Although the title of this chapter is ‘The Con- sumer’, its contents take a wider perspective and focus on all customers of tourism and leisure services together with other groups with an interest in the provision of a specific service. These other interested parties tend to be known collectively as ‘stakeholders’.
The Difference between Consumers, Internal Customers
and External Customers
Many writers use the words ‘consumer’ and
‘customer’ to indicate one type of purchasing
interaction with an organization. In service quality theory it is very rare that anyone writes about consumers; we are told that the needs of customers should be central to an organization’s decision-making process.
Whilst this approach may not be problematic for some sectors of the service industry, it does create a number of difficulties for the tourism and leisure industry. The reasons for this will be explained after the differences between these two concepts of consumer and customer are highlighted.
Consumers
Consumers can be defined as those people who directly purchase and then consume a service themselves.
There are many different types of consumer in the tourism and leisure industry but most are concerned with purchasing an admission ticket (e.g. to a concert or tourist attraction) or the use of a specific facility (e.g. a badminton court) or bundle of services (e.g. buying a place on a package holiday).
Consumers are in a position to make immedi- ate judgements on the quality of the service provided and will reconsider past experiences when deciding whether or not to make a further purchase.
Whilst service quality writers have left out the notion of consumers, legislation most certainly has not. The Consumer Protection Act, 1987 and its amendments set out to
©CABInternational2003.Service Quality in Leisure and Tourism
26 (C. Williams and J. Buswell)
On completion of this chapter it is expected that you will be able to:
•
understand the difference between con- sumers, internal customers and external customers and be able to apply these concepts to a range of organizations;•
analyse the importance of each of the above groups to specific tourism and leisure organizations;•
appreciate the need to develop relation- ships with suppliers;•
develop an understanding of the different stakeholders of public, private and voluntary sector tourism and leisure organizations;•
evaluate critically the benefits of tourism and leisure services to the consumers and customers;•
comprehend the decision-making process when applied to purchasing tourism and leisure experiences.protect this group. This is achieved in a num- ber of ways, one of which is to make sure that information given to potential consumers (e.g. price) is not misleading. Palmer (1998) states: ‘This is important for services which are mentally intangible and for which many customers would be ill-equipped to make valid comparisons between competing suppliers.’ This encompasses most of the services that the tourism and leisure industry provides. The Act also has the objective to ensure that products and services are safe and redress is available to anyone (not only a purchaser) if injured by them, and that this liability lasts for 10 years (Dale, 1994b).
Customers
Whilst the term customers can also encom- pass consumers, customers can be placed into two distinct groups: those that are either internal or external to the organization.
Juran (1988a) was the first quality theorist to acknowledge these divisions.
External customers
An external customer is a person who purchases services from a provider but who, unlike a consumer, does not necessarily con- sume them. An example of this phenomenon would be the social secretary of a working men’s club who arranges (purchases) day trips on behalf of the membership, or the treasurer of an amateur football team who books (purchases) the use of a football pitch from the local authority for the season. In each scenario the person may consume the service as well as purchase it but this is not necessarily the case.
To complicate the issue, other terms are often used to denote the external customer within the context of the tourism and leisure industry. A few examples are: tourist or traveller; visitor (e.g. to a museum or art gallery); concert goer; guest (of a hotel);
participant (in sport); spectator (of sport);
client (e.g. of a travel agency or fitness trainer);
and user (of what is provided by public sector services). One of the authors, when
conducting a survey in an art gallery with no admission charge, was chastised for using the term customer and was told that ‘patron of the arts’ was more appropriate.
The lack of consensus as to a generic name for a user of facilities can cause con- fusion, especially to seasonal and new staff.
Excessive labour turnover in tourism and leisure facilities ensures that there is always a high percentage of new employees. The importance of every external customer to the organization can be lost in the ‘labelling’ and inappropriate service may be delivered.
