the individual starts
working for an organization during an induction. The induction will involve the
person in the organization's culture for the first time, as well as briefing him or her on
day-to-day policies and procedures. At this very early stage the training needs of the
individual are identified. A training and development plan is constructed for the
individual which sets out personal goals that can be linked into future appraisals. In
practice most training is either 'on-the-job' or 'off-the-job.' On-the-job training
involves training whilst the job is being performed e.g. training of bar staff. Off-the-
job training sees learning taking place at a college, training centre or conference
facility. Attention needs to be paid to Continuing Professional Development (CPD)
where employees see their professional learning as a lifelong process of training and
development.
3.1.11 Personal Selling
There are different kinds of salesperson. There is the product delivery
salesperson. His or her main task is to deliver the product, and selling is of less
importance e.g. fast food, or mail. The second type is the order taker, and these may
be either 'internal' or 'external.' The internal sales person would take an order by
telephone, e-mail or over a counter. The external sales person would be working in
the field. In both cases little selling is done. The next sort of sales person is the
missionary. Here, as with those missionaries that promote faith, the salesperson builds
83

goodwill with customers with the longer-term aim of generating orders. Again,
actually closing the sale is not of great importance at this early stage. The forth type is
the technical salesperson, e.g. a technical sales engineer. Their in-depth knowledge
supports them as they advise customers on the best purchase for their needs. Finally,
there are creative sellers. Creative sellers work to persuade buyers to give them an
order. This is tough selling, and tends to o ffer the biggest incentives. The skill is
identifying the needs of a customer and persuading them that they need to satisfy their
previously unidentified need by giving an order.
3.1.12 Customer Service
Many products, services and experiences are supported by customer services
teams. Customer services provided expertise (e.g. on the selection of financial
services), technical support(e.g. offering advice on IT and software) and coordinate
the customer interface (e.g. controlling service engineers, or communicating with a
salesman). The disposition and attitude of such people is vitally important to a
company. The way in which a complaint is handled can mean the difference between
retaining or losing a customer, or improving or ruining a company's reputation.
Today, customer service can be face-to-face, over the telephone or using the Internet.
People tend to buy from people that they like, and so effective customer service is
vital. Customer services can add value by offering customers technical support and
expertise and advice
3.1.13 Physical Evidence
The setting where the service is delivered (Zeithaml and Bitner,1996). Where
the service company and the customer interact.Any tangible components that facilitate
performance or communication of the service. Physical evidence is the material part
of a service. Strictly speaking there are no physical attributes to a service, so a
consumer tends to rely on material cues. There are many examples of physical
evidence, including some of the following:
Packaging.
Internet/web pages.
Paperwork (such as invoices, tickets and despatch notes).
Brochures.
84

Furnishings.
Signage (such as those on aircraft and vehicles).
Uniforms.
Business cards.
The building itself (such as prestigious offices or scenic headquarters).
Mailboxes and many others . . . . . .
A sporting event is packed full of physical evidence. Your tickets have your
team's logos printed on them, and players are wearing uniforms. The stadium itself
could be impressive and have an electrifying atmosphere. You travelled there and
parked quickly nearby, and your seats are comfortable and close to restrooms and store.
All you need now is for your team to win! Some organisations depend heavily upon
physical evidence as a means of marketing communications, for example tourism
attractions and resorts (e.g. Disney World), parcel and mail services (e.g. UPS trucks),
and large banks and insurance companies (e.g. Lloyds of London).
3.1.14 Process
The actual procedure, mechanisms and flow of activities through which a
service is delivered (Zeithaml and Bitner, 1986). The dimensions of a processs
efficiency and effectiveness:
Length: the number of steps that participants have to follow in order to effect
service delivery
Duration: the time that elapses from the first to the last activity of the service
delivery process
Logistical effectiveness: the degree of smoothness in the flow of the steps of
the service delivery process
There are a number of perceptions of the concept of process within the
business and marketing literature. Some see processes as a means to achieve an
outcome, for example - to achieve a 30% market share a company implements a
marketing planning process.
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Another view is that marketing has a number of processes that integrate
together to create an overall marketing process, for example - telemarketing and
Internet marketing can be integrated. A further view is that marketing processes are
used to control the marketing mix, i.e. processes that measure the achievement
marketing objectives. All views are understandable, but not particularly customer
focused.
For the purposes of the marketing mix, process is an element of service that
sees the customer experiencing an organisation's offering. It's best viewed as
something that your customer participates in at different points in time. Here are some
examples to help your build a picture of marketing process, from the customer's point
of view.
Going on a cruise - from the moment that you arrive at the dockside, you are
greeted; your baggage is taken to your room. You have two weeks of services from
restaurants and evening entertainment, to casinos and shopping. Finally, you arrive at
your destination, and your baggage is delivered to you. This is a highly focused
marketing process.
Booking a flight on the Internet - the process begins with you visiting an airline's
website. You enter details of your flights and book them. Your ticket/booking
reference arrive by e-mail or post. You catch your flight on time, and arrive refreshed
at your destination. This is all part of the marketing process.
3.1.15 At each stage of the process, markets:
Deliver value through all elements of the marketing mix. Process, physical
evidence and people enhance services.
Feedback can be taken and the mix can be altered.
Customers are retained, and other serves or products are extended and marked
to them.
The process itself can be tailored to the needs of different individuals,
experiencing a similar service at the same time.
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Processes essentially have inputs, throughputs and outputs (or outcomes).
Marketing adds value to each of the stages. Take a look at the lesson on value chain
analysis to consider a series of processes at work.
It is against this background that we talk about the marketing of services. In the
present world, it is not possible that, we keep ourselves isolated. To be more
specific when we have advanced information technologies and quality professionals,
we dont find any sense in continuing with the traditional technologies and negative
attitudes.
We need positive attitude, creative approach and innovative strategies which
would make our efforts productive. This requires a fair blending of performance
orientation and employee-orientation. Our services as product are to be of world class
and our employees are to be professionally sound. This requires an in-depth
knowledge of quality and its changing perception. This is due mainly to the fact that
sky is the limit for quality.
4

Both the sectors Public as well as the private need to understand the new
corporate culture in which employees need to have personal commitment. The
business environment is more competitive and this makes a strong advocacy in favour
of quality generation. We cant negate that by and large in almost all the public sector
service generating organisations, the fast deteriorating quality has been a matter of
serious concern. The policy of liberalisation has make ways for leading
multinationals to enter the market and to excel competition to enter the market and to
excel competition which is found throwing a big challenge to the existence of public
sector undertakings. If they are found surviving, it is just due to the attitudinal
support of the masses. Sooner or later, we expect a shift in their attitudes and this
would compel the public sector service generating organisations to leave the ground
free for the private sector. To be more specific in the Indian condition, we dont find
it a positive development since the prospects / customers in a majority of the
conditions would face the implications of high price structure. The foreign companies
would start exploiting the masses and the national economy would be thrown back in
the reverse gear. Thus, it is high time that the public sector organisations start and

4
Op. Cit.
87

activate the innovation process and prove themselves to be strong enough to face the
challenges and threats in the market.
Of late, the technologies have been found dominating the services sector and
the organisations depending on traditional technologies or manual services have been
facing a rough time. This makes it essential that we promote the use of technologies
but the same time also keep in our minds the implications of the use of sophisticated
technologies on the generation of employment opportunities. Since we are facing the
problem of unemployment, the policy makers cant negate this dimension of
development. In a true sense, we need a policy that makes the ways for quality
generation but at the same time is also not to create the problem of retrenchment. A
fair synchronisation of technology and human resources is considered significant to
make the process of development proactive.
In some of the service generating organisations we face the problem of strong
trade unionism dominating decision making with a negative attitude. We cant negate
that such a development has been making an invasion on the efficiency of employees
vis--vis gearing back the profitability index of an organisation. The trade union need
to change their attitudes. If they continue to remain as fighters, the ultimate suffers
would be the workers / employees. If they make the organisations financially sick,
the problems of retrenchment would reach at an alarming stage. This makes it
pertinent that trade unions works as an efficiency generator. They keep in their
records, the efficiency index of employees and based on that continue to champion
their claims and subserve their interests.
In view of the above, it is right to mention that application modern marketing
principles would help almost all the organisations in enriching their efficacy, if
potentials are enriched, we become strong. And if we are strong, the resistance power
is increased. This simplifies the task of facing the rough weather. The world-wide
economic depression is not to be slowed down. The customers in almost all the cases
and areas are likely to be more sensitive to price. Thus the cost effectiveness would
play a decisive role in developing and thriving an organisation. The organisations
offering quality services at a reasonable price structure would prove to be leader. The
innovative marketing strategies would help them fantastically. It is in this context that
88

we make an advocacy in favour of the application of marketing principles in almost
all the areas.
Thus we need professional excellence to get the best result. The
professionalism makes the ways for innovation. This makes it essential that our
employees working in different sectors and areas are only not efficient but in addition
they are also committed, dedicated and value-based. Almost all the organisations
need to have an ongoing training programme for the development of sound
professionals. Performance-orientation is thus the first task which would help an
organisation in offering the world class services to be customers. At the same time,
we also need employee-orientation which would redress the interests of employees by
offering to them suitable incentives. In this context, it is important to mention that
efficiency would be the focal point around which our strategies would cluster. By
promoting inventions and innovations we would develop a new perception of quality
which would require involvement of efficient personnel. If we continue to offer to the
efficient personnel, the incentives based on their efficiency, the inefficient personnel
would have no option but to improve their efficiency. This would start a circle in
which total quality management would be required to be practiced in right fashion.
The Public Sector Banks have been found facing a rough weather. The State
Transport Corporations have been declared financially insolvent, the Life Insurance
Corporations lacks works culture, the Government-Managed hospitals are in a
depleted condition, the educational institutions, specially managed by the government
have been found offering substandard services to the masses, the truism industry has
miserably failed in contributing to the process of generating foreign exchange, the
hotel industry is facing a rough weather, the supply of electricity of the different
sectors is found presenting a gloomy picture.
Marketing of services is becoming increasingly specialized, going beyond the
generic principles of marketing. For example, services are usually perishable,
irreversible and highly personal. Unlike products, services are produced and
consumed at the same time. This of course, is equally applicable to organizations
whose core product is service: e.g. banks, transportation companies, hotels, hospitals,
educational institutions, professional services, and telecommunications; it is also
89

applicable to organizations that depend on service excellence for competitive
advantage: e.g. high technology manufacturers, automotive, and industrial products.
Multiple skills are required to be successful including soft skills like
communications, selling skills, cultural sensitivity and knowledge of human
psychology. This is combined with knowledge-based subjects like CRM, service
quality management, hospitality management, supply-chain management, travel and
tourism, services marketing, and other relevant subjects. In order to deliver excellent
service quality, it is critical to understand, create and deliver real value to all
stakeholders. Services marketing is marketing based on relationship and value. It may
be used to market a service or a product.
3.2 CLASSIFICATION OF SERVICES SECTOR
The Services Sector in India plays a vital role in the economy of the Country.
There is a large variety of services being offered in the market by service providers.
These services are heterogeneous and varied. GATS (General Agreement on Trade &
Services) identified as many as 155 activities as services and classified them in the
following 11 major categories:

A. Finance
B. Information Technology & Communication
C. Knowledge Process Outsourcing
D. Media & Entertainment
E. Retailing & Distribution
F. Tourism & Hotel
G. Health
H. Business Services
I. Construction & Engineering
J. Environment
K. Transport
A brief depiction of few major services of the above, is being presented herein in the
following paragraphs.

Ravi Shankar, Services Marketing The Indian Perspective.

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3.3 FINANCIAL SERVICES
The Indian financial sector is in for an overhaul. Financial sector reforms have
long been regarded as an integral part of the overall policy reforms in India. India has
recognized that these reforms are imperative for increasing the efficiency of resource
mobilization and allocation in the real economy and for the overall macroeconomic
stability. The reforms have been driven by a thrust towards liberalization and several
initiatives such as liberalization in the interest rate and reserve requirements have
been taken on this front. At the same time, the government has emphasized on
stronger regulation aimed at strengthening prudential norms, transparency and
supervision to mitigate the prospects of systemic risks. Today the Indian financial
structure is inherently strong, functionally diverse, efficient and globally competitive.
During the last fifteen years, the Indian financial system has been incrementally
deregulated and exposed to international financial markets along with the introduction
of new instruments and products.
Banking Sector
The banking sector is the most dominant sector of the financial system in
India. Significant progress has been made with respect to the banking sector in the
post liberalization period. The financial health of the commercial banks has improved
manifolds with respect to capital adequacy, profitability, asset quality and risk
management. Further, deregulation has opened new opportunities for banks to
increase revenue by diversifying into investment banking, insurance, credit cards,
depository services, mortgage, securitization, etc. Liberalization has created a more
competitive environment in the banking sector.
Capital Market
India has a long tradition of functioning capital markets. The Bombay stock
exchange is over a hundred years old and the volume of activity has increased in the
recent years. The process of reform of capital markets started in 1992 and aimed at
removing direct government control and replacing it by a regulatory framework based
91

on transparency and disclosure. The first step was taken in 1992 when SEBI was
elevated to a full-fledged capital market regulator.

An important policy initiative in 1993 was the opening of capital markets for
foreign institutional investors and allowing Indian companies to raise capital abroad.
FII registrations in the country have gone up significantly over the years. A number
of significant reforms have been implemented in the spot equity and related exchange
traded derivatives markets since the early 1990s. For instance, spot prices are mostly
market-determined, trading volumes in the derivatives market exceed those in spot
markets and market practices such as speed of settlement and dematerialization are
close to international best practices.
Insurance Sector
There exists huge scope of investment in the insurance sector in India. India
has an enormous middle-class that can afford to buy life, health and disability and
pension plan products. Further, insurance is one of the most important tax saving
instrument in the country.
Insurance sector has been opened up for competition from Indian private
insurance companies with the enactment of Insurance Regulatory and Development
Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance
Regulatory and Development Authority (IRDA) was established on 19th April 2000
to protect the interests of holder of insurance policy and to regulate, promote and
ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for
the entry of private players into the insurance market, which was hitherto the
exclusive privilege of public sector insurance companies/ corporations. Under the new
dispensation Indian insurance companies in private sector were permitted to operate
in India on the fulfillment of certain prerequisites. A large number of public and
private players are competing today in both life and general insurance segments. The
FDI cap/ Equity in the insurance sector is 26 percent under the automatic route subject
to licensing by the insurance regulatory and development authority.

R.K. Jain, SEBI Guidelines, Taxmann Publications, New Delhi (2006).

http://businessinindia.nic.in
92

Some of the major private players in the sector are:
In Life insurance Sector:
Bajaj Allianz Life Insurance Corporation
Birla Sun Life Insurance Co. Ltd. (BSLI)
HDFC Standard Life Insurance Co. Ltd. (HDFC STD LIFE)
ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU)
ING Vysya Life Insurance Co. Pvt. Ltd. (ING VYSYA)
Max New York Life Insurance Co. Ltd. (MNYL)
MetLife India Insurance Co. Pvt. Ltd. (METLIFE)
Kotak Mahindra Old Mutual Life Insurance Co. Ltd. SBI Life Insurance Co.
Ltd. (SBI LIFE)
TATA AIG Life Insurance Co. Ltd. (TATA AIG)
AMP Sanmar Assurance Co. Ltd. (AMP SANMAR)
Aviva Life Insurance Co. Pvt. Ltd. (AVIVA)
Sahara India Life Insurance Co. Ltd. (SAHARA LIFE)
Shriram Life Insurance Co. Ltd.
In General Insurance sector:
Bajaj Allianz General Insurance Co. Ltd. (BAJAJ ALLIANZ)
ICICI Lombard General Insurance Co. Ltd. (ICICI LOMBARD)
IFFCO Tokyo General Insurance Co. Ltd. (IFFCO TOKIO)
Reliance General Insurance Co. Ltd. (RELIANCE)
Royal Sundaram Alliance Insurance Co. Ltd.
TATA AIG General Insurance Co. Ltd. (TATA AIG)
Cholamandalam MS General Insurance Co. Ltd.
HDFC Chubb General Insurance Co. Ltd. (HDFC CHUBB)
Venture Capital
India is prime target for venture capital and private equity today, owing to
various factors such as fast growing knowledge based industries, favourable


93

investment opportunities, cost competitive workforce, booming stock markets and
supportive regulatory environment among others. The sectors where the country
attracts venture capital are IT and ITES, software products, banking, PSU
disinvestments, entertainment and media, biotechnology, pharmaceuticals, contract
manufacturing and retail.
*

3.4 INFORMATION TECHNOLOGY AND COMMUNICATION
Over the past decade, information technology industry has become one of the
fastest growing industries in India. Strong demand over the past few years has placed
India amongst the fastest growing IT markets in the Asia- Pacific region. The Indian
software and ITES industry has grown at a CAGR of 28 percent during the last five
years. It is expected that the contribution of IT and ITES to national GDP will rise to
7 per cent by 2007-08 against 4.8 per cent in 2005-06.
Recognizing the advantages of multi-country service delivery capabilities to
better manage evolving customer requirements and execute end-to-end delivery of
some new services, Indian companies are enhancing their global service delivery
capabilities through a combination of Greenfield initiative, cross-border M&A,
partnerships and alliances with local players. Global software product giants such as
Microsoft, Oracle, SAP, etc., have established their captive development centres in
India.
India's record on information security ranks better than most locations. The
authorities in India are maintaining a keen emphasis on further strengthening the
information security environment in the country. Specific initiatives underway include
enhancing the legal framework through proposed amendments to the IT Act 2000,
increasing interaction between industry players and enforcement agencies to help
create greater awareness about information security issues and facilitate mutual
support.
A majority of companies in India have already aligned their internal processes
and practices to international standards such as ISO, CMM, six sigma, etc., which has

*
Ibid.

