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Contact: +923006641921 Usman Waheed

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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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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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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



11

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Services cannot be inventoried

Services cannot be patented

Services cannot be readily displayed

or communicated

Pricing is difficult



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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



14

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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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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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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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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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Expected

Service

PerceivedService

GAP

Part 1 Opener

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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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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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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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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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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

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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


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

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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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Chapter 4

CUSTOMER

PERCEPTIONS OFSERVICE

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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


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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O t f


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Outcomes of


Increased customer retention

Positive word-of-mouth communications

Increased revenues

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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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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

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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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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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Chapter 5

UNDERSTANDING

CUSTOMEREXPECTATIONS AND

PERCEPTIONS THROUGHMARKETING RESEARCH

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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

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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

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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


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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:

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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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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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S


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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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S

S


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SMSM

Chapter 11

EMPLOYEES ROLES INSERVICE DELIVERY

100

S Service Employees


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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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S Service Employees


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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

102

S

Figure 11-3

Boundary Spanners Interact


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SM with Both Internal

and External Constituents

Internal Environment

External Environment

103

SFigure 11-4

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

S

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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S Service Culture


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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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SM

SM


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Chapter 12

CUSTOMERS ROLES INSERVICE DELIVERY

108

SM

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

SM How Customers Widen Gap 3


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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

SM

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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SM

SM


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SMSM

Chapter 14

MANAGING DEMANDAND CAPACITY

113

SM

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

SM

SM


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SMSM

Part 5

MANAGING SERVICEPROMISES

115

SM P id GAP 4


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SM

CUSTOMER

COMPANYExternal

Communicationsto CustomersGAP 4

Service Delivery

Provider GAP 4

Part 5 Opener

116

SM

SM


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SMSM

Chapter 15

INTEGRATED

MARKETINGCOMMUNICATION

117

SM

Figure 15-1

Communications and the


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SM Communications and the


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

SM

Figure 15-4

Approaches for


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M

Goal:Delivery


OfferService

Guarantees

CreateEffectiveServices

Communications

MANAGING SERVICE PROMISES

MakeRealisticPromises

CoordinateExternal

Communication

ppManaging Service Promises

120

SM

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


Offer Choices

121

SM

Figure 15-9

Approaches for


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M

Goal:Delivery


PrepareCustomers

for theServiceProcess

ClarifyExpectationsafter the Sale

Improving Customer Education

Teach

Customersto AvoidPeak

DemandPeriods

andSeek Slow

Periods

ConfirmPerformanceto Standards

122

SM

Figure 15-10

Approaches for Managing


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M

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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SM


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MM

Chapter 17

THE FINANCIAL ANDECONOMIC IMPACT OFSERVICE QUALITY

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SM

Objectives for Chapter 17:The Financial and Economic


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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

SM

Figure 17-1

The Direct Relationship between


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MService and Profits

Profits?ServiceQuality

126

SM

Figure 17-2

Offensive Marketing Effects of


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Mg

Service on Profits

ProfitsMarketShare

Reputation Sales

PricePremium

ServiceQuality

127

SM

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

SM

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

SM

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

SM

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

SM

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

SM

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

SM

Figure 17-10

Service Quality Spells Profits


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M

ServiceQualityCustomerRetention

Costs

PricePremium

Word ofMouth

Margins

Profits

DefensiveMarketing

Volume ofPurchases

MarketShare

Reputation

SalesOffensiveMarketing

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