Service Mgt 1(14 Pages)

7/28/2019 Service Mgt 1(14 Pages)

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Service Management: 1 Services Marketing

Why study Services Marketing?

Service-based economies

Service imperative in manufacturing, technology & IT

Professional services

Services marketing different from products

Service equals profits

Introduction:

What are services? Deeds, processes & performances

Why services marketing?

Service & Technology

Characteristics of Services wrt Goods

Services Marketing Mix Customer Focus

What is a Service?

A form of product that consists of activities, benefits,

or satisfactions offered for sale that are essentially

intangible and do not result in the ownership of

anything.

Services are deeds, processes, and

performances- Valarie Zeithaml

Services:

Services- Haircut, Dr, TV, Email, laundry,

B-School- Education, library, canteen, placement, counseling, photocopying, ATM,

telecommunication, hostel, gym

Customer complaints- service quality- delayed response / delivery, rude / incompetent

staff, inconvenient systems / timings

Supplier concerns- skilled & efficient staff, training/retaining staff, customer spoilt for

choice

Service Industries:

H- Hospitality & Healthcare

E- Education & Entertainment

F- Financial Services

T- Telecom, Travel & Tourism

I- Insurance

Construction & real estate

Retail (worlds largest employer)

Utilities-hair styling, pest control, plumbing, clubs

Professional Services- counseling, consultancy, Legal


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Tangibility:

Tangible- see, taste, feel, hear, smell- pre purchase

Customers not sure about purchase outcome

Will service meet their expectations?

Product- seen pre-purchase, ascertain if needs met Customers use cues to overcome intangibility

Service quality- clean premises, crowds, opinionpeers, family & friends, important

Higher purchases- WoM, information from trusted sources more important

Price may indicate higher quality

Marketers add tangibility to intangible services

Highlight physical evidence- ambience, cleanliness, experience, surroundings

Dr waiting rooms

Hotel lobby

Goods versus Services:

Goods Services Implications

Tangible Intangible No inventory, patent,

display, pricing

difficult

Standardised Heterogenous Customers part of process,

Employee critical in

delivery, satisfaction

Consistency, variability key

issues

Production & consumptionseparate

Simultaneous Customers participate in,affect outcome

Employees affect outcome,

mass

production difficult

Non

perishable

Perishable Difficult to synchronise

demand supply,

cannot be returned, resold

Differences in goods & services:

Most products have service component, even 50%

Hotels- Food 25%, Balance- services, people, ambience

No ownership- Rented car, loaned money, booked hotel

No inventory- Transitory & perishable, not stocked

Intangible- Quality of labour, staff competence

Customers help/shape product- Self service- ATM, Co-op- Saloon, concert fans, library

Input/output variable- consumed as produced, delivered in real time, customer present-

time sensitive / critical

Evaluation difficult- treatment, repairs, accounts, advicecustomers lack knowledge dont

know what to expect

Patenting difficult No returns, synchronising demand-supply difficult


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Characteristics of Services:

o Intangibilityo Heterogeneityo Simultaneous Production & Consumptiono Perishability

Implications of Intangibility:

Not inventoried

Not easily patented

Not readily displayed / communicated

Pricing difficult

Reduce uncertainty- buyers look for physical cues

Quality inferred fromplace, people, equipment, communication material, symbols and

price

Service providers major task- manage physical evidence- tangibilize the intangible-

Evidence & presentation- transform intangible services into concrete benefits

Implications of Heterogeneity:

Service quality depends on many uncontrollable factors

Service delivery and customer satisfaction depend on employee and customer actions

There is no sure knowledge that the service delivered matches what was planned and

promoted

Inseparability & Variability:

Services-produced & consumed simultaneouslyClients present & interact during service production

Services highly variable, dependent on who provides them & when & where provided

Invest in good hiring and training procedures

Standardize service-performance process

Service blueprint flowchart depicting events & processes, to recognise potential fail points

Monitor customer satisfaction

Implications of Simultaneous Production and Consumption:

Customers participate in and affect the transaction

Customers affect each other

Employees affect the service outcome Decentralization may be essential

Mass production difficult Implications of Perishability:

Services cannot be stored, returned or resold

Demand fluctuation causes problems

Difficult to synchronize supply & demand with services

Demand side Supply side

Differential pricing Part-time employees

Non-peak demand Increased consumer participation

Complementary services Shared services

Reservation systems Facilities for future expansion


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Challenges for Services:

Defining & improving quality

Designing & testing new services

Communicating & maintaining a consistent image

Accommodating fluctuating demandMotivating & sustaining employee commitment

Coordinating marketing, operations & HR efforts

Setting prices

Balancing standardization & personalization

Ensuring consistent delivery quality

Traditional Mix:

Elements controlled by the firm

4Ps not suited to marketing intangibles

Overhaul as customer assumes significance Services dominance led to specialized services Marketing

4Ps 4Cs

Product Customer Value

Price Cost-benefit

Place Convenience

Promotion Communication

Services Marketing Mix:

Product- Core features + bundle of supplementary service elements wrt benefits desired

Place & Cyberspace- Place & delivery time importantphysical, e, direct, retail, mobile,home delivery

Process- To create & deliver product elements to customers important to design &

implement effective processes.

Productivity: how efficiently service inputs are transformed into outputs that add value forcustomers.

Quality: the degree to which a service satisfies customers by meeting their needs, wants,

and expectations.

People: customers and employees who are involved in service production.

Promotion and education: communication activities designed to build customerpreference for a specific service or service provider. Provides information, persuades target

customers, and encouraging them to buy.


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Expanded Mix for Services -- The 7 Ps:

People

Major role in service delivery, influence buyer perceptions

Personnel & customers in the service environment

Physical Evidence

The environment where service is deliveredWhere firm & customer interact

Tangible components facilitating service performance/ communication

Process

Actual procedures, mechanisms, and flow of activities by which

the service is deliveredthe service delivery and operating systems

Expanded Marketing Mix for Services:


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Expanded mix:

People Physical Evidence Process

Employees Facility design Activity flow

Customers Equipment Number of steps

Communicating culture &values

Signage Level of customerinvolvement

Employee

research

Employee dress

Other tangibles

Ways to Use the 7 Ps:

Overall Strategic Assessment

How effective is a firms services marketing mix?

Is the mix well-aligned with overall vision and strategy?What are the strengths and weaknesses in terms of the 7 Ps?

Specific Service Implementation

Who is the customer?

What is the service?

How effectively does the services marketing mix for a service communicate its benefits

and quality?

What changes/ improvements are needed?


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The Nature of A Service:

Courier

Advice and

Communication

Order Tracking Bill Statements

Supplies Problem Solving

Pick-Up Tracking

Documentation

Overnight

Transportation

and Delivery of

Packages


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Category Differences:

Role of advertising in brand-bui lding wil l tend to vary with category type

Consumer

Products

Consumer

Durables

Services Corporate

Lower values Higher values Indeterminate No value

Frequent purchase Infrequent Indeterminate Variable

Narrow/Broad

Target customer

Narrow Target

Customer

Variable Very wide/

variable


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Intangibility- Provide cues/ evidence Variability- Provide cues/ evidence Variability- Better service Inseparability- Manage the service encounter

Services cannot be stored- Manage the demand & supply

Service C Categories- Classification:

Who/ What is the direct recipient

What

is the

nature

of the

service

People Possessions

Tangible

actions

People processing(Directed at the body)

Possession processing(Directed at physical

possessions)

Healthcare, Hotels, Saloons,Clubs, Restaurants, Priests Transport, storage, petrolpumps, housekeeping,

retail, laundry,

Intangible

actions

Mental processing(Directed at peoples mind)

Information processing(Directed at intangibles)

Education, IT, Music,

Religion, Advertising, PR,

Arts, Cable, Consultancy,

Banking, Accounting,

Insurance, Legal,

Programming, Research,

The Services MarketingTriangle:

Overall- Focus on delivery & consistency at all 3 levels

Company (Management)

Internal Marketing External

Marketing

(Enabling the promise) (Setting the

promise)

Employees Customers

Interactive Marketing

(Delivering the promise)


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Services Management: 2- Gaps Model

Gaps Model- Service Quality:

