School of Business

Bachelor of Business (Hons)

BMK4023
Services Marketing

Individual Assignment
May 2022 Semester

Submitted by:
Name Student ID
Thitinun Lekkla 0206114
Lee Wei Seng 0205588

Subject Lecturer: Dr. Ooi Chin Lye

LEARNING OUTCOME
This assignment will provide students with an opportunity to i llustrate the main components of
services marketing theory:
 Extended Services Marketing Mix
 The Three-stage Model of Services context
 Effective Services positioning & strategy

Tasks
This assignment helps to enhance students’ understanding of the integrative nature of service
management decisions. It provides an overview of important topics in services marketing
operations. The business operational issues and problems do provide an opportunity for students to
apply multiple concepts and theories in an integrated fashion to make service management
decisions in a dynamic problem environment.

Students are required to play the role of management and explore the strategies provided by the
selected organization(s). Students are encouraged to actively experience the class materials and
relate it to the business environment.

Each student must submit a report outlining their personal analysis and experiences of a selected
service provider organization with high-contact services (e.g. healthcare centre, hotel, F & B,
Financial Sectors etc.). The report will be in detail and must cover the services marketing
theories and concept learned. The following issues and questions should be addressed in the
report:

 Describe the organization's extended Services Marketing Mix strategy (additional 3Ps)
 Based on the three-stage model of services, what were your expectations in the services
provided by the organization?
 Evaluate the effectiveness of the organization’s services positioning and strategy.

Report Format
1. You are required to use essay format to structure your discussion and present in a report format,
i.e.:
a. Cover Page (Appendix C)
b. Table of Contents
c. Introduction
d. Body
e. Turnitin Report

2. The report should be at least 2,500 words in length.

3. The assignment should be typed by using Times New Roman, 12-point font, 1.5 spacing, one-
inch side margins, appropriate headers and footers, page numbering (preferred format: Page 1
of 10, Page 2 of 10, etc.), and utilize headings and sub-headings to organize your facts/points.
4. Tables are labelled sequentially. Title is placed above the table, right justified and in the
following format:
Table 1.0
Short Title (Italic)
5. Figures are labelled sequentially. Title is placed below the figure, left justified and in the
following format:

Figure 1.0
 Short Title (Italic)

6. Support your report with reliable and credible evidence and literature such as academic books,
journal articles, newspaper articles, and material from the internet. Recommended source:
http://library.kdu.edu.my/e-resources.html (KDU online databases).
7. All sources must be cited in the body of the report and listed at the end of the report following
the Harvard Referencing System.
8. Turnitin originality index should not exceed 20%.
9. Proof read and check for any grammatical, spelling, or punctuation errors before submission.
10. If required, support letter can be obtained from School of Business.

TURN-IT-IN REPORT
1. Full turn-it-in report can be submitted
2. Submission to turn-it-in should be a full and completed written assignment (excluding cover
page, table of content, reference list, and appendixes)
3. Originality index should not exceed 20%
4. Submission without turn-it-in report will not be accepted and will be marked zero

Class Name: Services Marketing May 2022

Class ID: TBA
Password: bmk4023

EVALUATION CRITERIA
A. Report (15%) on 28/6 (Week 6)
Refer Assessment Rubrics (Appendix A)

This assignment will be evaluated based on the followings:

a) Academic research and skills (20 marks)
 Rigorous/Sufficient and accurate referencing: Content supported with relevant and
appropriate academic journals / articles / books / magazines (types of sources used) (10
marks)
 Layout/language: Cover Page, Table of Content, Appendixes, headings/sub-headings, page
numbering, margins, spacing, paragraph structure, grammar, spelling (10 marks)

b) Application and analytical findings (80 marks)

 Sound, justified, critical and insightful description the organization's extended Services
Marketing Mix strategy (additional 3Ps) (30 marks)
 Sound, justified, critical and insightful evaluation of the three-stage model of services
relating to personal experiences in the services provided by the organization (30
marks)
 Sound, justified, critical and insightful evaluation of the effectiveness of the
organization’s services positioning and strategy (20 marks)

B. Individual Presentation (5%) on 21/6 (Week 5)

Refer Presentation Rubrics (Appendix B)

SUBMISSION
Date of submission is on 28/6 (Week 6). Students are to adhere to this deadline. Failure to meet
deadline due to loss of file and breakdown of computer/printer/vehicle will not be accepted.
Failure to meet deadline due to health and/or family reasons must be supported with relevant
documents (example: medical certificates from approved government hospitals) and must be
submitted within one (1) working day. Late submission will not be accepted and will be marked
zero
 Appendix A
Report Assessment Rubrics
Application and Analytical Findings (80%) Academic Research and Skills (20%)
Classification Range Sound, justified, critical and Sound, justified, critical and Sound, justified, critical and Language/Layout: Flow, Sufficient Referencing
insightful description the insightful evaluation of the insightful evaluation of the accuracy & Organization (evidence of reading) and
organization's extended Services three-stage model of services effectiveness of the (cover page, table of contents, accuracy in presenting
Marketing Mix strategy (additional relating to personal organization’s services appendixes, headings, (10%)
3Ps) (30%) experiences in the services positioning and strategy (20%) margins, spacing, grammar &
provided by the organization spelling (10%)
(30%)

