SERVICES STANDARDIZATION AND CUSTOMIZATION

BYUmit Haktan Sarhan

1

INTRODUCTION

STANDARDIZATION

Achieving maximum productivity through standardization of service prod-uct and service design and delivery achieving global economy of scale and lowest unit cost which is an import tenet of economics standardization means "one size fits all”

CUSTOMIZATIONCustomization on the other hand refers to the tailoring of the campaign according to the needs of an individual or groups of individuals. These are high margin products where the volumes are low and the buyers are few. E.g. McDonalds , Custom made models of cars, Cream lab in C-scheme

2

INTRODUCTION

PURE STANDARDISATION

•Identical services•Identical prices•Identical distribution channels•Identical promotional programs

3

INTRODUCTION

PURE CUSTOMISATION

•Distinct tailored services•Different pricing•Distinct distribution channels•Distinct promotion

4

Standardization potential

• Economies of scale in production, • Promotion,• Distribution and• Research and development

Standardization can also contribute to a coherent and

consistent global image of the firm and its products

5

CHALLENGES

• Application of uniform marketing policies,• Variations across markets in consumer attitudes,• competitive environments,• marketing management related variables must be

adequately assessed

6

THE GLOBAL CHALLENGE

Global market size: standardization

Local differentiation: customization

Strategy: Determine best combination of global and local activities for competitive advantage

7

Globalization (standardization)– Developing standardized services marketed worldwide

with a standardized marketing mix– Essence of mass marketing

Global localization (adaptation)– Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction– Essence of segmentation– Think globally, act locally

8

Standardization versus Adaptation

The faces of Coca Cola around the world

9

SERVICE DESIGN PHILOSOPHIES

STANDARDIZA-TION

ADAPTATION

CUSTOMIZATION

POLYCENTRIC

REGIOCENTRIC

GEOCENTRIC

ETHNOCENTRIC

10

THE RIGHT CHOICESTANDARDIZATION

Pro’s• Cost advantages it carries through the various economies of scale,• The consistent global image Con’s• However, variations across markets indicate that a fully standardized marketing approach may not be appropriate. Adjusting the marketing strategy such that it takes into account these variations enhances the product's chance of success

11

THE RIGHT CHOICECUSTOMIZATION

Pro’s• Customization adds value for you and for your clients• They may experience higher satisfaction• You know their needs and can look for niche opportunities

Con’s• Cost increases with added time and complexity• Customer may not recognize or be willing to pay for the added cost

12

THE RIGHT CHOICE

The standardization or customization depends on the product/service and the notion of the consumers

•Standard approach- laptops, computers, televi-sion, cosmetics ,etc.(universally accepted)•Customized approach- food and beverages, in-surance and banking solutions , etc(depends upon habits and taste)

13

THE RIGHT CHOICE

•Standardization allows a firm to economies of scale and to maintain simpler and more streamlined operations•Customization allows a firm to gain specific advantages within given markets that it might not otherwise will able to achieve•In practice, most firms fall in the middle of the continuum between standardization and customization and follow a policy of “Think global, act local” 14

SERVICES EXPECTATION AND SERVICE SATISFACTION

Customer Expectations of Service

Customer Expectations

•Beliefs about service delivery •Serve as standards or reference points against which performance is judged•Customers compare their perceptions of performance with these reference points when evaluating service quality•Thorough knowledge about customer expectations is critical to services marketers

16

Possible Levels of Customer Expectations

17

Dual Customer Expectation Levels

Desired Service:•Level of service that customer hopes to receiveAdequate service:•Level of service the customer will accept Zone of Tolerance: •Extent to which we accept variation in service

ZONE OF TOLER-ANCE

DESIRED SERVICE

ADEQUATE SERVICE

18

Zone of Tolerance

Zone of Tolerance • The range between desired service and adequate service;•Range or window in which customers do not notice service performance•When service falls outside this range(either very high or very low), the service gets the customer’s attention in either a positive or negative way•Influenced by such factors as predicted service, service prom-ises, word-of-mouth communications, past experiences, ser-vice alternatives, personal needs, and situational factors