94

helped to establish India as a credible sourcing destination. As of December 2006,
over 400 Indian companies had acquired quality certifications with 82 companies
certified as SEI CMM Level 5- higher than any other country in the field.
Production Profile
According to National Association of Software and Services Company
(NASSCOM), the Indian IT software and services sector grew by 31.4 percent during
2005-06, notching up aggregate revenue of US$ 29.6 billion, up from US$ 22.5
billion in 2004-05. Encouraged by the 2005-06 performance, the IT and ITES sector
is confident of achieving the US$ 60 billion milestone in exports by 2010.
4

The production and growth trends during the last five years have been as
follows:
Table-3.2 NASSCOM Production & growth
Year Production (Rs. Crore) Growth (Percentage)
2000-01 68,850 31.3
2001-02 80,124 16.4
2002-03 97,000 21.1
2003-04 118,290 18.2
2004-05 152,420 28.8
2005-06 185,660 21.8
Key Growth Drivers
According to NASSCOM, the high performance of the IT-ITES sector was in
large part due to factors such as the emergence of a more efficient global delivery

4
NASSCOM Newsletter.

95

model, the unbundling of large IT outsourcing deals with larger India-based delivery
shares, and the bagging of large contract by the country's players. Some of the other
performance drivers were ever-deepening customer relationships, cross border
mergers and acquisitions, the move of the industry towards a stable pricing model
Indian IT and ITES companies have moved up the value chain and have
expanded their product and service portfolios gravitating towards higher value
processes and achieving increased traction in engineering and product development
services.
India's edge in the off shoring domain was based on factors such as
availability of people's skills, a conducive business environment, focus on information
security and operational excellence by leading IT-ITES vendors and relevant financial
structures.
Future Outlook
According to NASSCOM, rapid growth will continue to be the hallmark of the
IT-ITES sector during 2006-07

. The industry is projected to touch revenues of

around US$ 36-38 billion in 2006-07, representing a growth of between 25-28 per
cent. IT-ITES exports are expected to grow by 27-30 percent in 2006-07, posting
revenues between US$ 29-31 billion. The domestic market too is forecasted to grow
rapidly at a rate of 20 percent, based on a rollout of E-governance, initiatives and
automation of key sectors such as retail, healthcare, transportation and manufacturing
among others.
KNOWLEDGE PROCESS OUTSOURCING (KPO)
The success of off-shoring Business Process Operations (BPO) sector in India
has led to the emergence of KPO sector in India. Knowledge Process Outsourcing
(KPO) can be simply defined as an off shoring of knowledge intensive business
processes that require specialized domain-based expertise. KPO delivers high value to
organizations by providing domain-based processes and business expertise rather than
just process expertise. These processes demand advanced analytical and specialized

NASSCOM Newsletter.

96

skill of knowledge workers that have domain experience to their credit. KPOs are
significantly higher on the value chain as compared to BPOs and involve processes
that demand advanced information search, analytical, interpretation and technical
skills as well as some judgement and decision-making process.

KPO services enable enterprises to:
Reduce design-to-market lead times
Manage critical hardware efficiently
Provide research on markets, products and services
Enhance organizational effectiveness in business administration
As per Nasscom estimates, the KPO industry was expected to grow by 45 per cent by
2010. Out of the $16 billion which the KPO industry was likely to assume by 2010,
around $12 billion would be outsourced from India. Further, it has been estimated in a
study by Evalueserve that as many as 2,50,000 such professionals would be hired by
the Indian KPO providers by 2010.
Potential areas for KPO services:
Business & Market Research
Data Analytics
Equity, Financial and Insurance Research
Training & Consultancy
Pharmaceuticals and Biotechnology
Medical Services
Research & Development
Network Management
Business and Technical Analysis
Learning Solutions
Animation & Design
Writing & Content Development
Legal Services
Intellectual Property Research

Ibid.

97

Key Players in the KPO sector
Office Tiger
The Smart Cube
Smart Analyst
Evalueserve
RocSearch
MarketRX
Advantage India
Highly competitive and qualified workforce
Cost competitiveness
Operational efficiencies
English level proficiency of workforce
Locational advantage
3.5 MEDIA AND ENTERTAINMENT
The Indian Entertainment and Media (E&M) industry is undergoing
remarkable change and is today one of the fastest growing sectors in the country. The
entertainment industry is a perfect blend of creativity and commerce and provides vast
investment opportunities. According to a report by FICCI and Pricewaterhouse
Coopers, the Indian entertainment and media industry is poised to become INR one
trillion (INR 100,000 crore) industry by 2011. The industry is estimated to be worth
INR 43,700 crore currently.
Key Drivers
Economic growth of the country in general and rising disposable income
levels in particular.
Gradually liberalizing attitude of the government.
Greater interface with international companies.
Privatization and growth of the radio industry.
Advancement in Technology.
98

Favorable regulatory initiatives.
Liberalized foreign investment regime.
Television Industry
The television industry continues to dominate the E&M industry by acquiring
a share of over 43 per cent. The television industry is estimated to be INR 19,100
crore and is projected to grow at an annual compound rate of 22 per cent per annum to
reach a level of INR 51, 900 crore by 2011. The move towards CAS/DTH is
considered to be the major driver for this growth with subscription revenues set to
take the segment to the projected heights. From a single public service sector
broadcaster, television has grown into a thriving industry with over 300 channels
being beamed across India.
Film Industry
The Indian film industry has experienced advancements on all fronts including
technology used, themes of the movies, finance, exhibition and marketing. The movie
making business has got strong impetus from the growth of multiplex culture. The
Indian film industry is getting corporatised and has started looking overseas for co -
production. India has the world's biggest movie industry and produces around 1000
movies each year. Today, the Indian film industry stands at INR 85 billion and is
projected to reach around INR 175 billion by 2011. The major reason for this high
growth rate is that the industry is increasingly getting more corporatised, highlighted
by public issues of several film production, distribution and exhibition companies,
long term contracts between film production companies and directors/ actors and the
fact that more than half of 2006s releases were by corporate rather than individual
banners.

Radio Industry
Radio has been the most cost effective source of entertainment in India for a
long time. For a long time, the radio industry was dominated by the state broadcaster-
All India Radio. However, the radio sector has been gradually liberalized and has

Ibid.

99

been opened for private and foreign investment. The government is going to award
338 licenses to private players through a bidding process. The liberalized government
policy initiatives such as increasing the FDI limit to 20 per cent and migration to a
revenue sharing regime has given a boost to the radio segment. Radio is all set to
become a INR 1.7 crore industry by 2011.
Print Media
The most significant development for the Indian print media in 2005 was the
relaxation of foreign ownership norms. The foreign investment cap under non-news
category has been enhanced from 74 percent to 100 percent in case of Indian entities
publishing scientific/ technical /specialty magazines/ periodicals/journals. Owing to
the promotional initiatives taken by the government, print media is expected to
witness a growth of 13 per cent to reach INR 23,200 crore by 2011.
Investment Opportunities
Theatre/ Multiplex Infrastructure
Television Segment
Film Entertainment
Animation Segment
Print Media
Mobile Entertainment
Television Software Content
Advertising
3.6 RETAILING
India is witnessing an unprecedented consumption boom. The economy is
growing between 7 and 9 percent and the resulting improvements in income dynamics
along with factors like favourable demographics and spending patterns are driving the
consumption demand.
Indian Retail Industry is ranked among the ten largest retail markets in the
world. The attitudinal shift of the Indian consumer in terms of "Choice Preference",
"Value for Money" and the emergence of organised retail formats have transformed
100

the face of Retailing in India. The Indian retail industry is currently estimated to be a
US$ 200 billion industry and organised Retailing comprises of 3 per cent (or) US$6.4
Billion of the retail industry. With a growth over 20 percent per annum over the last 5
years, organised retailing is projected to reach US$ 23 Billion by 2010.
The Indian retail industry though predominantly fragmented through the
owner -run " Mom and Pop outlets" has been witnessing the emergence of a few
medium sized Indian Retail chains, namely Pantaloon Retail, RPG Retail, Shoppers
Stop, Westside (Tata Group) and Lifestyle International.
Given the attractiveness of the Indian retail sector, foreign retailers like Wal-
Mart, Carrefour SA, Europe's largest retailer and Tesco Plc, the UK's largest retailer,
were keen to enter this growing market, despite the Indian retail sector being closed to
foreign direct investment (FDI). In February 2006, the Indian Government had
announced its decision to allow FDI of upto 51% in single brand retailing. Wal-Mart
had said that India was high on its priority and that it was closely monitoring the
Government's policy on FDI in the retail sector.
In the last few years, Indians have gone through a dramatic transformation in
lifestyle by moving from traditional spending on food, groceries and clothing to
lifestyle categories that deliver better quality and taste. Modern retailing satisfies
rising demand for such goods and services with many players entering the bandwagon
in an attempt to tap greater opportunities.
According to the 'Global Retail Development Index (GRDI) 2006' by the
management consulting firm 'A.T. Kearney', India has retained it's topmost position in
the annual study of retail investment attractiveness among 30 emerging markets.
The index is based on more than 25 macro-economic and retail-specific
variables. For instance, the country risk includes parameters like political risk,
economic performance, debt indicators, credit ratings, access bank finance and
business risk. The market attractiveness covers retail sales per capita, urban
population, laws and regulations and business efficiency. Similarly, market saturation
captures share of modern retailing, number of international retailers etc. and time
pressure has been calculated as the sum of CAGR (2000- 2005) of the retail sales and
101

the retail sales area weighted by the CAGR of the GDP between 2000-05. The study
quotes: "The Indian retail market is gradually but surely opening up, while China's
market becomes increasingly saturated. Similarly, Asia has dislodged Eastern Europe
as the most attractive region".

The Growth Drivers
The Indian Retail growth can be attributed to the several factors including
Demography Dynamics: Approximately 60 per cent of Indian population
below 30 years of age.
Double Incomes: Increasing instances of Double Incomes in most families
coupled with the rise in spending power.
Plastic Revolution: Increasing use of credit cards for categories relating to
Apparel, Consumer Durable Goods, Food and Grocery etc.
Urbanization: increased urbanization has led to higher customer density areas
thus enabling retailers to use lesser number of stores to target the same number
of customers. Aggregation of demand that occurs due to urbanization helps a
retailer in reaping the economies of scale.
Covering distances has become easier: with increased automobile penetration
and an overall improvement in the transportation infrastructure, covering
distances has become easier than before. Now a customer can travel miles to
reach a particular shop, if he or she sees value in shopping from a particular
location.
Technology in Retail
Over the years as the consumer demand increased and the retailers geared up
to meet this increase, technology evolved rapidly to support this growth. The
hardware and software tools that have now become almost essential for retailing can
be into 3 broad categories.

CAGR Report.

102

Customer Interfacing Systems
Bar Coding and Scanners
Point of sale systems use scanners and bar coding to identify an item, use pre-
stored data to calculate the cost and generate the total bill for a client. Tunnel
Scanning is a new concept where the consumer pushes the full shopping cart
through an electronic gate to the point of sale. In a matter of seconds, the items
in the cart are hit with laser beams and scanned. All that the consumer has to
do is to pay for the goods.
Payment
Payment through credit cards has become quite widespread and this enables a
fast and easy payment process. Electronic cheque conversion, a recent
development in this area, processes a cheque electronically by transmitting
transaction information to the retailer and consumer's bank. Rather than
manually process a cheque, the retailer voids it and hands it back to the
consumer along with a receipt, having digitally captured and stored the image
of the cheque, which makes the process very fast.
Internet
Internet is also rapidly evolving as a customer interface, removing the need of
a consumer physically visiting the store.
Operation Support Systems
ERP System
Various ERP vendors have developed retail-specific systems which help in
integrating all the functions from warehousing to distribution, front and back
office store systems and merchandising. An integrated supply chain helps the
retailer in maintaining his stocks, getting his supplies on time, preventing
stock-outs and thus reducing his costs, while servicing the customer better.

103

CRM Systems
The rise of loyalty programs, mail order and the Internet has provided retailers
with real access to consumer data. Data warehousing & mining technologies
offers retailers the tools they need to make sense of their consumer data and
apply it to business. This, along with the various available CRM (Customer
Relationship Management) Systems, allows the retailers to study the purchase
behavior of consumers in detail and grow the value of individual consumers to
their businesses.
Advanced Planning and Scheduling Systems
APS systems can provide improved control across the supply chain, all the
way from raw material suppliers right through to the retail shelf. These APS
packages complement existing (but often limited) ERP packages. They enable
consolidation of activities such as long term budgeting, monthly forecasting,
weekly factory scheduling and daily distribution scheduling into one overall
planning process using a single set of data.
Leading manufactures, distributors and retailers and considering APS
packages such as those from i2, Manugistics, Bann, MerciaLincs and Stirling-
Douglas.
Strategic Decision Support Systems
Store Site Location
Demographics and buying patterns of residents of an area can be used to
compare various possible sites for opening new stores. Today, software
packages are helping retailers not only in their locational decisions but in
decisions regarding store sizing and floor-spaces as well.
Visual Merchandising
The decision on how to place & stack items in a store is no more taken on the
gut feel of the store manager. A larger number of visual merchandising tools
104

are available to him to evaluate the impact of his stacking options. The
SPACEMAN Store Suit from AC Neilsen and ModaCAD are example of
products helping in modeling a retail store design.
TOURISM
Tourism in India has registered significant growth in the recent years. In 1951,
international tourist arrival stood at around 17 thousand only while the same has now
gone up to 3.91 million in 2005. The upward trend is expected to remain firm in the
coming years. Tourism is the third largest net earner of foreign exchange for the
country recording earnings of US$ 5731 million in 2005, a growth of 20.2 percent
over 2004. Tourism is also one of the sectors, which employs the largest number of
manpower.

According to the Ministry of Tourism, during January - December of the
calendar year 2006 total tourist inflow stood at 44,299,15 as against 39,186,10 in the
same period of the last year. The total foreign exchange earnings earned during
January- December of the calendar year 2006 stood at US$ 6569.34 million against
US$ 5730.86 million for the same period in 2005.
Indian tourism is one of the most diverse products on the global scene. India
has 26 world heritage sites. It is divided into 25 bio-geographic zones and has wide
ranging eco tourism products. Apart from this, India has a 6,000 km coastline and
dozens of beaches. India's great ethnic diversity translates into a wide variety of
cuisine and culture. India also has a large number of villages, plantations and
adventure locations. India is home to a great variety of wildlife and its reserves are
well known throughout the world. It also has one of the world's biggest railway
systems opening possibilities for those interested in rail tourism. India also has
excellent hospitals offering affordable medicare and traditional healthcare systems
like Ayurveda. In addition to this India organizes numerous fairs and festivals, which
are quite attractive to foreigners.
Tourism sector holds immense potential for Indian economy. It can provide
impetus to other industries through backward and forward linkages and can generate

Report of the ministry of Tourism, Government of India.

105

huge revenue earnings for the country. In the recent 2007-08 budget, the provision for
building tourist infrastructure has been increased from US$ 95.6 million in 2006-07 to
US$ 117.5 million in 2007-08.
Indian Tourism as an Engine of Economic Growth
According to the World Travel and Tourism Council, India' s travel and
tourism (T&T) industry is expected to contribute 2.1 percent to Gross Domestic
Product in 2006 (INR 713.8 billion or US$16.3 billion).

In the first half of the Annual Plan period of 2005-2006, the Ministry of
Tourism has taken several initiatives in the field of infrastructure development and
positioning Indian tourism as a major engine for economic growth. These include:
Emphasis for developing the existing and new destinations to world-class
standards.
Improvement of connectivity to important destinations
Identification of 10-15 new destinations/ circuits by each state /UT for
development to world class standard with all the required infrastructure
components
Tourism: A Versatile Sector
Medical Tourism: The ministry of tourism has taken several initiatives, in
partnership with the private sector, to promote India as a destination for
medical tourism and make it a global health destination. Several promotional
measures like road shows and developing publicity material have been
undertaken for the same.
Rural Tourism: A concept of rural tourism has been developed for
showcasing the art, crafts and culture of rural India and for creating gainful
employment in villages with tourism potential.
Cruise Tourism: India has a vast and beautiful coastline and hence the
potential to develop cruise tourism.

Ibid.