Outstanding Work 80 – 100 Excellent description and Excellent description and Excellent description and Excellent and logically Very high level of references
(High discussion of main issues and discussion of main issues discussion of main issues structured layout, (evidence of reading
Distinction/Grade A) material with evidence of and material with evidence of and material with evidence of organization, using correct supplementary sources) and
evaluation & approaches; evaluation & approaches; evaluation & approaches; grammar accurate referencing
excellent analysis; outstanding excellent analysis; excellent analysis;
evaluation outstanding evaluation outstanding evaluation
Excellent Work 70 - 79 Detailed and extensive Detailed and extensive Detailed and extensive High evidence of logically Extensive evidence of
(Distinction/ Grade description of main issues and description of main issues description of main issues structured layout, references (reading
B+) material with appropriate and material with appropriate and material with appropriate organization, using correct supplementary sources) and
discussion; coherent, logical, & discussion; coherent, logical, discussion; coherent, logical, grammar appropriate referencing
clear; very strong analysis; very & clear; very strong analysis; & clear; very strong analysis; layout
strong evaluation & application very strong evaluation & very strong evaluation &
theory application theory application theory
Good Quality Work 65 - 69 Accurate description of main Accurate description of main Accurate description of main Very satisfactory and High evidence of references
(Credit/ Grade B) issues and material; sound issues and material; sound issues and material; sound competently structured (reading supplementary
presentation – largely coherent, presentation – largely presentation – largely layout, organization, sources) and acceptable
logical & clear; systematic coherent, logical & clear; coherent, logical & clear; acceptable grammar layout
analysis; robust evaluation systematic analysis; robust systematic analysis; robust
evaluation evaluation
Acceptable Work 55 - 64 Acceptable description of main Acceptable description of Acceptable description of Satisfactory and competently Satisfactory evidence of
(Grade C+) issues and material; acceptable main issues and material; main issues and material; structured layout, references (& reading) and
presentation of data; quite acceptable presentation of acceptable presentation of organization, acceptable reasonable layout
coherent and generally data; quite coherent and data; quite coherent and grammar
methodical in analysis; generally methodical in generally methodical in
satisfactory evaluation analysis; satisfactory analysis; satisfactory
evaluation evaluation
Adequate Work 50 - 54 Superficial but satisfactory and Superficial but satisfactory Superficial but satisfactory Appropriate structured layout, Appropriate or basic
(Grade C) acceptable data analysis; and acceptable data analysis; and acceptable data analysis; organization, weak grammar references (evidence of
acceptable but some aspects of acceptable but some aspects acceptable but some aspects minimal reading) and weak
the results are unclear of the results are unclear of the results are unclear layout
Fail 49 and Not satisfactory and Not satisfactory and Limited or little evidence of Poorly structured layout, Limited or little references
below inappropriate data analysis; poor, inappropriate data analysis; knowledge and application of organization, poor grammar (no evidence of reading) and
unclear and inappropriate poor, unclear and key principles and concepts weak layout
presentation of results inappropriate presentation of of Logistics Strategy
results
 Appendix B
Logistics Strategy BBLG3024

ASSIGNMENT – INDIVIDUAL PRESENTATION (10%)

Student Name: Student ID:

Section/ Poor Acceptable Good Excellent Score
Criteria 0-3 points 4-6 points 7-9 points 10 -12 points
Content: The presentation The Logical sequences Information presented (__/12x 25%)
Strategies was a brief look presentation of information in logical, interesting =___
(25%) at the topic, but was a good allow the audience and flowing sequence
to follow from introduction
many questions summary of
presentation from through conclusion
were left the topic. Most introduction through and content depth
unanswered. important conclusion, supports assertions
Majority of information assertion support and recommendations
information covered; little chain evident
irrelevant and irrelevant info.
significant points
left out.
Comprehensi Presenter does not Demonstrates Presenter Presenter (__/12x 25%)
on: have an accurate basic knowledge demonstrates in demonstrates =____
Subject grasp of of subject, but depth subject expertise in subject
information and elaboration is knowledge, is at through clear and
Knowledge,
cannot intelligently minimal, or ease with material, concise explanation,
Resources answer questions presenter fails to answer questions elaboration, and key
(25%) about the subject, answer thoroughly, solid point delivery.
plagiarism questions, research with cited Credible, in-depth and
references references accurate research and
missing or analysis with cited
limited research references that
supports
presentations.
Visual Aids The slides were Limited visual Presentations has Clear and creative (__/12x 15%)
(15%) difficult to read; aid support relevant visual aids visual aids enhance =___
Presentation has presentation; that provide the presentations,
spelling and Too much evidence to support reinforce key points,
grammatical errors, information on assertions and and engage the
is irrelevant, or two or more recommendations audience;
difficult to interpret slides Information is clear
and concise on each
slide
Preparedness Presenter read Presenter fails to Presenter clearly Presenter clearly and (__/12x 35%)
: slides, mumbles, elaborate on key and effectively effectively =____
(Critical speaks to quietly; finding; communicates key communicates ideas
Evident lack of Presenter was ideas, speaking and and engages the
analysis &
preparation somewhat pace comfortable audiences. Concise
evaluation) for audience highlighting of key
(35%) prepared
points
Total Score
Comments :
 Table of Contents

