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Services Marketing

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Current Competitive Trends

• Customer Satisfaction and Customer Focus

• Value

• TQM and Service Quality

• Service as a key differentiator in Manufacturing Firms

• New measurement systems linking C.S with financial goals and operational measurements

• Emerging Technology

• Internationalisation of Services

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Characteristics Of ServicesCharacteristics Of Services

• Intangibility

• Inseparability

• Heterogeneity

• Ownership

• Experiential

• Perishability

Implication of these characteristics ???

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The Product ContinuumThe Product Continuum

Goods

Salt

Shoes

VCR

Automobile

Fast Food

Cruise

Consulting

Insurance

Education

Ideas / Services

Tangible dominant

Intangible dominant

Products contain both tangible and intangible components; predominantly tangible products are called goods, and predominantly intangible products are considered services.

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Mahatma Gandhi on Customer Orientation

• A customer is the most important person in our premises

• A customer is not dependent on us , we are dependent on him

• A customer is not an interruption in our work, he is the purpose of it.

• We are not doing a favour by serving him, it is he who does a favour by giving us the opportunity to do so.

• A customer is not someone to argue or match wits with. Nobody ever won an argument with a customer

• A customer is a person who brings us his wants. It is our job to handle them profitably to him and to ourselves.

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Services Marketing Mix

• Product

• Price

• Promotion

• Place

• People

• Physical evidence

• Processes

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Service TriangleService Triangle

Management

Employee CustomerDelivering the promise

Selling the promise

Enabling the promise

External M

arketingInte

rnal

Mar

ketin

g

Interactive Marketing

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Common Traps

• Regarding internal communications as less important

• Playing “favorites” and the opposite, i.e. automatically treating some people less well

• Forgetting the effect on the external customer• Being more concerned with “the system” than the

end result• Having a messy filing system• Reacting quickest to those who “shout loudest ”• Placing your own priority on the item

Internal paperwork nearly always affects the external customer. Process it quickly and

efficiently

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Customer Satisfaction = f (x, y)

X =

Y =

Your Performance

Customer Expectations

Performance > Expectations Delight / Wow

Performance = Expectations Satisfaction

Performance < Expectations Dissatisfaction

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Gap 1 : Not knowing what customers expect

Gap 2 : Not selecting the right service design standards

Gap 3 : Not delivering to Service Standards

Gap 4 : Not matching Performance to Promises

Gap 5 : Perceived Service and Expected Service

Service Quality Gaps

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GAP - 1

CUSTOMER EXPECTATIONS

Key Factors Insufficient marketing research Inadequate use of Marketing research Lack of interaction between management and customers Insufficient communication between contact employees

and managers Too many layers between contact personnel and top

management

MANAGEMENT OF PERCEPTIONS OF CUSTOMER EXPECTATIONS

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GAP - 2

Key Factors Inadequate management commitment to service quality Absence of formal process for setting service quality goals Inadequate standardization of tasks Perception of infeasibility – that customer expectations

cannot be met Co-Driven Standards

MANAGEMENT OF PERCEPTIONS OF CUSTOMER EXPECTATIONS

SERVICE QUALITY SPECIFICATIONS

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GAP - 3

Key Factors Lack of teamwork Poor employee – job fit Poor technology job fit Lack of perceived control ( contact personnel) Inappropriate evaluation / compensation system Role conflict / ambiguity among contact employees Failure to match demand and supply Customers not fulfilling their roles and responsibilities

SERVICE QUALITY SPECIFICATIONS

SERVICE DELIVERY

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GAP - 4

Key Factors Inadequate communication between salesperson &

operations Inadequate communication between advertising & operations Differences in policies and procedures across branches or

departments Exaggeration in advertising Exaggeration in personal selling

SERVICE DELIVERY

EXTERNAL COMMUNICATION TO CUSTOMERS

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Why Study Consumers?

• The psychology of consumers: how they think, feel, reason, and select between different alternatives

• Psychology of how the consumer is influenced by his or her environment

• The behavior of consumers while shopping

• Information Search

• Evaluation of service alternatives

• Service Purchase and consumption

• Post-purchase evaluation

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Behavior refers to a consumer’s response (or Behavior refers to a consumer’s response (or lack of response) to a given stimuli.lack of response) to a given stimuli.

