service marketing q
DESCRIPTION
Service MarketingTRANSCRIPT
Chapter 1
Service marketing is the endorsement of economic activities offered by a company to its consumers, it is considered to be a special sub set of marketing because it focuses on how rendering of services can affect both the customer attitude and the marketing strategy. Service marketing includes building public relations, advancing customer loyalty, developing quality of service, handling relationships and complaint management.
Define Service. What are the basic characteristics of service?***
Service is any act or performance that one party can offer to another that is essentially intangible in nature and doesn’t ownership of anything. Its production may or may not be tied with physical product. The American Marketing Association defines services as - “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.”
Characteristics of Services:
• Intangibility:
Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product.
• Inseparability:
It reflects the interconnection among the service provider, service receiver and other customer during delivering the service.
• Heterogeneity:
The variation in consistency from one service transaction to the next. Given the very nature of services, each service offering is unique and cannot be exactly repeated even by the same service provider.
• Perishability:
Services cannot be stored, saved, returned or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer.
Difference between Goods and Services*** Goods Services
A physical commodity A process or activity
Tangible Intangible
Homogenous Heterogeneous
Production and distribution are separation from their consumption
Production, distribution and consumption are simultaneous processes
Can be stored Cannot be stored
Transfer of ownership is possible Transfer of ownership is not possible
Question: Describe the service implications and management procedures***
Management Procedures of Service
• Management of Intangibility: Use of tangible clues, Use of personal sources of information, Creation of strong organizational image
• Management of Heterogeneity: Customization, Standardization • Management of Inseparability: Emphasize on selection and training the contact personnel and
service providers, Consumer management, Use of multisite location • Management of Perishability:
Demand Strategy- Creative Pricing, Reservation System, Development of complementary service, Development of nonpeak demand Supply Strategy- Part time employment, Capacity sharing, Utilization of third parties, Increase customer participation
Write down the eight elements (8P’s) in integrated service marketing? 8 Ps Service Marketing
1. Product 2. Price 3. Place 4. Promotion 5. Process 6. People 7. Physical Evidence 8. Productivity & quality
Goods Services Resulting Implications Tangible Intangible Services cannot be inventoried.
Services cannot be patented. Services cannot be readily displayed or communicated.Pricing is difficult.
Standardized Heterogeneous 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 and promoted.
Production separate from consumption
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 is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.
Chapter -2
Question: Explain service quality gaps with the help of a diagram.***
• Customer Gap:
• difference between expectations and perceptions
• 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 promises
What is expectancy disconfirmation mode? Discuss.***
A model proposing that comparing customer expectations lead customer to have their expectation confirmed or disconfirmed.
The Servuction Model
A model used to illustrate the factors that influence the service experience, including those are visible to the consumer and those and those are not.
• Inanimate Environment: All the nonliving features that present during the service encounter, like furniture, interior design, music, wall hangings etc.
• Contact Personnel: Employees other than the primary service providers who briefly interact with customers.
• Service Provider: Who provide the core services to the customers with direct interaction to them.
Define Service Encounter***
Service encounter
Involved in the production and delivery of the service are: the participants ¾ the customer and the contact personnel (employees); the process itself, and the physical environment in which the service is delivered.
• 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 quality
– build brand identity
– increase loyalty
• Participants in Service Encounter - Customer - Service Personnel - Process
Managing the service encounter
Being an effective service manager demands more than just the direct management of service encounters. We shall cover some different approaches to managing services in an indirect way.
Role theory is a learned set of behaviors that guides or directs how an individual operates in a given setting. Roles are passed down from employee to employee through on-the-job training. Thus, by understanding the frameworks of roles, managers can exert indirect control over the service encounter.
Script theory is an extension of role theory. In role theory, employees are likened to actors on a stage, so with script theory, we think of them as using scripts.
Common Themes in Critical Service Encounters Research:
Recovery:
DO DON’T • Acknowledge problem • Explain causes • Apologize • Compensate/upgrade • Lay out options • Take responsibility
• Ignore customer • Blame customer • Leave customer to fend for him/herself • Downgrade • Act as if nothing is wrong
Question: Describe the categories in consumer decision making and evaluation of services.***
Information Search
• In buying services consumers rely more on personal sources. WHY?
