Chapter  12 Services Marketing and Customer Relationships Sommers     Barnes Ninth Canadian Edition Presentation by Karen...
Chapter  Goals <ul><li>To gain an understanding of: </li></ul><ul><ul><li>The nature and importance of services </li></ul>...
The Nature of Services <ul><li>regardless of the “product”, there is a services component to the offerings of all firms </...
Goods and Services  Continuum <ul><li>There are two classes of services. </li></ul><ul><ul><li>Services that are the main ...
12 -  Canned foods Ready- made clothes Auto- mobiles Draperies, Carpets Rest- aurant meals Repairs: auto, house, landscapi...
Importance of  Services <ul><li>Three-fourths of the Canadian labour force is employed in service industries. </li></ul><u...
Characteristics of  Services <ul><li>intangibility : difficult to sample and to evaluate </li></ul><ul><li>inseparability ...
Strategic Services  Management <ul><li>intangibility generally makes the marketing of services a challenge </li></ul><ul><...
Strategic Product  Implications <ul><li>service organizations have to plan the introduction of new services and the manage...
Managing Service Quality <ul><li>Quality is hard to define, measure, control, and communicate  </li></ul><ul><li>Quality i...
Pricing Services <ul><li>The characteristics of perishability, inability to store, and fluctuating demand for services cre...
Distribution of Services <ul><li>because most services are tied directly to a specific service provider, most have been di...
Promotion of Services <ul><li>customer contact personnel represent the main channel of customer communication </li></ul><u...
Four Rs of Service Marketing <ul><li>Retention </li></ul><ul><li>Referrals </li></ul><ul><li>Relationships </li></ul><ul><...
The Changing Environment  for Services <ul><li>The boom in the service economy, reduced regulation has created an increase...
Other Considerations in  Marketing Services <ul><li>Impact of Technology: </li></ul><ul><ul><li>Remember, not everyone lik...
Future Service Profitability <ul><li>Impacted by: </li></ul><ul><ul><li>Focusing on the right priorities </li></ul></ul><u...
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  1. 1. Chapter 12 Services Marketing and Customer Relationships Sommers  Barnes Ninth Canadian Edition Presentation by Karen A. Blotnicky Mount Saint Vincent University, Halifax, NS Copyright © 200 1 by McGraw-Hill Ryerson Limited
  2. 2. Chapter Goals <ul><li>To gain an understanding of: </li></ul><ul><ul><li>The nature and importance of services </li></ul></ul><ul><ul><li>Characteristics of services and their marketing implications </li></ul></ul><ul><ul><li>Issues related to the planning and marketing of services </li></ul></ul><ul><ul><li>The four Rs of services marketing </li></ul></ul><ul><ul><li>The relationship marketing approach </li></ul></ul><ul><ul><li>The impact of technology in providing services </li></ul></ul>12 -
  3. 3. The Nature of Services <ul><li>regardless of the “product”, there is a services component to the offerings of all firms </li></ul><ul><li>in some cases, a service is the principal purpose of the transaction, as in the rental of a car, a haircut, or legal services -- we refer to this as the core service </li></ul><ul><li>in others, service is performed in support of the sale of a tangible product -- these are referred to as supplementary services </li></ul>12 -
  4. 4. Goods and Services Continuum <ul><li>There are two classes of services. </li></ul><ul><ul><li>Services that are the main purpose of a transaction —renting a truck to move. </li></ul></ul><ul><ul><li>Services that supplement the sale of a tangible good — for example, an information hotline for computer software. </li></ul></ul><ul><li>The focus here is primarily on identifiable, intangible services that are the main object of a transaction designed to provide want-satisfaction to customers; supplementary services growing in importance, however. </li></ul>12 -
  5. 5. 12 - Canned foods Ready- made clothes Auto- mobiles Draperies, Carpets Rest- aurant meals Repairs: auto, house, landscaping Air travel Insurance, Consulting, Teaching MOSTLY GOODS MOSTLY SERVICES The Goods-Services Continuum
  6. 6. Importance of Services <ul><li>Three-fourths of the Canadian labour force is employed in service industries. </li></ul><ul><li>Over 70% of the nation’s gross national product is produced by services. </li></ul><ul><li>From 1986 to 2000, virtually all new jobs will be in the service industries. </li></ul><ul><li>Huge growth in personal services as well as business services. </li></ul>12 - Copyright © 1998 by The McGraw-Hill Companies, Inc.