106

Convention Tourism: International convention Centres of the global standard
is considered to be one of the important segments for promoting India as an
attractive tourist destination in the global market. Ministry of finance has
already identified New Delhi, Mumbai, Bangalore, Goa and Jaipur for opening
of world-class convention centres. Several initiatives have been taken up by
way of public-private partnership to develop small convention centres of high
standard. India is undoubtedly a unique Conference Destination as it offers
cultural and heritage sites, the exotic and mystical, excellent facilities of beach
and adventure holidays which can be combined as pre and post conference
tours.
Investment Opportunities
Hotel industry
Service apartments
Adventure Tourism
Health Tourism
Convention centres
Wildlife Tourism
Highway Tourism
Amusement Parks
India INR
(Billion)
% of Tot
2006
Growth* INR
(Billion)
% of Tot
2016
Growth**
Personal Travel and Tourism 935.4 3.8 6.9 2,857.1 4.0 6.7
Business Travel 260.8 - 8.3 822.1 - 7.0
Government Expenditures 41.2 1.0 7.7 119.0 1.0 6.1
Capital Investment 681.5 7.2 8.3 2,314.2 7.5 7.8
Visitor Exports 302.2 3.3 10.9 1,031.3 1.3 7.8
Other Exports 121.5 1.3 14.6 984.6 1.3 17.6
Travel and Tourism Demand 2,342.7 - 8.4 8,128.2 - 8.0
T&T Industry GDP 713.8 2.1 7.2 1,881.9 1.7 5.1
T&T Economy GDP 1,827.6 5.3 7.8 5,542.3 5.0 6.6
T&T Industry Employment 10,679.6 2.4 0.8 10,591.8 2.0 -0.1
T&T Economy Employment 24,349.2 5.4 1.4 27, 015.8 5.1 1.0
Source: World Travel and Tourism Council- Table-3.2
107

*2006 real growth adjusted for inflation (%). **2007-2016 annualized real growth
adjusted for inflation(%).
ROLE OF RELATIONSHIP MARKETING IN SERVICES SECTOR
The dynamics of most services markets have changed; low levels of
competition have given way to vigorous and intense competition. In this competitive
marketplace marketing has become a key differentiator between corporate success and
failure. This chapter discusses the role of marketing, introduces and expanded
marketing mix for services, describes the evolution of services and relationship
marketing and outlines the framework for the remaining six chapters.
The Maturing of services marketing
The implications of marketing a performance rather than an object are well
understood today. The reality of many services being rendered on an ongoing or
periodic basis coupled with the reality of customers forming relationship with people
rather than goods paves the way for relationship marketing. Repeated contact
between customers and service providers facilitates relationship marketing.
Moreover, product intangibility often requires reselling efforts. As Levitt (1981) has
noted:
The most important thing to know about intangible products is that the
customers usually dont know what theyre getting until they dont get it. Only then
do they become aware of what they bargained for; only on dissatisfaction do they
dwell in keeping customers for intangibles, it becomes important regularly to
remind and show them what theyre getting so that occasional failures fade in relative
importance.
4

The core subject as the services marketing field has developed service
quality also has stimulated interest in relationship marketing. The object of
improving service quality, after all, is to engender customer loyalty. A natural
extension of the strong interest in service quality is growing interest in relationship
marketing. Effective relationship marketing should help a company capitalize on its
investment in service improvement.

4
Levitt (1981).
108

Benefits to firm
The development of services marketing was itself fueled by intensifying intra-
type and intertype competition in the late 1970s and early 1980s, including the
deregulation of banking, airline, trucking, and other service industries.
*
Service
industry competition has never been more fierce than it has been in the mid to late
1990s. AT&T and MCI are continually raiding each others customer bases, super
markets are competing with warehouse clubs such as Sams Club and Price / Costco,
discount broker Charles Schwab is attracting millions of investment dollars from full-
service brokerages and commercial bank accounts every week, and airlines have
implemented lower-cost service strategies (United Express) to try to stem the tide of
price leader Southwest Airlines. In the late 1990s, marketing to protect the customer
base has become an imperative.
Reichheld and Sasser (1990) have demonstrated across a variety of service
industries that profits climb steeply when a company successfully lowers its customer
defection rate. Based on an analysis of more than 100 companies in two dozen
industries, these researchers found that the firms could improve profits form 25% to
85% by reducing customer defections by just 5%. Not only do loyal customers
generate more revenue of more years, the costs to maintain existing customers
frequently are lower than the costs to acquire new customers. An analysis of a credit
card company showed that lowering the defection rate form 20% to 10% doubled the
longevity of the average customers relationship from 5 years to 10 and more than
doubled the net present value of the cumulative profit streams for this customer from
$135 to $300. if the defection rate declines another 5%, the duration of the
relationship doubles again, and profits increase 75% - from $300 to $525.
*

The benefits for the service producers are:
Due to good relationship management the service provider gets committed and
loyal customers, thus increasing the purchases, which in turn increase the
profits of the company.

*
Berry & Parasuraman, 1998
*
Reichheld & Sasser, 1990
109

Lower cost retaining the current customers cost much lower than making new
customers as new customers attract advertising cost and other promotional
costs, operating costs of setting up accounts and systems and cost of getting to
know the customers.
Free advertising through word of mouth.
It is easier for the firm to retain the employees when the company has stable
base of satisfied customers.
Benefits to the customer
Relationship marketing benefits the customer as cell as the firm. For
continuously or periodically delivered services that are personally important,
carryable in quality, and / or complex, many customers will desire to be relationship
customers. High-involvement services also hold relationship appeal for customer.
Medical, banking, insurance, and hairstyling services illustrate some or all of the
significant characteristics importance, variability, complexity, and involvement
that would cause many customers to desire continuity with the same providers, a
proactive service attitude, and customized service delivery. All are potential benefits
of relationship marketing.
The intangible nature of service makes them difficult for customers to evaluate
prior to purchase. The heterogeneity of labor-intensive services encourages customer
loyalty when excellent service is experienced. Not only does the auto repair firm
want to find customers who will be loyal, but customers want to find an auto repair
firm that evokes their loyalty.
The relationship marketing helps the customer on one hand and the service
provider on the other hand. The benefits which are associated with the customers are:
Customers remain loyal and receive more value compared to the competitors.
Customers have the sense of well being and quality of life as they have long
term relationship with the service provider.
Customer think that the service provider knows their preferences and have
tailored services to suit their needs over a period of time and they do not want
to change this arrangement they have remain loyal.
110

In addition to the risk-reducing benefits of having a relationship with a given
supplier, customers can reap social benefits. Barlow (1992) points out that it
fundamentally appeals to people to be dealt with on a one-on-one basis. Jackson
(1993) argues that relationship marketing addresses the basic human need to feel
important. Czepiel (1990) writes that because service encounters also are social
encounters, repeated contacts naturally assume personal as well as professional
dimensions.
Relationship marketing allows service providers to become more
knowledgeable about the customers requirements and needs. Knowledge of the
customer combined with social rapport built over a series of service encounters
facilitate the tailoring or customizing of service to the customers specifications.
Paarasuraman, Berry, and Zeithaml report that customers desires for more
personalized, closer relationships with service providers are evident in transcripts of
interviews with customers for both ongoing services (e.g., insurance, truck leasing)
and service provided intermittently (e.g., hotel, repair service). The following
customer comments illustrate many that were expressed in a series of 16 focus group
sessions in five cities:
*

They should be a partner and more actively give me advice on what may
calculated risks are. When they are a partner our money is their money too. (business
insurance customer). I would like them to be a distant extension of my company.
They should take care of the details (truck leasing customer). You need to know the
service tech. I should be able to call him directly. I want to know the tech on a one-
to-one basis. (business equipment repair customer). Agents should come back to you
and ask you if you need more coverage as your assets increase (auto insurance
customer). When employees remember and recognize you as a regular customer you
feel really good (hotel customer).
Relationship marketing does not apply to every service situation, as Barnes
(1994) emphasizes. However, for service distinguished by the characteristics
discussed above, it is a potent marketing strategy.


*
Parasuraman et al., 1991
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3.7 EVALUATION OF CURRENT RELATIONSHIP MARKETING
PRACTICES IN SERVICE SECTOR
The term relationship marketing was introduced during the 1980s and is a
relatively new and evolving concept as discussed by the researcher in the Chapter-1.
An early definition is provided by Leonard Berry: Relationship marketing is the
attraction, maintaining and in multi-service organisation enhancing customer
relationships. The marketing mind set is that the attraction of new customers is
merely the first step in the marketing process.
In the early 1990s the concept of relationship marketing was formally
introduced into the field of service marketing. And further the concept was also found
applicable in the case of industrial as well as consumer products. As the concept of
relationship marketing has emerged the focus has been shifted from transaction
marketing to relationship marketing as focus on single sale has shifted to customer
retention , orientation on product features has shifted to product benefits and little
emphasis on customer has shifted to customer services, as also further expended &
shown in table -13.However due to relationship marketing there is a shift of focus in
service marketing also as under:
Service Shift
Limited customer commitment TO High customer commitment
Moderate customer contact TO High customer contact
Quality is primarily a concern TO Quality is concern for all of production
Our view of relationship marketing extends this definition. This broadened view has
three complementary perspectives:
The nature of the way the companies view their relationships with customers
is changing. Emphasis is moving from a transaction focus to a relationship
focus with the aim of long-term customer retention.
A broader view is emerging of the markets with which the company interacts.
In addition of customer markets the organization also becomes concerned with
the development and enhancement of more enduing relationships with other
112

external markets including suppliers, recruitment, referral and influence, as
well as internal markets.
A recognition that quality, customer service and marketing activities need to
be brought together. A relationship marketing orientation focuses on bringing
the three elements into closer alignment and ensuring their combined
synergistic potential is released.
The first two of these perspective deal with the different market domains the
can be considered; we will discuss them at this point.
The six-markets model a broadened view of where marketing can be
applied. It suggests that companies have six key market areas where they should
consider directing marketing activity and where the development of detailed
marketing plans may be appropriate.
+
In addition to existing and potential customers,
those markets are referral markets, supplier markets, recruitment markets, influence
markets, and internal markets.










Fig. 3.2 : The Six-Markets Model : A Broadened View of Marketing

+
Adrian Payne, Prentice Hall of India Ltd., New Delhi





Customer
Markets
Internal
Markets

Supplier
Markets

Referral
Markets

Recruitment
Markets

Influence
Markets
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Customer Markets
Customers must, of course, remain the prime focus are for marketing activity.
But the focus needs to be less on transactional marketing an emphasis on the one-
off sale or hooking a new customer and more on the building of long-term client
relationship. These two approaches can be contrasted as follows:
Referral Markets
The best marketing is that which is carried out by your own customers; this is
why the customer loyalty ladder and the creation of advocates is so important. But
existing customers are not the only sources of referral. Referral markets go under
many names intermediaries, connectors, multipliers, agencies and so on. An
example of a bank will serve as an illustration here. Referral sources for the bank
included insurance companies, real estate brokers, accountancy and law firms as well
as existing customers and internal referrals. For this bank, an internal study of the
amount of business (both historic and projected) which originated from referral
sources showed how important these sources were, although the bank had
traditionally done little to promote itself in this area.
A strategy retreat was subsequently organized which included sessions on
referral sources, including presentations from several important intermediaries. The
bank was surprised at the criticism it received during these presentations. Aware
through its research of the importance of this business, the bank was surprised at the
criticism it received during these presentations. Aware through its research of the
importance of this business, the bank established a task force to develop better
relations with referral sources and establish a marketing plan to deal with the referral
markets. The result was noticeable and continued improvements in business
generated by referral sources.
Most organizations will need to take similar action. The current and potential
importance of referral sources should be established and a plan developed for
allocating marketing resources to them. Efforts should also be made to monitor
results and cost benefits. However, it is worth emphasizing that developing these
relationships takes time and that the benefits of increased marketing activity in this
area may not come to fruition immediately.
114

Supplier Markets
The relationship between an organization and its suppliers is undergoing some
fundamental changes mainly under the influence of the Japanese. The old
adversarial relationship where a company tried to squeeze its suppliers to its own
advantage, is giving way to a relationship based must more on partnership an
collaboration. There is good commercial sense in this. From the marketing point of
view, the concern is to sell the new attitudes implicit in such a collaborative
arrangement both to suppliers and, equally importantly, inside the company, since in
the past internal reward systems may have operated in a traditional antagonistic
relationship.
Recruitment Markets
The key scarce resource for business and other organizations is no longer
capital or raw materials it is skilled people, a vital, perhaps the most vital, element
in customer service delivery. And the situation is not getting any easier, even if
unemployment climbs to historic levels. The reason is demographic trends.
Influence Markets
Influence markets attend to vary according to the type of industry or industry
sector that an organization occupies. Companies involved in selling infrastructure
items, such as communications or utilities, will place government departments and
regulatory bodies high on the list of markets they must address. Most companies also
place the financial community in its various forms brokers, analysts, financial
journalists and so on in the influence category. Other examples include standards
bodies, political groups, consumer associations, trade associations, activist groups,
environmental control authorities, etc.
Internal Markets
Internal marketing involves two main concepts. The first is that every
employee and every department in an internal customer and an internal supplier. The
optimal operation of the organization is ensured when every individual and
department both provides and receives excellent service.
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The second concept is making sure that all staff work together in a way that is
aligned with the organizations stated mission, strategy and goals. The importance of
this has become particularly transparent in service firms, where there is a close
interface with the customer. Internal marketing aims at ensuring that all staff provide
the best representation of the organisations through successfully handling telephone,
mail electronic and personal contacts with customers.
Relationship marketing and transactional marketing are not mutually exclusive
and there is no need for a conflict between them. However, one approach may be
more suitable in some situations than in others. Transactional marketing is most
appropriate when marketing relatively low value consumer products, when the
product is a commodity, when switching costs are low, when customers prefer single
transactions to relationships, and when customer involvement in production is low.
When the reverse of all the above is true, as in typical industrial and service markets,
then relationship marketing can be more appropriate. Most firms should be blending
the two approaches to match their portfolio of products and services. Virtually all
products have a service component to them and this service component has been
getting larger in recent decades.
An example from a large, City law firm provides a good illustration of this. In
this law firm two events occurred within a short time. The first involved the gaining
of a contentious piece of litigation work from a new client. This work, worth around
Rs.100000 was likely to be a one-off piece of business as the clients existing law
firm did not wish to handle it. The law firms partners were jubilant and everyone
was excited about Aashishs brilliant coup in bringing in this new client. Six weeks
later another partner persuaded a large corporate client, who dealt with several law
firms, to give his firm all the companys convincing work. Prior to this, the firm had
only worked in one area of the law for this client. This represented additional work of
about Rs.150000 in the first year and would be a continuing and growing source of
future fees. There was little reaction to this news in the partnership except for the
comment Rajeev has finally got off his backside and done what he should have been
doing all along. The convincing work was on-going. As such it represented, in net
present value terms, perhaps five times as much profit as the litigation; yet other
members of the firm paid little attention to it.
116

Determining market emphasis on relationship marketing
The six markets customers, referral, supplier, recruitment, influence and
internal do not necessarily need their own formal written marketing plan, although
some organizations will find it help them. But companies do need to develop some
form of marketing strategy for each. The adoption of the relationship philosophy as a
key strategic issue is more important than a written plan. For example, a formal
marketing plan for an internal market is of little value if customer contact staff are not
motivated and empowered to deliver the level of service quality required. The needs
of members of all these markets and high levels of service quality are essential in
establishing and maintaining relationship with them.
However, not all markets require equal levels of attention and resources. A
decision on the appropriate level of attention can be arrived at through the following
steps:
Identify key participants in each of the markets.
Research to identify expectations and requirements of key participants.
Review current and proposed level of emphasis in each market.
Formulate the desired relationship strategy and determine if a formal market plan
is necessary.
Internal marketing and the six markets model has been criticised as not really
being marketing at all. At the core of marketing is the marketing philosophy of first
determining what the market wants, then providing it. It is doubtful that this is what is
occurring in influence markets, supplier markets, recruitment markets, or internal
markets. What is occurring is closer to public relations, persuasion, and management.
It appears to be marketing because it uses some marketing techniques, but it would
more accurately be described as salesmanship.
Relationship theorists tend to compare themselves to traditional marketing. In
doing so they frequently present traditional marketing in an unfavourable light. For
example, Adrian Payne claims that traditional marketing concentrates on product
features, has minimal interest in customer service, limited customer contact, and
quality is primarily a concern of production. Although there may still be some
117

marketers that think this way, these statements have not reflected marketing best
practices for more than three decades.





















118

Chapter 4
RELATIONSHIP MARKETING IN TOURISM INDUSTRY

4.1 INTRODUCTION TO TOURISM INDUSTRY
Tourism industry in India is on a great boom at the moment. India has
tremendous potential to become a major global tourist destination and Indian tourism
industry is exploiting this potential to the hilt. Travel and tourism industry is the
second highest foreign exchange earner for India, and the government has given travel
& tourism organizations export house status. The buoyancy in the Indian tourism
industry can be attributed to several factors.
Firstly, the tremendous growth of Indian economy has resulted in more
disposable income in the hands of middle class, thereby prompting increasingly large
number of people to spend money on vacations abroad or at home.
Secondly, India is a booming IT hub and more and more people are coming to
India on business trips.
Thirdly, aggressive advertising campaign "Incredible India" by Tourism
Ministry has played a major role in changing the image of India from that of the land
of snake charmers to a hot and happening place and has sparked renewed interest
among foreign travelers.
Travel & tourism industry's contribution to Indian industry is immense.
Tourism is one of the main foreign exchange earners and contributes to the economy
indirectly through its linkages with other sectors like horticulture, agriculture, poultry,
handicrafts and construction. Tourism industry also provides employment to millions
of people in India both directly and indirectly through its linkage with other sectors of
the economy. According to an estimate total direct employment in the tourism sector
is around 20 million. Travel & tourism industry in India is marked by considerable
government presence. Each state has a tourism corporation, which runs a chain of
hotels/ rest houses and operates package tours, while the central government runs the
India Tourism Development Corporation.
119

It is difficult for us to have a command on the cyclic movement of fashion,
needs and requirements and the lifestyles. The process of change is, of course,
influenced by the law of nature which forces us to welcome a change. If we delay,
the seeds of dissatisfaction and monotony, get a conducive nexus for their
germination and development. Hence to control or regulate the process, we allow a
change which influences our decision marketing behaviour and forces us to welcome
a change of place. It was against this background that the traveling was transformed
into a business and of late is an industry. The process of transformation has witnessed
a number of ups and downs in almost all the areas. Right form the very beginning of
culture and civilization, we find the process of change continuing, of course as a
pilgrimage. There is no doubt in it that the Roman Empire injected life, strength and
continuity to traveling and therefore, the credibility for the development of tourism
industry ultimately goes to them.
Thomas Cook was of the view that beauty is for the people.