• Personal influence becomes pivotal as product complexity increases
• Word of mouth important in delivery of services
• With service most evaluation follows purchase
Perceived Risk
• More risk would appear to be involved with purchase of services (no guarantees)
• Many services so specialized and difficult to evaluate (How do you know whether the plumber has done a good job?)
• Therefore a firm needs to develop strategies to reduce this risk, e.g, training of employees, standardization of offerings
Evoked Set
• The evoked set of alternatives likely to be smaller with services than goods
• If you would go to a shopping Centre you may only find one dry cleaner or “single brand”
• It is also difficult to obtain adequate pre purchase information about service
• The Internet may widen this potential
• Consumer may choose to do it themselves, e.g. garden services
Emotion and Mood
• Emotion and mood are feeling states that influence people’s perception and evaluation of their experiences
• Moods are transient
• Emotions more intense, stable and pervasive
• May have a negative or positive influence
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.
Factors that Influence Adequate Service
• Transitory service intensifiers – temporary – a computer breakdown will be less tolerated at financial year-ends
• Perceived service alternatives
• Perceived service role of customer
• Situational factors
Factors that Influence Desired and Predicted Service
• Explicit Service Promises
• Implicit Service Promises
• Word of Mouth
• Past Experience
Chapter 3
Question: Draw and discuss the figure of four focus strategies.***
Positioning is defined as the process of establishing and maintaining a distinctive place in the market for an organisation and/or its products/services offerings. This is the creating of a distinct place in the minds of a customer, or the perception of a customer.
The place a product occupies in consumers’ minds relative to competing products.
Example: eBay’s positioning: No matter what “it” is, you can find “it” on eBay!
FOUR FOCUS STARTEGIES
The extent of a company’s focus can be described along two dimensions—market focus and service focus. Market focus is the extent to which a firm serves few or many markets, while service focus describes the extent to which a firm offers few or many services.
These two dimensions define the four basic focus strategies shown in the following
Fully focused
A fully focused organization provides a limited range of services (perhaps just a single core product) to a narrow and specific market segment. There are both opportunities and risks to such a strategy. Firms has recognized expertise in a well-defined area, it may provide protection against would-be competitors, and then the firm can charge high prices. The biggest risk is that the market may be too small to get the volume of business needed for financial success. Other risks include the danger that demand for the service may decrease because of alternative products, or that purchasers in the chosen segment may be affected by an economic downturn.
Market focused
A market focused company concentrates on a narrow market segment, but has a wide range of services. Before choosing a market focused strategy, managers need to be sure that their firms have the operational capability to do an excellent job of delivering each of the different services selected. They also need to understand customer purchasing practices and preferences.
Service focused
Service focused firms offer a narrow range of services to a fairly broad market. However, as new segments are added, the firm needs to develop knowledge and skills in serving each segment. This may require a broader sales effort and greater investment in marketing communication.
Unfocused
Finally, many service providers fall into the unfocused category, because they try to serve broad markets and provide a wide range of services. The danger with this strategy is that unfocused firms often are “jack of all trades and master of none.”
Question: How will you develop a market positioning strategy?***
Positioning links market analysis and competitive analysis to internal corporate analysis
A. Market Analysis
Focus on overall level and trend of demand and geographic locations of demand
Look into size and potential of different market segments
Understand customer needs and preferences and how they perceive the competition
B. Internal Corporate Analysis
Identify organization’s resources, limitations, goals, and values
Select limited number of target segments to serve
C. Competitor Analysis
Understand competitors’ strengths and weaknesses
Anticipate responses to potential positioning strategies
Question: Define various types of positioning strategy.***
Positioning by Specific Product Attribute and Benefits: Here the marketer associates a product with an attribute, a product feature or a consumer feature. Eg. Grameen Phone (Stay Closer) – Strong Network and Wider Accessibility.