  7. 7. Characteristics of Services <ul><li>intangibility : difficult to sample and to evaluate </li></ul><ul><li>inseparability : difficult to separate services from the service provider; mainly direct sales; staff are essential to the delivery of quality services </li></ul><ul><li>heterogeneity : virtually every service is different; very difficult to standardize quality </li></ul><ul><li>perishability : those not sold can not be stored </li></ul><ul><li>fluctuating demand : demand for some services fluctuates by season, or even by time of day </li></ul>12 -
  8. 8. Strategic Services Management <ul><li>intangibility generally makes the marketing of services a challenge </li></ul><ul><li>understanding how people buy services and the segments that exist is just as important </li></ul><ul><li>knowing more about the value of customer segments is important -- some are more valuable than others </li></ul><ul><li>knowing what they value so that service levels can be tailored is also important </li></ul>12 -
  9. 9. Strategic Product Implications <ul><li>service organizations have to plan the introduction of new services and the management of the life cycle </li></ul><ul><li>the core service can be enhanced through the addition of supplementary services, thereby creating added value </li></ul><ul><li>the life cycle of services has to be managed </li></ul><ul><li>the branding of a service can be difficult as the customer often has nothing tangible to show </li></ul>12 -
  10. 10. Managing Service Quality <ul><li>Quality is hard to define, measure, control, and communicate </li></ul><ul><li>Quality is defined by the consumer </li></ul><ul><li>It’s important to measure customer satisfaction with an organization’s service quality. </li></ul><ul><li>Customers see five important components: </li></ul><ul><ul><li>Core service must measure up. </li></ul></ul><ul><ul><li>Quality of service , meeting expectations. </li></ul></ul><ul><ul><li>Technical aspects of delivery. </li></ul></ul><ul><ul><li>Interaction with people who deliver service. </li></ul></ul><ul><ul><li>Affective dimensions : How customers feel. </li></ul></ul>12 -
  11. 11. Pricing Services <ul><li>The characteristics of perishability, inability to store, and fluctuating demand for services create pricing challenges. </li></ul>12 - <ul><li>Pricing Strategies include: </li></ul><ul><ul><li>Discount strategies: Cheaper by the week. </li></ul></ul><ul><ul><li>A variable pricing strategy: Kids eat free, movies cheaper on Tuesdays. </li></ul></ul><ul><ul><li>Price competition. </li></ul></ul>
  12. 12. Distribution of Services <ul><li>because most services are tied directly to a specific service provider, most have been distributed directly to customers </li></ul><ul><li>with advancing technology, many firms are now delivering services through machines </li></ul><ul><li>channels of distribution are necessarily short; some firms use one agent intermediary, such as insurance, real estate, and travel agents </li></ul><ul><li>some firms use franchises to distribute services </li></ul>12 -
  13. 13. Promotion of Services <ul><li>customer contact personnel represent the main channel of customer communication </li></ul><ul><li>service providers must ensure that each service encounter is a positive one if customers are to develop a positive image </li></ul><ul><li>many professional service firms are now permitted to advertise </li></ul><ul><li>other elements of the promotional mix are used, including publicity and community affairs </li></ul>12 -
  14. 14. Four Rs of Service Marketing <ul><li>Retention </li></ul><ul><li>Referrals </li></ul><ul><li>Relationships </li></ul><ul><li>Recovery </li></ul>12 -
  15. 15. The Changing Environment for Services <ul><li>The boom in the service economy, reduced regulation has created an increase in competition. </li></ul><ul><li>Major focus on increased productivity, efficiency </li></ul><ul><ul><li>Work on people aspects of business: </li></ul></ul><ul><ul><ul><li>Education, training programs </li></ul></ul></ul><ul><ul><li>Change technology: </li></ul></ul><ul><ul><ul><li>Computer-based technologies used. </li></ul></ul></ul><ul><ul><li>Restructure jobs. </li></ul></ul><ul><li>Bottom line: People are key to success! </li></ul>12 -
  16. 16. Other Considerations in Marketing Services <ul><li>Impact of Technology: </li></ul><ul><ul><li>Remember, not everyone likes impersonal technology </li></ul></ul><ul><li>Performance Measurement: </li></ul><ul><ul><li>Larger firms can use market share, etc. </li></ul></ul><ul><ul><li>Customer perceptions are essential. </li></ul></ul><ul><li>Prospects for Growth: </li></ul><ul><ul><li>It is very likely that services will continue to take an increasing share of the consumer dollar. </li></ul></ul><ul><ul><li>The use of marketing programs in all services is expected to increase considerably. </li></ul></ul>12 -
  17. 17. Future Service Profitability <ul><li>Impacted by: </li></ul><ul><ul><li>Focusing on the right priorities </li></ul></ul><ul><ul><li>Increasing service quality </li></ul></ul><ul><ul><li>Investing in problem solving </li></ul></ul><ul><ul><li>Being fair to customers </li></ul></ul><ul><ul><li>Investing in leadership development </li></ul></ul>12 -
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