Service Marketing Analysis: Haidilao Hotpot's Singapore Expansion

This report provides an in-depth analysis of the service marketing strategies employed by Haidilao hotpot restaurant chains, focusing on their existing service delivery system and recommendations for their expansion into Singapore. The report begins with an introduction to Haidilao, its competitive positioning, and target customer base, followed by an examination of its service delivery elements, including core and supplementary services, and servicescape imagery. The analysis includes a critique of the current service delivery blueprint and proposes improvements based on a mystery shop survey. The report emphasizes the importance of adapting service delivery to Singapore's cultural context, considering factors like employee satisfaction, training, and customer experience. The report concludes with recommendations for Haidilao to enhance its business prospects in Singapore, considering elements such as cultural traditions and lifestyle of people. This report also highlights Haidilao's unique approach to customer service, including its focus on employee satisfaction, various supplementary services, and the use of technology to improve customer experience.

Running head: SERVICE MARKETING
Service Marketing
Name of the Student:
Name of the University:
Author’s Note:

1SERVICE MARKETING
Table of Contents
Introduction...................................................................................................................2
Background on the Service Organization.....................................................................3
Service Delivery Elements............................................................................................4
Servicescape Imagery..................................................................................................7
Mystery Shop survey analysis......................................................................................7
Critique of the Service Elements and Service Delivery Blueprint................................8
Current service delivery blueprint...............................................................................10
Recommendations......................................................................................................16
Conclusion..................................................................................................................17
References.................................................................................................................18
Appendix 1..................................................................................................................20

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Introduction
The report highlights the service delivery system which is being used by the
Haidilao hotpot restaurant chains. The report not only discusses the existing service
delivery system used by the restaurant chains in the nation of China but at the same
time recommends the kind of changes that the restaurant chains need to make for
the launch of their business in the Singapore. Davis et al. (2018) are of the viewpoint
that although the nations of Singapore and China both belong to the continent of
Asia yet the culture and business style followed by the people of the two nations are
drastically different from one another. Thus, it becomes all the more important for the
concerned restaurant chain to analyze the existing service delivery that they are
using and also to make improvements in the same so as to have a better chance of
gaining success in Singapore.
The report begins by introducing the Haidilao hotpot restaurant chains and the
nature of services that if offers to the customers. This section of the report will also
discuss the competitive positioning strategies which are being used by the
concerned restaurant and also their targeted customer base. The report next sheds
light on the service delivery elements offered by the concerned restaurant like core
elements of the service, service distribution and others. In addition to this, the report
also offers a servicescape imagery of the services which are being offered by the
restaurant. The report next takes the help of Mystery Shop Survey to understand the
nature of changes that the concerned restaurant needs to make. On the basis of the
results obtained from this survey, the current service delivery blueprint used is being
critiqued and a new one is proposed. Lastly, the report concludes by recommending
some changes that the concerned restaurant needs to make within the framework of
their organisation so as to improve the prospects of the business in the nation of
Singapore.
As opined by Lee, Verma and Roth (2015), the business style or for that
matter the service delivery style which is being followed by an organization within a
particular nation depends to a great extent on the national culture of the nation in
which it is operational. Haywood and Pickworth (2015) are of the viewpoint that the
organizations which are operational in more than one nation needs to modify their

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business style or service delivery style on the basis of the cultural traditions of that
particular nation. In this regard, mention needs to be made of organizations like
Starbucks, PepsiCo and others which offer different kinds of products or services
and also different service delivery styles in diverse nations of the world (Davis et al.,
2018). Thus, Haidilao hotpot restaurant chains which is planning to open its
restaurants in Singapore needs to take into effective consideration the culture
traditions of the nation and also the lifestyle of the people for the service delivery
style that are likely to follow within the framework of the concerned nation.
Background on the Service Organization
Haidilao hotpot restaurant chains had banked on the concept of hotpot, which
was initially articulated by Mr Zhang Zhou in the year 1994 (Xie-lin & Xiao-dan,
2014). The restaurant under discussion here is a steamboat restaurant wherein the
people get the opportunity to cook their own food at the tables which they have opted
depending on their taste and convenience (Nothhaft, 2018). The customers are thus
offered with various kinds of soups which they can use for the preparation of food
that they want to eat. In this regard, it needs to be said that the restaurant offers a
wide variety of food products to the customers like meat slice, vegetables, seafood,
noodles, desserts and others (Zhang & Xu, 2016). More importantly, the restaurant is
not only known for the tasty foods that it offers to the customers but also for various
other perks like manicure services, playground for children of customers and others
(Ambler, 2018). It is pertinent to note that the restaurant although initially established
in the nation of China is currently operational in different international locations like
London and others (Cnbc.com, 2018). According to BBC News (2018), one of the
major factors which attract customers is the unique customer experience that they
get at these restaurants along with the above mentioned perks.
Chen, Shen and Fan (2015) have stated that one of the major reasons which
had enabled the restaurant under discussion here to attain competitive advantage
within the nation of China is the fact that unlike other restaurants of the nation this
restaurant banks on the national culture of China. The net result of this is the fact
that the majority of the food products and also the hotpot business idea that the
restaurant is currently using have been a part of Chinese tradition since the 20th
century (Gu, 2016). In addition to the effective usage of the cost leadership strategy