The opinion of
Mr. Cook generated new dimensions in the tourism business which paved copious
avenues for the development of tourism as an industry. We cant deny that since time
immemorial, travel has been the first choice for masses, the qualitative improvements
in the process could take place with the participation and cooperation of leading
global organisations, such as World Tourist Organisation, Pacific Area Travel
association, International Union of Official Travel Organisation or so. With the
development of a broader concept, the essence of tourism was further distilled and it
was more a holistic approach because in the general theory of tourism, Walter
Hunziker and Kurt Kraph considered it both a human as well as an economic
activity
4
. In 1974, this approach was again brushed up by Burkat and Dedlik since
they viewed tourism as a composite phenomenon embracing a whole range of
different relationships between travellers and the host population. The fun and
excitement, do doubt, gained the momentum with the holistic approach. This new
approach made possible development of traveling business an industry.

Jha, S.M., Services Marketing, Himalaya Publishing House, Mumbai (2003).

4
Hunziker and Krapf, quoted from Foster Douglas, Travel & Tourism Management, Macmillan,
London, 1988.

120

In the face of this succulent benefits, the developed, less developed and even
the developing countries started assigning due weightage to the tourism industry in
their national development agenda. We agree with this view that with tremendous
socio-economic potentials, the tourism industry is considered to be an economic
bonanza which paves avenues for the development of a number of allied industries,
such as hotel, communication, banking, transportation, trade and commerce or so. In
addition, we also consider tourism a potential source for making possible world peace
through mutual appreciation and international understanding.
The Concept Of Tourism
Before studying other dimensions, we go through the concept of tourism.
Tourism denotes the temporary, short-term movement of people to destination
outside the place where they normally live and work and their activities during their
stay at these destinations.

Tourism is a pleasure activity in which money earned in ones normal
domicile is spent in the place visited.

Tourism is the totality of the relationship and phenomenon arising from the
travel and stay of strangers, provided the stay does not imply the establishment of a
permanent residence and is not connected with the remunerated activities.
+

Tourism an activity involving a complex mixture of material and
psychological elements. The material ones are accommodation, the attraction and
entertainment available. The psychological factors include a wide spectrum of
attitudes and expectations.
Tourism is a composite industry. It consists of various segments which can
produce a wide range of products and services.
E

Burkart A.J. and Medlik S., Tourism Past, Present and Future, Heinemann, London, 1974.

Christopher J. Holloway, The Business of Tourism, Pitman, London, 1960.

+
Foster Douglas, Travel and Tourism Management, Macmillar, London.

121

In view of the aforesaid viewpoints of different experts, the following points
emerge regarding tourism:
Tourism is a temporary and short-term movement of people.
Tourism is the totality of relationship.
Tourism is an activity involving a complex mixture of material and psychological
elements.
Tourism is the activity concerned with the utilization of leisure hours
Tourism is a composite industry consisting of various segments.
The Concept of Tourist
The origin of the word tourist dates back to 1292 AD. It has come from the
word tour. A number of experts have defined the term.
Tourists are voluntary temporary travellers, traveling in the expectation of
pleasure from the novelty and change experienced on a relatively and non-recurrent
round-trip.
D

Dictionnaire Universal says Tourist is a person who makes a journey for the
sake of curiosity for the fun of traveling.
The League Committee finds tourists a person visiting a country other than
that in which he usually resides.
Tourists are:
Persons traveling for pleasure, health and domestic reason.
Persons arriving in the course of sea cruise.
Persona traveling for business purposes.
Persons traveling for convention.
Not to be Tourists

E
Preface of National Committee on Tourism Report of Ministry of Tourism, Govt. Of India, New
Delhi.

D
Erik Cohen, quoted from John Lea : Tourism and Development in the Third World, Routledge,
London, 1988.
122

Persons arriving without a work to take up an occupation.
Persons coming from the rural areas to the urban areas.
Students in boarding.
Persons domiciled in one country and working in adjoining country.
Persons passing through a country without stopping.
Tourism as Service Industry
Like other industrial projects, tourism projects too involve professional
management, capital investment, special skills and training. The Government of India
and a number of other states have declared tourism as an industry. Gujarat State
which is at the forefront of the industrial development will also declare tourism as an
industry.
Availability of land is a primary requirement of any project. The process of
grant of land will be facilitated in urban areas for the projects concerning setting up of
hotels, restaurants and apartment hotels etc. Existing arrangements for grant of
government waste land to industrial units will be made applicable to various tourism
projects. Arrangements will be made to acquire private land under Land Acquisition
Act for various tourism projects by companies registered under the Companies Act.
The existing commercial rates of NA assessment applicable to land involving tourism
projects would be reviewed and rates of NA assessment for industrial purposes will be
made applicable to them.
As one of the sets of infrastructural institutions, the State Financial Institutions
have made an important contribution in creating conductive environment for
industrial entrepreneurs. They will be called upon to do the same for tourism
entrepreneurs in terms of making available adequate finance. So far, the lending from
the State Financial Institutions has been largely confined to hotels only. In reality, the
range of activities for tourism projects is far larger than just hotels as can be seen from
the following illustrative list :
Accommodation Projects :
Hotels
123

Resorts
Motels
Apartment Hotels
Heritage Hotels
Food Oriented Projects :
Restaurants
Wayside Facilities on the State Highways.
Other Tourism - Related Projects :
Amusement Parks and Water Sports
Handicraft Village Complexes
Fairs and Festivals.
Camps and Facilities Encouraging Adventure
Train Travel Projects
Sea/RiverCruise Projects
Sound and Light Shows
Museums
Natural Parks/Zoos
Safari Projects
Ropeways
Sports/Health Facilities Complexes
Training Schools for the managerial expertise for Hospitality Industry.
Golf Courses.
Service Oriented Projects :
Travel Agency
Tour operation
Transport Operation
Linkage with the International Hotel Chains (Franchise)
Human Resources Development (HRD) for Tourism Industry and necessary
training facilities.
124

The Concept of Tourism Marketing
A clear perception of tourism marketing requires a brief analysis of marketing.
We are well aware of the fact the there have been fundamental changes in the
traditional concept of marketing which has been influenced by the multidimensional
changes in the business environment. A transformation in the attitudes, lifestyles,
expectations is the result of a number of developments. Professionalism paves the
ways for excellence which opens doors for quality generation vis--vis competition.
Almost all the organisations producing goods or generating services have no option
but to assign an overriding priority to quality upgradation that requires innovations.
This necessitates a change in the concept of marketing which determines its functional
boundaries. We find satisfaction of users the focal point around which all the
functional areas of marketing cluster. While clarifying the perception of tourism
marketing, it is essential that we assign due weightage to the three important
considerations, the first generation of profits by the tourist organizations, second
world class services to the tourists which help in satisfying them and the third positive
contributions of tourist organization to the process of social transformation and
ecological balance.
4

We consider marketing a human activity directed at satisfying the needs and
wants through exchange processes. The American Marketing Association defines
marketing as the performance of business activities that direct the flow of foods and
services form producer to consumer or user. Kolter finds marketing a social and
managerial process by which individuals and groups obtain what they need and want
through creating and exchanging products and value with others.
Krippendorf says, Marketing in tourism is to be understood as the systematic
and co-ordinated execution of business policy by tourist undertakings whether private
or state, owned at local, regional, national and international levels to achieve the
optional satisfaction of the needs of identifiable consumer groups and in doing so
achieves and appropriate return.

4
Jha, S.M., Services Marketing, Himalaya Publishing House, Mumbai.

125

Burkart and Medlick opine, Tourism marketing activities are systematic and
co-ordinated efforts extended by National Tourist Organisation and/or tourist
enterprises at international, national and local levels to optimize the satisfaction to
tourist groups and individuals in view of sustained tourism growth.

In view of the above, the following points emerge regarding tourism
marketing:
Tourism marketing is a process of creating a product of providing an service.
Tourism marketing comprises fact finding, data gathering, analyzing (marketing
research), communication to inform and promote (Promotion), ensuring and
facilitating sales, selection of marketing planning (distribution), Coordination,
control and evaluation (marketing planning and auditing), developing
professionally sound personnel (people).
Tourism marketing is an integral effort to satisfy tourists and more so, it is a
device to transform the potential tourists into the actual tourists.
Tourism marketing is the safest way to generate demand, expand market and
increase the market share.
Tourism marketing is a managerial process to promote business.
Users of Tourism Services
We find different categories of users availing the services of tourist
organisation. We find classification of different categories which would help the
tourism professionals in studying and identifying the level of their expectations vis--
vis their behavioural profile.
Non-users: Persons not interested in using the services are known as nonusers.
They lack willingness, desire and ability and therefore, the level of income or even the
availability of leisure hour is not to influence them.
Potential Users: We also call them prospects or the prospective users. They
have willingness but the marketing resources have not been used optimally for

Burkart A.J. and Medlik S., Op. cit.

126

influencing their impulse. They bear the efficacy and the marketing professionals are
supposed to capitalize on their potentials by using creative promotional measures.

Actual Users: Persons already using the services generated by the tourist
organisations are known as actual users.
Occasional Users: Users forming a habit and availing the services
occasionally but not forming a habit to travel are known as occasional users.
Habitual Users: Users forming a habit and availing the services regularly are
known as the habitual users.
+

It is right to mention that men and women; kids and teens, youth and grey; rural and
urban; poor and rich; white collar and blue collar personnel; executives and
technocrats, professionals and intellects, literate and illiterate are the different
categories of users availing the multi-dimensional services of tourist organisations. It
is quite natural that the behavioural profile of all the users cant be identical. This
makes it essential that professionals study and understand their changing behavioural
profile.
Tourism has emerged as one of world's largest industries and a fastest growing
sector of the world economy; tourism receipts account for a little over 8% of world
export of goods and more than 34% of world export of services. In India, however,
the sector has failed to receive due importance on the countrys development agenda.
Employing only 2.4% of the Indian workforce, the vast potential of tourism as an
instrument of employment generation and poverty alleviation has tended to remain
largely unutilized. Of the 625 million world tourist arrivals in 1998, India received a
meagre 2.36 million or 0.38% of the total world tourist arrivals and only 0.62% of
world tourist receipts. Compared to other countries in the region India's performance
in the sector has been rather poor. Major causes cited for the low performance are lack
of professionalism, unhygienic conditions, poor infrastructure, lack of easily
accessible information, lack of safety, poor visitor experience, restrictive air transport

op. cit.

+
Jha and Singh, Marketing Management in Indian Pespective, Himalaya Publishing House, Mumbai.

127

policy, inadequate facilitation services, multiplicity of taxes and the low priority
accorded to tourism. However, despite its tiny share of world tourist arrivals, tourism
in India has emerged the second largest foreign exchange earner for the country even
though the mainstay of the Tourism industry in India continues to be domestic
tourism.
In the Indian perspective, we find Seventh Five Year Plan as water-shed in the
development of tourism industry. For the first time, the vast potential of tourism as a
foreign exchange earner and generator of employment opportunities was recognized.
Several policy initiatives were taken to develop the tourism sector. In the
development of tourism, the public sector has made a significant contribution. Of late,
the industry is equipped with a reasonable infrastructural base and is poised for a self-
sustained growth. The future growth of tourism is required to be activated with the
support of the private sector. The strategy for the development of tourism is required
to be designed on the basis of low-cost economy, higher level of productivity,
efficiency in the use of infrastructure and sophisticated tourist facilities.
In the Ninth Five year Plan (1999-2007), the Special Tourism Areas have been
selected and in the Tenth Five year Plan (2000-2008), we look forward to energizing
the process of development but the image problem is found complicating the task of
professionals. In the business world, we need more professional excellence to make
and assault on the image problem and it is in this context that we make a strong
advocacy in favour of conceptualising innovative marketing with the help of world
class professionals. We have tremendous opportunities and the professional
excellence would make ways for capitalizing on the same optimally.
Tenth Five Year Plan (2002-07)
To make Tamil Nadu the number one State in India in respect of Tourism
sector and place it on the map of International Tourism by marketing it as an
important destination with heritage sites.
Double the tourist arrivals and revenue to the Government by the end of the
10
th
Five Year Plan period.
To address rampant unemployment problem through tourism.
To make tourism a major economic activity in the coming years
128

Goals, Objectives and Strategy
The following elements inter alia will influence the policies and programmes
of the Tourism Department during the Tenth Five Year Plan period:
a) Sustainability
Hitherto the maintenance of the assets created was not taken care of
adequately. In recognition of this aspect, the State Government has taken recently
earnest efforts to improve infrastructure at various destinations. In order to ensure
sustainability, proper upkeep and operation and maintenance also would be made part
of the projects in future. As a first step in this direction, a project directory containing
all relevant details of tourism related projects implemented in the State since 1980 is
being prepared. This maiden venture will not only provide an opportunity for review
and evaluation of the facilities already available, the facilities required to be created
etc., but also help the State plan its future activities.
b) Tranquility, Public Order and Tourism
The terrorist attack on world trade centre, U.S.A. on 11-9-2001 windeed a
black day in the history of tourism. The attack had a devastating effect on Tourism as
fear gripped all over and, in its aftermath, several nations issued negative advisories
regarding travel. The situation has, however, quickly returned to normalcy. The ethnic
strife in Sri Lanka, the ongoing warlike situation in West Asia, the cross border
terrorism from western borders of the country have all had a contributory role and
share in affecting tourism. Tourism can thrive and prosper only if there is peace and
tranquility. However, the issues concerning safety and security of tourists and their
belongings should be kept in mind.
c) Private Sector participation
Recognition of the fact that tourism is essentially a private sector activity and
the Government has to play only a catalytic role and that of a facilitator and to provide
the platform for accelerated growth of tourism in the State. And the realisation that
the Government need no longer be a service provider.
d) Institutional arrangement
129

More effective coordination among various organisations and sectors of
Government such as civic administration and adequate road, rail and air connectivity,
communication, general administration etc. would be ensured.
e) Product identification and product development
Keeping the clientele in view, products such as cultural and architectural
heritage, pilgrims and religious destinations, ecotourism destinations such as hill
stations, beaches, rural and village tourism, arts and performing arts, crafts, and
handicrafts, music, dance, the whole life - style yoga, health, Ayurveda, Siddha etc
and provision of world class infrastructure/ support systems etc., would have to be on
the top of agenda.
f) Paradigm shift
To recognise that tourism is an economic activity and is a major engine of
economic growth; for it has very extensive forward and backward economic linkages
that builds upon and has impact on overall income, employment etc., especially for
the vulnerable sections such as women, children, disabled etc
g) India as a complete Tourist Destination
To position India as a complete tourist destination for all seasons and for all.
h) Information Technology and Tourism
At the working level, therefore, evolve a new work culture taking note of the
requirement of an environment of co-operative federation, diversification and
technological advancement
In India Travel and tourism demand is expected to generate INR2,342.7
billion (US$53.5 billion) of economic activity (Total Demand ) in 2006. The industry
will directly contribute 2.1 per cent to GDP in 2006, while the broader travel and
tourism economy in India should contribute 5.3 per cent to GDP for the same period.
Over the next ten years, travel and tourism demand will increase to INR8,128.2
billion (US$128.0 billion) by 2016. The industry is forecast to increase its total
economic activity by 5.1 per cent per annum in India in real terms over the next ten
130

years. Source: Competitiveness Monitor 2004, World Travel and Tourism Council,
2004









Fig. 4.1 : Forecast Travel & Tourism demand in India(US $ billon)

Personal travel and tourism in India is estimated at INR935.4 billion (US$21.4
billion) or 3.8 per cent of total personal consumption in 2006. By 2016, this should
reach INR2,857.1 billion (US$45.0 billion) or 4.0 per cent of total consumption. The
business travel portion of this is estimated at INR260.8 billion (US$6.0 billion) in
2006, and is forecast to grow to INR822.1 billion (US$12.9 billion) by 2016.