The Customer Gap

The Provider Gaps:Gap 1not knowing what customers expect

Gap 2not having right service designs & standards

Gap 3not delivering to service standards

Gap 4not matching performance to promises

Putting It All Together: Closing the Gaps

The Customer Gap:

Customer Gap

Gaps Model of Service Quality:

Customer Gap:

difference between customer expectations & perceptions

Provider Gap 1 (The Knowledge Gap):

not knowing what customers expect

Provider Gap 2 (The Service Design & Standards Gap):

not having the right service designs and standards

Provider Gap 3 (The Service Performance Gap):

not delivering to service standards

Provider Gap 4 (The Communication Gap):

not matching performance to promises

Expected Service

Perceived Service


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Key Factors Leading to the Customer Gap:

Provider Gaps

Gap 1:Not knowing what customers expect

Gap 2:Not selecting right service designs & Customer Gap

standards

Gap 3:Not delivering to service standards

Gap 4:Not matching performance to promises

Key Factors Leading to Provider Gap 1:

Inadequate marketing research orientation

Insufficient, inadequate use, no service quality focus

Lack of upward communication

Poor interaction- management & customers

Poor communication- contact employees & managers

Too many layers- contact personnel & management

Insufficient relationship focus

No market segmentation

Focus on transactions than relationships

Focus on new customers than relationship customers Inadequate service recovery

Not listening to customer complaints

Failure to make amends when things go wrong

No appropriate recovery mechanisms for service failures

Customers

xpectation

Customers

Perception

Customers expectation

Company perception Of customer

Expectations


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Poor service design Unsystematic new service development process

Vague, undefined service designs

Failure to connect service design to service positioning

Absence of customer-driven standards

Lack of customer-driven service standards

Absence of process to focus on customer requirements

Absence of formal process for setting service quality goals

Inappropriate physical evidence and servicescape

Failure to develop tangibles in line with customer expectations

Servicescape design not meeting customer & employee needs

Inadequate maintenance and updationg ofservicescape


Deficiencies in HR policies

Ineffective recruitment, role ambiguity, role conflict

Poor employee-technology job fit

Inappropriate evaluation and compensation systems

Lack of empowerment, perceived control, and teamwork

Customers who do not fulfill roles

Customers who lack knowledge of their roles & responsibilities

Customers who negatively impact each other

Problems with service intermediaries

Channel conflict over objectives & performance

Difficulty controlling quality and consistency Tension between empowerment and control

Failure to match supply and demand

Failure to smooth peaks and valleys of demand

Inappropriate customer mix, price overreliance to smooth demand

Customer-Driven Service Designs and Standards

Management Perceptions of Customer Expectations

Customer-Driven Service Designs and Standards

Service Delivery


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Key Factors Leading to Provider Gap 4

Lack of integrated services marketing communications Tendency to view each external communication as independent

Not including interactive marketing in communications plan

Absence of strong internal marketing program

Ineffective management of customer expectations

Poorcommunication to manage customer expectation

Lack of adequate education for customers

Overpromising

Overpromise- advertising, personal selling & physical evidence

cues

Inadequate horizontal communications

Insufficient communication between sales and operations Insufficient communication between advertising and operations

Differences in policies and procedures across branches or units

Gaps Model of Service Quality:

Service Delivery

External Communications to Customers


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Services Management: 3- Focus on the Customer

Consumer Behavior in Services:

Search, Experience, and Credence- Properties

Consumer Choice Consumer Experience

Post experience Evaluation

Understanding Differences Among Consumers

Consumer Evaluation

Processes for Services:

Search Qualities

attributes a consumer can determine prior to

purchase of a product

Experience Qualitiesattributes a consumer can determine after

purchase (or during consumption) of a product

Credence Qualities

characteristics that may be impossible to evaluate

even after purchase and consumption

Issues to Consider in Examining the Consumers Service Experience:

Services as processes

Service provision as drama

Service roles and scripts

The compatibility of service customers

Customercoproduction

Emotion and mood

Differences in Service Experience in U.S. and Japan

Authenticity

Caring

Control

Courtesy Formality

Friendliness

Personalization

Promptness

Documents

Service Mgt 1(14 Pages)