Exam Revision: October
2013
Service Quality
MKTG 1268
1
July 2013 Semester
Note: all students are to understand that these...
Sections in the Paper
• There are THREE Parts in the SQ Exam Paper
• Part A consists of 10 multiple choice questions
worth...
Coverage and Focus
• In terms of the examinable chapters... MCQs
cover chapters 7 to 15
• For the discussion and case ques...
The cases for Section C
• There are TWO cases in Section C
• One is a one-paragraph scenario and there are
two questions (...
Techniques for doing well in mini-cases
• Read the case in detail
• Pick out the key issues; try to assess WHICH area
of S...
Time management
• Do justice to each Part; don’t over-write on one area
even if you know a lot because you will sacrifice ...
7
Here is a sample of what a case study from a newspaper
cutting might look like (this is NOT coming out for your exam)
Yo...
The following are just extract of slides from my lectures
DO NOT interpret these as being
the only content that you need t...
Chapter One – Introduction to Services Marketing
9
 You must also know:
 Characteristics of services
 The Lovelock Clas...
Government
Policies
Business
Trends
Social
Changes
Advances
in IT
Globalization
Innovation in service products & delivery ...
Four Categories Of Services (Fig 1.10)
11
11
Characteristics of Services
Compared to Goods
Intangibility
Perishability
Simultaneous
Production
and
Consumption
Heteroge...
Services Pose Distinctive Marketing Challenges
 Marketing management tasks in the service sector differ from those in
the...
Differences, Implications, and
Marketing-Related Tasks (1) (Table 1.2)
Difference
 Most service products
cannot be invent...
Implications
 Behavior of service
personnel & customers
can affect satisfaction
 Hard to maintain quality,
consistency, ...
Traditional 4 Ps Applied to Services (1)
 Product elements
 Service products are at the heart of services marketing
stra...
Traditional 4 Ps Applied to Services (2)
 Place and time
 Service distribution can take place through physical and
non-p...
Traditional 4 Ps Applied to Services (3)
 Price and other user outlays
 From the firm’s perspective, pricing generates i...
Traditional 4 Ps Applied to Services (4)
 Promotion and Education
 Plays three vital roles:
 Provide information and ad...
Extended Mix for Managing the Customer Interface
(1)
 Process
 How firm does things may be as important as what it does
...
Extended Mix for Managing the Customer Interface
(2)
 Physical environment
 Design the servicescape and provide tangible...
Extended Mix for Managing the Customer Interface
(3)
 People
 Interactions between customers and contact personnel
stron...
How would you LINK the 4 characteristics of
services to the 7 Ps?
23
Intangibility Perishability Heterogeneity Inseparabil...
Sample Practice Exam Essay Questions
24
1. The marketing of services is different to the
marketing of tangible goods”. Pro...
25
2. List and describe each of the expanded marketing
mix elements and contrast the expanded marketing
mix for services t...
Sample Practice Exam Essay Questions
26
 List and explain why the unique characteristics of
services (that makes them dif...
27
 The marketing mix for services is different to that of
tangible goods. Explain the marketing mix elements
applicable ...
28
Chapter 2: Consumer Behavior in a Service Context
High and Low
Contact Service
Systems
The 3
stages of
Consumer
Decisio...
Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage
Pre-purchase Stage - Overview
 Customers seek solutions to...
30
Service Attributes
Pre-purchase Stage – Evaluation of Alternatives
Service Attributes
 Search attributes help customers evaluate a product
b...
Pre-purchase Stage – Evaluation of Alternatives
Perceived Risks
 Functional – unsatisfactory performance outcomes
 Finan...
33
Pre-purchase Stage – Evaluation of Alternatives
Perceived Risks – Strategies for Firms to Manage Consume
Perceptions of Ri...
Pre-purchase Stage – Evaluation of Alternatives
Service Expectations – Factors Influencing Consumer
Expectations of Servic...
Pre-purchase Stage – Purchase Decision
 When possible alternatives have been compared
and evaluated, the best option is s...
Service Encounter Stage - Overview
Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage
● Service encounters ran...
38
Service Encounter Stage : Overview
Service Encounter Stage
 Service encounter – a period of time during which a
customer interacts directly with the service...
Distinctions between High-contact
and Low-contact Services
 High-contact Services
 Customers visit service facility and ...