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Source: India: Travel and Tourism Climbing to New Heights, World Travel and
Tourism Council, February 2006

Figure 4.2 : INDIA PERSONAL AND BUSINESS TRAVEL AND TOURISM
(2000 CONSTANT US$ BILLION)
Evidence of the boom in the hospitality and tourism sector can be seen in the number
of new hotels popping up across the country and the re-modelling of existing ones to
expand capacity. The hotel industry is an important part of the tourism sector.,
1. Tourism Is an Information-Intensive Industry
Tourism is very information-intensive and information is often dubbed the
"life-blood" or "cement" of the industry which holds together the different producers
within the travel industry - airlines, tour operators, travel agencies, attractions, car
rental, cruise lines, and other supplies. "In few other areas of activity are the
generation, gathering, processing, application and communication of information as
important for day-to-day operations as they are for the travel and
tourism industry" (Poon 1993:154). The perishability of tourism products and the
often erratic tourist demand make the task of balancing tourism supply and demand
far more significant than any other sector. That is probably why tourism became one
of the first industries to widely apply IT and conduct electronic commerce from the
1960s in the form of computerized reservation systems (CRSs) and then global
distribution Systems (GDSs).
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However, the traditional CRSs and GDSs had only improved the information
communication between tourist businesses, originally between airlines and travel
agents, as they do not directly interact with consumers. The systems are also
expensive to both the tourism producer and the retailer. For instance, the GDS cost
accounted for an average 8.1% of the International Air Transport Association (IATA)
member airlines' distribution cost in 1996 (IATA 2000), and the major GDSs charge
around US$600 a month to put a terminal in a travel agency. Moreover, the systems
are flawed with incompatibility between each other, especially in the lodging sector,
where "switch" companies such as THISCO (The Hotel Industry Switching
Company) was needed to connect hotels with all the major GDSs to facilitate room
reservations by travel agencies worldwide (Sheldon 1997). With the effective use of
the Internet, these problems can be addressed effectively and cheaply. In addition to
its traditional function, a web-based GDS can increase the speed of information
transmission, improve the quality of information delivery (from the old viewdata to
the window-based computer screen), reduce the cost to the user as no special
connections are necessary, and most important of all, has the potential to interact with
all web users in the world. Having realised the tremendous potential of the Internet,
GDS companies already started to develop new and web-based systems
which could transform the whole tourism distribution landscape in the near future.
For example, Amadeus launched Amadeus Pro Web in January 2000, which is a
browser-based reservation tool allowing travel agents to service customers worldwide
without a dedicated communications line and at a greatly reduced cost. In fact, with
this system any Internet user can become an online travel agent within a week
(Amadeus 2000).
2. Tourist Products and Services Are Difficult to Evaluate
As a service industry, most tourist products are intangible services, they are
experienced and cannot be touched, tasted, smelt or seen and therefore
difficult for tourists to grasp and evaluate. Furthermore, the spatial fixity of tourist
attractions and amenities means that a tourist cannot really assess their quality until he
arrives at the destination. Tourists have, for a long time, relied on limited information
from holiday brochures and other literature to evaluate tours and destinations.
Comprehensive, relevant, timely and accurate information is essential in tourists'
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holiday decision making process. But they were not readily available to tourists until
the emergence of the Internet, especially the wide use of the Web.
With the Internet, virtually unlimited amount of information can be stored at a
web site and an unlimited number of users can retrieve it at any time from anywhere
in the world. The Web can not only provide more information but also provide it from
a much wider range of sources; while in the past, tourists are almost exclusively
dependent upon representations and descriptions by the travel trade. The Web can
also deliver the information in a greater variety of formats, from text to photos,
graphs, audio and video clips, whereas in the past, tourists primarily relied on the
printed brochures as the limited copies of videos of a limited number of tourism
destinations or holidays were only available to the major travel agents. The web-based
electronic brochure can also facilitate the complex process of choosing among the
hundreds of holidays using browser-generated selections from back-end databases
linked to web servers whereas the printed brochures are usually arranged and indexed
by one way, often by destination. Through Internet video telephony, tourists can also
"test drive" a prospective holiday by viewing real-time scenes
through cameras placed in hotels, clubs, restaurants, scenic spots and other sites in
the destination and transmitted via the Internet. Video clips can also show episodes
and scenes of festivals, art performances and service delivery to facilitate tourists in
the comparison and evaluation of intangible services, the quality of which is
otherwise difficult to assess in advance.
3. Tourism Distribution Has Physically Nothing but Travel Tickets to
Deliver
Since in tourism, it is the tourists who travel to the destination, rather than the
tourist product be transported to the market. When a tourist books an airline seat, a
hotel room, or a package holiday, he acquires the right to use that seat, room or
holiday in the specified time period. After the tourist completed his journey or
holiday, he takes nothing home but experiences (though often together with some
photos and souvenirs). In the whole process, from the booking, through the out
journey to the return journey, the only things being transported are travel tickets and
the tourist himself. This unique characteristic offers tourism a great advantage in
Internet marketing as the only cost of online sale will be the transaction processing
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expense plus a little postage cost; in contrast, for manufactured goods, the delivery
cost is often substantial.
'With the increasing popularity of electronic-ticketing (c-ticketing) or
ticketless-travel, especially among airlines, online tourism distribution over the Web
may one day have no physical goods (not even a ticket) to deliver at all. Ticket-less
travel means that check-in is achieved by proof of identity and a booking reference
number. This saves the cost of ticketing for the airline which would usually include
stationery, printing and postage and speeds up the check-in process at airports by
enabling passengers to self check-in at check-in machines with a credit card.
Worldwide, there are more than 30 airlines offer e-ticketing in at least some routes in
its networks (IATA 2000). About 60% of United Airlines' passengers are now using
c-tickets. British Airways has even announced that from May 2000 travellers will be
charged 25 for a printed ticket where e-ticketing is available for the flight. It could
also cost the traveller 50 to replace a lost paper ticket. Obviously, c-ticketing is a key
development that will accelerate the acceptability and convenience of booking air
travel via an on-line travel agent. Since such a web-based e-ticket seller has no
physical ticket to deliver, it can potentially sell from anywhere in the world to anyone
in the world (Richer and 0'Neil-Dunne 1998).
4. The Tourism Destination Product Is Fragmented
As a place product, tourism includes all the elements a destination has to offer
to tourists, including the social, cultural and physical environments as well the
"touristic" components of tourism supply such as attractions, transport and lodging
facilities, and other travel related services. Pollock (1999) highlights the difficulties in
tourism destination marketing which are attributable primarily to two factors. First,
tourism is fragmented in that while the tourist looks at a holiday as a complete
"experience", it is sold in the market place "in bits" as beds, meals, tours, seats, etc. by
a plethora of independent suppliers that operate independently of one another.
Second, no one agency controls or can deliver content about a destination's tourism
product as the marketing of a tourism destination is shared by another plethora of
organisations such as tourist information centres, regional tourism boards, national
tourism organisations and national tourist offices overseas located in main generating
markets.
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The Internet provides the effective means for a destination to develop a
sustainable electronic "infrastructure" that is capable of establishing a comprehensive
and multi-lingual destination web site. This site can present existing and potential
tourists with up to date information, from a variety of sources, about the destination in
all aspects of tourism - tourist attractions, transportation, accommodation, tour
operators, travel agencies, shopping and leisure facilities - as well as the background
of its people, culture, history, economy, climate. The master destination database can
be integrated through hyperlinks with individual tourism companies as well as with
suite of applications which enable tourists to pick and mix to make their own holiday
"packages". As such a mega-site could be the "portal" or the "home page" of the web
sites of all tourism enterprises in a destinations, it is a great deal easier for the
destination to establish itself in the already crowded web-space. From this first stop-
of-call, an visitor can search for all the information he needs to make a decision as to
whether to visit the destination, what facilities to use and to arrange for reservations
and transactions online. In comparison, with the traditional media, in order to get the
relevant information of a destination a tourist often needs to go to a travel agency to
get a brochure, to a bookshop to get a guide book, and may also contact the
destination's national tourist office to get some promotional literature. Furthermore,
the printed literature the tourists get is often outdated while a properly constructed and
maintained web site can provide right-to-the-minute information.
5. The Vast Majority of Tourism Enterprises Are Small In Size
The fragmented tourism industry is also polarised in that on the one hand,
there are a few large multinational airlines, tour operators, hotel chains and theme
parks; on the other, there are millions of small and often family owned businesses,
especially in the travel retailing, tour guiding, hotel and catering sectors. For example,
in Scotland the average size of the accommodation establishment in the Bed and
Breakfast sector was 2.5 rooms in 1999. For the small tourism enterprises, the Web is
probably the first effective and feasible medium for them to carry out professional
marketing function beyond the basic sales and operating activities.
The Internet has opened the door for small businesses with little capital to
reach a worldwide market. Open access results in lower entry barriers so that virtually
anyone can both access and provide content to the Internet. Travel retailing is one of
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the sectors m the economy that requires very little initial capital investment. The Net
also re-defines economies of scale, allowing small firms to achieve low unit costs for
products and services in markets (such as tour operating) dominated by large
companies. In the hospitality sector, small firms could also have more cost-effective
marketing through the destination's web-site than the printed tourist directory. In
essence, the Web "levels the playing field" (Hoffman and Novak 1996). For this
reason, Inkpen (1998:178) goes so far as to praise the Internet as a marketer's "dream"
because it enables companies of different sizes to compete on more equal terms. This
analysis also applies to tourism destinations (as resorts, regions or nations). For
example, a strong web presence may substantially increase the exposure of many
small and developing destinations in the Western market where the high cost of mass
media advertising made such exposure practically impossible in the past.
Nevertheless, it must be noted that although it costs little to achieve a web exposure,
the development of a fully functional marketing and sales site and especially the
promotion of the site to increase visitor numbers require huge investment. Therefore,
the Internet provides a level playing field for all sizes of companies only at the point
of entry - that is, to establish a web presence.
4.3 THE MAIN APPLICATIONS OF THE INTERNET IN TOURISM
MARKETING
The Internet as a marketing media can be of great benefit to virtual all areas of
marketing, from marketing research, through market segmentation, targeting and
positioning, to the effective use of the marketing mix, and marketing organisation and
control. The following discussion does not attempt to provide an exhaustive list of the
Net's use in tourism; rather, it simply intends to exemplify its common applications in
and main implications for tourism marketing.
1. Marketing Research
The Internet does more than automating online business transaction, it can
"informate" in that it provides a vast amount of information which was previously
unavailable. Marketing is essentially an information-processing activity which links
an organisation to the external environment in which it operates. The Internet is an
invaluable source of low cost but up-to-date marketing intelligence which can be
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sourced through a company's own site (for details of its customers) and other web
sites (for information on competition situations, market conditions and the general
environment). The Internet is extremely useful in build a customer information
database. With the use of proper software such as Aurum Software's Web-Trak (and
even with simple means like cookies, web forms and email feedback) it is easy to
gather systematic data about all users who visited the company's web site. This
information can be used to identify prospects, understand customer needs and
customize resources to give greater levels of service to customers (Heinen 1996). A
database of online transaction histories can be the primary marketing resource of
tourism companies, determining what kind of travel products they can deliver, what
market segments they serve best, and what is the lifetime value of each customer to
the firm.
By searching other web sites, a company can get valuable information about
market demand, supply, competition and economic, demographic, legislation and
technological changes in the domestic and international markets. Web sites of
government agencies, media companies and non-profit organisations usually
provide large amount of information free on general issues; while commercial sites
are good sources of information on new technologies, best business practices, and
industry initiatives. Scanning competitors' home pages helps companies to
track competitors' marketing strategies and tactics. For example, from hotel chains'
web sites, one can easily locate information about the chains' main business activities,
financial performance, new hotel openings and investment plans, and key marketing
strategies; whereas airlines' web sites often show such useful data as business and
financial analysis, strategic alliance groups, new routes development and fleet
expansion plans, frequent flyer programmes and (where a online GDS is available)
the fares and availability of flights between any two destinations.
2. Market Targeting
An important feature of the Web as a medium is that it is the consumer who is
actively searching for information about products or brands in which they are
interested. In effect the consumer is "pre-screened" and shows both interest and
involvement in visiting the web site. While on the Web, the consumer can also
provide instantaneous feedback to the marketer (Stern, 1995). All the feedback, and
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indeed, every "click" or "hit" the user makes can be memorised by the web server.
Through the application of the IT data mining technique, companies can find patterns
within their internal customer data and make sense of data or turn data
into meaningful marketing information. For instance, the visitation record of an
online brochure may show the total number of hits, the distribution of the hits among
the pages and across time, the order of the pages been accessed. The user's visitation
data can be easily combined with user profile information from user registrations
through online visit cards or questionnaires and used to uncover the consumers
'interest and the patterns of demand and buying behaviour. This in turn leads to
identification of likely target segments, often niches based on specific benefit sought.
Armed with such information, organisations can refine their targets and develop
specific means to achieve true one - to- one marketing (Pitta 1998).
The appropriate use of user profile and surfing behaviour data can improve the
effectiveness and efficiency of market segmentation and targeting. This is because the
traditional approach to market segmentation is often based simplistically on
geographical, demographic and economic variables while the psycho, behavioural or
lifestyle data is costly to collect and difficult to measure and compare. In Internet
marketing, it is easier to collect these data from potentially each and every user of the
company web site, though tangible rewards such as free prize draws and free
membership, are often needed to attract users to fill in web forms. It is even a great
deal simpler and more effective in market targeting as the email messages and even
tailor-made web-pages can reach the intended receiver with little cost. It is possible to
set up 'virtual" or cyber - communities for each target market niche in the form of
news-groups through which consumers with similar interest and behaviour patterns
can be sent with relevant product offering and other information from the marketer.
Members of such Internet communities can regularly exchange information and
strengthen a sense of belonging.
4. Product
One of the major advantages of the Internet in marketing is that the tourist can
here be a value creator for tourism companies through redefining the labour division
between the marketer and the tourist in providing tourist experiences (Dellaert 1999).
This is because, on the one hand, tourists can provide individual preferences for or
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specifications of holiday packages through feedback in the forms of web forms, email
messages or simply the 'clicking' patterns, which the tourism marketer can use to
development new products or tailor-make existing products to suit the needs of
particular consumer(s). In this sense, the Internet has accelerated a shift in the nature
of products from mass produced and tangible to customised and information based.
On the other hand, the self-servicing tourist can not only conduct transactions
online and reduce costs of sales for the supplier but also actively participate in the
production process itself. Provided with choices, a tourist can now assemble his own
product according to the specifications desired. This is especially useful in the
production and marketing of package holidays. Tour operators, for example, can offer
modular products or services, such as flights, rooms, tours, car hire and performances
on their web sites, and allow the user to participate in the development of the specific
holiday packages using a menu of options, ie., 'pick and mix" his own package. As
tour operators negotiate with the providers of these separate holiday items and buy in
bulk, The economies of scale will enable the operators to offer lower "parts" prices to
individual consumers than they buy directly from the different producers of the travel
products. At the meantime, since the booking engine is integrated with the product
inventory, it is easy for the operator to adjust in real-time the prices of different
holiday components in response to their relative popularity and demand patterns. In
this way, tour operators can effectively provide the market with low cost and flexible
(rather than the conventional rigid) package tours This is what both marketers and
consumers have long dreamed for - high quality products made individually at a unit
cost level of mass production -all enabled by the power of the Internet.
Internet technologies can also contribute to the improvement of current
products on offer or development of new products and services that redefine the
company's strategic position. For instance, Boeing announced on 27 April 2000 plans
for a network which will allow passengers to use the internet, watch TV and receive
other data while flying. Called Connexion by Boeing, it will use satellite technology
to provide broadband services to aircraft, which could greatly improve passengers'
flight experiences. The introduction of electronic ticketing (e-ticketing) and flight
information exchange through mobile phones by many airlines in recent years also
improve customer services. The Internet also give tourist attractions such as museums
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and galleries wider format options for electronic presentation and show web
collections which are physically impossible to construct (Taylor and Ran 1995). Zoos
and aquariums can improve its product offering through 'live" camera links using web
sites like whale-watching to show views of animals not in captivity (Benhow 1997).
5. Pricing
The role of the Internet in pricing is based on its ability in processing and
exchanging large amount of data instantaneously with a great number of people. This
information processing capacity enables a company to analyze relevant pricing data
effectively and quickly. The information exchange capacity enables firms to set and
change prices in real time and also facilitates online bidding and flexible pricing. Both
of these qualities of the Net are extremely useful in tourism marketing.
The major tour operators in the UK, for example, produce some 2,000 to 3,000
brochure pages annually, most pages feature a price panel with perhaps 100 separate
prices, making a total of about a quarter of a million individual prices (Holloway and
Robinson 1995). The sheer number of prices, together with the fact that most
brochures are launched 10 months in advance of the holiday season, mean that pricing
in the travel industry is extremely difficult Since it is unpractical to set the prices for
such a great number of holidays on the bases on demand analysis or competition
research, most operators simply follow a cost-plus policy with little regard to the
market changes in the months to follow. Even an operator wishes to adjust its
holidays prices it is a costly and cumbersome process as new price panels have to be
printed and distributed to the travel agencies. With the help of a web-based
reservation system, the task can be a great deal easier. A tour operator can make real-
time adjustment to its thousands of holiday prices at a touch of a button in response to
competition moves and demand changes. A special late-booking section can also be
included in the main web site to promote 'left-over" holidays at the last minute to
solve the problems of over-supply or under-demand in the package tour industry
which has become a chronic issue in the UK during the last decade or so.
In Internet marketing, the potential for price discrimination is diminished
given the enhanced capability of consumers to identity the least expensive source,
regardless of supplier or location. The skilled consumer could have the "perfect
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knowledge" of market prices, which could facilitate the realization, to certain extent,
of 'perfection competition" at the national and global markets. This will lead to the
increasing standardisation of prices across companies or even borders, especially for
the undifferentiated products such as airline seats, beach holidays and city breaks.
Other applications of pricing on the Web including bidding and flexible pricing -
many web-based businesses allow customers to bid for products on their sites.
Customers commit to the sale if the price is agreed upon. The bidding locks in
customers to the sale and the committed price. This is a flexible pricing strategy
where the buying capacity of the customer reflects in the eventual price. Companies
such as Ebay.com and Bid.com have developed a model where other vendors can
place products up for bids (De and Mathew 1999). Airlines could sell seats on over-
demanded flights or routes through online bidding to the highest bidders to generate
extra revenue. Tour operators may use online bidding in a different manner to market
special holidays the demand for which may be extremely difficult to estimate in
advance. For example, a tour operator can put on its web site the details of a package
holiday to the moon and the total cost (including profit margins) for a group, say 50
travellers, the more people bid the lower the price for each traveller. This way of
pricing could well enhance the operator's image and profitability, as it is both an
innovative marketing and sound financial approach.
4.4 RELATIONSHIP MARKETING PRACTICES IN THE TOURISM
INDUSTRY AND UNITS SELECTED
Hospitality Philosophy in tourism
Tourism industry is a multi-segment industry including travel & hospitality
where accommodation, attraction, transportation, communication are found important.
The product of these services includes air, sea, road, rail carriers, hotels and other
forms of tourist accommodation. In addition, the facilities like catering, amusement,
skiing, shopping etc. add attractions to the product. These services reach to the
ultimate users through tour operators and the travel agents. The instrumentality of
transport operators tour operators and travel agents determine the processing of
services. Such relationship marketing practices are followed in the tourism industry.
*


*
Jha. S.M., Himalaya Publishing House, New Delhi.