LIST OF FIGURES
LIST OF TABLES
LIST OF ABBREVIATIONS
1.0 Introduction
2.0 Extended Services Marketing Mix
2.1 Product
2.2 Price
2.3 Place
2.4 Promotion
2.5 People
2.6 Process
2.7 Physical Evidence
3.0 The Three-Stage Model of Services Context
3.1 Before Eating (Pre-purchase Stage)
3.2 During Eating (Service Encounter Stage)
3.3 After Eating (Post-Encounter Stage)
3.4 Challenges of Three-Stage Model of Services
4.0 Effective Services Positioning and Strategy
4.1 Services Positioning
4.2 Services Strategy
4.3 Problems and Challenges
5.0 Conclusion
6.0 Reference List
7.0 Turnitin report
List of Figures
Figure 1.0: Haidilao’s take-away Hot Pot Products
Figure 2.0: Example of Haidilao’s variety of logos and packaging
Figure 3.0: The pre-purchase process of consumers in services
Figure 4.0: Haidilao’s Services Positioning
1.0 Introduction
The Marketing Mix is a set of controllable variables that the organization can use to influence
the buyer’s response (Philip, 2009). The Chartered Institute of Marketing (CIM, 2008)
promotes the philosophy of a market-oriented organization, in which the target market and
user are central to every single decision made, and that decision should be in the best interests
of the target market while still doing so at a profit. This decision should be in the best
interests of the target market. A two-way conversation takes place between marketing and
design when it is framed within the context of a strategy that puts the user at the center.

In 1994, Haidilao was established as a brand. Haidilao International Holding Ltd. is a world-
renowned catering company after more than two decades of growth. Haidilao plans to
establish 935 chain restaurants in China, Singapore, the United States, South Korea, Japan,
Canada, the United Kingdom, Vietnam, Indonesia, and Australia by the end of June 30th,
2020. As part of its worldwide growth, the firm established its first Malaysian branch in 2019
at the Sunway Pyramid Hotel (insiderretail.asia, 2019). Haidilao has weathered the storms of
the market and consumers over the years, and has built a name for itself as a high-quality hot
pot brand. Haidilao is a kind of hot pot that may be found in a variety of China. Integrity is a
core value for Haidilao, a global catering company with operations in more than 30 countries.
One of its most important responsibilities, according to this company, is to ensure that its
food items meet the highest quality and safety standards possible while giving better service
to its customers (haidilao.com, 2022).

The objective of this research is to describe the high-contact-service organization’s extended

Services Marketing Mix strategy with the additional 3Ps – People, Process, and Physical
evidence which is Haidilao Hot Pot. Another topic will be discussing the expectations of the
customers in the services provided by Haidilao based on the three-stage model of services.
Finally, will be elaborating on the effectiveness of Haidilao’s services positioning and
strategy.
2.0 Haidilao's Extended Services Marketing Mix Strategy
The marketing mix is an essential set of marketing tools and features that
many companies use to enhance their market penetration among their target market segments
(Zander, 2018). Nowadays, hundreds of new hotpot brands appear in Malaysia and all over
the world where there are several competitors. The promotion of values encourages
individuals to focus more on the quality of services whilst comparing tastes. Therefore, if
they want to escape the tough competition, they need a distinctive marketing approach that
can attract the attention of the public.

Zhang Yong, Haidilao’s founder, had a vision of offering customers an inviting and
memorable restaurant experience. Today, Haidilao restaurants are known for offering
customers services such as free manicures and shoe-polishing while they’re waiting for a
table (Tom, 2018). Zhang has said that he believes in the importance of superior customer
service. “I’m from the countryside, where rural people believe that if you take money from
other people and you don’t bring benefit to them, then you are a liar,” he told The Wall Street
Journal in 2013. The following will be discussing Haidilao’s extended services marketing
mix strategy – Product, Price, Place, and Promotion with 3Ps - People, Process, and Physical
evidence, which brings fames and trust in tastes and services to their customers.

2.1 Product
Haidilao Hotpot Restaurant products are divided into five categories, all of which are offered
under the Haidilao brand. In other words, this company offers a range of items, allowing
customers to choose a desired product variety that meets their demands. Haidilaos products
are also very distinctive, having unique characteristics that other competitors lack. Along
with them, their items are seen to be of higher quality than those of its competitors.
Customers are willing to pay higher costs for these items as a result of this. Furthermore,
Haidilao's items are well-known for their classic touch and style, as well as their practicality
for consumer usage.

Haidilao Hot Pot also serves ‘hotpot’ dishes. In these hot pots, pouring hot water over a
heating pad activates a chemical reaction that quickly heats a pre-cooked dish which about 10
minutes (McFarlan et al, 2018). Haidilao's product range includes sauces, broths, and the self-
heating “hotpot for lazy people”. This cold-water hot pot is popular among office workers,
students, and backpackers. Haidilao’s hot pot makes a warm dinner wherever. The package
includes boxed materials, spoons, a heating pad, chopsticks, and bowls (Koetse, 2018).
Customers waiting to be served at Haidilao Restaurant source (Khor, 2019). Many customers
also prefer Haidilao services because of the additional personalized and free services it offers
to customers. Besides the free drinks, games, fruits and snacks, the brand also offers
manicures to its clients while they are waiting for the services. Customers also enjoy free
leather shoe cleaning, free message services, free photo printing and even children’s play
rooms (Gabriel, 2018).