POSITIONING BY PRICE/ QUALITY: The positioning is done based on price and quality of the product. Premium products are positioned like this. Eg. Rolex (high price), Add- Din (low price)
POSITIONING BY USE OR APPLICATION: Specific image or position for a brand is to associate it with a specific use or application. Eg. Google Earth
POSITIONING BY PRODUCT CLASS: Often the competition for a particular Service comes from outside the Service class. Eg. G-Cinema, Telefilm, Limited hour Play etc.
POSITIONING BY PRODUCT USER: Here the persona of the product is associated with the User. Eg. Idea – Abhishek Bachan
POSITIONING BY COMPETITOR This is similar to positioning by product class, although in this case the competition is within the same product category. Eg. Onida TV – “Neighbour’s Envy, Owners Pride”
POSITIONING BY CULTURAL SYMBOLS: The cultural symbols are used to differentiate the brands. Eg. Humara Bajaj, MDH-Degi Mirch, Air India
Positioning Map
Great tool to visualize competitive positioning and map developments of time
Useful way to represent consumer perceptions of alternative products graphically
Also known as perceptual maps (built on preference maps)
Information about a product can be obtained from market data, derived from ratings by representative consumers or both
Positioning Map of Chocolates
Using Positioning Maps to Analyze Competitive Strategy
Positioning Maps Help Managers to Visualize Strategy
Positioning maps display relative performance of competing firms on key attributes
Research provides inputs to development of positioning maps - challenge is to ensure that
Attributes employed in maps are important to target segments
Performance of individual firms on each attribute accurately reflects perceptions of customers in target segments
Predictions can be made of how positions may change in light of future developments
Simple graphic representations are often easier for managers to grasp than tables of data or paragraphs of prose
Charts and maps can facilitate “visual awakening” to threats and opportunities, suggest alternative strategic directions
Chapter 4
Communication Mix
The communication mix refers to specific methods used to promote the company or its products to targeted customers
Messages through Marketing Channels: Advertising
Build awareness, inform, persuade, and remind
Challenge: How stand out from the crowd?
Effectiveness remains controversial
Research suggests that less than half of all ads generate a positive return on their investment
Messages through Marketing Channels: Public Relations
PR/Publicity involves efforts to stimulate positive interest in an organization and its products through third parties
e.g., press conferences, news releases, sponsorships
Corporate PR specialists teach senior managers how to present themselves well at public events, especially when faced with hostile questioning
Unusual activities can present an opportunity to promote company’s expertise
Messages through Marketing Channels: Direct Marketing
Mailings, recorded telephone messages, faxes, email
Potential to send personalized messages to highly targeted micro segments
Need detailed database of information about customers and prospects
Advance in on-demand technologies empower consumers to decide how and when they prefer to be reached, and by whom
e.g. email spam filters, pop-up blockers, podcasting
Permission Marketing goal is to persuade customers to volunteer their attention
Enables firms to build strong relationships with customers
e.g., People invited to register at a firm’s website and specify what type of information they like to receive via email
Messages through Marketing Channels: Sales Promotion
Defined as “Communication that comes with an incentive”
Should be specific to a time period, price, or customer group
Motivates customers to use a specific service sooner, in greater volume with each purchase, or more frequently
Messages through Marketing Channels: Personal Selling
Interpersonal encounters educate customers and promote preferences for particular brand or product
Common in B2B and infrequently purchased services
Many B2B firms have dedicated sales force to do personal selling
Customer assigned to a designated account manager
For services that are bought less often, firm’s representative acts as consultant to help buyers make selection
Face-to-face selling of new products is expensive— telemarketing is lower cost alternative
Messages through Marketing Channels: Trade Shows
Popular in B2B marketplace
Stimulate extensive media coverage
Many prospective buyers come to shows
Opportunity to learn about latest offerings from wide variety of suppliers
Sales representative who usually reaches four to five potential customer per day may be able to get five qualified leads per hour at a show
Messages through Internet: Company’s Website
The web is used for a variety of communication tasks
Creating consumer awareness and interest
Providing information and consultation
Allowing two-way communication with customers through email and chat rooms
Encouraging product trial
Allowing customers to place orders
Measuring effectiveness of advertising or promotional campaigns
Innovative companies look for ways to improve the appeal and usefulness of their sites
Messages through Internet: Online Advertising
Banner advertising
Placing advertising banners and buttons on portals such as Yahoo, Netscape and other firms’ websites
Draw online traffic to the advertiser’s own site
Web sites often include advertisements of other related, but non competing services
Search engine advertising
Reverse broadcast network: search engines let advertisers know exactly what consumer wants through their keyword search
Can target relevant messages directly to desired consumers
Several advertising options:
Pay for targeted placement of ads to relevant keyword searches
Sponsor a short text message with a click-through link
Buy top rankings in the display of search results
Messages through Service Delivery Channels
Frontline employees
Communication from frontline staff can be for the core service or supplementary elements
New customers in particular need help from service personnel
Service outlets
Can be through banners, posters, signage, brochures, video screens, audio etc.