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The term of chain of relationship services denotes the method through which
the services reach to the destination. The middlemen are the link and if the link is
strong, the producers succeed in raising the influx of tourists. The middlemen are the
tour operators and the transport operators who buy services like hotel rooms, seats in
the aircrafts, railways, arrange chartered flights and sell the same either to the travel
agents or even directly to the tourists. The tour operators are also called the producers
of a new product. The travel agents buy the services at the request of their clients and
provide a convenient network of sales distribution channel for the tourism industry
which focuses on the different middlemen engaged in the process of distributing the
services.
Like other industries, the tourism industry depends substantially on the
management of human resources. We are well aware of the fact that tourism industry
is an amalgam of different industries and therefore all the supporting industries need
to assign due weightage to the management of people who bear the responsibility of
accelerating the productivity of technologies used in the process.
The tourism industry cannot work efficiently if the travel agents, tour
operators and travel guides depend fantastically upon the new generation of
computers and internet services but after all we find employees, staff contributing
significantly to the process. The travel guides need professional excellence since the
projection of a positive image regarding destination in particular requires their due
cooperation, failing which even the world class services offered by the travel agents
are found meaningless. The tour operators also need to manage human resources
efficiently.
In the management of people relationship, the related organizations are
required to think in favour of developing an ongoing training programme so that we
find a close relation between the development of technologies and the quality of
personnel who are supposed to operate and maintain the same. We find strong
justification for an overriding priority to this sub-mix of the marketing mix. We focus
here on the credentials they need to fulfill the expectations of customers. We also go
through the developments making the environmental conditions conducive and focus
on the incentives to them for energizing the process of performance orientation. In
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addition, we make an anatomy of employee-orientation that requires due weightage to
efficiency-generation, value-orientation and perfection.
However, it is worth remembering that many of the concepts, as well as many
of the specific techniques, will work equally well whether they are directed at
products or services. In particular, developing a marketing strategy is much the same
for products and services, in that it involves selecting target markets and formulating a
marketing mix. Thus, Theodore Levitt suggested that "instead of talking of 'goods'
and of 'services', it is better to talk of 'tangibles' and 'intangibles'".

Levitt also went

on to suggest that marketing a physical product is often more concerned with
intangible aspects (frequently the `product service' elements of the total package) than
with its physical properties. Charles Revson made a famous comment regarding the
business of Revlon Inc. `In the factory we make cosmetics. In the store we sell hope.'
Arguably, tourism industry marketing merely approaches the problems from the
opposite end of the same spectrum.
Tourists are, by definition, strangers in the destination. Their dress codes and
patterns of behaviour are different from the residents and often different from those
that the tourist would display at home; inhibitions are shed and the consequent
problems of prostitution, drugs, gambling and sometimes vandalism arise. As
strangers, tourists are also vulnerable and fall victim to robbery and crimes
perpetrated by the local community who may see these activities as a way to redress
the balance.
A destination can have a variety o f products or benefits to offer. It could be
of historical importance or have a natural resource or an artistic landscape and in the
absence of each a unique resource could be created. It could be of religious
significance or adventure or a shopping paradise. All these features are important. A
destination offers a unique combination of features which cannot be duplicated
elsewhere. Building on this uniqueness of benefits to generate more tourism is the
name of the game which is called tourism marketing.
India has realised the role that tourism can play in its economic development.
According to some estimates tourism is one of the largest foreign exchange earning

Levitt, T. (1981) "Managing Intangible Products and Product Intangibles", Harvard Business
Review, May-June, 1981, pp.94-102.
144

industries in India. The relationship marketing practices, thus play vital role in
tourism industry in India. The tourism and hotel marketing are the twins connected
with each other. Tourism is a major industry throughout the world today. With the
development of tourism, hotel industry has also grown phenomenally. From Indias
point of view, these issues play dominant role.
Relationship marketing concept in tourism
Indias National Tourism Policy that comprehensively captures all various
dimensions of tourism marketing initiatives. The National Tourism Policy of India,
2002, has underlined the 6 S of tourism development, the six key result areas of
swagat (hospitality), soochna (information), suvidha (facilitation), suraksha
(security/protection), sahyog (cooperation) and sanrachna (infrastructure
development) These six areas comprise both hard and soft elements of tourism,
and encompass all positive initiatives and measures for effective customer
relationship service marketing. Researcher in this study has analyzed these areas
during data collection process with the respondents.











Fig. 4.3 : The Six S relationship framework for tourism services
145

The Six S relationship framework for tourism services requires an understanding of
the underlying needs that tourists wish to satisfy for all the Six S is vital, especially
for marketing tourist destination to potential tourists. Maslows hierarchy of needs has
been used by the researcher to explain the various needs of tourists; that travel
motivations fit well into researchers hierarchy of needs & motivation model is shown
in Table 4.1- below. However, researcher feels that this model may not set the
foundation for a theory of motivation for the tourist that explains why people buy and
take holidays.
Table 4.1 -Researchers hierarchy of need & motivation model for tourism &
travel services

NEED MOTIVE TOURISM & TRAVEL LITERATURE REFERENCEs
Physiological Relaxation Escape, relaxation, relief of tension, sun lust, physical,
mental relaxation of tension
Safety Security Health, recreation, keeping oneself active and healthy for
the future
Belonging Love Family togetherness, enhancement of kinship
relationship, companiosnship, facilitation of social
interaction, maintenance of personal ties, roots, ethnic,
show ones affection for family members, maintain social
contacts.
Belonging Achievement Convince oneself of ones achievement, status, show
ones importance to others, prestige, social recognition,
ego-enhancement, professional/business, status and
prestige
Self-actualization Be true to ones
self
Exploration and evaluation of nature, self-discovery,
satisfaction of inner desires
To know and
understand
Knowledge Cultural, education, wanderlust, interest in foreign areas
Aesthetics Appreciation of
beauty
Environment, scenery

Tourist buying behaviour is often determined by several factors such as
motivation, perceptions, learning and attitudes; and these factors are influenced by
personality, culture and society as shown in Figure-4.4. This model is used to
146

understand how and why people make vacation purchase decisions. The needs and
wants form the internal stimuli, while the availability of destinations forms the
external stimuli in the model. These stimuli are linked to perception, attitudes, and
preference and affect the behaviour of the tourists. A tourists motivation occurs when
an individual wants to satisfy a need.













Fig. 4.4- Tourist Buying behavior
Consumer behaviour literature reviews that needs and motivations are interrelated.
Arguably, people take a trip to fulfil their various needs, for instance :

Behaviour
Did traveler
book
destination?
Prefernce
Is
destination a
Perferred
alternative?
Perception
Is destination
perceived as
possible
alternative?
Awarness
Is traveler aware
of destination
choice ?
Learning
Can travellers decision
making be affected
before/after purchase
decision is made?
Need/Wants
Why does traveler
need/want to
travel?
Attiudes
Does traveler
Like/dislike
Destination?
147

physiological (climate and health), and
psychological (relaxation and adventure).

Researchers in this study has agreed to the extent that tourists motivations
are multiple and tourists may have different reasons for taking either domestic or
overseas vacations. Researcher proposes two stages in a travel decision, known as
push factors and pull factors.
Accordingly, push factors are considered as internal factors to instill a desire
for travel and therefore aim to satisfy various psychological needs; whilst pull
factors, which are considered external factors, focus on the benefits of a particular
destination and these factors influence where, when and how that person decides on
his vacation.
Each tourist destination has a variety of products and services to attract
tourists and each tourist has the opportunity to choose from a set of destinations .
Undoubtedly, destination choices are influenced by various factors such as the
travellers age, income, personality, and motivations as well as the cost, distance and
risk involved.
Researcher claims that tourist motivations and selection of destinations are
shaped by both push and pull factors. As noted, push factors are related to intangible,
intrinsic desires of the individual tourist such as desire for escape, while push factors
are related to the attractiveness of a destination and tangible characteristics such as
beaches, accommodation, recreation facilities, cultural and historical resources .
Preference and destination attributes can be matched to specific psychological
profiles of tourists. Similarly, motivation is a dynamic concept that varies from one
tourist to another, from one market segment to another, from one destination to
another as well as from one decision making process to the next. Hence, arguably, the
concept of motivation can be considered as an element of market segmentation in the
tourism industry.
Researcher stresses that differences in motivation between tourist respondents
of different cultures are crucial for destination management to gain an understanding
of tourists values, preferences and behavior.
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Further, researcher would also like to mention here that analysis of stage-1 in
the chapter two shows that tourist or traveler at all the stages of purchase wishfully
looking to satisfy their all types of needs, temptations & desires. He has various types
of needs as also explain above, which he would always like to discuss on one to one
basis with the service provider for all his Touch Points . Based on the belief
elicitation survey a list of formative items (Table-1) were suggested by the
researcher. These formative items are also some of the proposed needs of the tourist
or travelers. We can also include the Tourism literature reference mentioned in the
Researchers Table above.
Researcher also interpreted that theses needs can be delivered to the customers
through strong relationship marketing through Internet based services offered by the
units under study.
Results of the study shows the satisfication of the respondents over internet
based services offered by the Units under study at all the stages of purchase at
attraction & retention level.
All the Units selected under the study particularly dealing in tourism business
are the important user of interactive relationship and the units under the study are
well placed to benefit customers & organisations because of their special
characteristics.
Table 4.2- shows the main influences of the Web Sites based Internet relationship
features in selling the tourism products by the units selected under this study:







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Table 4.2- Respondents Purchase Behavior & Internets influences in the units
selected
Before-Purchase At-Purchase After-Purchase
Information Search Evaluation of Alternative Purchase
Transaction

Access & Navigation

Entertainment

Payment Options

Online Booking

Room Information

Payment options

Rate Information

Service Information

Incentives & Triggers

General Information

Information on Region
(Added Value)

Added Value

External Links (Added Value)

Payments options & method

Service Support

Personal identification

Purchase Conditions

Problem solving

Mobile Interface

Competitive Shopping

Feed back channels

Geographical report

Dynamic Pricing

Order Tracking

Languages

Reservations

On line community

Links to other related search
Engines

Cancellation of booking

Web centre

Timer-Tables

Change of travelling
schedule refund options

FAQ

Best Price

Acknowledgements &
receipts Print options

Complaining ability

Comparative table

Premium services (Tatkal)

Customer safety

Site customization

Availability of services

Refunds

Customer Education

Accommodations & stay

Disputes settlements

Alternative channels

Amenities & Conveyances

Follow-up services

Loyalty programme

Conveyances

Membership

Auctions bids

Search capability

Product customization

Alerts, contact details

Mailing List

Company Profile

Chat

Bulletin Boaard

Product & Services Information

Promotion offers

User friendliness

Web page loading speed

Reliability of site

Map reading

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The internet as an effective relationship media between respondents
(customer) & service provider (Units selected ) on one to one basis is revolutionising
the distribution and sales of travel and tourism information. It provides direct access
to end consumers for all their needs fulfillments.
The internet interactive relationship developments are permeating every
aspect of tourism marketing by the units selected in this study. The rapid advancement
of information technology, notably the Internet and the World Wide Web, has created
challenges and opportunities for the relationship marketing in the unites selected in
this study. The power of Web sites is that they can simultaneously advertise, inform,
display, promote special offers, make a sale and provide instant booking and
confirmation in customers homes or offices.















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Chapter - 5
CONCLUSIONS AND SUGGESTIONS

