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Services Marketing
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Chapter 1
INTRODUCTION
TO
SERVICES
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Objectives for Chapter 1:
Introduction to Services
Explain what services are and identify service
trends
Explain the need for special services marketing
concepts and practices
Outline the basic differences between goods and
services and the resulting challenges for service
businesses Introduce the service marketing triangle
Introduce the expanded services marketing mix
Introduce the gaps model of service quality
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SM Introduction
Services are deeds,processes andperformance
Intangible, but may have a tangiblecomponent
Generally produced and consumed at the
same time Need to distinguish between SERVICE and
CUSTOMER SERVICE
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SM Challenges for Services
Defining and improving quality
Communicating and testing new services
Communicating and maintaining a consistentimage
Motivating and sustaining employee commitment
Coordinating marketing, operations and humanresource efforts
Setting prices
Standardization versus personalization
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Examples of Service
Industries
Health Care hospital, medical practice, dentistry, eye care
Professional Services
accounting, legal, architectural Financial Services banking, investment advising, insurance
Hospitality restaurant, hotel/motel, bed & breakfast,
ski resort, rafting Travel
airlines, travel agencies, theme park
Others: hair styling, pest control, plumbing, lawn
maintenance, counseling services, health club
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Figure 1-1
Tangibility Spectrum
TangibleDominant
Intangible
Dominant
SaltSoft Drinks
Detergents
Automobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
Management
ConsultingTeaching
Fast-foodOutlets
Fast-foodOutlets
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Figure 1-2
Percent of
U.S. Labor Force by Industry
0
10
20
30
40
50
60
70
80
1929 1948 1969 1977 1984 1996
PercentofGDP
Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and
July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S.Economy, Scientific American, 244,3 (1981): 31-39.
Year
Services
Manufacturing
Mining & Agriculture
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0
10
20
30
40
50
60
70
80
1948 1959 1967 1977 1987 1996
Figure 1-3
Percent of U.S. Gross Domestic
Product by Industry
Percen
tofGDP
Year
Source: Survey of Current Business, August 1996, Table 11, April 1998, Table
B.3; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S.
Economy, Scientific American, 244,3 (1981): 31-39.
Services
Manufacturing
Mining & Agriculture
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Differences Between
Goods and Services
Intangibility
Perishability
SimultaneousProduction
andConsumption
Heterogeneity
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SM Implications of Intangibility
Services cannot be inventoried
Services cannot be patented
Services cannot be readily displayed
or communicated
Pricing is difficult
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SM Implications of Heterogeneity
Service delivery and customer satisfaction
depend on employee actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the service
delivered matches what was planned andpromoted
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Implications of Simultaneous
Production and Consumption
Customers participate in and affect the
transactionCustomers affect each other
Employees affect the service outcome
Decentralization may be essentialMass production is difficult
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SM Implications of Perishability
It is difficult to synchronize supply and
demand with services
Services cannot be returned or resold
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Table 1-2
Services are Different
Goods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.
Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.
Standardized Hetero eneous Service delivery and customer satisfaction depend on
employee actions.Service ualit de ends on man uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.
Productionseparate fromconsumption
Simultaneousproduction andconsumption
Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.
Decentralization may be essential.Mass production is difficult.
Non erishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing,
Journal of Marketing49 (Spring 1985): 33-46.
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Figure 1-5
The Services Marketing Triangle
InternalMarketing
Interactive Marketing
ExternalMarketing
Company(Management)
CustomersEmployees
enabling thepromise
delivering the promise
setting thepromise
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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Ways to Use the
Services Marketing Triangle
Overall StrategicAssessment
How is the service
organization doing
on all three sides of
the triangle?
Where are the
weaknesses?
What are the
strengths?
Specific ServiceImplementation
What is being promotedand by whom?
How will it be deliveredand by whom?
Are the supportingsystems in place todeliver the promisedservice?