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which is being used by the concerned restaurant to offer the best quality food
products and that too at very affordable prices is another factor which has helped the
organisation to attain competitive advantage. For example, it is seen that an average
customer can get VIP treatment after spending just $20-$30 for the entire meal
(Ambler, 2018). Furthermore, the unique perks that the restaurant offers to the
customers like manicure services, playground for the children of customers and
others have helped the restaurant to position itself as one of the best restaurants of
the nation (Liang, Wang & Xu, 2016). Moreover, the restaurant over the years have
developed its own management style, supply chain system, delivery system and
others to gain competitive advantage over its competitors (Nothhaft, 2018). In
addition to this, the online services offered by the restaurant and also the use of
various signature styles like the “noodle dance” and others have not only been much
appreciated by the customers but also helped it to gain competitive advantage as
well (Xie-lin & Xiao-dan, 2014).
The focus of the restaurant in the nation is on the customers belonging to
individuals belonging to the age bracket of 18-54 years of age who likely to try out
the Chinese cuisine (Zhang & Xu, 2016). In addition to this, the restaurant also
focuses on the customers who belong to the working class and food items or menu
used during the peak hours (8AM -10AM and 6PM- 8PM) are specifically designed
keeping in view the preferences of these individuals (Chen, Shen & Fan, 2015).
However, in the recent times, it is seen that the concerned restaurant is trying to
embrace the western model and is offering various western cuisines as well. In
addition to this, it is seen that the restaurant is also using the courier or home
delivery system to enhance their existing customer base.
Service Delivery Elements
The plethora of services offered by the Haidilao hotpot restaurant chains can
be broadly divided into two categories, namely, core and supplementary services.
The core services offered by the restaurant under discussion here include the
steamboat and the food offered by the restaurant. On the other hand, the
supplementary services are related to the various kinds of hospitality services that it
offers to the customers to improve the quality that they had at the restaurant. For
example, the customers are offered ipads on which they can log-in to their account

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of the restaurant and order food from there as per their preference (Gu, 2016). In
addition to this, they are also offered with a serial key and the number of the waiter
so that they can call them if help is required. In addition to this, they are also offered
with ziplock bag for mobile phone and aprons so that their cloth is not spoiled (Xie-lin
& Xiao-dan, 2014). Moreover, assistance is also offered to the customers regarding
the cooking of the food. More importantly, if the customers had visited the restaurant
alone then company is provided by the waiters and also teddy bears while they eat.
In addition to these, there are various kinds of additional perks for the customers
who are in the waiting line. For example, there is separate waiting room for the
customers wherein they are treated with snacks, complimentary drinks and even ice-
creams, free WiFi and others (Ambler, 2018). Furthermore, the customers can even
get manicure and there is playground for children wherein they can pass their time
while their family members of parents are in the waiting line. There are blankets also
for the customers who feel cold within the restaurant in addition to the shopping
options that are available to them.
Davis et al. (2018) are of the viewpoint that the business prospects of an
organisation depends to a great extent on the job satisfaction level of their
employees since the services offered by them is directly dependent on this. Thus,
the primary focus of the restaurant under discussion here is to keep the employee
satisfaction level and thereby reduce the attrition rate. It is pertinent to note that the
employees of the restaurant are provided with various kinds of training programs like
skills to manage customers in an effective manner and others in order to serve the
customers in an effective manner (Nothhaft, 2018). Furthermore, the employees
apart from the people management skills are also offered culinary trainings so that
they can help the customers to cook their food in an effective manner (Zhang & Xu,
2016). Moreover, they are also offered with various kinds of customer scripts so that
they are able to deal with various kinds of customers in an effective manner.
The service delivery system of the restaurant starts from the moment the
customers step in the restaurants and ends at the time of the exit of the customers.
For example, after the entry of the customers they are taken to the tables if the
tables are available or taken to the waiting rooms where they spend their time before
the tables get vacant (Liang, Wang & Xu, 2016). During this time they are offering
various kinds of snacks, manicure and other services so that they do not feel bored

