pcc mktg 29 chapter 3 serv. mktg mgmt

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  • 1.MKTG 29 : Service Marketing ManagementChapter 3 : Managing Service Encounters Professor : Mr. Abelito T. Quiwa. MBA School Year : 2010 - 2011

2. We will explore the following questionsin this particular chapter1. How does reducing (or increasing ) the level ofcustomer contact impact on decisions relating toservice design and delivery strategies? 2. What is the distinction between back-stage andfront-stage operations? 3. What are the critical incidents and what is theirsignificance for customer satisfaction? 4. What insight can be gained from viewing servicedelivery as a form of theatre? 5. When customers behave badly, what problems dothey cause for the firms, its employees and othercustomers? 6. What is the potential role of customers as co-producers of service? 3. Customer and the Service Operation In service businesses, customers are often involved inthe production of the service. Suppliers of people-processing services usually expect their customers tocome to what Theodore Levitt has called factories in thefield sites where service production, delivery andconsumption are all rolled into one. Customers who are actively involved in the serviceoperation, can have a significant impact on theorganizations productivity. Sometimes they are expected to cooperate closely withservice employees, while at other times they may begiven the option of undertaking self-service. In both such instances, the customer becomes deeplyinvolved in the service operation. 4. Technology and Customer Contact Development in technology often offer radically new waysfor a business to create and deliver its services,particularly those core and supplementary services thatare information -based. For instance, to attract new business and take advantageof cost-saving advance in internet technology likeintroduce Internet banking. Many service problems revolve around unsatisfactoryincidents between customers and service personnel. Inan effort to simplify service delivery, improve productivityand reduce some of the threats to service quality, somefirms are using technology to minimize or even eliminatecontact between customers and employees. Thus, face-to-face encounters are giving way totelephone encounters. 5. Service Encounters: Differing Levels of Customer Contact Empahsises Encounter with Nursing HomeService PersonnelHigh Haircut Four Star Hotel Management Consulting Good Restaurant Airline Travel Retail Banking Telephone Banking Motel Car Repair Insurance Fast Food Dry Cleaning Movie Theatre Cable TV City Bus Home Banking Mail-Based Repairs Internet-Based LowEmpahsisesEncounter with SservicesEquipment 6. Service Encounters: Differing Levels of CustomerContactHigh-contact services tend to be those in which customers visit the service facility in person. Customers are actively involved with the service organization and its personnel throughout service delivery (e.g. Hairdressing or medical services).Most people-processing services are high- contact ones. Services from the other three processes based categories may also involve high levels of customer contact, when customers go to the service site and remina there until service delivery is completed. 7. Service Encounters: Differing Levels of CustomerContact Medium-contact services entail less involvement with service providers. They involve situations in which customers visit the service providers facilities ( or are visited at home or at a third- party location specified by that provider) but either do not remain throughout service delivery or else have only moderate contact with service personnel. The purpose of such contacts is often limited to1) establishing a relationship and defining a service need (e.g. Management consulting, insurance or personal financial advice, where clients make an intial visit to the firms office but then have relatively limited interactions with the provider during service production.2) Dropping off and picking up a physical possession that is being serviced; or3) Trying to resolve a problem. 8. Service Encounters: Differing Levels of CustomerContact Low-contact services involves every little, if any,physical contact between customers and serviceproviders. Instead, contact takes place at arms lengththrougn electronic or physical distribution channel afast-growing trend in todays convenience orientedsociety.o Also included are possession-processing services inwhich the item requiring service can be shipped to theservice site or subjected to remote fixes deliveredelectronically to the customers premises from adistant location. This is becoming incresingly commonfor resolving software problems.o Finally, many high-contact and medium-contactservices are being transformed into low-contactservices. 