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Source: Adapted from A. Parasuraman
Company
CustomersProviders
Technology
Figure 1-6
The Services Triangle
and Technology
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Services Marketing Mix:
7 Ps for Services
Traditional Marketing Mix
Expanded Mix for Services: 7 Ps
Building Customer Relationships Through
People, Processes, and Physical Evidence
Ways to Use the 7 Ps
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Traditional Marketing Mix
All elements within the control of the firm that
communicate the firms capabilities and image to
customers or that influence customer satisfactionwith the firms product and services:
Product
Price
Place
Promotion
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Expanded Mix for Services --
the 7 Ps
Product
Price Place
Promotion
People
Process
Physical Evidence
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Table 1-3
Expanded Marketing Mix forServices
PRODUCT PLACE PROMOTION PRICE
Ph sical oodfeatures
Channel type Promotionblend
Flexibility
Quality level Exposure Salespeople Price level
Accessories Intermediaries Advertising Terms
Packaging Outlet location Salespromotion
Differentiation
Warranties Trans ortation Publicity Allowances
Product lines Storage
Branding
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PEOPLE PHYSICALEVIDENCE
PROCESS
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicatingculture and values
Signage Level of customer involvement
Employee research Employee dress
Other tangibles
Table 1-3 (Continued)
Expanded Marketing Mix for
Services
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SM Ways to Use the 7 Ps
Overall Strategic
Assessment
How effective is a firmsservices 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 ServiceImplementation
Who is the customer?
What is the service?
How effectively does theservices marketing mix for aservice communicate its
benefits and quality? What
changes/improvements areneeded?
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Services Marketing Triangle
Applications Exercise
Focus on a service organization. In the context
you are focusing on, who occupies each of the
three points of the triangle?
How is each type of marketing being carried out
currently?
Are the three sides of the triangle well aligned?
Are there specific challenges or barriers in any ofthe three areas?
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SMSM
Part 1
FOCUS ON THE CUSTOMER
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PerceivedService
Expected
ServiceCUSTOMER
COMPANY
Customer
Gap
GAP 1
GAP 2
Gaps Model of Service Quality
GAP 3
ExternalCommunications
to CustomersGAP 4Service Delivery
Customer-Driven ServiceDesigns and Standards
Company Perceptions ofConsumer Expectations
Part 1 Opener
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Gaps Model of Service
Quality
Customer Gap:
difference between expectations andperceptions
Provider Gap 1: not knowing what customers expect
Provider Gap 2:
not having the right service designs and
standards Provider Gap 3:
not delivering to service standards
Provider Gap 4:
not matching performance to promisesPart 1 Opener
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SM The Customer Gap
Expected
Service
PerceivedService
GAP
Part 1 Opener
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SMSM
Chapter 2
CONSUMER BEHAVIORIN SERVICES
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Objectives for Chapter 2:Consumer Behavior in
Services Overview the generic differences in consumer behavior
between services and goods
Introduce the aspects of consumer behavior that a
marketer must understand in five categories of consumer
behavior:
Information search
Evaluation of service alternatives Service purchase and consumption
Postpurchase evaluation
Role of culture
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SM Consumer Evaluation
Processes for Services Search Qualities
attributes a consumer can determine prior to
purchase of a product Experience Qualities
attributes 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
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Figure 2-1
Continuum of Evaluation forDifferent Types of Products
Difficult to evaluateEasy to evaluate
High in search
qualities
High in experience
qualities
High in credence
qualities
Most
Goods
Most
Services
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Figure 2-2
Categories in ConsumerDecision-Making and Evaluation of
Services
Information
SearchEvaluation of
Alternatives
Purchase andConsumption
Post-PurchaseEvaluation
Use of personal sources Perceived risk
Evoked set Emotion and mood
Service provision as drama Service roles and scripts Compatibility of customers
Attribution of dissatisfaction Innovation diffusion Brand loyalty
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Figure 2-3
Categories in Consumer Decision-
Making and Evaluation of Services
Information
SearchEvaluation of
Alternatives
Purchase andConsumption
Post-PurchaseEvaluation
Use of personal sources Perceived risk
Evoked set Emotion and mood
Service provision asdrama
Service roles and scripts Compatibility of customers
Attribution of dissatisfaction Innovation diffusion Brand loyalty
CultureValues and attitudes Manners and customs
Material culture Aesthetics
Educational and socialinstitutions
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SM Information search
In buying services consumers rely more onpersonal sources. WHY? Refer p32
Personal influence becomes pivotal asproduct complexity increases
Word of mouth important in delivery ofservices
With service most evaluation followspurchase
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SM Perceived Risk
More risk would appear to be involved withpurchase of services (no guarantees)
Many services so specialised and difficult toevaluate (How do you know whether theplumber has done a good job?)