Self-service delivery points
ATMs, vending machines and websites are examples
Customer Training
Messages Originating from Outside the Organization
Word of Mouth (WOM)
Recommendations from other customers viewed as more credible
Strategies to stimulate positive WOM:
Having satisfied customers providing comments
Using other purchasers and knowledgeable individuals as reference
Creating exciting promotions that get people talking
Offering promotions that encourage customers to persuade their friend to purchase
Developing referral incentive schemes
Blogs – A new type of online WOM
Becoming increasingly popular
Communications about customer experiences influence opinions of brands and products
Some firm have started to monitor blogs as form of market research and feedback
Media Coverage
Compares, contrasts service offerings from competing organizations
Advice on “best buys”
Ethical Issues in Communication
Advertising, selling, and sales promotion all lend themselves easily to misuse
Communication messages often include promises about benefits and quality of service delivery. Customers are sometimes disappointed
Why were their expectations not met?
Poor internal communications between operations and marketing personnel concerning level of service performance
Over promise to get sales
Deceptive promotions
Unwanted intrusion by aggressive marketers into people’s personal lives
Many service firms employ a unified and distinctive visual appearance for all tangible elements
e.g. Logos, uniforms, physical facilities
Provide recognition and strengthen brand image
Especially useful in competitive markets to stand out from the crowd and be instantly recognizable in different locations
Question: What are the Common Educational and Promotional Objectives in Service Settings?
Common Educational and Promotional Objectives in Service Settings:
Create memorable images of specific companies and their brands
Build awareness/interest for unfamiliar service/brand
Compare service favorably with competitors’ offerings
Build preference by communicating brand strengths and benefits
Reposition service relative to competition
Reduce uncertainty/perceived risk by providing useful info and advice
Provide reassurance (e.g., promote service guarantees)
Encourage trial by offering promotional incentives
Familiarize customers with service processes before use
Teach customers how to use a service to best advantage
Stimulate demand in off-peak, discourage during peak
Recognize and reward valued customers and employees
Chapter 6
Question: Discuss the six step to setting a price.
Price is that which is given up in an exchange to acquire a good or service. It is the one element of marketing mix which produce revenue.