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and also pass their time if an effective manner. Moreover, once the customers have
ordered their food through the ipads they are also offered assistance for the cooking
of the meal as well. Furthermore, recommendations are also been made regarding
the kind of sauce that the customers can try out and also the food. In addition to this,
for the single customers company is being offered by teddy bears and waiters.
The servicescape model which is being used by the restaurant under
discussion here is indicated by the below given figure-
Figure 1: Bitner’s Servicescape model
Source: Davis et al., (2018)
The focus of the restaurant is offering the right kind of ambience to the
customers and it is seen that the restaurant takes the help of music and scents and
also air conditioners to create the right kind of ambience within the restaurants
(Ambler, 2018). In addition to this, the entire space of the restaurant is divided into
various sections like eating sections, waiting section, cooking section and others
(Gu, 2016). The major signs used by the restaurants are written in the Chinese
language to highlight the Chinese connection (Nothhaft, 2018). In addition to this,
various artifacts like teddy bears and others are being used to create the right kind of
environment within the restaurants (Chen, Shen & Fan, 2015).

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The restaurant follows a decentralized policy and thus there are no bottle-
necks within its framework. Information is being readily passed on to the different
employees so that they are being able to work in an effective manner (Chen, Shen &
Fan, 2015). However, in the recent times the restaurant has faced various customer
management issues and had even being fined S$800 because of the inadequate
food and hygiene standards used by the restaurant (Zhang & Xu, 2016). More
importantly, these issues or situations serve as moments of truth for the restaurant
and thus they need to work on these issues in an effective manner to continue their
growth.
Servicescape Imagery
(Please insert pictures here)
Mystery Shop survey analysis
The mystery survey has been conducted on the Haidilao hotpot restaurant
chains to examine the quality of the appearances, food and services they offer. The
mystery shop survey has been conducted to examine the elements that are being
executed properly and elements that has the scope of improvement. This has been
conducted to develop a reference point for starting up a new organization in the
same industry and checking one of the best in the market provides ample amounts
of knowledge regarding the do’s and don’ts of the industry.
The survey shows that the outside appeal of the restaurant is excellent and
depicts the image the image they want to portray in the minds of the consumers.
The outside appearance is excellent and its makes it more appealing to the
consumers. The cleanliness of the restaurants is excellent and the restaurant
provides clean aprons and protective bags. The interior of the restaurant is also
clean and they have highly focused on the cleanliness of the overall restaurant.
The hosting area of the restaurant is magnificent and they employees greet
every consumer cordially and professionally. The hosting area covers one third of
the restaurant and provides excess amenities like free Wi-Fi, complementary snacks,
manicure, board games, hand messages and beverages. This makes the waiting
time worthwhile and as they are huge crowds gathered up all the time, the

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consumers are provided with better experience. The customer engagement in the
restaurant is very high and the service providers are always eager to address the
concerns and queries of the consumers. The main attractiveness of the restaurant is
the fact that the consumers cook their own meal and the waiter’s entertain them
using their signature noodle dance. In the terms of the quality of the workforce in the
food chain, it can be seen that there professional and have immense expertise what
they do. They are highly effective in providing the consumers with products and
experience which easily surpasses the quality of a normal average diner. However, it
has been seen that due to the immense number of consumers waiting for their turn,
some of the consumers may not be addressed due to the limited number of the
employees to look into the consumers issues. The food is of highest quality and
provides a very positive experience to the consumers. Moreover, the overall prices of
the meals are quite less when compared to the quality of service offered by the
company.
Critique of the Service Elements and Service Delivery Blueprint
This part of the report critically evaluates the service elements, the mystery
survey and the service delivery blueprint to examine the strengths and weakness of
the organization, Haidilao hotpot restaurant chains. The evaluation of the core and
supplementary service offerings shows that the organization has been strong in both
developing their core and supplementary elements. The core element of the service
is the hotpot services, the supplementary services consist of the hospitality services
provided by the organization to keep their consumers occupied and interested during
their waiting time (Bitner& Wang, 2014). The next element is the consumer and
employee script, where the employees have been kept motivated at all times and
provided with training on regular basis to improve their quality of services. According
to the customer service theory, the main aim of the business is to attract more and
more consumers to increase the business volumes (Lovelock & Patterson, 2015).
Haidilao has developed a reputed brand image among the consumers due to the
reliable food services, flexibility in their services, trust in minds of the consumers and
aesthetics of the company. Bowen,(2016) states that aesthetics draws the primary
impression in the minds of the consumers and is a crucial factor in invoking positivity.