Therefore a firm needs to develop strategiesto reduce this risk, e.g, training ofemployees, standardisation of offerings
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SM Evoked Set
The evoked set of alternatives likely to be smallerwith services than goods
If you would go to a shopping centre you mayonly find one dry cleaner or single brand
It is also difficult to obtain adequate prepurchaseinformation about service
The Internet may widen this potential Consumer may choose to do it themselves, e.g.
garden services
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SM Emotion and Mood
Emotion and mood are feeling states that
influence peoples perception and
evaluation of their experiences Moods are transient
Emotions more intense, stable and
pervasive
May have a negative or positive influence
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Service Provision as
Drama
Need to maintain a desirable impression
Service actors need to perform certain
routines
Physical setting important, smell, music,
use of space, temperature, cleanliness, etc.
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Global Feature:
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Global Feature:
Differences in the Service
Experience in the U.S. and Japan
Authenticity
Caring
Control Courtesy
Formality
Friendliness
Personalization
Promptness
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SMSM
Chapter 3
CUSTOMER
EXPECTATIONS OFSERVICES
43Objectives for Chapter 3:
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Objectives for Chapter 3:Customer Expectations of
Service
Recognize that customers hold different types ofexpectations for service performance
Discuss controllable and uncontrollable sources of
customer expectations Distinguish between customers global expectations of
their relationships and their expectations of the serviceencounter
Acknowledge that expectations are similar for manydifferent types of customers
Delineate the most important current issues surroundingcustomer expectations
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SM DEFINITIONS
Customers have different expectations reservicesor expected service
Desired servicecustomer hopes to receive Adequate servicethe level of service the
customer may accept
DO YOUR EXPECTATIONS DIFFER RESPUR and CAPTAIN DOREGO?
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Figure 3-1
Dual CustomerExpectation Levels
(Two levels of expectations)
Adequate Service
Desired Service
Zone ofTolerance
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Figure 3-2
The Zone of Tolerance
Adequate Service
Desired Service
Zone ofTolerance
47Figure 3-3
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g
Zones of Tolerance VARY for
Different Service Dimensions
Most Important Factors Least Important Factors
Levelof
Expectation
Source: Berry, Parasuraman, and Zeithaml (1993)
Adequate Service
Desired Service
Zone of
Tolerance
Desired
Service
AdequateService
Zone
of
Tolerance
Desired Service
Adequate Service
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Factors that Influence
Desired Service
DesiredService
AdequateService
Zone
of
Tolerance
Enduring Service
Intensifiers
Personal Needs
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Personal needs include physical, social,
psychological categories
Enduring service intensifiers are individual, stable
factors that lead to heightened sensitivity to
service
This can further divided into Derived Service
Expectations and Personal service Philosophies
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Figure 3-6
Factors that Influence
Adequate Service
DesiredService
AdequateService
Zone
of
ToleranceSelf-Perceived
Service Role
Situational
Factors
Perceived Service
Alternatives
Transitory Service
Intensifiers
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Transitory service intensifierstemporary
a computer breakdown will be less tolerated
at financial year-ends Perceived service alternatives
Perceived service role of customer
Situational factors
52Figure 3-7
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Factors that Influence
Desired and Predicted Service
DesiredService
AdequateService
Zoneof
Tolerance
Predicted
Service
Explicit Service
Promises
Implicit Service
Promises
Word-of-Mouth
Past Experience
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SMSM
Chapter 4
CUSTOMER
PERCEPTIONS OFSERVICE
54Objectives for Chapter 4:
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Objectives for Chapter 4:
Customer Perceptions of
Service
Provide you with definitions and
understanding of customer satisfaction and
service quality Show that service encounters or the
moments of truth are the building blocks of
customer perceptions Highlight strategies for managing customer
perceptions of service
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Customer Perceptions of
Service Quality and
Customer Satisfaction
Service
Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Product
Quality
PricePersonal
Factors
Customer
Satisfaction
Situational
Factors
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F t I fl i
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Factors Influencing
Customer Satisfaction
Product/service quality
Product/service attributes or features
Consumer Emotions
Attributions for product/service success or
failure
Equity or fairness evaluations
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Outcomes of
Customer Satisfaction
Increased customer retention
Positive word-of-mouth communications
Increased revenues
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SM Service Quality
The customers judgment of overall
excellence of the service provided inrelation to the quality that was expected.
