Service Quality Club Pacha Club

¶ … Service Quality

Club Pacha

Club Pacha has successfully differentiated itself from many nightclubs and entertainment venues in Manhattan by concentrating on a unique four-floor design that assures their customers will have a unique experience. Given the fact that the nightclub industry has been severely impacted the recession which has yield a -.9% growth from 2005 to 2010 and only a 2.8% growth from 2010 to 2015 with total revenues of $89.1B, every nightclub has to strive to be so different and unique in the experiences they offer that the generate return customers. From a marketing standpoint, this is not particularly easy as there are 199,401 nightclubs in operation across the U.S. And Manhattan and the New York metro area is known as the most competitive and affluent of nightclubs nationally if not globally. New York is the most competitive market for a nightclub to operate in nationally and one of the top ten globally. For Club Pacha to have survived and thrived during a recession, the experiences it delivers to customers has not only met but exceeded expectations. The Club is also very well attuned to what it is actually selling as an experience in nightclubs and that is an eclectic, high energy and in their VIP Services area, exclusivity and elegance. All of these elements of an experience are what successful marketers rely on when they integrate the marketing mix and strategies of their firms (McAdam, Joseph Pine II, 2006). Each of the extended attributes of the market mix are analyzed and assessed in this paper using the Gap Model of Service Quality (Candido, Morris, 2000). Recommendations are also made with regard to how Club Pacha can also increase the quality of their execution of each of the extended marketing mix factors, all coordinated to deliver an exceptional customer experience on a consistent basis. Pervading this analysis is the fact that excellence in marketing, especially when it comes to services marketing, is more oriented toward services, service recovery when a customer is dissatisfied, and gap model of service quality for analyzing variances between expected and perceived service quality levels (Crosby, 2010).

Environment of the Firm

The economic environment the firm operates in is highly fragmented due to the many psychographic groups that prefer nightclubs as a way to socialize with friends and enjoy special occasions including New Year's Eve. These psychographic groups are more defined by their shared interests, tastes in music and venue type than strictly by age (Berger, 1993).

A common set of demographic factors emerge from an analysis of the psychographic attributes of nightclub customer's however. First, those customers with incomes $50,000 or higher generate 70% or more of the revenues in higher-end nightclubs that have restaurants included in them. Generation Y consumers were born in the mid-1980s and prefer entertainment that is interactive, including venues that have WiFi and good cell phone coverage as well. The focus on experiences for Gen Y consumers is very high and driven by the need to define their identity by what they do for entertainment and fun (McAdam, Joseph Pine II, 2006). High-income Gen Y consumers are the primary market high-end nightclubs and restaurants and are the primary factor in driving the development of multi-experience venues, which the club Pacha exemplifies with its design. From a competitive standpoint the Gen Y consumer is the one that the nightclubs attempt to gain loyalty from through frequent visitor programs and through special promotions. This segment defines the overall marketing mix of many clubs throughout the New York metro region, and many of the U.S. regions as well.

From a government and legal standpoint the city and country food quality, fire and safety regulations force a significant cost on the operation of club Pacha on a daily basis, as the taxes to pay many of these services are included in very transaction. The costs associated with property taxes are also significant and require club Pacha to generate significant revenue to pay them. Often insurance companies will require that the city taxes be paid on a bi-annual basis as will the mortgage company or property owner for the building. These considerations are what owning a business and the building it operates in costly and often a central part of the financing. For club Pacha there is also liability insurance that must be included in all of these costs as the city of New York also will require compliance for liability as the club is a public meeting place. All of these factors add up and define the cost structure of the club while also contributing to the breakeven point over time of the entire business on a monthly and yearly basis. For a club that is of the magnitude of club Pacha, all of these items must also be in compliance as their image or reputation will be determined by these factors as well, Being in compliance is good for the branding of their business and its continued operations over time. As club Pacha will need to attain a high degree of trust as part of their brand, having all of these costs and licenses taken care of so they are not a distraction is a critical part of their business as well.