The Servuction System (Fig 2.21)
41
41
Servuction System:
Service Production and Delivery
 Servuction System – visible front stage and invisible
backstage
 Ser...
43
Service Encounter Stage
Theater as a Metaphor for Service Delivery
“All the world’s a stage and all the
men and women m...
44
Theatrical Metaphor: An Integrative Perspective
 Good metaphor as service delivery is a series of events that customer...
Post-encounter Stage - Overview
Pre-purchase Stage
Service Encounter Stage
Post-purchase Stage
 Evaluation of service
per...
© Pearson Education South Asia Pte Ltd 2013. All rights reserved46
Post-purchase Stage : Overview
Sample Practice Exam Question:
47
 Explain each of the following:
Search, experience and credence
attributes (6 marks)
...
Chapter 4 - Product
48
 You should have an advantage studying this for the exam
because it was the key topic used in the ...
Refer back also to the key concepts that underpin
the service product
49
 Chapter one: recall and understand the implicat...
Designing a Service Concept (1)
 Core Product
 Central component that supplies the principal,
problem-solving benefits c...
Designing a Service Concept (2)
 Service concept design must address the
following issues:
How the different service com...
Integration of Core Product, Supplementary
Elements and Delivery Process (Fig. 4.3)
52
52
The Flower of Service (Fig 4.4) (1)
Core
Information
Consultation
Order-Taking
Hospitality
Payment
Billing
Exceptions
Safe...
Managerial Implications
 Not every core product is surrounded by
supplementary elements from all eight clusters
 Nature ...
Make sure you have some examples ready for illustrating the
different elements of the Flower or Service (example SISTIC)
5...
Product Lines And Brands
 Most service organizations offer a line of products
rather than just a single product.
 They m...
Spectrum of Branding Alternatives
(Fig 4.18)
Source: derived from Aaker and Joachimsthaler
57
57
A Hierarchy of New Service Categories (1)
1. Style changes
Visible changes in service design or scripts
2. Service improv...
A Hierarchy of New Service Categories (2)
5. Product-line extensions
Additions to current product lines
6. Major process ...
Achieving Success in Developing New Services
 In developing new services,
Core product is of secondary importance
Abili...
Sample Exam Question
 Draw a diagram of the Flower of Service
model, distinguishing between the
‘facilitating’ and ‘enhan...
Practice Exam Question
 List and explain the five(5) of the
seven types of a ‘new service’.
62
Practice Exam Question : A Case Situation
63
 Café Rende is a small café well known among the locals for its
delicious ca...
Chapter 8 – Service Processes
 Flowcharting Service Delivery
 Blueprinting Services to Create Valued
Experiences and Pro...
Developing a Blueprint
 Identify key activities in creating and delivering
service
 Define “big picture” before “drillin...
Key Components of a Service Blueprint
1. Define standards for front-stage activities
2. Specify physical evidence
3. Ident...
Identify ‘Fail Points’
 Analysis of reasons for failure often reveals opportunities for
failure proofing to reduce/elimin...
Why Redesign?
 Revitalizes process that has become outdated
 Changes in external environment make existing practices obs...
Levels of Customer Participation (2)
 3 levels
 Low – Employees and systems do all the work
- Often involves standardize...
 Customers can influence productivity and quality of
service processes and outputs
 Customers not only bring expectation...
Self-Service Technologies (SSTs)
Many companies and government organizations seek
to divert customers from employee contac...
• You are about to open a cafeteria business. To ensure
that all your service staff understands the service
process you ha...
73
Sample Practice Exam Essay Question: read the following
case study and answer the question (next page)
Question for the exam case study:
• Suggest how restructured hospitals can
reduce the bed crunch using the following
servi...
75
a) What are SSTs?
b) Give two examples of how SST have replaced
traditional forms of delivery of core
products, and two...
(a) Identify and describe three clearly different
uses of Self-Service Technologies (SSTs). Give
real-life examples of eac...
Chapter 10 : Crafting the Service Environment
 Physical environment
 Design the servicescape and provide tangible eviden...
1. Shape customers’ experience and their behavior
 Message-creating medium: symbolic cues to
communicate the distinctive ...
 Physical surroundings help shape appropriate
feelings and reactions in customers and
employees
 Servicescapes form a co...