Process and outcome quality are both
important.
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The Five Dimensions of
Service Quality
Ability to perform the promisedservice dependably and accurately.
Knowledge and courtesy ofemployees and their ability toconvey trust and confidence.
Physical facilities, equipment, andappearance of personnel.
Caring, individualized attention thefirm provides its customers.
Willingness to help customers andprovide prompt service.
Tangibles
Reliability
Responsiveness
Assurance
Empathy
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SERVQUAL Attributes
Providing service as promised
Dependability in handling customersservice problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records
Keeping customers informed as towhen services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customersrequests
RELIABILITY
RESPONSIVENESS
Employees who instill confidence incustomers
Making customers feel safe in theirtransactions
Employees who are consistently courteous
Employees who have the knowledge toanswer customer questions
ASSURANCE
Giving customers individual attention
Employees who deal with customers in acaring fashion
Having the customers best interest at heart
Employees who understand the needs oftheir customers
Convenient business hours
EMPATHY
Modern equipment
Visually appealing facilities
Employees who have a neat,professional appearance
Visually appealing materials
associated with the service
TANGIBLES
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SM The Service Encounter
is the moment of truth
occurs any time the customer interacts with the firm
can potentially be critical in determining customer satisfaction and
loyalty types of encounters:
remote encounters
phone encounters
face-to-face encounters
is an opportunity to:build trust reinforce qualitybuild brand identity
increase loyalty
62Figure 4-4
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Check-In
Request Wake-Up Call
Checkout
Bellboy Takes to Room
Restaurant Meal
g
A Service Encounter
Cascade for a Hotel Visit
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Common Themes in Critical
Service Encounters Research
Recovery: Adaptability:
Spontaneity:Coping:
Employee Responseto Service Delivery
System Failure
Employee Responseto Customer Needs
and Requests
Employee Responseto Problem Customers
Unprompted andUnsolicited EmployeeActions and Attitudes
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Figure 4 6
Evidence of Service from the
Customers Point of View
People
ProcessPhysical
Evidence
Contact employees
Customer him/herself
Other customersOperational flow ofactivities
Steps in process
Flexibility vs.
standard
Technology vs.
human Tangible
communication
Servicescape
Guarantees
Technology
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SMSM
Part 2
LISTENING TOCUSTOMERREQUIREMENTS
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Provider GAP 1
CompanyPerceptions of
ConsumerExpectations
ExpectedService
CUSTOMER
COMPANY
GAP 1
Part 2 Opener
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SMSM
Chapter 5
UNDERSTANDING
CUSTOMEREXPECTATIONS AND
PERCEPTIONS THROUGHMARKETING RESEARCH
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C R h Obj ti
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Common Research Objectives
for Services
To identify dissatisfied customers
To discover customer requirements or expectations
To monitor and track service performance
To assess overall company performance compared tocompetition
To assess gaps between customer expectations andperceptions
To gauge effectiveness of changes in service
To appraise service performance of individuals and teamsfor rewards
To determine expectations for a new service
To monitor changing expectations in an industry
To forecast future expectations
69Figure 5-1
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Criteria for An Effective
Services Research Program
Research
Objectives
Includes
Perceptions
and
Expectationsof
Customers
Includes
Measures
of
Loyalty or
BehavioralIntentions
IncludesStatisticalValidity
When Necessary
MeasuresPriorities
orImportance
Occurs
with
Appropriate
Frequency
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Portfolio of Services Research
Customer ComplaintSolicitation
Relationship Surveys
Post-Transaction Surveys
Customer Focus Groups
Mystery Shopping ofService Providers
Employee Surveys
Lost Customer Research
Identify dissatisfied customers to attempt recovery;identify most common categories of service failure forremedial action
Obtain customer feedback while service experience is still