9. Service As a System The level of contact that a service business intends to have with its customers is a major factor in defining the total service system. Within such a system, these are three overlapping sub-systems:1) Service operations ( where inputs are processed and the elements of the service product are created)2) Service delivery ( where final assembly of these elements takes palce and the product is delivered to the customers)3) Service marketing which embraces all points of contact with customers, including advertising, billing and market research ( Figure 3.2) 10. Service As a System Parts of this system are visible or otherwise apparent to customers, while other parts are hidden in what is sometimes referred to as the technical core and the customer may not even know of the existence. Physical Support Technical Other Core Customer Customers Contact Personnel Back StageFront Stage(Invicible ) (Visible to Customer)Figure 3.2 The Service Business as a System 11. Service Operation System Like a play in a theather, the visible components of serviceoperations can be divided into those relating to the actors ( orservice personnel) and those relating to the stage set ( orphysical facilities, equipment and other tangibles) What goes on back stage is of little interest to customers. Likeany audience, they evaluate the production on those elementsthey actually experience during service delivery and, of course,on the perceived service outcome. Naturally, if the backstage personnel and system( e.g. Billing,ordering, account keeping) fail to perform their support tasksproperly in ways that affect the quality of frontstage activities,customers will notice. The proportion of the overall service operation that is visible tocustomers varies according to the level of customer contac.Since high-contact services directly involves the customer inperson, either customers must enter the service factory, orservice workers and their tools must leave their back stage andcome to the customers chosen location. 12. Service Delivery Service Service delivery is concerned with where, when andhow the service product is delivered to the customer. Traditionally, service providers had direct interactionswith their customers. But to achieve cost reductions,productivity improvements and greater customerconvenience, many services that do not need thecustomers to be physically present in the factory nowseek to reduce direct contact. As a result, the visiblecomponents of the service operation system isshrinking in many industries. Although self-service delivery often offers customersgreater convenience than face-to-face contact, theshift from personal service ( sometimes referred to as 13. The Dramaturgy of Service Delivery Figure 3.3 shows the relative important of theatrical dimensionsfor different types of service businesses. As you can see, watchrepair services have very few frontstage theatrical componentscompared to services like airlines and spectator sports.Contact Low High (1)(2)Car RepairPhysicianAudience SizeLowWatch RepairBarber Shoe Repair Lawyer (3)(4) UtilityAirlineHigh InsuranceSpectator SportsDiscount Retailer Restaurants Audience Size = Number of people receiving the service simultaneously Contact = Amount of time front stage/amount of time back stageFigure 3.3 Relative Importance of Theatrical Dimensions 14. Role and Script Theories Role and script theories offer some interesting insights forservice providers. It we view service delivery as a theatricalexperience, then both employees and customers act outtheir parts in the performance according to predeterminedroles. Roles have also been defined as combinations of socialcues, or expectations of society, that guide behaviour in aspecific setting or context. Scripts are sequences of behaviour that both employeesand customers are expected to learn and follow duringservice delivery. Script are learned through experience,education and communication with others. Much like amovie script, a service script provides detailed actions thatcustomers and employees are expected to perform. 15. Service Marketing System The scope and structure of the service-marketing system often varies sharply from one type of organization to another. OtherAdvertksing Customer Sales CallsInterior &Market Research SurveysExteriorBilling/StatementsFacilitiesMiscellaneous Mail. TelephoneTechnical Calls, Faxes, etc.Core EquipmentTheCustomerRandom Exposures to Facilities/Vehicles ServiceChance Encounters with Service People PersonnelOtherBack StageFront StageCustomer Word-of- Mouth(invisible) (visible) Figure 3.4 The Service Marketing System for a High-Contact Service 16. Service Marketing System The scope and structure of the service-marketing system often varies sharply from one type of organization to another.ServiceService DeliveryOther Contact PointsOperation System System AdvertisingMail Market Research Surveys Billing/ Statements Technical Self ServiceThe Equipment CustomerRandom Exposure toThe Facilities, PersonnelCustomer Telephone, Fax Website, etc. Word of-Mouth Back StageFront Stage (invisible) (visible) Figure 3.5 The Service Marketing System for a Low-Contact Service 17. Physical Evicence Since many servic