There is a six-step to setting a price:
1. Selecting the pricing objective
2. Determining demand
3. Estimating costs
4. Analyzing competitors’ costs, prices, and offers
5. Selecting a pricing method
6. Selecting the final price
Step 1: Selecting the Pricing Objective
• Survival
• Maximum current profit
• Maximum market share
• Maximum market skimming
• Product-quality leadership
Step 2: Determining Demand
• Price Sensitivity
Factors Leading to Less Price Sensitivity:
- The Product is more distinctive - Buyers are less aware of substitutes - Buyers Cannot easily compare the quality of substitutes - The Expenditure is a smaller part of buyer’s total income - The Expenditure is a Small compared to the total cost of the end product - Part of the cost is paid by another party - The product is Used with previously purchased assets - The product is assumed to have high quality and prestige - Buyers cannot store the product
• Estimating demand curves
- Statistical Analysis - Price Experiments - Surveys
• Price Elasticity of Demand
Changes in Price affect Consumer demand
Step 3: Estimating Costs
Types of Costs - Fixed and variable cost - Total Cost - Cost per unit of production
Accumulated Production Activity-Based Cost Accounting Target Costing
Step 4: Analyzing competitors’ costs, prices, and offers
- Evaluate the competitor’s price and product value
Step 5: Selecting a price method
• Markup pricing
• Target-return pricing
• Perceived-value pricing
• Value pricing
• Going-rate pricing
• Auction-type pricing
Step 6: Selecting the final price
• Impact of other marketing activities
• Company pricing policies
• Gain-and-risk sharing pricing
• Impact of price on other parties
Price Adaption Strategies
• Geographical pricing
• Discounts/ Allowances
- Cash, Quantity, Functional, Seasonal, Volume, Prompt payment discount
- Allowance
• Promotional pricing
- Loss-leader pricing - Special-event pricing - Cash rebates - Low-interest financing - Longer payment terms - Warranties and service contracts - Psychological discounting
• Differentiated pricing
- Customer-segment pricing - Product-form pricing - Image pricing - Channel pricing - Location pricing - Time pricing - Yield pricing
Respond to low-cost rival by/Brand Leader Responses to Competitive Price Cuts
• Maintain price
• Maintaining price and adding value
• Reducing price
• Increasing price and improving quality
• Launching a low-price fighter line
Chapter 7
Help Customers to Evaluate Service Offerings
• Customers may have difficulty distinguishing one firm from another -Provide tangible clues related to service performance
• Some performance attributes lend themselves better to advertising than others. e.g., Airlines • Firm’s expertise is hidden in low-contact services
- Need to illustrate equipment, procedures, employee activities that take place backstage
Promote Contributions of Service Personnel
• Frontline personnel are central to service delivery in high contact services
- Make the service more tangible and personalized
• Show customers work performed behind the scenes to ensure good delivery - To enhance trust, highlight expertise and commitment of employees - Advertisements must be realistic - Messages help set customers’ expectations - Service personnel should be informed about the content of new advertising campaigns
or brochures before launch
Facilitate Customer Involvement in Production
- Customers are actively involved in service production; they need training to perform well
- Show service delivery in action
- Television and videos engage viewer
e.g., Dentists showing patients videos of surgical procedures before surgery
- Streaming videos on web and podcasts are new channels to reach active customers
Stimulate or Dampen Demand to Match Capacity
• Live service performances are time-specific and can’t be stored for resale at a later date - Advertising and sales promotions can change timing of customer use
• Examples of demand management strategies: - Reducing usage during peak demand periods
- Stimulating demand during off-peak period
Chapter 8
Question: Define Service blueprint? What are the components of service blueprint?
Service Blueprint is a picture or map that accurately portrays the service system so that different people involved in providing it can understand and deal with it objectively regardless of their individual point of view
Service Blueprinting/ Service Mapping
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view.
Blueprint Components
• Customer actions: it includes steps, choices, activities and interactions that customer performs in the process of purchasing, consuming and evaluating the service
• Onstage employee actions: steps and activities that the contact employees performs that are visible to the customer.
• Backstage employee actions: steps and activities that occur behind the scene to support onstage activities.
• Support processes: covers the internal services, steps and interactions that take place to support the contact employees in delivering the service.
CUSTOMER ACTIONS
Line of interaction: direct interactions b/w the customer and organization
ONSTAGE” CONTACT EMPLOYEE ACTIONS
Line of visibility: this line separates all service activities that are visible to the customers from those that are not visible
“BACKSTAGE” CONTACT EMPLOYEE ACTIONS
Line of internal interaction: separates contact employee’s activities from those of other service support activities and people
SUPPORT PROCESSES
Building a Service Blueprint
Application of Service 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
Blueprints Can Be Used By:
• Service Marketers
• creating realistic customer expectations
• service system design
• promotion
• Operations Management
• rendering the service as promised
• managing fail points
• training systems
• quality control
• Human Resources
• empowering the human element
• job descriptions
• selection criteria
• appraisal systems
• System Technology
• providing necessary tools:
• system specifications
• personal preference databases
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.