The Russell Model of Affect
(Fig. 10.8)
80
80
An Integrative Framework: Bitner’s Servicescape Model (Fig. 10.9)
81
81
An Integrative Framework:
The Servicescape Model
82
83
Design
elements in
a retail store
environment
PUTTING IT ALL TOGETHER
84
Selection of Environmental Design Elements
 Consumers perceive service environments
holistically
 Design with a holistic...
Practice Exam Question
86
 Describe four core purposes of service environment
(8 marks)
 Explain the effects of the serv...
Practice Exam Questions
87
 The servicescape of a service outlet serves
several important functions (in terms of
influenc...
Chapter 11 : Managing People for Service
Advantage
 People
 Interactions between customers and contact personnel
strongl...
Overview of Chapter 11
 Service Employees Are Extremely
Important
 Frontline Work Is Difficult and Stressful
 Cycles of...
Importance of Service Personnel
 Help maintain firm’s positioning. They are:
 A core part of the product
 The staff rep...
Front Line in Low-Contact Services
 Many routine transactions are now conducted without
involving front-line staff, e.g.,...
Boundary Spanning and Role Stress
 Boundary spanners link the organization to outside
world
 Multiplicity of roles often...
Boundary Spanning and Role Stress
 Boundary spanners link inside of organization to
outside world and often experience ro...
Emotional Labor
 “The act of expressing socially desired emotions
during service transactions” (Hochschild, The Managed
H...
Cycle of Failure (1) (Fig 11.6)
95
Cycle Of Mediocrity (1)
(Fig. 11.9)
96
Cycle of Success (1)
(Fig. 11.11)
97
The Service Talent Cycle for
Service Firms (Fig. 11.12)
98
Service employees need to learn:
 Organizational culture, purpose and strategy
 Get emotional commitment to core strateg...
Is Empowerment Always Appropriate?
Empowerment is most appropriate when:
 Firm’s business strategy is based on personaliz...
 Suggestion involvement
 Employee make recommendation
through formalized programs
 Job involvement
 Jobs redesigned
 ...
Motivate And Energize The Frontline
 Use full range of available rewards effectively,
including:
 Job content
 People a...
SERVICE LEADERSHIP
AND CULTURE
103
Service Leadership and Culture
 Charismatic/transformational leadership:
Change front line’s values, goals to be
consist...
The Inverted Organizational Pyramid
(Fig. 11.25)
105
Sample Practice Exam Essay Question
106
The owner of “Tasty Restaurant” noticed that profits had been
decreasing over the ...
Sample Exam Question:
107
 Draw and explain in detail all the three of the
HRM cylces (eg Cycle of Success, Cycle of
Medi...
Chapter 12 : Managing Relationships and Building
Loyalty
 The Search for Customer Loyalty
 The Wheel of Loyalty
 Buildi...
Why Is Customer Loyalty Important to A
Firm’s Profitability?
 Customers become more profitable the longer they
remain wit...
© Pearson Education South Asia Pte Ltd 2013. All rights reserved110
Assessing the Value of a Loyal Customer
• Must not ass...
 Customers stay loyal when we create value for them
 Value can be created for customers through
 Confidence benefits
C...
Why are Customers Loyal? (2)
(Service Insights 12.1)
 Social benefits
Mutual recognition and friendship between
service ...
The Wheel of Loyalty (Fig. 12.6)
113
113
Learn all sections
of this model!
114
 Service companies should consider the financial value to the
firm of each customer, rather than just count how many
...
Effective Tiering of Service :The Customer Pyramid (Fig 12.8)
115
115
116
 Service tiering, building loyalty bonds, and creating
membership programs are three of the strategies.
 Customer ti...
Relationship between Satisfaction and Loyalty
117
The satisfaction-loyalty relationship can be divided
into three zones:
...
The Customer Satisfaction Loyalty Relationship (Fig. 12.10)
118
118
Strategies for Developing Loyalty Bonds with
Customers (1)
 Deepening the relationship
 Bundling/Cross-selling services ...
Strategies for Developing Loyalty Bonds
with Customers (2)
 Reward Based Bonds
 Can be financial or non-financial bonds ...
121
ServiceInsight12.4
Strategies for Developing Loyalty Bonds
with Customers (3)
 Social Bonds
 Based on personal relationships between provid...
Analyze Customer Defections and Monitor
Declining Accounts
 Understand reasons for customer switching
 Churn Diagnostics...
