service mkt and crm

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Chapter Goals

To gain an understanding of: The nature and importance of servicesCharacteristics of services and their

marketing implicationsIssues related to the planning andmarketing of services The four Rs of services marketing

The relationship marketing approach The impact of technology in providingservices

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The Nature of Servicesregardless of the product, there isa services component to the offeringsof all firmsin some cases, a service is theprincipal purpose of the transaction,as in the rental of a car, a haircut, orlegal services -- we refer to this as thecore servicecore service

in others, service is performed insupport of the sale of a tangibleproduct -- these are referred to assupplementary servicessupplementary services

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Goods and ServicesContinuum There are two classes of services.

Services that are the main purpose of atransaction renting a truck to move.Services that supplement the sale of atangible good for example, aninformation hotline for computersoftware.

The focus here is primarily on identifiable,intangible services that are the mainobject of a transaction designed to providewant-satisfaction to customers;supplementary services growing inimportance, however. 12 - 4


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Canned

foods

Ready-

madeclothes

Auto-

mobiles

Draperies,

Carpets

Rest-

aurantmeals

Repairs:

auto, house,landscaping

Air

travel

Insurance,

Consulting,Teaching

MOSTLY GOODS MOSTLY SERVICES

The Goods-Services

Continuum


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Importance of Services

Three-fourths of the Canadianlabour force is employed inservice industries.Over 70% of the nations gross

national product is produced byservices.

From 1986 to 2000, virtually allnew jobs will be in the serviceindustries.Huge growth in

personal servicespersonal services

as well as business services.business services. 12 - 6Copyright 1998 by The McGraw-Hill Companies, Inc.


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Characteristics of Services

intangibilityintangibility : difficult to sample and toevaluateinseparabilityinseparability :: difficult to separate

services from the service provider;

mainly direct sales; staff are essential tothe delivery of quality servicesheterogeneityheterogeneity : virtually every service

is different; very difficult to standardizequalityperishabilityperishability :: those not sold can not be

storedfluctuating demandfluctuating demand :: demand for some

services fluctuates by season, or even bytime of day 12 - 7


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Strategic ProductImplications

service organizations have to plan theintroduction of new services and themanagement of the life cycle

the core service can be enhancedthrough the addition of supplementaryservices, thereby creating added valuethe life cycle of services has to be

managedthe branding of a service can bedifficult as the customer often hasnothing tangible to show

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Managing Service Quality

Quality is hard to define, measure, control,and communicateQuality is defined by the consumerIts important to measure customer

satisfaction with an organizations servicequality.Customers see five important components:

Core serviceCore service must measure up.

Quality of serviceQuality of service , meeting expectations.Technical aspectsTechnical aspects of delivery.InteractionInteraction with people who deliverservice.

Affective dimensions: Affective dimensions: How customersfeel. 12 - 10


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Pricing Services The characteristics of perishability,

inability to store, and fluctuatingdemand for services create pricing

challenges.

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Pricing Strategies include: Discount strategies: Cheaper by the week. A variable pricing strategy: Kids eat free,

movies cheaper on Tuesdays. Price competition.


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Distribution of Servicesbecause most services are tieddirectly to a specific service provider,most have been distributed directly tocustomerswith advancing technology, manyfirms are now delivering servicesthrough machines

channels of distribution arenecessarily short; some firms use oneagent intermediary, such as insurance,real estate, and travel agents

some firms use franchisesfranchises to 12 - 12


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Promotion of Servicescustomer contact personnel

represent the main channel of customer communication

service providers must ensure thateach service encounterservice encounter is apositive one if customers are todevelop a positive image

many professional service firms arenow permitted to advertiseother elements of the promotional

mix are used, including publicity and 12 - 13


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The Changing Environmentfor Services

The boom in the service economy, reducedregulation has created an increase incompetition.Major focus on increased productivity,efficiency

Work on people aspects of business:Education, training programs

Change technology:Computer-based technologies used.Restructure jobs.

Bottom line: People are key to success!

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Other Considerations inMarketing Services

Impact of Technology:Impact of Technology:Remember, not everyone likes impersonaltechnology

Performance Measurement:Performance Measurement:Larger firms can use market share, etc.Customer perceptions are essential.

Prospects for Growth:Prospects for Growth:

It is very likely that services will continueto take an increasing share of theconsumer dollar.

The use of marketing programs in all

services is expected to increaseconsiderably. 12 - 16


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Future ServiceProfitabilityImpacted by:

1. Focusing on the right priorities2. Increasing service quality

3. Investing in problem solving4. Being fair to customers5. Investing in leadership development

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service mkt and crm

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