Switchers Vs. LoyalsSwitchers Vs. Loyals

First Level Segmentation - Demographics & Psychographics

Second Level Segmentation - Desired Benefits

Third level Segmentation - Behavior

Segmentation DynamicsSegmentation Dynamics

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DIMENSIONS OF QUALITY

• Reliability

• Tangibles

• Responsiveness

• Assurance

• Empathy

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The Five Dimensions of Service

Service Dimension Definition

Reliability The ability to perform the promised service dependably & accurately

Tangibles The appearance of physical facilities, equipment, personnel & communication materials

Responsiveness The willingness to help customers & provide prompt service

Assurance The knowledge & courtesy of employees and their ability to convey trust & confidence

Empathy The caring, individualised attention provided to the customer

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The flower of ServiceInformation

Consultation

Order Taking

Hospitality

Caretaking

Exceptions

Billing

Payment

CORE

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Creating and Delivering New Services

CORPORATE OBJECTIVES AND RESOURCES

Market Opportunity Analysis Resource Allocation Analysis

Market Positioning Statements Operating Assets Management

Service Marketing Concept Service Operations Concept

SERVICE DELIVERY PROCESS

Performance Evaluation

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Service Blueprints

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Gap Analysis Grid

Low Priority

Current company strength

Low High

Low

High

IMPORTANCE

SATISFACTION

Attributes that need attention - area where priorities should be focused

Unnecessary strengths - possible overkill

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Key reasons for provider GAP 4Service Delivery

Key Factors Related to Pricing:

Assuming that customers hold reference prices for services

Narrowly defining price as monetary cost

Signalling the wrong quality level with an inappropriate price

Not understanding customers’ value definitions

Not matching price strategy to customers’ value definitions

External communications to Customers

GAP

4

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Image Value

Product Value

Services Value

Monetary Price

Time cost

Energy cost

Psychic cost

Total

customer

value

Total

customer

cost

Customerdelivered value

Determinants Of Customer Added Value

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Customer definitions of value

“Value is low price”

• Discounting• Odd Pricing• Syncro-pricing• Penetration Pricing

“Value is everything I want in a service”

• Prestige pricing

• Skimming Pricing

“Value is the quality I get for the price I pay”

• Value Pricing

• Market Segmentation Pricing

“Value is all that I get for all that I give”•Price Framing

•Price Bunding

•Complementary pricing

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Key reasons for provider GAP 3

Customer-Driven Service Designs and Standards

Key Factors Related to Demand and Capacity:

• Failure to smooth the peaks and valleys of demand

• Overuse of capacity

• Attracting inappropriate customer segments to build demand

• Relying too much on price to smooth demand

Service Delivery

GAP

3

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Strategies for shifting demand to match capacity

Shift Demand Demand too lowDemand too high

Use Signage to communicate busy days and times

Offer incentives to customers for usage during nonpeak times

Take care of loyal or ‘regular’ customers first

Advertise peak usage times and benefits of non peak use

Charge full price for the service - no discounts

Use Sales and advertising to increase business from current market segments

Modify the service offering to appeal to new market segments

Offer discounts or price reductions

Modify hours of operation

Bring the service to the customer

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Strategies for flexing capacity to match demand

Flex Capacity Demand too lowDemand too high

Stretch time, labor, facilities, and equipment

Cross- train employees

Hire part-time employees

Request overtime work from employees

Rent or share facilities

Rent or share equipment

Subcontract or outscore activities

Perform, maintenance, renovations

Schedule vacations

Schedule employee training

Lay off employees

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Elements of Physical Evidence

Servicescape

Facility ExteriorExterior DesignSignageParkingLandscapeSurrounding Environment

Facility InteriorInterior DesignEquipmentSignageLayoutAir quality / Temp.

Other TangiblesBusiness cards

Stationery

Billing statements

Reports

Employee dress

Uniforms

Brochures

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Typology of the Service Organisations based on variations in form and use of Servicescape.

Servicescape usage LeanElaborate

Complexity of the Servicescape

Self-Service

(Customer only)

Remote Service

(employee only)

Telephone company

Insurance company

Utility

Professional services

Telephone mail -order desk

Automated voice-messaging based services

Essel World

Golf course

ATM

Vending machines

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Typology of the Service Organisations based on variations in form and use of Servicescape.

Servicescape usage LeanElaborate

Complexity of the Servicescape

Interpersonal Services

(both customer and employee)

Hotels

Restaurants

Health clinic

Hospital

Bank

Airline

School

Dry cleaner

Hair saloon

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How Do Customers Form ExpectationsHow Do Customers Form Expectations

Word of mouth

Price

Past experience

Brand image and your communications

Your competitors communications

Independent research agencies

Business Drivers / End Customers Expectations

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LEVELS OF EXPECTATION

THE SERVICE QUALITY LADDER

CUSTOMER B

EOMES

C

HAMPIO

N

DESIRED

SERVICE

ZONE OF

TOLERNACE

ADEQUATE SERVICE

UNSATISFACTORY

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Approaches for managing customer expectations

Communicate realities in the service

industry

Communicate criteria for service

effectiveness

Create tiered-value offerings

Offer choices

Delivery

> or =

Promise

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