What Drives Customers to Switch? (Fig 12.14)
124
124
Address Key Churn Drivers
 Deliver quality service
 Reduce inconvenience and non-monetary costs
 Have fair and transpar...
Other Ways to Reduce Churn
 Implement Effective Complaint Handling
and Service Recovery Procedures
 Increase Switching C...
Common Applications Of CRM Systems (1)
(Service Insights 12.6)
 Data collection
 Customer data such as contact details, ...
Common Objectives Of CRM Systems (2)
(Service Insights 12.6)
 Marketing automation
 Mining of customer data enables the ...
© Pearson Education South Asia Pte Ltd 2013. All rights reserved129
What a Comprehensive CRM Strategy Includes
Integrated ...
Implementation of CRM- key questions to ask when
defining customer relationship strategy:
 How should our value propositi...
Practice Examination Questions
131
 The implementation of profitable service strategies
can include building relationship...
Practice Examination Question
132
 As a graduate who has undertaken and successfully
completed the MKTG 1268 Service Qual...
Practice Exam Question
133
 Café Rende is a small café well known among the locals for its delicious
cakes, well blended ...
Chapter 13: Service Recovery
 Customer Complaining Behavior
 Customer Responses to Effective Service
Recovery
 Principl...
Customer satisfaction formula: linking the topics
135
Service Quality
(chapter 14)
This chapter (13) Chapter 12
Customer response to service failures
1. Do nothing
2. Complain in some form to the service firm
3. Take some kind of over...
Customer Response Categories to Service Failures (Fig. 13.3)
137
Why do customers complain?
 Compensation for a monetary loss—either in the
form of a refund and/or by having a service
pe...
The types of ‘justices’ (see page 342 and Figure
13.7)
139
 Procedural justice
 Concerns policies and rules that custome...
3 Dimensions of Perceived Fairness in Service Recovery
Process (Fig. 13.6)
140
Dealing with Complaining Customers and
Recovering from Service Failure
 Take complaints professionally and not personally...
Service recovery
Service recovery involves actions taken
by the organisation to put things right
for the customer followin...
Importance of Service Recovery
 Plays a crucial role in achieving customer
satisfaction
 Tests a firm’s commitment to sa...
The Service Recovery Paradox
 Customers who experience a service failure that is
satisfactorily resolved may be more like...
Principles of effective service recovery systems
145
 Table 13.1 recommends some strategies companies can
adopt to reduce...
Strategies to Reduce Customer Complaint Barriers (Table 13.1)
146
146
How to Enable Effective Service Recovery
 Be proactive
 On the spot, before customers complain
 Plan recovery procedure...
The Power of Service Guarantees
• Force firms to focus on what customers want
• Set clear standards
• Require systems to g...
How to Design Service Guarantees
 Unconditional
 Easy to understand and communicate
 Meaningful to the customer
 Easy ...
Types of Service Guarantees
150
151
Seven Types of Jaycustomers: (1)
The Cheat and Thief
 The Cheat: thinks of various way to cheat the firm
 The Thief: No ...
Seven Types of Jaycustomers: (2)
The Rulebreaker
 Many services need to establish rules to guide
customers safely through...
 Shouts loudly, maybe mouthing insults, threats and curses
 Service personnel are often abused even when they are not to...
 Family Feuders: People who get into arguments with
other customers – often members of their own family
 The Vandal:
 S...
Seven Types Of Jaycustomers: (5)
The Deadbeat
 Customers who fail to pay (as distinct from “thieves”
who never intended t...
Consequences of Dysfunctional Customer Behavior
 Employees:
 Mood or temper negatively affected
 Long-term psychologica...
Practice Exam Question
158
 You are the chief marketing officer at XCel Pte Ltd.
From your perspective, for the benefit o...
Practice Examination Question
159
 As a graduate who has undertaken and successfully
completed the MKTG 1268 Service Qual...
Practice Examination Question:
160
 Research suggests that many dissatisfied
customers never complain but simply defect t...
Practice Examination Question:
161
 Using the most appropriate theory/conceptual
model taught in this course, explain why...
Chapter 14 – Service Quality and Productivity
 Integrating Service Quality and Productivity
Strategies
 What is Service ...