Figure 1.0 Haidilao’s take-away Hot Pot Products

2.2 Price
Haidilao's pricing strategy is based on a competitor pricing model. The corporation considers
operating and service costs when determining to price for items. Prices are higher than its
competitors when competition price information is unavailable, according to the
company's pricing strategy (Tie-ying, 2011). Free delivery is included in the final price of its
online items, which contributes to their higher cost. Optional product strategy models price
basic items apart from accessories. Wholesalers, retailers, and channel members may obtain
the items at a cheaper price, allowing them to generate huge profit margins.

2.3 Place
Over 500 retailers across the country sell Haidilao's products. The company utilizes retailers
extensively as part of their marketing strategy. Customers can easily obtain their products
online from wholesalers to retailers, and then directly from customers through an Amazon-
like site. (Coghlan and Hansen, 2018). Haidilao has created strategic partnerships with a
variety of service providers to handle its online business. There is also an omni-channel
distribution system in place, which integrates the company's physical shops with its online
stores. The company's website generates a significant number of sales, considering the large
and consistent volume of traffic. (Cai, 2015).
2.4 Promotion
Haidilao's annual promotional budget is set by the company, which uses a particular
proportion of total revenues to determine how much it spends on marketing. They have
established a presence on Facebook, YouTube, and Twitter. This has benefited in the
promotion of their brand image and presence across the globe (Pasto, 2018).

2.5 People
The marketing mix of Haidilao from a Hot Pot to Crisis Management - The art of dealing
with sudden and unexpected events which disturb the employees, organization, as well as
external clients, refers to Crisis Management (Prachi, 2015). They also place an essential
focus on people development and people building (Zander, 2018). For this reason, employees
are so important to Haidilao's ability to build long-term customer relationships. The following
things are crucial to Haidilao's development of their employees and people:
2.5.1 Training
Haidilao provides frequent training to assist staff progress professionally. The training
concentrate on managerial and organizational abilities as well as field knowledge. Haidilao's
training sessions and activities help employees improve, develop, and flourish. All training is
hands-on so employees learn and experience.
2.5.2 Organizational Ownership
Haidilao strengthens employee engagement and loyalty so they may perform well at work.
They know happy staff equals happy consumers. Haidilao offers compensation schemes,
including stock sharing, to boost employee dedication and ownership. Crisis Management
incorporates workers in decision-making at various administrative levels and considers their
opinion on projects and products to promote organizational ownership.
2.5.3 Motivation Building
Employees at Haidilao represent the company's public face and are inspired by the company's
dynamic and innovative work environment. Different incentive systems and bonuses are also
used to keep them engaged. The management's admiration and recognition of various
workers' efforts and performance may also serve as a source of inspiration.
2.5.4 Succession Planning
Haidilao's emphasis on succession planning helps them to remain a prominent leader in the
market. In order to fill the vacancy at Haidilao, they execute succession planning for all
management levels, which includes both internal promotions and external recruitments. They
have been able to deal with a wide range of issues because to their strategic succession
planning.
2.6 Process
To ensure that customers can always access products at the local retail store, Haidilao has
installed systems that enable the local stores to notify the central team whenever the
inventory gets low (Silas, 2021). Once they receive the notifications, to continue servicing
consumers, management replenishes local stores with additional supplies. In terms of its
online delivery system, the staff checks the orders received in its computer system and,
depending on these, the particular items are delivered to the partner delivery service provider,
who then delivers them to the consumer (Khor, 2019). Haidilao has organized systematic
processes in place to make sure that the business experiences consistent growth (Zander,
2018).
2.6.1 Operations
All operations at Haidilao are well defined and conveyed to workers. Systematic procedures
are in place for all operations, from product sourcing to ultimate sale. For supervisory
reasons, all operational procedures are kept, validated, and uploaded through the
organization's internal site.
2.6.2 People Management
Haidilao has also created clear people management procedures by simplifying its human
resource management department, as well as standards for staff recruiting, training, salary
management, and performance review. All persons involved in the processes are informed
not only to management and supervisors but also to workers, in order to foster transparency
and a trusting atmosphere. Progressive people management systems and processes have
allowed them to keep the workforce motivated and happy – which reflects in satisfied
customers (Zander, 2018).
2.6.3 Quality Maintenance
Haidilao has policies and procedures in place to ensure that quality is maintained. Their
products go through three levels of quality control before they reach the customer. The
management has also established a dedicated quality maintenance and quality check
department in addition to quality inspections at the production and distribution levels. Experts
in the quality maintenance department ensure that not only the finished product but also the
production processes themselves are of the highest standard quality.
2.6.4 Store Management
Store management at Haidilao is overseen by a strict set of regulations and procedures. Both
the store's floor plan and the performance of its employees are impacted by these procedures.
Regular footfall monitoring and strategy development are also part of the store management
procedures. Customers are treated to a methodical procedure before making a purchase.

2.7 Physical Evidence

The physical evidence is also important in the marketing strategy for Haidilao as it works
towards influencing the consumers in favour of the brand and its offerings (Zander, 2018).
The physical evidence for Haidilao include:
2.7.1 Store Atmosphere
Haidilao's retail design and administration are both innovative and engaging. Customers are
able to connect with and appreciate the store's product offerings in a calm and pleasant
environment because to the store's atmosphere. The design of Haidilao's stores is particularly
crucial since it dictates the level and nature of the customer's experience and relationship with
the brand. It's much simpler for Haidilao to have a firm grip over the ambiance of the shop
when the stores are owned and run by the company.
2.7.2 Packaging
The packaging of Haidilao is distinctive compared to other competitors in the business. The
packaging has a vivid feel to it, and the colours and designs are often modified. The
restaurant's logo is straightforward and readily recognized by customers. The brand logo has
also become a symbol of confidence, ambition, and aspiration for consumers who use
products by Haidilao. The packaging of the products is sophisticatedly done and matches the
brand image developed and maintained by Haidilao (Zander, 2018).