As their customer base is primarily young, education and higher-income Gen Y and accustomed to having access to the Internet, their need for WiFi access and choosing a club location with excellent cell phone coverage is critical. This requirement of providing customers with the opportunity to be connected is critical as the majority of the primary target market for club Pacha is on social networks and uses Twitter, Facebook, Foursquare, text messaging and e-mail to keep in touch. Having WiFi access across all four floors is a critical success factor for the club, in fact having several high bandwidth wireless routers per floor is essential. Again, this also relates back to the experience of being at the club as well. The club needs to be synonymous with convenience and staying connected, and as a result, the WiFi network is critical to the club's position and reinforcing the experience that is being created there. From a social and cultural standpoint, the club needs to bring all these elements together mentioned in this environmental analysis section to ensure that a unique and differentiated experience is created for their customers. With a structure of four floors, the club can also define unique experiences for each area including customizing each of the floors for specific parties or events. This further adds to the differentiation and the unique experience being created.

Extended Marketing Mix

The following extended marketing mix is analyzed using the Gap Model of Service Quality (Candido, Morris, 2000) to determine how club Pacha can better manage the gaps between customers and providers, perceptions of expected vs. perceived service and analysis of service delivery.

Product or Service

Club Pacha's service and experience deliver is actually the product being analyzed using the Gap Model of Service Quality. All aspects of club, from the initial visit, through the exploring of each floor if open to the public, to the quality of the interactions with hostesses and staff all contribute to the perceived service. How the club promotes itself in terms of its unique value of experiences, the commitments in makes about its service, and the implied service value all are part of any gap analysis (Booms, Bitner, 1981). Advertising, promotion and the intensive use of social networks including Facebook fan pages and YouTube video all fuel the perceived service of the club. The experience patrons have either validate and strengthen or lead to dissatisfaction and lack of interest in going back.

For club Pacha's senior management the challenge is going to be how to use the continued development of new experiences to continually fuel a consistent expected performance over time that aligns with the perceived experience or service. The continual development of new services must concentrate on keeping expected and perceived expectations aligned with each other to ensure long-term customer satisfaction occurs (Candido, Morris, 2000). The new service offerings being developed also must stay focused on minimizing and eliminating the potential for a major difference between expected and perceived expectations by setting the overall expectations at a realistic level. This is critically important with special events as well, with such fundamental practices as making sure the entertainments booked for New Year's Eve can actually make it, keeping costs down to provide loyal customers with the opportunity to introduce friends to the club, and also always looking at how to translate consumer expectations that are not met into service programs. In short, this cycle needs to be continuous to ensure that the club continually stays relevant to patrons over time (Crosby, 2010).

Place

The location or place of the club is the catalyst of how expectations are set and kept throughout the relationship cycles they have with customers. Place must be highly differentiated, very unique and focused on entertainment and delivering exceptional value for the time and money invested there. The focus must also be on how to create the place or location so it is eclectic enough to meet the diverse expectations of the customer base.

When the Gap Model of Service Quality is applied to Place there are many areas of marketing strategy that need to be taken into account. First, there is the need to ensure the Place or location does not cause the need for service recovery completely on its own. This can happen if the variation in quality of locations varies so significantly that customers perceive big differences in expeie3nces between floors of the club Pacha for example. As the website and club have shown through marketing, each floor is unique yet of consistent high quality in terms of sound systems and seating, lighting and dance floors. All of these factors or place service to differentiate the club overall but also create the potential of ensuring expected and perceived service stay consistent with each other. The necessity of service recovery is reduced when each floor of the club has the same level of quality associated with it as well. The VIP Service the club offers on the floor that overlooks another can be used in marketing to accentuate the exclusivity of the club and underscore its unique value as well. All of these factors work together to minimize any variation in perceived vs. expected service delivery, in addition alleviating the potential for service recovery being necessary. Place is one of the most powerful marketing attributes that can be used for ensuring consistently of expectations are set and met. Using accuracy in promotions is key to making gaps in service quality be minimized. The club's owners could further define areas of the club for special occasions and have testimonials from customers on their YouTube channel as well. The use of social media to underscore the value of its location would also be extremely useful as well.