fresh; act on feedback quickly if negative patterns develop
Use as input for quantitative surveys; provide a forumfor customers to suggest service-improvement ideas
Assess companys service performance compared tocompetitors; identify service-improvement priorities; trackservice improvement over time
Measure individual employee service behaviors for use incoaching, training, performance evaluation, recognition andrewards; identify systemic strengths and weaknesses inservice
Measure internal service quality; identify employee-perceived obstacles to improve service; trackemployee morale and attitudes
Determine the reasons why customers defect
Research Objective Type of Research
Future Expectations ResearchTo forecast future expectations of customersTo develop and test new service ideas
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Stages in the Research
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Stages in the Research
Process
Stage 1 : Define Problem
Stage 2 : Develop Measurement Strategy
Stage 3 : Implement Research Program
Stage 4 : Collect and Tabulate Data
Stage 5 : Interpret and Analyze Findings
Stage 6 : Report Findings
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Service Quality Perceptions
Relative to Zones of Tolerance
by Dimensions
Retail Chain
9
8
7
6
5
4
3
21
0Reliability Responsiveness Assurance Empathy Tangibles
OO O O
Zone of Tolerance S.Q. PerceptionO
O
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Chapter 6
BUILDING
CUSTOMER
RELATIONSHIPS
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Relationship Marketing
is a philosophy of doing business that focuses on keeping
and improving current customers
does not necessarily emphasize acquiring new customers
is usually cheaper (for the firm)--to keep a current
customer costs less than to attract a new one
goal = to build and maintain a base of committed
customers who are profitable for the organization
thus, the focus is on the attraction, retention, and
enhancement of customer relationships
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A Loyal Customer is One Who...
Shows Behavioral Commitment
buys from only one supplier, even though other options
exist
increasingly buys more and more from a particularsupplier
provides constructive feedback/suggestions
Exhibits Psychological Commitment
wouldnt consider terminating the relationship--psychological commitment
has a positive attitude about the supplier
says good things about the supplier
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Benefits to the Organization
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Benefits to the Organization
of Customer Loyalty
loyal customers tend to spend more with the
organization over time
on average costs of relationship maintenance are
lower than new customer costs
employee retention is more likely with a stable
customer base
lifetime value of a customer can be very high
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inherent benefits in getting good value
economic, social, and continuity benefits
contribution to sense of well-being and qualityof life and other psychological benefits
avoidance of change
simplified decision makingsocial support and friendships
special deals
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Strategies for Building
Relationships
Foundations:
Excellent Quality/Value
Careful Segmentation
Bonding Strategies:
Financial Bonds
Social & Psychological Bonds
Structural Bonds
Customization Bonds
Relationship Strategies Wheel
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Figure 6-1
C t G l f
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Getting
Satisfying
Retaining
Enhancing
Customer Goals of
Relationship Marketing
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Figure 6-3
Underlying Logic of Customer
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Underlying Logic of Customer
Retention Benefits to the
Organization
Customer Retention &
Increased Profits
Employee Loyalty
Quality
Service
Customer Satisfaction
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Steps in Market Segmentation
and
Targeting for Services
IdentifyBases forSegmentingthe Market
STEP 1:
DevelopProfiles ofResultingSegments
STEP 2:
DevelopMeasuresof SegmentAttractive-ness
STEP 3:
Select theTargetSegments
STEP4:
Ensure thatSegmentsAreCompatible
STEP 5:
82
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Figure 6-6Levels of Retention Strategies
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ExcellentQuality
and
Value
Levels of Retention Strategies
I. Financial
Bonds
II.
Social
Bonds
IV.