One of the most important aspects of the study is to examine the relationship
marketing in the service sector. The researcher has examined the relevance of
fundamental concepts of relationship marketing and their suitability with special
reference to the tourism and hotel industry. The researcher has also examined the
strategic issues involved in the relationship marketing. The study has led to
interesting findings about the relationship marketing in hotel and tourism. There are
several implications of relationship marketing for the organization. Improvement and
up gradation of technology, customer satisfaction and fulfillment of customers
expectations are very important.
Today tourism & hotels organizations selected in this study have realized that
their ability to compete is dependant on their relationship with their target customers.
Customer relationship management (CRM), therefore, is a buzzword today.
The Internet has transformed Customer Relationship Management (CRM) in
travel, tourism & hospitality. A large majority of our customers are planning and
booking their travel schedules and hotel stay online. In reality, internet means
different things to different people especially in the hospitality and travel verticals.
From a working definition, CRM and its online application, eCRM is a business
strategy aiming to engage the customer in a mutually beneficial relationship. Within
this context here is the best description that describes eCRM that is universal for any
travel supplier or intermediary: Electronic customer relationship management
(eCRM), in the context of Internet distribution and marketing in the hospitality and
travel verticals, is a business strategy supported by Web technologies, allowing travel
services suppliers to engage customers in strong, personalized and mutually beneficial
interactive relationships, increase conversions and sell more efficiently.
Establishing mutually beneficial interactive relationships with your customers
is the ultimate goal of any web based internet services initiative. Here are the main
components of an such strategy in travel and hospitality:
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Know Your Customer
Customer Service
Personalization
More Efficient Marketing
Build Customer Loyalty
Two key questions challenge hoteliers and travel suppliers today:
1. Who owns the customer in this new online environment? The online
intermediary, which made the booking, or the hotel where the guest stayed or
the airline that provided the service?
2. How can travel suppliers and hoteliers establish mutually beneficial interactive
relationships with their customers in order to increase repeat business, boost
revenues, and retain loyalty?
Strengthening Customer Service in Travel and Hospitality
The Internet is the best interactive marketing channel ever invented. Therefore
it is the ideal medium for reaching out to your customers and establishing interactive
relationships with them.
It is important to understand that customer service is only one aspect of eCRM and is
primarily a reactive function aiming to improve performance and efficiency, while
eCRM as a whole is a proactive long term strategy.
On the other hand web based services are more than just a tool to achieve and
enhance customer satisfaction. The traditional CRM focus in travel and hospitality has
always been Customer Satisfaction. The presumption is very simple: customers will
appreciate good service so much they would not go to your competitor. In other
words:
Customer Satisfaction + Quality of services = Customer Loyalty.
Businesses, worldwide, are passing through a period of flux. A few
management thinkers call it a transitional phase in the business environment but it is a
shift which has actually taken place from the conventional mode of doing business to
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the modern business management techniques. The markets are growing by leaps and
bounds. International Boundaries are nowhere proving to be any kind of restriction
for any business house. Consequently, consumer base for any product or for any
business has grown exorbitantly. Companies are not relying on branding and
advertising. Pricing has become key to grab the markets but who will bear these
prices? The answers implies to the Customers.
Researches have proved that retaining an old customer is 1/5
th
the cost of
acquiring a new customer. So companies have to maintain a long-term relationship
with the existing customers, which further may help to increase the customer base of
the company. This depends upon the intensity of Customer Relationship thus making
CRM an essence of any business. In the present scenario, the service sectors like
Banking, Insurance, ITES, Consultancy have grown organically. The threshold of the
service sector lies in maintaining and developing good relations with the people.
Although customers are important for all the service sectors but life insurance sector
is more concerned with the personal care of the customers since its products are life
care related products. As is said in the market Insurance is not sold but is bought,
this makes the need of this study more needy because it becomes the first priority for
life insurance sector to have a healthy relations with the customers so that the trust is
built up for the said proverb. After going through the related researches and available
literature, it is found that CRM in life insurance sector was a field that has a huge
potential and should be exploited in this highly competitive world. This proves the
rationale of the study
In hospitality the Internet has provided hoteliers with unprecedented
capabilities to interact with their customers:
eNewsletters
Online promotions and sweepstakes
Reservation Confirmation emails
Pre-Arrival emails with value adds and upsells
Post-stay Thank you emails and comment cards
Interactive Web 2.0 applications on the hotel website (experience and photo
sharing, customer generated Top 10 lists of touch-points, things to do in the
destination, etc.)
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Providing innovative customer service on your website and to your customers
via latest technological applications is a must.
Building and Strengthening Interactive Relationships with Customers
Building interactive relationships with the customer consists of three critical
lifecycle stages: Attract Maintain -- Retain. Here are some of these action steps:
Understand customer needs and build a marketing strategy around those needs
Being there for the customer in every step of before purchase, at purchase
and after purchase .
Communicating with the customer and providing unique value proposition
CRM and customer loyalty are closely intertwined and may make all the
difference between a company that must constantly access new customer and new
markets as opposed to extracting wealth from existing customers.
It costs 4-6 times more to attract a new customer than retaining one.
Existing customers are not only less costly to retain, but they also respond 4-5
times more readily to promotions and e-mail campaigns than new customers. It is
important to extract more wealth out of your existing customer base.
So how do travel service providers go about building loyalty online?
Product Differentiation (provide unique value proposition)
Customer Differentiation (personalized service, customer appreciation and
rewards)
True loyalty on the Internet is difficult to achieveyour competition is just a
click away. Reward Programs of major airlines and hotel brands provide a crucial
competitive advantage over online intermediaries, most of whom do not have such
programs.
Reward programs are very popular with online travelers, and especially with
people who book online. Here are the most obvious benefits of a well-functioning
reward program in travel and hospitality. Service provider will be able to:
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Identify their most loyal customers
Market to their most loyal customers
Accumulate guest-centric customer intelligence
Optimize Lifetime Guest Value
And yet travel suppliers and hoteliers do not need just any customer loyalty. A
low-attachment loyalty (e.g. inertia loyalty, price loyalty) can bring only limited
results. Hoteliers should strive to achieve true Premium Loyalty (i.e. emotional or
brand loyalty), which is characterized by high level of attachment and repeat
purchases. This is the ultimate loyalty valued most by companies.
The Scope of the study is confined to a few cities such as Ludhiana,
Chandigarh & Jalandhar as these cities where all the major players of the life
insurance sector are infield whether Private, Public or Foreign insurance company.
The time period of the study is restricted to nearly 4 year i.e. year 2002 to Date of
completion of study. The reason for choosing such time period is simply due to nature
of study i.e. Customer Relationship Management strategies which are followed by
corporate houses are variable with time due changing customer preferences and
buying practices. This study on completion is likely to be great help to the insurance
companies, professionals, policy makers, researchers and to all interested in CRM
practices in insurance sector.
Using Internet for Personalization, Customization and Relevance
Personalization is more than just providing the right information to the right
person at the right time. Naturally, personalization immediately raises concerns about
privacy and sharing of customer data. How much can we personalize the customer
experience without infringing on the customers personal privacy? Very strict
corporate policies have to be put in place to address this sensitive issue and avoid
customer dissatisfaction and legal implications.
Personalizing the customer experience on the travel or hotel website, or in
your online marketing and communications, is a powerful conversion and retention
tool. Customizing your interaction with your most valuable customers (those 20% that
generate 80% of your business) will provide significant long-term rewards.
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In hospitality, personalization on the hotel level should start by identifying all
electronic touch points with your customers (hotel guests, meeting planners, travel
professionals, etc.) and creating an action plan. Personalize all electronic
communications with your customers. Adopt a policy on how to address your guests
via email (first name only, Mr/Mrs +Last Name, etc). Addressing customer
segmentation issues on the property website is a logical next step. Creating a targeted
email marketing campaign is another good step.
For the major hotel brands, personalization efforts are much more complex
and expensive. Customization tools used by some major brands and airlines allow
website users to actively personalize their website experiences using over 250 criteria.
Here are some of the efforts by the major travel and hospitality companies to make
the user experience more personable:
In hospitality today, where your only communication with your customers will
often occur over the Internet, it is more important than ever to have a robust eCRM
strategy
After having obtained data and information from the various sources, the
researcher has analysed them in the preceding chapters and the gist has been
submitted in the concluding part.
The researcher has personally observed that hotel management have to
maintain more relationship aspects with the customers as compare to the travel and
tourism..
The study has revealed that the Taj Hotels, the Ashok Group of Hotels and the
ITC-Welcome Group of Hotels, make my trip .com, ezeego1.com., yatra.com have
emerged as total quality suppliers of services to their customers. This is why the
productivity and profitability of these hotels have increased largely.
In this research, researcher investigate the relationship between internet and an
important surrogate of electronic relationship success:
online customer satisfaction using web based internet services as effective
relationship marketing tool of the units under study particularly hotels & tourism
units.
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Following conclusions are drawn by the researcher in this study:
More specifically, researcher develop, operationalize and empirically test a
temporal model explaining the relationship between three categories of
internet relationship stages (i.e., before-purchase, at-purchase and after-
purchase internet) and online customer satisfaction at two phases of the
customer lifecycle, i.e., attraction and retention.
This research presents important theoretical and practical contributions. On the
theoretical side, we demonstrate the necessity of the temporal
conceptualization of online customer satisfaction through internet facilities for
effective relationship between the service provider and customer in order to
account for the variability of the satisfaction drivers from the attraction phase
to the retention phase.
Researcher also shown the suitability of the transaction cycle framework for
categorizing electronic marketing relationship.. The results of a longitudinal
survey of the online customers of hardware retailers provided strong support
for the model and revealed the dominant role of before-sales internet of
companies web-links in satisfaction formation at the attraction phase and the
prevalence of after-sales relationship at the retention phase. On the practical
side, a belief elicitation process identified specific features for each of the
three relationships stages.
The survey results elucidated the relative importance of these features in
satisfaction formation, giving insights to practitioners. The practical
implications can be summarized as three paradigm shifts. The significance and
magnitude of the effects of product customization, website customization and
dynamic pricing reflect the perceived importance of online relationship
marketing activities that are intended to support the one-to-one paradigm shift:
transforming the relationship between the firm and the customer from a one-
to-many mode into a one-to-one mode.
Other marketing relationship drivers of customer satisfaction include alerts,
search capabilities, order tracking and problem solving. They represent
another transformation of the relationship between the firm and the customer:
from passive to active. Another significant variable, i.e., online community, is
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intended for yet another paradigm shift: many-to-many marketing, where the
customers are involved in providing value to each other.
The World Wide Web, as an interactive communication medium, is still in its
infancy stage. In the present study it is mostly the larger hotel chains which
have begun to explore its potential to develop long-term relationships with
customers.
The smaller hotel chains are still not doing so, probably because they are
lacking in financial and marketing resources, or only want to cater to a more
localized or nationalized market. This will allow a competitive advantage to be
developed by the larger hospitality organizations. Thus, the Web still has a
long way to go in terms of its development as a RM tool, which is very much
dependent upon customers' demands, hotel companies' willingness to let their
web sites assume a bigger marketing role, and the available technology.
However, there seems to be widespread confidence within the hotel industry
of the future of the web as a marketing mechanism. Hotel companies should,
as proposed by table 1, adopt RM as a strategy guiding the development of
their web sites.
Both RM and the World Wide Web combined together present a powerful
competitive advantage for hotel companies at a time when there is increasing
competition over a reduced customer base. As such, no hotel company can
afford to ignore the full potential of the Web as a strategic mechanism to
facilitate the practice of RM. This means that the application of the Web as a
RM tool is the next logical step forward for the whole of the hotel & tourism
industry.
This study have reported a strong preference for the Web as a hotel
information source and as a hotel-booking medium.It is evident that the World
Wide Web has now come of age with the information aspects being
augmented with interactive, reservation and data transfer benefits. The hotel
under study are committed to the Web as a major distribution channel and
marketing tool. All of the hotel chains in the study are now involved in
exploring its potential to develop long-term relationships with customers. The
Web still has a way to go in terms of its development as a relationship
marketing tool, which remains dependent upon customers demands, the hotel
companies' willingness to let their Web sites assume a bigger marketing role,
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and the available technology. However, the results here indicate widespread
confidence within the hotel industry of the future of the Web as a marketing
mechanism.
There is sufficient evidence to suggest that hotel companies are adopting
relationship marketing as a strategy guiding the development of their Web
sites, as proposed by Table 9 . The question now remains of how long is it
likely to be before researchers and developers consider 'loyalty agents' -
facilitators that can act on behalf of both the buyer and seller, in a mutually
rewarding relationship?
Given such possibilities, the hotel selected in this study must continue to
exploit the full potential of the Web as a strategic mechanism to facilitate the
practice of relationship marketing . The Web technology of the future is likely
to further facilitate the development of relationship marketing , particularly for
stages 4 and 5 of Table in approaches to the long-term retention of customers.
Hotels must continue to pursue Relationship Marketing and the Web as an
imperative.
Relationship marketing has emerged for many reasons including as result of
the awareness of the importance of relationships in services and of increasing
consumer expectations. While it is clear that relationship marketing is not
always appropriate, it is essential when dealing with certain products and
services as the development of a relationship will add value to the customer.
It is clear that relationship marketing is reforming the way service firms are
conducting business. In order to remain competitive companies must embrace
the philosophy of relationship marketing. Relationship marketing is beneficial
to both organisations and customers. However, it is essential for a company to
segment its customers on the basis of their profitability, as resources should be
allocated on this basis.

There is no universal remedy for implementing relationship marketing
strategies successfully. Overcoming these common pitfalls can lead the way to
a profitable future for any company striving to establish a relationship
marketing orientation. Relationship marketing strategies only yield returns
when they are implemented effectively.

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This study has so far examined some of the key issues related to the marketing
of tourism & hospitality on the Internet. In particular, it has highlighted the
main features of the Internet as an effective and efficient
communication medium, including its addressability, interactivity, flexibility
and accessibility, and its role in improving customer service and reducing
costs. It has also analysed the unique characteristics of tourism & hospitality
which make it perfect to be marketed on the Internet and further explored the
main areas in tourism marketing where the Internet could play a significant
role and provide substantial benefits for both the marketer and the consumer.
In an investigation of the key forces which drive Internet commerce, it has
found that a wide variety of factors, grouped conveniently in four
broad categories demand, organisational, technological and governmental -
could both enable and restrict the application of the Internet in tourism
marketing.
With regard to the future of Internet tourism & hospitality marketing, there
appears to be little question that the Internet will permeate into every aspect of
tourism business and every area of marketing activities. Indeed, the Net could
become the dominant platform and instrument for tourism promotion and
distribution in five years' time. This is based on the author's belief that Internet
marketing has now survived its infancy and is ready to accelerate the transition
from the introduction to the growth stage as more and more people and
organisations are recognising its unique and great potential for marketing. The
increasing power of computers, decreasing surfing cost, and higher level of
computer literary and web skills will make web surfing as a necessity in
everyday life to an increasingly large population, especially in the developed
world. Many of the current technological constraints could also be overcome
(though new problems will inevitably emerge) in the next few years with the
high quality broadband access via optical fiber or satellites to improve speed;
the wide application of constantly improving firewalls, encryption and digital
signature software to enhance security; the development of more sophisticated
search engines and 'intelligent agents" to simplify web search task; and the
Wireless Application Protocol (WAP) technology linking mobiles to the
Internet to extend the range of services available to the public. At the same
time, governments are increasingly involved in the expanding e-commerce
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through providing incentives to small businesses, facilitating infrastructure
development and establishing the regulatory framework which supports and
protects all those concerned.
It is obvious to the current writer that the key to the future growth and
improvement in Internet tourism marketing lies in tourism organisations. The
market conditions and web technologies are improving steadily and a
conducive legal and social environment is starting to take shape, it is now up
to tourism organisations to seize and exploit the opportunities created by such
changes to its full potential. Therefore, the crucial question for academic
researchers and practitioners in future research is how tourism organisations
can take advantage of the changes and opportunities brought about by the
Internet. To offer a prescriptive list of policy recommendations is neither
feasible, because it requires a thorough understanding of all relevant issues
including expertise in technology, tourism, marketing and a keen awareness of
all new developments in both IT and tourism, nor necessary since different
tourism businesses have different resources and operate in different settings.
Instead, an attempt is made here to discuss issues that are both important and
with wide applicability. Three interwoven cognitive issues are highlighted
below to emphasise the significance of changing the mentality of tourism
organisations to preparing for the new virtual business environment.
In order to market tourism products successfully on the Internet, a tourism
organisation must first of all have a strategic vision whereby it can fully
comprehend the changing market space, from physical to both physical and
virtual, and the underlying forces shaping this new marketing space. The
Internet has altered forever the tourism marketing system and its environment,
no tourism business can escape its impacts but companies willing to become
engaged in Internet and embrace Net commerce should find more
opportunities while those still pretend that the internet is a bad dream, such as
some travel agencies, will be left with all the threats. Whether a organisation
likes it or not, the Internet is here to stay and is going to dominate tourism
marketing. Andy Grove, the Chairman of Intel, has been widely quoted as
saying that in five years' time all companies will be Internet companies or they
won't be companies at all.
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The Internet must not be treated as just a promotion aid or distribution device,
but be seen as a major force in itself that profoundly changes the way tourist
business is conducted. Marketers and service providers of travel, tourism and
hospitality will need to rethink fundamentally the processes by which they
identify, communicate, and deliver customer value. They will need to improve
their skills in managing individual customers and allies. They will need to
involve their customers in the act of code signing their desired products.
Indeed, tourism marketers should change their business paradigm and
marketing practices to suit the new Internet based relationship marketing era.
As the Internet alters the critical success factors in many businesses, tourism
organisations must use it effectively to create new competitive advantages. For
example, tour operators like Cox & king, Trade wings, Thomas cook were
obsessed with gaining control of distribution through vertical integration with
travel agencies in the last few years, but with the emerging web-based online
sales companies like make my trip .com, Ezeego1.com, Yatra.com and IRCTC
has a direct control over the customer in service and product distribution now
supersedes control of traditional distribution. In responding to the threats from
airlines direct sale, the major GDSs have been using the Internet to develop
web-based GDSs and to diversify their product base to include hotels, car
rental, cruise lines, tour operators, etc. Clearly, tourism organisations have to
adopt a technology management policy that will assist their competitive
strategy and usefully leverage the technology innovations to their advantage.
Strategic Internet partnerships or alliances, especially those between tourism
companies, and between tourism and IT companies, are also a major source of
competitive advantage.
Hence, the conclusions were drawn on the basis of available information in both the
studies. There may have been some bias in responding to the answer. However,
proper care has been taken into consideration to analyse the information on the basis
of best possible data.
Thus, this part of the study is concluded with the concluding remarks that effective
research methodology is a necessary adjunct between the work done by the researcher
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and the conclusions drawn by him for the purpose of putting forth the
recommendations and suggestions to the management of the organizations under
study. It may, thus, be concluded that a solid research methodology is the root of
successful research work and the researcher has adhered to it.
On the basis of the research data and information and observations of the
researcher, the researcher proceeds onward to submit useful suggestions in the form
of recommendations, which if observed, would go a long way to build perfect
relationship marketing of tourism and hotel industry in general and the organizations
under study. Some of the suggestions are:
i. It is suggested that hotels should invest more funds in the development of
research and advancement of Interactive technology of the key inputs in
the customer relations marketing is the use of technology or data mining
and also for responding to the customer in real time.
ii. One of the key issues in organisation structuring is that of the development
of inter-functional processes which ensure that customers problems are
resolved by all the departments that have a role in it. Thus, the hotels and
tourist centres management should involve all the departmental heads and
executives in the CRM process.
iii. The hotels should develop customer relationship and marketing
information system to obtain useful data and information about the needs
of the customers, about the changing fashions, about the demand of the
business executives, foreign tourists and all other users of the hotels and
tourist centers.
iv. It is suggested that total quality services i.e tangible & intangible touch
points as discussed by the researcher in the study should be strengthened
which would be possible by adopting bench-marking programmes. For this
purpose, total employees involvement would be useful.
v. The hotels and tourist centres should develop team work for quality and
quality circles. At all the stages of purchase i.e before purchase, at
purchase and after purchase during customer attractions to customer
retention cycle. There should be visionary leadership for inspiring changes
for long term customer relationship focus.
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vi. Creation of quality culture, quality of work life and adoption of
organizational re-engineering programmes would also help the tourism and
hotel industry in achieving the targets of total quality management.
Peoples involved in the process of service marketing should be focused for
total quality management for total customer satisfaction especially tourism
and hospitality services sector.
vii. It is further suggested that tourist centres and hotels should start quality
awards to their executives and employees who excel in providing quality
services of the customers. For this, quality audit and education and
training and re-training of the employees would be added advantage. The
tourism and hotel industry should have close contacts with the universities,
colleges and institutions which are providing hotel management coursed at
under-graduate and post-graduate levels. This would also help in re-
generating tourism and hotel marketing concepts.
viii. It is further suggested that customer choices, customer expectations should
be examined and offered online to them. For this purpose, data should be
collected from stake holders and long term strategy should be developed.
ix. It is further suggested that relationship managers, whatever their titles are,
should be incharge of integrating the hotels and tourism processes, and
other capabilities that create total customer value i.e cost against benefits
and the caring customer interface.
x. On the basis of research data, it is suggested that working with the
relationship managers would be capable managers incharge of planning
and implementing flexible and high performance capabilities to super-
charge the customer relationship.
xi. It is again suggested that all efforts should be diverted by the tourism and
hotel industry for measuring the present demand of the customers and
forecasting the future demand. This would be possible by obtaining more
and more information about the markets. Due to increase in online air,
train travel booking, customers are diversifying aggressively and are just a
touch away from the service providers.
xii. It is further suggested that cost-benefit analysis should be conducted by the
tourism and hotel industry so that exact knowledge could be obtained
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about the cost of relations and revenues obtained by the adoption of
relationship marketing.
xiii. The researcher would further suggest that Indian tourism and hotel
industry should learn lesson from UK and USA to maintain relationship
with their customer in service sectors through electronic relationship.
xiv. The tourism and hotel industry should publish free books and journals to
give full information about heir activities, operations, programmes and
future plans and the services being provided by them.
xv. Lastly it is suggested that tourism and hotel industry should do their best to
earn customer loyalty and customer fascination towards the hotels, tourism
and their intended services.
The researcher hopes that the suggestions given above, would be found useful
by the tourism and hotel industry and especially the seventeen units selected in this
study by the researcher. There is no end of the research in this gigantic area. There is
further need for more sophisticated empirical studies. It is hoped that the future
researchers would chose other tourist centres and hotels for application part of
relationship marketing.
In future research, other proxies of internet success through electronic
customer relationship management (e.g., continued usage: re-sales, firm profitability)
should be studied. Of particular interest is the mediating role of satisfaction. In fact,
satisfaction is considered to be an immediate goal of relationship marketing that is
assumed to determine the medium-term goals (e.g., customer retention and loyalty)
and subsequently firm performance, e.g., profitability. These complex relationships
require further investigation.
Further research in this area should not only overcome the limitations present
in this research efforts but also widen and deepen the understanding of this topic.
This research has been conducted on a small segment and further researchers can take
larger sample sizes and other related areas of relationship marketing to enrich the
present study. Some of the areas for further research may be automation of
relationship marketing, developing organisations for relationship marketing,
relationship marketing in mass markets, affinity partnering, relationship marketing in
consumer markets, relationship marketing and marketing strategy and finally the
importance of relationship marketing in the global business.
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(C) Web Resources
www.itcportal.com
www.itcwelcomgroup.in
www.tajhotels.com
www.theashokgroup.com
www.theashok.com
www.delhi.regency.hyatt.com
www.Hyatt.com
www.oberoihotels.com
www.InterContinental.com
www.thegrandhotels.net
www.indiatourism.com
www.theashokgroup.com
www.jktourism.org
www.jktourismdevelopmentcorporation.com
www.thomascook.co.in
www.thomascook.com
www.coxandkings.com
www.tradewingstours.com
www.tradewingsindia.org
175

www.irctc.co.in
www.irctc.com
www.rajtravels.com
www.rajnationalexpress.in
www.sitatours.com
www.sitaindia.com
www.makemytrip.com
www.makemytrip.co.in
www.Yatra.Com
www.ezeego1.co.in

















176

ANNEXURE-1
QUESTIONNAIRE
for Customer/ Tourist / Tour operator / Hotelier / Working Professionals
Market Survey

Name M/F Age Education
Income/Yrs(Rs.)

