MBS507 Strategic Marketing Management

Designing & Managing Services

Best & Worst Service Experience?

Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 13-2

qutoofrestaurant.com

For discussion today

1. How do we define and classify services and how do they differ from goods?

2. What are the new services realities?

3. How can we achieve excellence in services marketing?

4. How can we improve service quality?

5. How can goods marketers improve customer support services?

What is a Service?

A service is any act of performance that one party can offer another that is essentially

intangible and does not result in the ownership of anything; its production may or

may not be tied to a physical product.

Services are Everywhere

Figure 13.1 Continuum of Evaluation for Different Types of Products

Most high in experience & credence … riskyRely on WOM, physical cues, loyal due to high switching costs

[can evaluate before purchase]

[can evaluate after purchase]

[hard to evaluate even after consumption]

Pure tangible good Good with accompanying services Hybrid [equal parts – goods & services]

Service with accompany goods Pure service

Categories of Service Mix

waterlesscarwash.com; eisingerbrown.com

Service Distinctions

1. Equipment-based or people-based

2. Service processes

3. Client’s presence required or not

4. Personal needs or business needs5. Objectives [profit or nonprofit] and ownership [private or public]

Distinctive Characteristics of Services

Intangibility

Inseparability

Variability

Perishability

cannot be seen, tasted, felt, heard, or smelled before purchase

cannot be separated from providers

depends on who provide them; when, where & how

cannot be stored for later sale or use

Disneyland Paris

Pic soruce: seafrance.org

• Intangibility• Inseparability• Variability• Perishability

Begins with theme or benefitUse physical evidence & presentation

[Demonstrate service quality through]

Physical Evidence and Presentation

1. Place [traffic flow, waiting line]

2. People [adequately staffed]

3. Equipment [look modern]

4. Communication material [distinct benefit]

5. Symbols [Name & symbol suggest benefit]

6. Price [use incentive]

To demonstrate a “tangible” positioning, e.g. a “fast” bank

Inseparability

―Produced and consumed simultaneously―Provider is part of the service―Provider-client interaction

Variability

Depends on who, when, whereStandardize – use blueprint, flowchart, look out for fail pointsService guarantees reduce perception of risk

Variability: Increase quality control

1. Invest in good hiring and training procedures

2. Standardise the service performance process throughout the company; develop common definitions of what is expected

3. Monitor customer satisfaction using suggestion and complaint systems, customer surveys, and comparison shopping

Increasing Quality Control

Blue print or flow chart … SOP

Perishability

Fluctuating demand Manage demand versus supply… next slide

Matching Demand and Supply

Demand side

1. Differential pricing

2. Nonpeak demand [grow]

3. Complementary services [alternatives for waiting customers]

4. Reservation systems

Supply side

1. Part-time employees

2. Peak-time efficiency [focus on essential tasks]

3. Increased consumer participation

4. Shared services

5. Facilities for future expansion

1. Segmented pricing … non-preak

New Service Realities

CUSTOMER EMPOWERMENT: more sophisticated, demand for self-select elements through unbundled services; want control, communication (Internet), & participationCUSTOMER COPRODUCTION: Joint fulfillment of service; perceives more value & stronger connection

Figure 13.3

Root Causes of Customer Failure

Servicescape - physical environment

1. Netflix 2. Comcast - software 3. Wireless phone – reminders about overseas 4. Golf club behavior

Solutions to Customer Failures

1. Redesign processes and redefine customer roles to simplify service encounters

2. Incorporate the right technology to aid employees and customers

3. Create high-performance customers by enhancing their role clarity, motivation, and ability

4. Encourage customer citizenship where customers help customers

Figure 13.4

Types of Marketing in Service Industries

training and motivating employees to serve

Best Practices

1. Strategic Concept [need-satisfaction, customer obsession]

2. Top-Management Commitment [to service, not just financial]

3. High Standards [quality standards]

4. Self-Service Technologies

5. Monitoring Systems [audit both firm & competitors’ performance]

6. Satisfying Customer Complaints [satisfiers & dissatisfiers]

7. Satisfying Employees

Best practice

Ritz Carlton, Boston

Its unique culture starts with a motto: "We are ladies and gentlemen serving ladies and gentlemen." One of its remarkable policies is to permit every employee to spend up to $2,000 making any single guest satisfied.

– Forbes.com

Figure 13.5

Importance-Performance Analysis

customers rated 14 service elements or attributes of an automobile dealer’s service department

Improving Service Quality

Listening Reliability Basic service Service design Recovery

Surprising customers Fair play Teamwork Employee research Servant leadership

10 key things to do

Figure 13.6 Service-Quality Model [Gaps]

Determinants of Service Quality

Reliability: ability to perform the promised service dependably and accurately

Responsiveness: Willingness to help customers and provide prompt service

Assurance: knowledge and courtesy of employees and their ability to convey trust and confidence

Empathy: provision of caring, individualized attention to customers

Tangibles: appearance of physical facilities, equipment, personnel, and communication materials

Customer Worries

Failure frequency

Downtime

Out-of-Pocket Costs

Example: speed of repair of machinery; provision of a loaner

Example: expenditure on regular maintenance and repair costs

Example: frequency of break down

For Review and reflection…

How do we define and classify services and how do they differ from goods?

What are the new services realities? How can we achieve excellence in services

marketing? How can we improve service quality? How can goods marketers improve customer

support services?

Malhotra DVD Case 19.1 Marriot

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