Structural
Bonds
III. Customization
Bonds
Volume andFrequency
Rewards
Bundling and
Cross Selling
Stable
Pricing
Social Bonds
Among
Customers
Personal
Relationships
Continuous
Relationships
Customer
IntimacyMass
Customization
Anticipation
/ Innovation
Shared
Processes
andEquipment
Joint
Investments
Integrated
Information
Systems
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Chapter 7
SERVICE RECOVERY
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Figure 7-5
S i R St t i
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Service Recovery Strategies
Service
Recovery
Strategies
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Figure 7-6
Causes Behind Service
High Price
Price Increases
Unfair Pricing
Pricing
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Causes Behind Service
Switching
Service
Switching
Behavior
g
Deceptive Pricing
Location/Hours
Wait for Appointment
Wait for Service
Inconvenience
Service Mistakes
Billing Errors
Service Catastrophe
Core Service Failure
Uncaring
Impolite
Unresponsive Unknowledgeable
Service Encounter Failures
Negative Response
No Response
Reluctant Response
Response to Service Failure
Found Better Service
Competition
Cheat
Hard Sell
Unsafe
Conflict of Interest
Ethical Problems
Customer Moved Provider Closed
Involuntary Switching
Source: Sue Keaveney
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y a Good Gua a tee
Works
forces company to focus on customers
sets clear standards
generates feedback
forces company to understand why it failed
builds marketing muscle
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Part 3
ALIGNING STRATEGY,
SERVICE DESIGNAND STANDARDS
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CUSTOMER
COMPANY
GAP 2
Customer-DrivenService Designs and
Standards
CompanyPerceptions of
ConsumerExpectations
Provider GAP 2
Part 3 Opener
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Chapter 8
SERVICE DEVELOPMENTAND DESIGN
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Figure 8-1
Risks of Relying on Words
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Risks of Relying on Words
Alone to
Describe Services
Oversimplification
Incompleteness Subjectivity
Biased Interpretation
Figure 8-4
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Service Mapping/Blueprinting
A tool for simultaneously depicting the service
process, the points of customer contact, and the
evidence of service from the customers point of
view.
Service
Mapping
Process
Points of Contact
Evidence
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Service Blueprint Components
CUSTOMER ACTIONSline of interaction
ONSTAGE CONTACT EMPLOYEE ACTIONS
line of visibility
BACKSTAGE CONTACT EMPLOYEE ACTIONS
line of internal interaction
SUPPORT PROCESSES
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SM
pp
Blueprints
New Service Development concept development
market testing
Supporting a Zero Defects Culture managing reliability
identifying empowerment issues
Service Recovery Strategies identifying service problems
conducting root cause analysis
modifying processes
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Chapter 10
PHYSICAL EVIDENCEAND THE SERVICESCAPE
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Table 10-1
Elements of Physical
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Elements of Physical
Evidence
Servicescape Other tangibles
Facility exteriorExterior design
SignageParkingLandscapeSurrounding environment
Facility interior
Interior designEquipmentSignageLayoutAir quality/temperature
Business cardsStationery
Billing statementsReportsEmployee dressUniformsBrochuresInternet/Web pages
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Table 10-2Examples of Physical Evidence from theCustomers Point of View
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Customer s Point of ViewService Physical evidence
Servicescape Other tangiblesInsurance Not applicable Policy itself
Billing statementsPeriodic updatesCompany brochureLetters/cards
Hospital Building exteriorParkingSignsWaiting areas
Admissions officePatient care roomMedical equipmentRecovery room
UniformsReports/stationeryBilling statements
Airline Airline gate areaAirplane exteriorAirplane interior (dcor, seats, airquality)
TicketsFoodUniforms
Express mail Not applicable PackagingTrucksUniformsComputers
Sportingevent
Parking, Seating, RestroomsStadium exteriorTicketing area, Concession AreasEntrance, Playiing Field
SignsTicketsProgramUniforms
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Part 4
DELIVERING ANDPERFORMING SERVICE
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CUSTOMER
COMPANY
Provider GAP 3
Service Delivery
GAP 3
Customer-Driven
Service Designs andStandards
Part 4 Opener
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Chapter 11
EMPLOYEES ROLES INSERVICE DELIVERY
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SM Service Employees
They are the service
They are the firm in the customers eyes
They are marketers
Importance is evident in
The Services Marketing Mix (People)
The Service-Profit Chain
The Services Triangle
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SM Service Employees
Who are they?