Internal customers
This term acknowledges that people working within an organization can be internal cus- tomers of each other. For example, the mar- keting department of a theatre is the internal customer of the creative director. Marketing requires information about the season’s programme and the individual cast members so that the department can design the public- ity leaflet and have it printed in time for the mailshot company to distribute. The market- ing function is also the internal customer of the business director and equally requires the information on pricing structures for each event for the same reasons. Figure 3.1 illustrates how a marketing and box office department needs to meet its ticket sales targets as required by its internal customer, the business director.
In service quality management and customer care workshops, it is standard
Marketing and box office
Internal customer
Internal customer
Creative director
Business director Fig. 3.1. The internal customer relationships in one area of theatre management: flow of information for publicity material production.
procedure for the facilitator to ask the partici- pants to consider ‘who are my customers?’
and ‘who am I a customer of?’ but it would be better to differentiate between internal and external customers. Many service organiza- tions go to a lot of trouble to have a cus- tomer-centred organization but on analysis this only refers to external customers. Juran (1988b) considered that ‘the first step in quality planning is to identify who are the customers.’ Grönroos and Gummesson (1986, cited in Burca, 1995) stressed that staff who are not visible to the external customers are still important to the overall quality of service delivery, as their contribution influences the outcome.
For the purpose of this text, as with most others, in service quality the word ‘customers’
is used generically to mean the three groups defined above, as illustrated in the case study in Box 3.1.
Whatever label is given to the ‘custom- ers’, it is necessary to acknowledge their importance to the organization. Their views need to be sought, as their needs and expecta- tions are always changing.
Suppliers and Contractors
Within a holistic service quality management culture, the suppliers to an organization are equally as important as the external and internal customers. Of course, whether or not they deliver (on time) the correct goods or services can have a major impact on service delivery quality and its outcomes. This inter- relationship with the customers and suppli- ers is known as the quality chain (Oakland, 1993) or Juran’s (1988a) ‘spiral of progress in quality’.
In the past, suppliers were seen as a necessary evil, to be dominated by the organization’s purchasing power. The main objective was for the organization to look after itself without any thought of the supplier and to get the cheapest price (Juran, 1988a). This adversarial approach was generally a recipe for problems to occur.
Deming (1986) stated that price is not a valid reason to award contracts. He took
a more holistic approach when appraising suppliers, considering the quality of goods and services to be supplied. He suggested that using only one supplier would eventually reduce costs, but this may not always be possible. A tourism and leisure facility, whilst it may have one specific core service (e.g.
a museum or a golf course), may also have a number of peripheral services attached (e.g. food and beverage, merchandizing) and multiple suppliers may be the only option.
The building of a relationship with suppliers, whilst hinted at by Deming (1986), was advocated by Feigenbaum (1991). He was convinced that taking a holistic approach to all aspects of quality management (total quality control) includes building relationships with the customers and the suppliers. This was earlier supported by Peters (1987).
Gummesson (1993) made allowances for occasional mistakes by suppliers, especially major events outside the organization’s con- trol (such as strikes or earthquakes) that will have a ‘knock-on’ effect on service delivery quality. He suggested that if a quality preven- tion system is in place ‘to give early warning signs’ of a potential problem or delays occur- ring, alternative strategies may be put in place. The only way for a supplier to ‘admit’
that there are problems is if a trusting, sup- portive relationship has been developed. This relationship will be based on a desire for both organizations to be mutually successful.
Crosby (1984) took this concept a stage further and went so far as to say that the education of suppliers is appropriate, as well as supporting them. He also advocated that suppliers should be consulted using similar methodologies as with customer audits (e.g.
focus groups, questionnaires; see Chapter 13), in addition to the educational workshops. The
Box 3.1. Case study: consumers, internal and external customers of a package holiday.
Unlike the airline companies that are part and parcel of a vertically integrated holiday group, the hotel element of a package holiday tends to be owned by others. Therefore Table 3.1 is a good example of the difference between customers and consumers.
UK-based retailer, Marks and Spencer, was one of the first companies to adopt this approach; it is rarer for this to happen in the wider tourism and leisure industry than in the public sector.
This relationship culture between clients and contractors is inherent in public sector leisure management (parks, open spaces, leisure centres, etc.). The fact that many existing public sector employees won the contracts when compulsory competitive tendering of local government services was
brought in, due to the formation of direct service organizations, meant that relation- ships of this nature were already formulated.