Figure 2.0 Example of Haidilao’s variety of logos and packaging

2.7.3 Website Design

The website design is straightforward and simple to use. Haidilao's corporate website has the
brand logo and is packaged similarly to the company's goods. The website's design patterns
and colours shift in response to changes in product packaging to meet varied marketing
demands.

3.0 The Three-Stage Model of Services Marketing

3.1 Before Eating (Pre-purchase Stage)

The pre-purchase stage for services is more complex since it includes a wider variety of
conditions and activities. Because consumers are engaged in the service production process,
the decision-making process is more time-consuming and complicated. Consumer
competence, knowledge, and perceived risk all play important roles in this pre-purchase stage
(Byrne, 2005). Arousal causes clients to begin investigating and analysing their choices
before making a purchase decision during the pre-purchase period. Needs may be activated
by a range of sources, including the unconscious mind (for example, impulsive shopping),
internal states (for example, hunger), and external ones (such as the marketing mix).
Consumers may make impulsive purchases or engage in "unplanned behaviour." Because of
the higher perceived risk and unpredictability associated with services, impulsive purchases
occur less often than with items (Sharma, Sivakumaran, and Marshall, 2009). When
consumers recognise a need or a problem, they are motivated to seek solutions to fulfil that
need or solve that issue, according to the planned purchase behaviour hypothesis (Figure 3.0).
Pre-purchase information (Konus, Verhoef, and Neslin, 2008) has a significant influence on
what customers decide to buy.
Figure 3.0 The pre-purchase process of consumers in services (Source: Tsiotsou and Wirtz,
2012)
Haidilao service employees will greet you with a smile and inquire what they can do for you,
and they may even offer to clean your vehicle for free if you ask. They will open the door for
you as soon as they see a cab in their field of view. The whole eating experience at Haidilao
is complemented with smiling service from the time you step through the door. Due to an
overabundance of patrons, you will have to wait for a table. Watermelon, apples, peanuts, and
soy milk are just some of the foods and beverages you'll find at the hotel's reception desk.
You may also read novels, play Gobang, and clean your shoes while waiting for a table.
However, waiting for a table is the most tedious part of dining because of the traditional
method of waiting. In Haidilao, however, the presence of these distinguishing features has
transformed the monotonous into an exciting experience (Zhang and Xu, 2016).

3.2 During Eating (Service Encounter Stage)

Consumer contacts with the service provider occur at the service encounter stage. Consumers
co-create value and experiences at this stage, co-produce a service, and evaluate the service
experience (Brodie et al., 2011). Consumer engagement may be used as a proxy for the
strength of a company's customer connections based on the emotional and rational ties that
consumers have created with a brand. Engaged people have strong sense of trust, honesty,
pride in the business or brand, and passion for its products. Consumer participation with
service brands has been characterised as behaviour toward a brand or firm that continues
beyond the purchase and includes positive word of mouth, referrals, supporting other
customers, blogging, writing reviews, and even taking legal action. (Van Doorn et al., 2010).
Customers' contacts with a service provider might thus serve as a setting in which they can
develop, express, and deepen their participation (whether good or negative). Consumers must
be motivated and equipped with the necessary skills and knowledge to contribute their time,
effort, and information at the service encounter stage in order to jointly manufacture a service
or jointly create value (Lusch and Vargo, 2006).

The Haidilao staff will inquire about your dining needs and preferences, such as if you prefer
eating by a window or in a corner when there is an empty table. Then they lead you to your
seat and serve you to your taste. In the interim, the waiter will serve beverages for you and
provide recommendations on food. The most praised feature is that the service advises you
not to order too much food in order to reduce waste, rather than providing expensive or
surplus food for their own profit. For instance, Haidilao ensures prompt dinner service by
giving each customer an apron to avoid accidental spills of oil or plates. Customers will be
provided a waterproof bag to store their cell phones in so they may use them without fear
throughout dinner. Of course, a string and a little hairpin are usual for long-haired ladies, and
fabric is frequent for those who wear spectacles. When you sit, a heated towel will be
available to clean your hands. Not only that, but the waiters know your name and remember
your birthday. When you go to the restroom, there is specialised personnel that brings you
hand soap and towels, as well as toothbrushes, toothpaste, and cosmetics for ladies to meet
their beauty needs. Consideration of a small place and respect for those who bring someone,
in addition to being useful, touches on the slow thawing of a very sensitive point (Zhang and
Xu, 2016).

3.3 After Eating (Post-Encounter Stage)

In the last stage of service consumption, the post-encounter stage, clients' behaviour and
attitudes are examined. At this phase in the service consuming process, customer satisfaction
and perceived service quality have taken the lead because of their link to company success
(Brady and Robertson, 2001). Happy consumers, on the other hand, may not necessarily
return to the same vendor or buy the same things they originally purchased from them. In
addition to customer happiness and perceived value, consumer responses to service failures
(such as complaining and switching behaviour) and consumer reactions to service recovery
are also crucial post-purchase outcomes (Tsiotsou and Wirtz, 2015).