boundary spanners
What are these jobs like?emotional labor
many sources of potential conflict
person/role organization/client
interclient
quality/productivity
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Figure 11-3
Boundary Spanners Interact
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SM with Both Internal
and External Constituents
Internal Environment
External Environment
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Sources of Conflict for
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SM Sources of Conflict for
Boundary-Spanning Workers
Person vs. Role
Organization vs. Client
Client vs. Client
Quality vs. Productivity
104
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Figure 11-5
Human Resource Strategies for Closing GAP 3
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SM
Customer-oriented
Service
Delivery
Hire the
Right People
Provide
Needed SupportSystems
Retain the
Best
People
DevelopPeople to
Deliver
Service
Quality
Hire forService
Competencies
and ServiceInclination
ProvideSupportive
Technologyand
Equipment
Treat
Employees
as
Customers
Empower
Employees
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SM Service Culture
A culture where an appreciation for good service
exists, and where giving good service to internal
as well as ultimate, external customers, isconsidered a natural way of life and one of the
most important norms by everyone in the
organization.
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SMSM
Chapter 12
CUSTOMERS ROLES INSERVICE DELIVERY
108
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Importance ofOtherCustomers in Service
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SM
Customers in ServiceDelivery
Other customers can detractfrom
satisfaction
disruptive behaviors excessive crowding
incompatible needs
Other customers can enhancesatisfaction mere presence socialization/friendships
roles: assistants, teachers, supporters
109
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SM How Customers Widen Gap 3
Lack of understanding of their roles
Not being willing or able to perform their roles
No rewards for good performance Interfering with other customers
Incompatible market segments
110
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Customers as Contributors
to Service Quality and
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SM to Service Quality and
Satisfaction
Customers can contribute to
their own satisfaction with the service
by performing their role effectively
by working with the service provider
the qualityof the service they receive
by asking questions
by taking responsibility for their own satisfaction
by complaining when there is a service failure
111
SM
Strategies for Enhancing
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SM Customer Participation
1. Define customers jobs
- helping himself
- helping others- promoting the company
2. Individual differences: not everyone wants
to participate
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SMSM
Chapter 14
MANAGING DEMANDAND CAPACITY
113
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Understanding Capacity
Constraints and Demand
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SM Constraints and Demand
Patterns
Time, labor,
equipment and
facilities
Optimal versus
maximal use ofcapacity
Charting demand
patterns
Predictable cycles
Random demand
fluctuations
Demand patterns by
market segment
Capacity Constraints Demand Patterns
114
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SMSM
Part 5
MANAGING SERVICEPROMISES
115
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SM
CUSTOMER
COMPANYExternal
Communicationsto CustomersGAP 4
Service Delivery
Provider GAP 4
Part 5 Opener
116
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SMSM
Chapter 15
INTEGRATED
MARKETINGCOMMUNICATION
117
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Figure 15-1
Communications and the
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SM Communications and the
Services Marketing Triangle
Internal MarketingVertical Communications
Horizontal Communications
Interactive MarketingPersonal Selling
Customer Service CenterService Encounters
Servicescapes
External MarketingCommunicationAdvertising
Sales PromotionPublic Relations
Direct Marketing
Company
CustomersEmployees
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
118
SM
Approaches forIntegrating Services Marketing
Figure 15-3
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SM
g g gCommunication
Goal:Delivery
greater thanor equal topromises
ImproveCustomerEducation
ManageService
Promises
ManageCustomer
Expectations
ManageInternal
MarketingCommunication
119
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Figure 15-4
Approaches for
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M
Goal:Delivery
greater thanor equal topromises
OfferService
Guarantees
CreateEffectiveServices
Communications
MANAGING SERVICE PROMISES
MakeRealisticPromises
CoordinateExternal
Communication
ppManaging Service Promises
120
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Figure 15-8
Approaches forManaging Customer Expectations
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M
Communicate Criteria forService Effectiveness
Create Tiered-ValueOfferings
Managing Customer Expectations