Promotion

While Place is the most potentially strong factor in determining the expect of differences in the Gap Model of Service Quality, promotion is the single greater catalyst of initially setting accurate expectations or not. This factor in the marketing mix is the one most responsible for making service recovery efforts required in many service- and experience-based businesses as well. In the enthusiasm to promote a service business including a nightclub, businesses will often over-state the quality of service, food, location and quality of the experience overall,. Experiences are intentionally heightened to get customers in the door and seeing the nightclub, restaurant or entertainment event often without any thought about how these expectations, often very high, can be met. The role of promotion is to honestly set expectations and put the voice of the customer into the promotional programs so they resonate with accuracy and authenticity. When a promotional program deliberately creates an incorrect picture or series of expectations, it invites the need for service recovery (Ha, John, 2010). Promotion can also be a strong delineator of customer vs. provider gaps as well, in addition to defining the parameters of expected service vs. perceived service. All of these factors of the Gap Model of Service Quality also enter into the equation of how Promotion is used as marketing variable as well.

Promotion has actually been responsible for closing the gap between perceived and expected expectations as well, especially in experienced-based businesses. This is accomplished by relying more on the actual experience selling itself, not over-committing or selling more of an experience than the club or venue can really deliver. The closing of the gap between perceived and expected perceptions is also accomplished by using promotion as a means to connect with, not push messages to, customers. There is a big difference about using promotion to start a conversation with a customer and push a message on them. This mentality of using promotion to start a conversation is a strategy that Club Pacha needs to consider more often as their promotion today is more like a bullhorn than intent to listen.

Price

The single greatest marketing variable that determines the perceived quality level of a business, nightclub, product or service, price is the catalyst of many expectations being set exceptionally high yet not being delivered on. The perception of price carries with it an implicit assumption about quality as well. Club Pacha is on the pricey side for drinks and entrees, and very expensive for a dedicated floor. For this, the club needs to consider what additional value they can deliver. The high price connotes and contributes to their perception of being exclusive, yet also sets into motion the perception and expectation fo exceptional quality too.

Club Pacha has done intensive competitive analysis of the nightclubs, restaurants and other high-end venues throughout the areas they are located in and these insights have defined their segmentation and pricing strategy. This is an excellent baseline, yet the many potential areas of where club Pacha can fail in terms of achieving all the expectations they have set is still highly risky given the image they are choosing to create (Marsella, Stone, Banks, 2005). While promotion is a powerful marketing attribute in defining the distance between perceived and expected service, price can quickly also do this and define the level of service delivery only by its relative position against competitors in the same market. Price is the one marketing variable that equates across all substitute entertainment and experiential-based businesses that a potential club Pacha customer would consider. Due to the power of price it must be used more as a means to close the gaps in the Gap Model of Service Quality by being used for managing expectations so they can be exceeded.

People

The people or employees of Club Pacha also need to be integral to the promotion and place aspects of the value proposition for the club. People are the critical link across each of the five gaps throughout the Gap Model of Service Quality. They are the force that either underscore and make more relevant the promotion, place and product value propositions or make them more relevant and at a loss of credibility. People put the entire marketing mix into motion and either strengthen it or make it weaker with their attitude and performance over time. People are also the deliverers of service recovery as well, with the focus on alleviating the dissatisfaction customers have over time. The people in the club working must also be focused on how best measure perceived vs. expected service as well. On this one dimension, it is critical to hire people who are excellent listeners and can ascertain when expectations are either being met and exceeded or not.

Finally, people are critical for communicating the level of commitment the management staff of club Pacha has to their satisfaction and enjoying the experience being there. The use of the Gap Model of Service Quality is also critically important for ensuring that the training program for employees is well tuned to the current and future expectations of customers as well. The use of the Gap Model to teach situational leadership is also important for each department that operates the club as well. All of these aspects of people as a major part of the marketing mix and the ability of the club to set and achieve expectations over the long-term. The people component of the marketing mix must be focused on service recovery quickly and thoroughly to keep customers loyal and willing to spend their evenings and special occasions in the club as well.