Haidilao will provide you with free fruit and snacks when you complete your dinner and hope
to sit down to relax and converse. "Someone once wanted to package the remaining
watermelon, but the server informed them they couldn't since the fruit had been chopped," a
customer stated. When the visitor paid the bill, however, a full watermelon was wrapped
(Zhang and Xu, 2016). Small gifts will be given by Haidilao, along with feedback on the
eating experience and suggestions for future enhancements (Lu, Liu, and Yang, 2022).

3.4 Challenges of Three-Stage Model of Services

Many customers have recognised and commended Haidilao's exceptional service. However,
the context for these honours is far from straightforward. The requirements of customers are
always evolving as time progresses. Haidilao must also learn rapidly when it comes to
innovation and development. As part of Haidilao's investigation and conversation, they can
go deep into the minds of customers and their shopping habits. Customers' comments and
behaviours provide insight into both their personality as persons and how their environment
has influenced them (Lu, Liu, and Yang, 2022).

3.4.1 Pre-, During-, and Post-Purchase is Irreversible

There are three steps in food industry services: pre-consumption, in-consumption, and post-
consumption. In the Haidilao situation, it's easy to see where each step ends and where it
begins. In today's hot pot market, word-of-mouth is still an important source of pre-
consumption induction, both online and off. Consumers' "personalised service or care" in the
middle of the purchase cycle is a critical point of contact for inspiring high consumer
awareness and long-term customer loyalty. In the post-consumer stage, it's important to share
good dining experiences online or in person to make sure that loyal customers are being made
and kept (Lu, Liu, and Yang, 2022).

3.4.2 Pay Attention to Personal and Emotional Moments

The places of contact in the midst of the consuming process, "according to the individualised
service or care offered by customers," are well worth consideration. For businesses to be
successful, Haidilao must depend on the real-world interactions between workers and
customers to produce productive moments. Customer requirements and the moment they
connect with customers can only be swiftly captured via strong emotions and high attention
from staff. The everyday training of staff is frequently insufficient to address this issue.
"Soft" training is necessary for employees to grasp the psychology of customers and to
respond appropriately to their behaviour (McDougall, 2021). In order to master this skill,
Haidilao has to put in plenty of time and effort.
3.4.3 The More Points of Contact, the Worse it might be.
The more points of contact, the worse. Customers continue to value Haidilao's customer
service and the employees' enthusiasm and care. Staff and customers might get fatigued if
typical touchpoints do the same tasks over and over again. Haidilao's founder, Mr. Zhang
Yong, is likewise well-aware of this issue. As Haidilao's exceptional customer service
becomes more uniform, some customers have grumbled about the overly enthusiastic
treatment, and some even wish for a little more room for consumption. When it comes to
managing touchpoints, the hardest level to control is service that is both enthusiastic and
useful enough.

4.0 Effective Services Positioning and Strategy

4.1 Services Positioning

High Price

Low Quality High Quality

Low Price
Figure 4.0: Haidilao’s Services Positioning

Haidilao created a strong value proposition that has resulted in long-term consumer loyalty.
The restaurant sector differs along two axes: "the vertical restaurant industry varies in the
price they charge, from cheap to expensive," and "the horizontal varies in the quality they
deliver, from low quality to high quality." The vertical axis represents the price level, with
the greatest price representing restaurants aiming for a high gourmet grade, such as Michelin-
starred restaurants. Figure 1 compares Haidilao's service position to other restaurants in order
to have a better idea of how Haidilao is positioned (Nguyenová, 2020).

4.1.1 Enthusiastic Services

When asked what Haidilao is known for, their services are always mentioned. In Haidilao,
the waiters are very eager and attentive to detail. The waitstaff are offering heated towels to
customers who are waiting for a meal. Even the restaurant staff is having a good time with
the kids on the playground. Contrary to other eateries, consumers now firmly believe in high-
quality service. Additionally, Haidilao pays their employees more and gives them the
freedom to make decisions based on consumer demands. Workers in Haidilao become more
passionate as a result, evolving and developing a feeling of belonging and power. When there
are no special events or activities, for instance, they may provide a discount or even provide
the service for free (Chang, 2022).

People have a variety of needs, including physiological requirements, safety needs,

belongingness and love needs, esteem needs, self-actualization needs, and more, according to
Abraham H. Maslow's "hierarchical theory of needs," which was put forward in 1943 (Xu,
Qian, and Zhang, 2021). Overall, the service in Haidilao may satisfy a variety of customers'
wants beyond basic physiological requirements. Respect and belonging needs may be met
through Haidilao. Customers will develop favourable beliefs and ideas about Haidilao as a
result, which will foster brand loyalty. Additionally, the thorough and comprehensive service
will guarantee customers a wonderful experience.