Location Use Internet (Y/N) No. of Purchase on internet
(1/2/3 0r more)

When last used Why Using ( Travel /Tourism/Hotels ) Web
friendliness (Y/N)

First Hit / Subsequent Hit

Q. Which Organisation Web site you are visiting on regular basis for buying
services.

Taj Group Of Hotels ITDC Sita World Travel
ITC Maurya J & K Tourism Make My Trip.Com
Intercontinental-The
Grand
Thomas Cook
IRCTC (Indian
Railway)
Ashoka Group Cox & King Ezeego1.com
The Oberoi Trade Wings Yatra.com
Hyatt Regency Hotel
Raj Travel &
Tours
other (Pl.Mention)



177

Q. Mark your Satisfaction Level of the Web based Internet Services.


Before the Purchase
Strongly
Agree
Agree Neutral Disagree Strongly
Disagree
Personal identification
(ID),

Mobile Interface

Geographical report

Languages,

Links to other related
search engines

Time tables

Comparative table

Loyalty programme,

Customer education

Alternative channels

Membership

Search capability

Alerts

Mailing list

Company profile

Chat

Bulletin Board

Product & Services

178

information
User friendliness

Web page loading speed

Reliability of site

Map reading & contact
details


At the time of Purchase
Strongly
Agree
Agree Neutral Disagree Strongly
Disagree
Payments options &
method

Purchase conditions

Competitive shopping

Dynamic pricing ,
Auctions bids

Reservations

Cancellation of booking

Change of traveling
schedule

Refund options

Acknowledgements &
Receipts

Print options

Premium services
(Tatkal )

Availability of services

Accommodations & stay

Amenities &

179

Conveyances
Product customization


Remarks..........................................................................................................................
..........................................................................................................................................




After the Purchase
Strongly
Agree
Agree Neutral Disagree Strongly
Disagree
Service support

Problem solving

Feed back channels

Order Tracking

On line community

Web centre

FAQ

Complaining ability

Customer safety

Refunds

Disputes settlements

Follow-up services



180

Q. Make your satisfaction level of Web Mechanism features.


Web Features
Strongly
Agree
Agree Neutral Disagree Strongly
Disagree
Accessibility

Responsiveness

Processing Time

Information available

Security Provisions

Time Saving

Economical

Value added Services

Web site for employees

Customer Research

About Channel Members

Feedback

Remarks
..........................................................................................................................................





181

ANNEXURE-2

List of Hotels
1. Ashok 50B, Chanakyapuri New Delhi-110021.
2. Grand Hyatt Nelson Mandela Raod, Vasant Kunj, Phase-II, New Delhi-
110070.
3. Taj Palace 2, Sardar Patel Marg ,New Delhi-110021.
4. The Park 15 Parliament Street ,New Delhi-110001.
5. The Oberoi Dr. Zakir Hussain Marg ,New Delhi-110003.
6. Hyatt Regency Bhikaiji Cama Place, Ring Road New Delhi-110066 .
7. The Oberoi Maidens 7,Shyam Nath Marg, Delhi -110054.
8. Hotel Connaught Shaheed Bhagat Singh Marg, New Delhi-110 001.
9. Hotel Diplomat 9, sardar patel road, New Delhi-110 021.
10. Hans Plaza , Barakhamba Road, Connaught Place, New Delhi.
11. The Ambassador Hotel, Sujan Singh Park, New Delhi-110 003.
12. York Hotel K-10, Connaught Circus, New Delhi 110 001.
13. Hotel Broadway 4/15 A, Asaf Ali Road, New Delhi 110002.
14. Hotel Nirula's L- Block, Connaught Circus, New Delhi 110 001.
15. Hotel Sobti 237 - 98, Hardhian Singh Road, Karol Bagh, New Delhi.
16. Hotel Marine Plaza 29, Marine Drive,Mumbai.
17. The Orchid Hotel 70 C, Nehru Road, Vile Parle (East) Mumbai-400099.
18. Sea Side Hotel Pvt. Ltd 39/2 Juhu Beach, Near Sun'N' Sand Hotel,Mumbai -
400 049.
19. Hotel Sahara Star Mumbai Airport, Santa Cruz,Mumbai-400099.
182

20. Hotel Sea Princess 969, Juhu Tara Road, Juhu Beach,Mumbai-400049.
21. Hotel Ramada Plaza Palm Grove Juhu Beach,Mumbai-400049.
22. Hotel Hilton Towers Nariman Point ,Mumbai-400021.
23. Hotel Hyatt Regency Sahar Airport Road,Mumbai-400099.
24. Hotel J W Marriott Juhu Tara Road, Juhu Beach,Mumbai-400049.
25. The Oberoi Hotel Nariman Point,Mumbai-400021
26. Hotel Le Royal Meridien Ascort Centre, Sahar Airport Road Andheri
(East), Mumbai.
27. Hotel Sun-N-Sand 39 Juhu Beach, Juhu Mumbai-400049.
28. Hotel Taj President 90, Cuffe Parade Mumbai-400005.
29. The Retreat Hotel.Erangal Beach, Madh Marve Road, Madh
Island,Mumbai-400061.
30. The Resort Hotel 11, Madh Marve Road, Aksa Beach, Malad
(West)Mumbai-400095.
31. ITC Hotel Grand Central Sheraton & Towers Dr B R Ambedkar Road,
Parel
32. Hotel The Leela Kempinski Sahar, Andheri (East) Mumbai-400059.
33. Hotel Taj Lands End Bandstand, Bandra (West) Mumbai-400050.
34. Citizen, Mumbai 960, Juhu Tara road, Juhu Beach, Mumbai 400049
35. Hotel Heritage Sant Savta Marg, Opp. Gloria Church, Byculla.Mumbai-400
027.
36. Airlink 75, Off Nehru Road, Near Sanatcruz Airport, Vile Parle
(East),Mumbai 99.
37. Hotel Ajanta 8 Juhu Tara Road, Santacruz West .Mumbai-400049.
38. Hotel Atithi 77, A and B Nehru Road, Vile Parle (East), Mumbai - 400 099.
183

39. Hotel Godwin 41, Garden Road Colaba.Mumbai-400039.
40. Hotel J uhu Continental Juhu Tara Road,Juhu, Mumbai -400 049.
41. Hotel Ramee International 757, S.V.Road, Khar.Mumbai-400 052.
42. The Royal Garden Juhu Tara Road, Juhu, Mumbai - 400 049.
43. Aggarwal, M.L. 2003 South Asian Journal of Management, April- June 2003.
44. Arora, Balraj. 2002. The Times of India, September 21, 2002.
45. Arthur O, Connor. 2002. CRM Strategies, January 3, 2002,
46. Bensalem, P.A 2000. Lead organizers modules November, 13, 2003
47. Breti Andreson. 2002, CRM Magazine October 2000.
48. Chatterjee, P.K. and Prasad, A. Vipalpa. Jan- March 2003.
49. Frederick. 2004.
50. Gartner. 2003. Stamford.CONN, September 3, 2003.
51. Grover, Satinder. 2003. The Economic Times, March 13, 2003.
52. Gupta, Praveen. 1999. Insurance Delivery and modern marketing techniques.
Proc. International Insurance Conference 1999. pp174.
53. John. 2004. Peppers & Rogers Group, February 25, 2004, Search crm.com.
54. Johri, Govind. 2000. Customer satisfaction in emerging Insurance Market in
India. The Insurance Times, October 2000.
55. Kelly, Michael. 2002. Business on-line, Jan. 2002.
56. Kelly, Michael. 2003, CRM Today, March 2003.
57. Kortzer, Tony. 2004, New Industry- Specific Apps from people soft March 23,
2004.
58. Krishnamurthy, R. 2001. Positive outlook, Asia Insurance Post, July 2001.
59. Lawrence, F. Goldman. 1999, Column Published in DM Review. Nov5, 1999.
184

60. Lawrence, F. Goldman. 1999. Column Published in DM Review.
61. Saraf, Vikas. 2003. Indian Journal of Marketing, Jan 2003.
62. Stembo, Sem 2003. South Asian Journal of Management April-June 2003.
63. Sharma, Arpit. 2002. South Asian Journal of Management April- June 2003.
64. Singh, Manisha. 2002. The Economic Times, December 2, 2003.
65. Zechariahs, Candice 2003. The Economic Times, March 31, 2003.
66. Suchet, Phillippe. 2000, Webtrends, April 1, 2004.
67. Suchet, Phillippe. 2004. Webtrends, February 19,2004,
68. Taj Krishna Road No 1, Banjara Hills, Hyderabad-500 034.
69. ITC Hotel Kakatiya Sheraton & Towers Begumpet, Hyderabad-500 016.
70. Hotel Taj Banjara Road No 1, Banjara Hills-500 034.
71. Taj Residency Road No. 1, Banjara Hills, Hyderabad 500034.
72. Viceroy Hotel & Convention Centre Opp Hussain Sagar Lake, Tank Bund
Road, Hyderabad
73. Hotel Manohar Begumpet, Hyderabad-500016.
74. Hotel Sitara Ramoji Film City, Hayatnagar Mandal Anajpur Gramam, RR
District.
75. Hotel Park View Sector 24, Chandigarh - 160 024.
76. Taj Chandigarh Block No. 9, Sector 17-A, Chandigarh.
77. The Royal Meridien 1, GST Road, St. Thomas Mount Chennai-600016.
78. Taj Coromandel 37, Mahatma Gandhi Road Chennai-600034.
79. The Park 601, Anna SalaiChennai-600006.
80. Fishermans Cove Covelong Beach, Kanchipuram Chennai-603112.
81. Radisson 531, GST Road, St. Thomas Mount Chennai-600016.
185

82. Taj Connemara No-2, Binny Road Chennai-600002.
83. Trident Hilton 1/24, GST Road Chennai-600027.
84. Golden Palms Spa and Resort Nagarur, Dasanpura, Hobli, Off Tumkur
Road, Bangalore .
85. The Grand Ashok Hotel Kumara Krupa High Grounds , Bangalore.
86. ITC Hotel Windsor Sheraton & Towers 25 Golf Course Road, Bangalore.
87. The Leela Palace Kempinski Hotel 23, Airport Road, Bangalore.
88. Le Meridien Hotel 28, Sankey Road, PB No. 174, Bangalore.
89. Oberoi Hotel 37-39, Mahatma Gandhi Road, Bangalore.
90. The Park Hotel 14/7, M. G. Road, Bangalore.
91. Taj Westend Hotel Race Course Road, Bangalore.
92. Taj Residency Hotel 41/3, Mahatma Gandhi Road, Bangalore.
93. Rama Hotel 40/2 Lavelle Road Bangalore.
94. Regalis Hotel 41/2, Lavelle Road Bangalore .
95. Capitol Hotel Raj Bhawan Road Bangalore.
96. Chancery Hotel 10/6 Kasturba Road Bangalore.
97. Luciya International Hotel 6 O.T.C Road Bangalore.
98. Royal Orchid Hotel 1,Gulf Avenue, Adjoining KGA Golf Course Bangalore.
99. St Marks Hotel 4/1 St Marks Road Bangalore.
100. Taj Gateway Hotel Number 66, Residency Road Bangalore.

101. Mapple 7E,D.D.K Industrial Area, 1st Phase,I.T.P.L Road,
Mahadevpura,Bangalore.
186

102. Comfort Inn Residency Hotel Bangalore, 18 III Main Road, Gandhinagar,
Bangalore.
103. Goldfinch Hotel 32/3 Crescent Road High Grounds off Kumara Kripa Road
Bangalore.
104. Eagle Ridge Resort Bangalore.
105. Hotel Central Park Number 47 Dickenson Road Manipal Center Bangalore.
106. Taj Kuteeram Hessaragatta Bangalore.
107. The President Jayanagar 3 Block Bangalore-560 011.
108. Ginger Hotel 128 EPIP Phase II Whitefield Bangalore 560 066.
109. Angsana Oasis Spa & Resort Northwest County Main Doddaballapur Road
, Bangalore.
110. Ashraya International Hotel 149, Infantry Road, Bangalore.
111. Central Park Hotel Bangalore 47 Dickenson Road, Bangalore.
112. Doddis Resort Bangalore Allalasandra, Bellary Road, Yelahanka.
113. Eagleton Golf Resort Bangalore Mysore Highway, Bangalore.
114. Harsha Hotel Park Road, Bangalore.
115. Highgates Hotel 33, Church Street , Bangalore.
116. Mercure Inn Hotel Plot 1&2, KIADB Industrial area, Attibele, Bangalore.
117. Museum Inn Hotel 1, Museum Road, Off M G Road, Bangalore.
118. Nahar Heritage Hotel No. 14, St. Mark's Road, Bangalore.
119. Hotel Nilgiris Nest 171, Brigade Road, Bangalore.
120. Rama Hotel 40/2, Lavelle Road, Bangalore.
121. Ramanashree California Hotel Anathapura Gate, Doddaballapur Road,
Bangalore.
187

122. Ramee Guestline Plot No. 1 & 2, KIADB Industrial Area Attibele,
Bangalore .
123. Samrat Hotel 173/1, S.C. Road, Seshadri Puram, Bangalore.
124. Sukh Sagar Hotel 10, 3rd Main Road, Gandhinagar, Bangalore.
125. Swagath Hotel No 75, Hospital Road, Near Majestic Theater, Bangalore.
126. The Atria Number 1 Palace Road Bangalore.
127. The Capitol 10/6 Lavelle Road Bangalore.
128. Gateway Hotel Residency Road Bangalore.
129. Infantry Court Infantry Road Bangalore.
130. St Mark's Hotel 4/1 St Mark's Road Bangalore.
131. The Monarch 54 Brigade Road Bangalore.
132. Manipal County # 65 Singasandra,Off Hosur Road Bangalore.
133. The Chancery 10/6 Lavelle Road Bangalore.
134. J ai Mahal Place Jacob Road, Civil Lines Jaipur-302006 .
135. Rajputana Palace Sheraton Palace Road Jaipur-302006.
136. Rajvilas Goner Road Jaipur-302016.
137. Rambagh Palace Bhawani Singh Road Jaipur-302005.
138. Country Inn and Suites Khasa Kothi Circle, MI Road Jaipur-302001.
139. Clarks Amer Post Box No-222, JLN Marg Jaipur-302018.
140. J aipur Palace Tonk Road Jaipur-302015.
141. Le Meridien 1, RIICO Kukas Jaipur-303101 .
142. Mansingh Palace Sansar Chandra Road Jaipur-302001.
143. Trident Opposite Jal Mahal, Amber Fort Road Jaipur-302002.
188

144. Ashok Jai Singh Circle, Bani Park Jaipur-302016.
145. Hotel J aypee Palace Jaypee Palace Hotel Fatehabad Road,Agra 282003.
146. Amar Vilas - An Oberoi Resort Taj East Gate Road, Agra.
147. WelcomHotel Mughal Sheraton Taj Ganj, Agra .
148. Hotel Taj View Taj Ganj, Fatehabad Road, Agra .
149. Hotel Clarks Shiraz 54 Taj Road, Agra .