19

Zones of Tolerance forDifferent Service Dimensions

LEVEL OFEXPECTA-

TION

MOST IMPORTANT FACTORS

LEAST IMPORTANT FACTORS

ZONE OF TOLERANCE

DESIRED SER-VICE

ADEQUATE SERVICE

ZONE OF TOLERANCE

DESIRED SERVICE

ADEQUATE SERVICE

20

Zones of Tolerance forFirst-Time and Recovery Service

•First time service

Outcome

Process

•Recovery service

Outcome Process LOW EXPECTATIONS HIGH

21

Factors that Influence Desired Service

DESIRED SERVICE

states or conditions Essential to the physical or psychological well being--- physical, social, psychological, and functional

PERSONAL NEEDS ENDURING SERVICE INTENSIFIERS

individual stable factors that lead the customer to a

heightened sensitivity- Derived service expectations- Personal service philosophy

22

Factors That Influence Adequate Service Expectations

ADEQUATE SERVICE TEMPORARY SERVICE INTENSIFIERS (short-term, individual factors that make a consumer more aware of the need of service) PERCEIVED SERVICE ALTERNATIVES(As the number of alternatives increases, the level of adequate service increases and the zone of tolerance narrows)CUSTOMER SELF-PERCEIVED SERVICE ROLE(how well the customer perceives they are performing their own role in service delivery)

23

SITUATIONAL FACTORS (Temporary changes in the normal state of things ---- tends to lower the level of adequate service expected and widen the zone of tolerance)

Example: Reason for purchase, Consumer mood, Weather, Time constraints ,Emergency

PREDICTED SERVICE(Tell customers when service provision is higher than what can nor-mally be expected so that predictions of future service encounters will not be inflated.)

24

Factors that Influence Desired and Predicted Service

Explicit service promises

Make realistic and accurate promises that reflect the service actually delivered rather than an idealized version of the service.

Implicit service promises

• Ensure that service tangibles accurately reflect the type and level of service provided.

• Ensure that price premiums can be justified by higher levels of performance by the company on important customer attributes.

Past experienceCustomer’s previous exposure to service that is relevant to the focal service.

Word-of-mouth communicationsSimulate word of mouth in advertising by using testimonials and opinion leaders.

25

Customer satisfaction

Definition:

•What customer expects and how he perceives that service re-ceived lived up to those expectations. •Service satisfaction=(customer) expectation-perception (of customer) •Objective satisfaction is reduction of the discrepancy between the current situation and the desired situation• Depend more on customer & his style than technology or system

26

Satisfaction is person’s feelings of pleasure or disappointment that results from comparing a service perceived performance (or outcome) to their expectations

•Perceived performance = Expectations : customer satisfaction•Perceived performance < Expectations : customer dissatisfaction•Perceived performance > Expectations :delighted customer

27

Factors Influencing Customer Satisfaction

•Product/service quality•Product/service attributes or features•Consumer Emotions•Attributions for product/service success or failure•Perceptions of equity or fairness•Other consumers, family members, and coworkers•Price•Personal factors– the customer’s mood or emotional state– situational factors

28

Outcomes of Customer Satisfaction

• Increased customer retention• Positive word-of-mouth communications• Increased revenues

29

Relationship between Customer Satisfaction and Loyalty in Competitive Industries

0%

20%

40%

60%

80%

100%

Verydissatisfied

Dissatisfied Neithersatisfied nordissatisfied

Satisfied Verysatisfied

Satisfaction measure

Loya

lty (r

eten

tion)

30

REFRENCES

•R .k . Teas ; journal of marketing ( Expectations, Performance Evaluation and Consumers” Perception of Quality)•www.slideshare.com•www.youtube.com•Service Marketing by Christopher Lovelock , Philip kotler

THANK YOUPresented by:Ankit Deora

Gargy SharmaRudrakshi SinghSakshi Somani

Shivanshika ShekhawatSupriya SomaniSurbhi Mathur