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The consumer feedbacks are considered very seriously and the company has
been strictly monitoring the complaints and makes regular checks on the cleanliness
and the quality of the services offered by the organization (Wakefield & Blodgett,
2016). The company uses a central distribution system in order to monitor the check
the quality of the products throughout the different chains of restaurants. The
servicescape of a restaurant is one of the first and foremost element that attracts the
consumers or the consumers assess while making their visit in a restaurant. The
décor of the diner is a key factor as it develops the ambience and provided added
value to the overall experience. In case of the food chain, they have developed a
good ambience for the customers that add value to their overall experience. The
temperature, lighting, scent and music are above the average level when compared
to a normal diner of same price range.
The moment of truth for majority of the consumers are positive as the quality
of the experience offered surpasses the expectation of any first time consumer
(Grönroos&Gummerus, 2014). There some potential bottlenecks due to the lack of
understanding of the needs of the consumers and lack of capital. However, the
company has been operating for quite some time but the company is experiencing
losses due to the high cost of their operations and less revenue generation.
Previously there had been incidents where the consumers have complained about
the cleanliness of the food delivered and the employees did not attend effectively to
the needs of the consumers. This has impacted the reputation of the food chain in
Singapore which is the reason that company has developed strict policies for
managing the quality of the food and satisfaction of the consumers in the market.
The critique of the restaurant has identified both strengths and weaknesses
for the company and further opportunities that should be used to reduce the
weaknesses. In case of the food chain, the major strengths of the restaurant is their
unique value proposition, their impeccable consumer service they provide and the
servicescape they have developed. The organization provides the best quality food
and experience to the consumers by providing them the opportunity to cook for
themselves with high quality of ingredients and witness an ambience which
contributes to the food experience. The facilities provided in the waiting area are of
premium quality which shows the level of satisfaction that the restaurant wants to
reach. The repetitive sales of organization are good and they have a huge consumer

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base in the market that waits for even three hours to get into the diner. In majority of
the cases, the consumers have praised the chain for the efforts that have put in to
the make the experience of the consumers even more fruitful.
However, the major drawback for the company is their elaborate infrastructure
and operations that has been increasing their overall operational. The services of the
organization is charged at $20-30 which is quite average for a diner that provides
such added premium facilities to the consumers. Moreover, the communication
between the staffs at the backend and the frontend needs improvement as they tend
to lose track of the consumer needs during heavy rush hours. Therefore, in order to
address this, the report will analyze the current service blueprint of the organization
and develop a modified blueprint to address the needs of the consumers. However,
there are mainly two ways of improving the service delivery blue print, one is
reducing the cost of the overall operation and the other way is increasing the price of
the service and product offerings of the food chain. However, the viability of each
option will be evaluated in the next of the report and will consist of flowcharts
explaining the change in need.
Current service delivery blueprint
Elements Current delivery
approach
Proposed delivery
approach
Expected outcome
Timing 10 Am to 2 PM in
morning and 6 PM
to 12 AM in night.
The restaurant is
open for 6 days a
week and average
timing of service
delivery is 20
minutes.
It is proposed that
weekly timing for
them will remain
same with existing 6
days a week.
However, the daily
timing will be
increased by
removing gap area
in noon time. This
will help to cater to
more number of
Number of target
customers will get
increased due to
having more service
hours and
increased footfalls.
In addition, it will
also provide the
restaurant with
opportunity of
offering of more
diverse services

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customers
preferring early
evening buffet.
Peak hours will be
10 to 12 in morning
and 6 to 8 at night.
This time period will
witness the
maximum traffic and
footfall.
and buffets in
different day
timings. The
average revenue
will get increased in
the long term.
Front stage and
backstage
Front stage services
include the
receptionist and en
service delivery
employees
including the waiter.
Effectiveness of the
front stage
employees
determines the
satisfaction level of
the employees.
However, the front
stage services are
limited to this.
Backstage service
includes managing
the queue,
accounting and
managing inventory.
In addition, the food
preparing process is
also included.
It is proposed that
front stage
employees for the
restaurant should
include the chat and
call support. This is
due to the reasons
that chat and call
support is also
effective in
enhancing the
service quality for
the customers.
Inclusion of the chat
and call service in
the front stage
services will help to
meet the query of
the customers in the
initial stage.
It is recommended
that backstage
employees should
The average level
of customer
satisfaction and
retention will get
increased with their
queries and
grievances being
met in the initial
stage. In addition,
inclusion of the
support services will
increase the
effectiveness of the
line of interaction
between the
employees and the
customers.
More effective
communication
process between
the backstage
employees and the
customers will help