Exercise for Creating Customer-Defined Service Standards
• Form a group of four people
• Use your school’s undergraduate or graduate program, or an approved alternative
• Complete the customer-driven service standards importance chart
• Establish standards for the most important and lowest-performed behaviors and actions
• Be prepared to present your findings to the class
Chapter 9
What are the Key Components of Service Blueprint? ***
1. Define standards for front-stage activities
2. Specify physical evidence
3. Identify main customer actions
4. Line of interaction (customers and front-stage personnel)
5. Front stage actions by customer-contact personnel
6. Line of visibility (between front stage and backstage)
7. Backstage actions by customer contact personnel
8. Support processes involving other service personnel
9. Support processes involving IT
Customer as Co-Producer: Levels of Customer Participation***
• High – Customer works actively with provider to co-produce the service - Service cannot be created without customer’s active participation - Customer can jeopardize quality of service outcome
• Medium – Customer inputs required to assist provider - Provide needed information and instructions - Make personal effort; - May Share physical possessions
• Low – Employees and systems do all the work - Involves standardized work
Process Redesign: Principle Approaches
• Eliminating non-value-adding steps • Shifting to self-service • Delivering direct service • Bundling services • Redesigning physical aspects of service processes
Self Service Technologies (SSTs)
• SSTs are the ultimate form of customer involvement in service production - Customers undertake specific activities using facilities or systems provided by service
supplier - Customer’s time and effort replace those of employees
• Information-based services lend selves particularly well to SSTs - Used in both supplementary services and delivery of core product
• Many companies and government organizations seek to divert customers from employee contact to Internet-based self-service
Service Firms as Teachers: Well-trained customers perform better
• Firms must teach customers roles as co-producers of service • Customers need to know how to achieve best results • Education can be provided through:
- Brochures - Advertising - Posted instructions - Machine-based instructions - Websites, including FAQs - Service providers - Fellow customers
• Employee must be well-trained to help advise, assist customers
Managing Customers as Partial Employees to Increase Productivity and Quality
1. Analyze customers’ present roles in the business and compare to management’s ideal 2. Determine if customers know how to perform and have necessary skills 3. Motivate customers by ensuring that will be rewarded for performing well 4. Regularly appraise customers’ performance; if unsatisfactory, considering changing roles of
termination
Identifying Jay Customer
Jay customer
A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers.
Why do jay customer matter?
Can disrupt processes Affect service quality May spoil experience of other customers
What should a firm do about them?
Try to avoid attracting potential jay customers Institute preventive measures Control abusive behavior quickly Take legal action against abusers But firms must act in ways that didn’t alternate other customers
Managing difficult customer
1. Egocentric Edgar
The type of customers who place his or her needs above all other customers and service personnel.
Dealing Strategy:
Take actions within the organization policy in the way that demonstrate you are trying to solve his or her problems in a special way. Let not know the edgar the policy of organization.
2. Bad mouth betty
The type of customers who becomes loud, crude and abusive to service personnel and other customer alike.
Dealing Strategy:
Ignore the foul language and listen to the core problem Let know him/her you are willing to solve her problem but not to listen his or her abusive
language Hang up, walk way or do whatever is necessary
3. Hysterical Harold
The type of customers who reverts to screaming and tantrums to make his/her point.
Dealing Strategy:
Move to Harold offstage Take responsibility for the problem
4. Dictatorial Dick
The type of customers who assumes superiority over all personnel and management.
Dealing Strategy:
Provide service in equitable manner Tell straight forward exactly what you can do for him
5. Freeloading Freda
The type of customers who uses tricks or verbal abuse to acquire service without paying.