4.1.2 Pricing Strategy and Location

The pricing method used by Haidilao to preserve revenues and pay expenses while providing
exceptional and passionate service is exemplary. This is accomplished in two ways by
Haidilao. First, it will demand a significantly higher price for its meals since brand-loyal
customers are prepared to pay more. In addition, Haidilao utilised a strategy of discounted
pricing (Xu, Qian, and Zhang, 2021). There are discounts for several customer categories,
including college students and the elderly. Additionally, different discounts are offered at
various periods. There are discounts on weekdays from 2pm to 5pm and from 10pm to 7am.
On the weekend, discounts of 60% are offered between midnight and seven a.m. (Chang,
2022). Each restaurant's site is assessed in terms of its target clientele, surrounding
environment, potential rivals, and present condition. The location increases the restaurant's
visibility and popularity. In addition, unlike typical hotpot restaurants with their plain and
colourless menus, Haidilao crafts a beautiful menu with intricate illustrations. This will entice
customers.

4.1.3 Activities and Facilities

Another important element that draws customers to Haidilao is its infrastructure. There are
several amenities available in Haidilao. Children may play with playground-style toys and
bouncy houses. There are several types of games available for adults to play while they wait
for their seats, including chess, poker, and other board games. For those who are hungry, a
variety of foods are available. People who use phones have access to free WiFi. People might
pass the time while waiting by playing or engaging in other activities. Customers take
advantage of these amenities and feel as comfortable and at ease in Haidilao as they would at
home (Bao and Li, 2016). Customers would think Haidilao is even superior when compared
to similar products. despite the challenges facing those who are seated-waiting. For those
who are eating, there are festivities as well. For instance, employees are having a party and
singing Happy Birthday to those who have birthdays. A complimentary cake will also be
provided at that table. Customers will feel good in a warm environment that waiters will
create. Customers will be asked for their opinion of it and any areas that may be improved
while they are paying the bill. After that, they will think back on this time and connect their
present feelings to how they felt about the meal (Chang, 2022).

4.1.4 Brand
Due to excellent service, Haidilao has earned its reputation and brand. Those who received
excellent service will recommend Haidilao to their friends. This will provide a favourable
first impression and improve their overall dining experience. The target customers contribute
to the company's increased revenue and focuses on providing services in the midrange and
upper levels. Moreover, Haidilao actively monitors the development of technology in China,
providing information and the most recent news on major social networking apps such as
Instagram (Alhelalat, Ma'moun, and Twaissi, 2017). The experienced public relations staff of
Haidilao are adept at creating hot issues and handling unfavourable news. For instance, they
will react promptly to their own errors. For less serious issues, such as the chief's error while
demonstrating how to stretch noodles, Haidilao would simply turn it into a humorous story
and inform the audience that if they completed the requirements, they would get a free lunch.
This competent public relations staff guarantees that Haidilao has a positive reputation.
Haidilao creates its positive reputation and brand via its values and activities, with customer
service as its key objective. The customers that appreciated the experience will then help
promote the brand. (Chang, 2022).

4.2 Services Strategy

4.2.1 Offering Competitive Compensation

Front-of-house positions in China, including waiters and waitresses, are often seen as
unstable and of low social status. But Haidilao distinguishes itself from the competition, and
its staff members help the company achieve its exceptional market success by being energetic
and inventive. Due to the company’s competitive salary, they often express high levels of
satisfaction (Wang, 2022). By providing better working circumstances, more organised salary
levels than other companies, and more opportunities for career progression, Haidilao keeps
and motivates personnel based on "the principle of fairness and placing fate into your own
hands" (Tang, 2011). All workers are permitted to reside in rent-free apartments equipped
with nannies, washing machines, Wi-Fi, and air conditioning. A parent subsidy is available to
those who have held the position of assistant or higher-level manager for more than six
months. The Family Care Team at Haidilao also has a budget of RMB 100,000–200,000 set
aside each year to assist staff members in times of crisis and other urgent situations. Ancient
Chinese literature is replete with references to the values of impartiality, equality, fairness,
and justice, as well as organisational and employee welfare. However, Haidilao has put these
ideas into action. Haidilao's core values are based on the main ideas of Confucianism and
family-based collectivism. This makes sure that its employees and their families feel valued,
respected, and trusted, and that the company works as a whole (Chen, Shen, and Fan, 2015).

4.2.2. Exceeding Customer Expectations

Beginning with the first purchase and continuing through real ownership and the complete
service experience, customers' perceptions of value and satisfaction are formed. As a result,
reservations must be made in advance. The Haidilao telephone operator takes each customer's
preferences into account so that appropriate preparation may be made. Once the customer
arrives, they may take advantage of free parking and a free car wash. The ushers at the
restaurant's entryway will greet the client and inform him or her of other amenities like free
manicures, board games, and a kids' play area. Each party participant will be given an apron
to keep their clothing free of food stains after everyone has arrived. Extra care is needed to
safeguard their possessions from food. Long-haired guests may use the offered hair bands and
clips to keep their hair out of their meals. To cope with the steam from the hot pot, guests
who wear glasses are provided a lens cleaning towel. There are several different sauces and
condiments on a buffet table nearby. Free refills are offered on all beverages. Additionally,
half-portions may be ordered for any of the meals on offer. Dinner guests kept an eye on the
servers as they served and refilled their drinks as they ate and conversed with each other. It is
a highlight on the menu, with face-changing Sichuan Opera (a subset of the greater broad
Sichuan opera) being performed right in front of the customers during dinner time. The
waiter shocked and thrilled the customer by bringing two platters of hand-cut fruit
immediately after the diner was seen asking the server for some watermelon. Haidilao offers
each diner two complimentary flash photos after the meal. All of the consumers who took
part in the observation said that they had a great time overall. The food was always fresh, and
the service was always great, so the customers felt welcome and cared for (Chen, 2015).