NegotiateUnrealistic
Expectations
Goal:Delivery
greater thanor equal topromises
Offer Choices
121
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Figure 15-9
Approaches for
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M
Goal:Delivery
greater thanor equal topromises
PrepareCustomers
for theServiceProcess
ClarifyExpectationsafter the Sale
Improving Customer Education
Teach
Customersto AvoidPeak
DemandPeriods
andSeek Slow
Periods
ConfirmPerformanceto Standards
122
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Figure 15-10
Approaches for Managing
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Goal:Deliverygreater thanor equal topromises
pp g gInternal Marketing Communications
Create Effective
VerticalCommunications
Align BackOffice Personnel
w/ External Customers
Create EffectiveHorizontal
Communications
CreateCross-Functional
Teams
123
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Contact: +923006641921 Usman Waheed
MM
Chapter 17
THE FINANCIAL ANDECONOMIC IMPACT OFSERVICE QUALITY
124
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Objectives for Chapter 17:The Financial and Economic
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Contact: +923006641921 Usman Waheed
MImpact of Service
Examine the direct effects of service on profits
Consider the impact of service on getting newcustomers
Evaluate the role of service in keeping customers
Examine the link between perceptions of service andpurchase intentions
Emphasize the importance of selecting profitablecustomers
Discuss what is know about the key service drivers ofoverall service quality, customer retention andprofitability
Discuss the balanced performance scorecard to focuson strategic measurement other than financials
125
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Figure 17-1
The Direct Relationship between
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MService and Profits
Profits?ServiceQuality
126
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Figure 17-2
Offensive Marketing Effects of
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Mg
Service on Profits
ProfitsMarketShare
Reputation Sales
PricePremium
ServiceQuality
127
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Figure 17-3
Defensive Marketing Effects ofS i P fit
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M Service on Profit
Margins
Profits
CustomerRetention
Costs
PricePremium
Word of
Mouth
Volume ofPurchasesServiceQuality
128
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Figure 17-5
Perceptions of Service,Behavioral
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M BehavioralIntentions and Profits
CustomerRetention
Costs
PricePremium
Word ofMouth
Margins
Profits
Volume of
Purchases
Service BehavioralIntentions
Sales
129
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Figure 17-6
The 80/20 Customer Pyramid
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M The 80/20 Customer Pyramid
Most ProfitableCustomers
Least ProfitableCustomers
What segment spends more withus over time, costs less to maintain,
spreads positive word of mouth?
What segment costs us in
time, effort and money yetdoes not provide the returnwe want? What segment is
difficult to do business with?
Other
Customers
Best
Customers
130
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Figure 17-7
The Expanded Customer Pyramid
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M The Expanded Customer Pyramid
Most Profitable
Customers
Least Profitable
Customers
What segment spends more withus over time, costs less to maintain,
spreads positive word of mouth?
What segment costs us intime, effort and money yet
does not provide the returnwe want? What segment is
difficult to do business with?
Gold
Iron
Lead
Platinum
131
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Figure 17-8
The Key Drivers of Service Quality,
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MCustomer Retention, and Profits
Key Drivers
ServiceQuality
Service
Encounter
Service
Encounter
Service
Encounter
CustomerRetention
BehavioralIntentions Profits
Service
Encounter
Service Encounters
132
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Figure 17-9Sample Measurements for the
Balanced Scorecard
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M Balanced Scorecard
Adapted from Kaplan and Norton
Innovation andLearning Perspective
CustomerPerspective
Service Perceptions
Service Expectations
Perceived Value
Behavioral Intentions:
OperationalPerspective:
Right first time (% hits)Right on time (% hits)
Responsiveness (% on
time)
Transaction time (hours,
days)
Throughput timeReduction in waste
Process quality
Financial Measures
Price Premium
Volume Increases
Value of Customer
Referrals
Value of Cross Sales
Long-term Value of
Customer
% Loyalty% Intent to Switch
# CustomerReferrals
# Cross Sales# of Defections
Number of new productsReturn on innovation
Employee skills
Time to market
Time spent talking to
customers
133
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Figure 17-10
Service Quality Spells Profits
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ServiceQualityCustomerRetention
Costs
PricePremium
Word ofMouth
Margins
Profits
DefensiveMarketing
Volume ofPurchases
MarketShare
Reputation
SalesOffensiveMarketing