Dealing Strategy:
Suggest to take legal action Persuade him/her to take him/her business elsewhere Develop new policy
Chapter 10
E-Commerce: Move to Cyberspace
Internet facilitates 5 categories of “flow”
Information
Negotiation
Service
Transactions
Promotion
Electronic channels offer complement/alternative to traditional physical channels
Convenience (24-hour availability, save time, effort)
Ease of obtaining information online and searching for desired items
Better prices than in many bricks-and-mortar stores
Broad selection
Recent Developments link Websites, customer management (CRM) systems, and mobile telephony
Integrating mobile devices into the service delivery infrastructure can be used as means to:
Access services
Alert customers to opportunities/problems
Update information in real time
The Challenge of Distribution in Large Domestic Markets
Marketing services (i.e., physical logistics) face challenges due to:
Distances involved (geographic areas)
Existence of multiple time zones
Multiculturalism (especially, immigrants and indigenous people)
Differences in laws and tax rates
companies counter this by:
Targeting specific market segments
Seeking out narrow market niches
Serving multiple segments across a huge geographic area is biggest marketing challenge
How Service Processes Affect International Market Entry
People processing services require direct contact with customers
Possession processing involves services to customer’s physical possessions
Information-based services include mental processing services and information processing services
Employee cycle of failure
Begins with a narrow design of jobs to accommodate low skill levels, an emphasis on rules rather than service and the use of technology to control quality
Strategy of low wages is accompanied by minimal effort on selection of training
Consequences include bored employees who lack the ability to respond to customer problems, become dissatisfied and develop a poor service attitude.
Outcomes for the firm are low service quality and high employee turnover
Because of weak profit margins, the cycle repeats itself with the hiring of more low paid employees to work in this unrewarding atmosphere
Customer cycle of failure
Begins with repeated emphasis on attracting new customers
Become dissatisfied with employee performance and the lack of continuity implicit in continually changing faces
These customers fail to develop any loyalty to the supplier
This requires an ongoing search for new customers to maintain sales volume
Chapter 11
Select And Hire the Right People:
1. Be the Preferred Employer
Create a large pool: “Compete for Talent Market Share”
What determines a firm’s applicant pool?
Positive image in the community as place to work
Quality of its services
The firm’s perceived status
There is no perfect employee
Different jobs are best filled by people with different skills, styles or personalities
Hire candidates that fit firm’s core values and culture
Focus on recruiting naturally warm personalities
2. How to Identify the Best Candidates
Observe Behaviour
Hire based on observed behavior, not words you hear
Best predictor of future behavior is past behavior
Consider group hiring sessions where candidates given group tasks
Personality Testing
Willingness to treat co-workers and customers with courtesy, consideration and tact
Perceptiveness regarding customer needs
Ability to communicate accurately and pleasantly
3. How to Identify the Best Candidates
Employ Multiple, Structured Interviews
Use structured interviews built around job requirements
Use more than one interviewer to reduce similar to me effects
Give Applicants a Realistic Preview of the Job
Chance to have “hands-on” with the job
Assess how the candidates respond to job realities
Allow candidates to self-select themselves out of the job
The Organizational Culture, Purpose and Strategy
Promote core values, get emotional commitment to strategy
Get managers to teach “why”, “what” and “how” of job.
Interpersonal and Technical Skills
Both are necessary but neither is sufficient for optimal job performance
Product/Service Knowledge
Staff’s product knowledge is a key aspect of service quality
Staff need to be able to explain product features and to position products correctly
Factors Favoring Employee Empowerment
Firm’s strategy is based on competitive differentiation and on personalized, customized service
Emphasis on long-term relationships vs. one-time transactions
Use of complex and non-routine technologies
Environment is unpredictable, contains surprises
Managers are comfortable letting employees work independently for benefit of firm and customers
Employees seek to deepen skills, like working with others, and are good at group processes
Motivate and Energize the Frontline
Use the full range of available rewards effectively, including:
Job content
Feedback and recognition
Goal accomplishment
Service-Profit Chain Model
• Most applicable to service environments.
• Model is based on a set of cause and effect linkages between internal and external performance, and defines the key performance measurements on which service-based firms should focus.
Causal Links in the Service Profit Chain
Customer loyalty drives profitability and growth
Customer satisfaction drives customer loyalty
Value drives customer satisfaction
Employee productivity and retention drive value
Employee loyalty drives productivity
Employee satisfaction drives loyalty and productivity
Internal quality drives employee satisfaction
Top management leadership underlies chain’s success