Another way of forming a relationship with suppliers/contractors is via the strategy of awarding long-term contracts (Dale and Boaden, 1994); this again was implemented when the public sector leisure services management contracts came up for renewal.
On the first occasion they were awarded for 3 years; at renewal they were extended to 5–7 years.
Supplier Act Definition
Travel agents (A) Person (B) requests a holiday B is a consumer of A's services Travel agents (A)a Books the holiday with tour operator
(C)
A is an external customer of C's services B is a consumer of C's services Airport (D) Person (B) goes on holiday by
aeroplane (C2)
B is a consumer of D's and C2's services
Tour operator's airline (C2)
Airport services (D) C2 is a consumer of D's services C2 is also an internal customer of C and vice versa
Coach (E) Transfer to the hotel and back Can supply coaches for day trips as well
B is a consumer of E's services C is an external customer of E's services
Hotel (F) Accommodation for the duration of the holiday
B is a consumer of F's services C is an external customer of F's services Hotel supplies (G) Hotel has many suppliers (e.g. food,
drinks, maintenance)
B is a consumer of G's services F is a consumer of G's services (i.e. the hotel staff will eat the food when on duty) and will be an external customer of other services (e.g. pool maintenance) Attractions and
hospitality venues (H)
Day trips arranged by tour operator (C)
B is a consumer of H's services C is an external customer of H's services Airport (I) Person (B) goes home by aeroplane
(C2)
B is a consumer of I's and C2's services
Tour operator's airline (C2)
Airport services (I) C2 is a consumer of I's services
Tour operator's representative (C3)
General information and problem solving
B consumes the services provided by C3 C3 is the internal customer of the tour operator's other departments (C) and airline (C2)
aIf the travel agency is part of the same holiday group, the travel agency is an internal customer of the tour operator.
Table 3.1. The booking and consumption of a package holiday.
Vendor rating
A systematic way of classifying different suppliers is by a technique known as vendor rating (Chaplin, 1982). This means that, after an in-depth appraisal of the supplier and its management systems, an organization is given a classification:
•
Vendor rating A: continue with normal quality inspection of the goods or services it supplies.•
Vendor rating B: a more rigorous inspection is required.•
Vendor rating C: a reduction ininspection is appropriate.
Oakland (1993) saw this as time con- suming on both parties and also costly. His method would be to expect suppliers to be certificated to an externally assessed quality system (e.g. ISO 9000, 2000, outlined in Chapter 11). He suggested that if this is achieved the suppliers will supply appro- priate goods and services, and time can then be spent on building a ‘partnership’. Audits and reviews in a much more concise form are still required from time to time.
Stakeholders
Another name for an organization’s supplier could be ‘stakeholder’, as the supplier has a vested interest in the organization’s present and future success. According to theConcise Oxford Dictionary, a stakeholder in an organi- zation is someone who is ‘materially con- cerned in its welfare’. This is the context appropriate to tourism and leisure organ- izations rather than the more familiar stake- holder definition appertaining to a gambler’s
‘wager on an event’.
Public sector stakeholders
The new management regime of ‘Best Value’
(see Chapter 13) currently being implemen- ted in public sector services requires that all stakeholders in a service are consulted about its delivery. Table 3.2 gives the list
of stakeholders concerned with a heritage attraction managed by the public sector.
Whilst this type of consultative process is expensive, recent research has shown that over 50% of responding leisure departments use a number of consultation methods and sample non-users as well as users (Guest and Taylor, 1999). One problem that may emerge is: whose opinions take priority if differing, conflicting views are given?
OMBUDSMEN. Another set of stakeholders in the public sector not included in the list above is a number of bodies for its citizens to complain to known as ombudsmen, created by the UKgovernment. Parliamentary or local government ombudsmen can investigate complaints about central or local government services. The complaint can be regarding either procedures or direct service provision.
One area in which the ombudsmen will not get involved is pricing structures. Complaints of a financial nature can be taken to the National Audit Office (for government organizations) or the Audit Commission (in the case of local authorities).
