services marketing and customer relationships
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Services Marketing andServices Marketing and
Customer RelationshipsCustomer Relationships
Prof. Rushen ChahalProf. Rushen Chahal
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The Nature of ServicesThe Nature of Services
y regardless of the product, there is a servicescomponent to the offerings of all firms
y in some cases, a service is the principal
purpose of the transaction, as in the rental ofa car, a haircut, or legal services -- we refer tothis as the core servicecore service
y in others, service is performed in support of
the sale of a tangible product -- these arereferred to as supplementary servicessupplementary services
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Goods and ServicesGoods and Services
ContinuumContinuum
y 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 a tangiblegood for example, an information hotline forcomputer software.
y The focus here is primarily on identifiable, intangible
services that are the main object of a transactiondesigned to provide want-satisfaction to customers;supplementary services growing in importance,however.
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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 ofImportance of
ServicesServices
y Three-fourths of the Canadian labourforce is employed in service industries.
y
Over 70% of the nations gross nationalproduct is produced by services.
y From 1986 to 2000, virtually all new jobswill be in the service industries.
y Huge growth in personal servicespersonal services as wellas business services.business services.
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5Copyright 1998 by The McGraw-Hill Companies, Inc.
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Characteristics ofCharacteristics of
ServicesServicesyy intangibilityintangibility: difficult to sample and to evaluate
yy inseparabilityinseparability:: difficult to separate services fromthe service provider; mainly direct sales; staff areessential to the delivery of quality services
yy heterogeneityheterogeneity: virtually every service is different;very difficult to standardize quality
yy perishabilityperishability:: those not sold can not be stored
yy fluctuating demandfluctuating demand:: demand for some servicesfluctuates by season, or even by time of day
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Strategic ServicesStrategic Services
ManagementManagement
y intangibility generally makes the marketing ofservices a challenge
y understanding how people buy services and
the segments that exist is just as importanty knowing more about the value of customer
segments is important -- some are morevaluable than others
y
knowing what they value so that servicelevels can be tailored is also important
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Strategic ProductStrategic Product
ImplicationsImplications
y service organizations have to plan theintroduction of new services and themanagement of the life cycle
y the core service can be enhanced through theaddition of supplementary services, therebycreating added value
y the life cycle of services has to be managed
y the branding of a service can be difficult as thecustomer often has nothing tangible to show
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Managing Service QualityManaging Service Quality
y Quality is hard to define, measure, control, andcommunicate
y Quality is defined by the consumer
y Its important to measure customer satisfaction with
an organizations service quality.y Customers see five important components:
Core serviceCore service must measure up.
Quality of serviceQuality of service, meeting expectations.
TechnicalaspectsTechnicalaspects of delivery.
InteractionInteraction with people who deliver service.
Affective dimensions:Affective dimensions: How customers feel.
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Pricing ServicesPricing Services
The characteristics of perishability, inability to
store, and fluctuating demand 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 ServicesDistribution of Servicesy because most services are tied directly to a
specific service provider, most have beendistributed directly to customers
y with advancing technology, many firms are now
delivering services through machinesy channels of distribution are necessarily short;
some firms use one agent intermediary, such asinsurance, real estate, and travel agents
y some firms use franchisesfranchises to distributeservices
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Promotion of ServicesPromotion of Servicesy customer contact personnel represent the
main channel of customer communicationy service providers must ensure that each
service encounterservice encounteris a positive one ifcustomers are to develop a positive image
y many professional service firms are nowpermitted to advertise
y other elements of the promotional mix areused, including publicity and community affairs
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Four Rs of Service MarketingFour Rs of Service Marketing
y Retention
y
Referralsy Relationships
y Recovery
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The Changing EnvironmentThe Changing Environment
for Servicesfor Services
y The boom in the service economy, reduced regulationhas created an increase in competition.
y Major focus on increased productivity, efficiency
Work on people aspects of business:x Education, training programs
Change technology:x Computer-based technologies used.
Restructure jobs.y Bottom line: People are key to success!
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Other Considerations inOther Considerations in
Marketing ServicesMarketing Services
yy Impact of Technology:Impact of Technology:
Remember, not everyone likes impersonal technology
yy Performance Measurement:Performance Measurement:
L
arger firms can use market share, etc. Customer perceptions are essential.
yy Prospects for Growth:Prospects for Growth:
It is very likely that services will continue to take an
increasing share of the consumer dollar. The use of marketing programs in all services is
expected to increase considerably.
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Future Service ProfitabilityFuture Service Profitability
Impacted by:
1. Focusing on the right priorities
2. Increasing service quality3. Investing in problem solving
4. Being fair to customers
5. Investing in leadership development
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