4.2.3 Continue to enhance the Haidilao dining experience

High quality service, which is already the foundation of the Haidilao’s brand, is the main
focus of Haidilao efforts to increase customer satisfaction and brand loyalty. By further
adjusting the food and service, Haidilao wants to provide each client with a unique dining
experience. For instance, Haidilao is creating automated machinery that can alter soup bases
so that customers may choose their preferred degree of spice, depth of flavour, and quantity
of certain components like spring onions and mushrooms. If this technology were put in
place, every visitor would be able to design his or her own unique soup foundation. Each
visitor's individual preferences are saved in the Haidilao membership system and may be
automatically ordered the next time they come. In order to expand Haidilao's clientele,
Haidilao also keeps creating new recipes based on local culinary traditions and palate
preferences. Haidilao is also looking at the idea of using artificial intelligence technology,
which would allow it to provide a range of tailored value-added services, such as dish
suggestions based on past orders. Haidilao launched flagship eateries that employ digital
sensors and projection mapping technology to provide customers with a fully immersive
eating experience. To create distinctive dining experiences with different landscapes, periods,
and themes, Haidilao integrated architectural lighting, audio, and visual technology into the
dining places. Haidilao thinks the immersive eating experience will help to make the
restaurants more enjoyable and boost client satisfaction. In order to improve the experience in
the waiting spaces, Haidilao has started using virtual reality entertainment (Haidilao
International Holding Ltd., 2018). Visitors can play games that give them discounts and free
stuff as rewards, which makes their whole dining experience better.

4.3 Problems and Challenges

The lack of a staff reserve is the most significant issue caused by Haidilao's quick
development. The main team at Haidilao's new shops often has to work there for three to five
years before moving on. The issue of "people" in the dish room, service room, and rear of the
kitchen was first brought to Haidilao's attention in August 2017. In August 2017, it was first
discovered that there were signs of rats in the back kitchen serving area, dishwashing area,
and other locations. Later, it was discovered that some Haidilao employees had used a hot pot
spoon to remove the clogged drain's garbage, which sparked a lot of debate and inquiries
from the public (Bai, 2017). The repeated food hygiene and safety issues are enough to show
that Haidilao's internal management has a serious issue that needs to be resolved, even though
Haidilao later won the public's tolerance and understanding thanks to its sincere apology and
effective solutions. As a catering company, food hygiene and safety sit at the core of
Haidilao's development.

Haidilao had quality issues as a result of an actual scarcity of employee reserves, but there
were also difficulties with the company's corporate culture. The criterion of success at
Haidilao in the past didn't include financial achievement but rather the pleasure of both
customers and staff. However, Haidilao has recently begun to evaluate the number of patrons
and the pace of table turnover, which has caused a reduction in the quality of service and put
personnel under a lot of stress. Many former workers claim that Haidilao's corporate culture
is imitating Huawei and becoming more like a sweatshop, which instils a sense of awe and
dread in others. This certainly goes against Haidilao's basic cultural logic (Qiaoqiao, 2022).

There are two further challenges worth considering when Haidilao expands abroad. The first
is how to understand the scope of hospitality and privacy. Customers may feel that certain
services in the Chinese cultural setting go beyond what is considered to be an acceptable
distance between individuals, yet they nonetheless prefer to accept and approve of such
hospitality services. However, in other nations where privacy is valued, such specialised
services may put clients under mental strain or even make them feel violated. The ability of
these employees from various nationalities and cultural backgrounds to get along with one
another, overcome cultural barriers, and develop a strong sense of corporate identity while
working harmoniously and happily in a team environment and with a shared consciousness is
another important issue for businesses expanding internationally (Qiaoqiao, 2022).
5.0 Conclusion
In conclusion, the use of the Service Marketing Mix approach, together with the additional
3Ps, has helped Haidilao become successful through its branches in Malaysia and other
countries. Along with the supply of one-of-a-kind product categories, this company's Crisis
Management strategies have been modified for both conventional and digital media. As a
result, the company has established a devoted client base, which has contributed to its
expansion.

The three-stage model of services - pre, during, and post, shows that at the pre-purchased
stage, arousal causes clients to begin investigating and analysing their choices before making
a purchase decision. Needs may be activated by a range of sources, including the unconscious
mind and internal states. Pre-purchase information has a significant influence on what
customers decide to buy. Consumer contacts with the service provider occur at the service
encounter stage or during eating. Consumers co-create value and experiences at this stage,
co-produce a service, and evaluate the service experience. Engagement may be used as a
proxy for the strength of a company's customer connections. In the last stage of service
consumption, the post-encounter stage, customers' behaviour and attitudes are examined. At
this stage, customer satisfaction and perceived service quality have taken the lead. Happy
consumers may not necessarily return to the same vendor or buy the same things.

Price and quality are the two distinct aspects of the establishment that are contrasted with one
another. Because Haidilao provides such exceptional value to its customers, the company has
earned their undying devotion. The most costly restaurants are those that have achieved a
high level of gourmet excellence, such as those that have been awarded Michelin stars.
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3.0 Turnitin Report

Haidilao's Services Marketing - Thitinun Lekkla (0206114) and

Lee Wei Seng (0205588)
O R IG IN ALIT Y REPORT

18 %
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