Stakeholders Definition and notes Dedicated
users Direct users Indirect users
Marginal users General public Council taxpayers Staff Elected representatives (councillors) Grant-awarding organizations Whole of the electorate
Those who use the facilities on a regular basis (e.g. local schools) Those with a direct interest (e.g.
coach operators and tourists) Those who benefit but do not use the service (e.g. local hoteliers)
Informal users (e.g. locals who only use the shop and café) Anyone who passes through the area and notices the attraction Residential and businesses, financial stakeholders Permanent and temporary Those who represent some of the groups above
(e.g. National Lottery)
To which all councillors have to answer
Table 3.2. The range of stakeholders in a public sector heritage attraction. (Source: Davies and Girlder, 1998.)
NATIONAL LOTTERY COMMISSION. Another commission directly related to the tourism and leisure industry is the one that oversees the running of the UK’s National Lottery.
Whilst the gaming side of the National Lottery has never been operated on a day-to-day basis by the State, having always been managed by the commercial company Camelot, this com- mission ensures that Camelot in its unique monopoly position does comply with the con- tract it has signed with the UK government.
Camelot does not award National Lottery grants but each week gives 28p in every £1 of its takings to the lottery grant-awarding bodies, Sports Councils, Arts Councils, Heri- tage Lottery Fund, Millennium Commission, National Lotteries Charities Board and the New Opportunities Fund, for distribution.
Whilst it is very unusual for a lottery player to complain to the Lottery Commission, orga- nizations have remonstrated with them about the way grants are awarded.
Stakeholders in the voluntary sector The stakeholders of a voluntary organization (e.g. a choral society or an amateur athletic club) are very similar to those in the public sector. Whereas the decision-making process of public sector tourism and leisure facilities is carried out by elected councillors with advice from professional staff, in the volun- tary sector many stakeholder representatives are part of the management team.
Handy (1988) states that a management team containing representatives from all stakeholders will generally comprise clients, the community at large and funding agencies, and is known as astakeholder democracy.
Commercial sector stakeholders Stakeholders in the commercial sector of the tourism and leisure industry include some of the categories above. For example, taking the ‘community at large’, the closure of large factories has shown how local economies can be dependent on a particular commercial operation (e.g. in Blackpool the whole of the economy is geared to tourism). Also the impact of major events (e.g. motor racing) on the community cannot be underestimated
(Burnset al., 1986), not only economically but also environmentally.
Another stakeholder, similar to those previously mentioned, is represented by the funding agencies. Grant aid is available to the commercial sector and, whilst it cannot receive lottery funding, other grants are avail- able especially in areas designated by central government as having ‘assessed area status’.
An additional source of income for commer- cial organizations is sponsorship. Although sports sponsors have some of the highest profiles, sponsorship can be found in tourist attraction, such as theme parks (e.g. Kodak at Disneyland Paris). The sponsors are another category of stakeholder.
The commercial sector is not made up of companies of similar size but needs to be divided into two sectors: (i) large commercial companies listed on the stock market (e.g.
Granada Group, Manchester United Football Club); and (ii) smaller companies that are owned and managed by one or a few people, i.e. sole traders (e.g. small fitness clubs, restaurants).
STAKEHOLDERS OF LISTED COMPANIES. As well as encompassing groups such as consumers, customers, staff and suppliers, the stake- holders of the large companies listed on the stock market must include the share- holders. Shareholders have specific rights to be involved in the decision-making process through a company’s annual general meeting.
In 1999 a £623 million take-over bid for Manchester United Football Club was launched by BSkyB, the satellite television broadcasting company, and the smaller shareholders seemed to have very little power. The views of the owners of the major shares (i.e. the directors of the club and the financial institutions) outweighed those of the minority shareholders.
The minority shareholders are also the fans (consumers) of the team and passionately voiced their opposition to the take-over. This seemed to have very little effect and it was only averted by the intervention of the Depar- tment of Culture, Media and Sport, which referred the take-over decision to the Monop- olies and Mergers Commission (MMC). The MMC decided that there would be a conflict of