Overview of Chapter 14 (cont’d)
 Hard Measures of Service Quality
 Tools to Analyze and Address Service
Quality Problems...
Productivity and quality in a service context
164
 Service managers need to focus on both productivity and
quality from t...
Integrating Service Quality and
Productivity Strategies
 Quality and productivity are twin paths to
creating value for bo...
5 Dimensions of Service Quality
Responsiveness: Promptness; helpfulness
Tangibles: Appearance of physical elements
Reliabi...
167
Table 14.1
Dimensions of
Service Quality
Six Service Quality Gaps
(Fig. 14.5)
168
168
Summary of the 6 Gaps
169
 Gap 1, the Knowledge Gap relates to a lack of management
understanding of what customers expec...
Suggestions for Closing the
6 Service Quality Gaps (1) (Table 14.2)
170
170
Suggestions for Closing the
6 Service Quality Gaps (2) (Table 14.2)
171
171
Suggestions for Closing the
6 Service Quality Gaps (3) (Table 14.2)
172
172
Suggestions for Closing the
6 Service Quality Gaps (4) (Table 14.2)
173
173
Soft and Hard Measures of Service Quality
 Soft measures —not easily observed, must be
collected by talking to customers,...
SERVQUAL – See Appendix 14.1
(also see Table14.4 on page 396)
175
 Service-based components: The SERVQUAL Scale
 SERVQUA...
Key Objectives of Effective Customer Feedback
Systems
176
 Together, these allow the
company to understand
where it stand...
Customer Feedback Collection Tools
 Total market surveys
 Annual surveys
 Transactional surveys
 Service feedback card...
Hard Measures of Service Quality
 Service quality indexes
 Embrace key activities that have an impact on customers
 Con...
Tools to Analyze and Address
Service Quality Problems
 Fishbone diagram
 Cause-and-effect diagram to identify potential ...
Cause-and-Effect Chart for
Flight Departure Delays (Fig. 14.10)
180
180
Customer-driven Ways to Improve Productivity
 Change timing of customer demand
 By shifting demand away from peaks, mana...
Backstage and Front-Stage Productivity Changes: Implications for
Customers
 Backstage changes may impact customers
 Keep...
Practice Exam Essay Question:
183
 List and describe each of the five service
quality (e.g. SERVQUAL) dimensions.
 How d...
184
Sample Practice Exam Essay Question: read the following
case study and answer the question (next page)
Question for the exam case study:
185
• Using the GAPs model, identify THREE gaps
that explain why there is a difference i...
Chapters 5 – 7 ? (the remaining
Service MM elements not tested)
Now what about the other chapters?186
These should be read...
Chapter 5: Distributing Services Through Physical
and Electronic Channels
 Place and time
 Service distribution can take...
Chapter 6 : Setting Prices and Implementing
Revenue Management
 Price and other user outlays
 From the firm’s perspectiv...
Chapter 7: Promoting Services and Educating
Customers
 Difficulty of marketing communication because of
intangibility iss...
And Finally….
190
 The best of luck !!
 Go out there and SCORE!!
SQ LO1 Class of April 2013
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SQ Exam Revision (October 2013)

  1. 1. Exam Revision: October 2013 Service Quality MKTG 1268 1 July 2013 Semester Note: all students are to understand that these notes are provided as a guideline on how to prepare more effectively for the examination. It is NOT intended to be a ‘spotting exercise’ or model answers- all students must read the text and your lecture notes in the first instance. The lecturer has mentioned many times in class that it is the responsibility of students to READ THE ASSIGNED TEXT CHAPTERS IN FULL. Those who rely completely on studying from the PowerPoint slides may end up under- performing in the exams. Please take note of this carefully before you start your revision
  2. 2. Sections in the Paper • There are THREE Parts in the SQ Exam Paper • Part A consists of 10 multiple choice questions worth 2 marks. (= 20 marks) • Part B consists of two 'Discussion Questions' worth 20 marks each (=40 marks) • Part C consists of two Applied Theory Cases - questions related to each case totals to 20 marks each (i.e., section totals 40 marks)
  3. 3. Coverage and Focus • In terms of the examinable chapters... MCQs cover chapters 7 to 15 • For the discussion and case questions (Sections B and C), they cover chapters 1, 2, 4, 8, 10, 11, 12, 13, 14 • The exam is more applied in nature: – Mere regurgitation of theory is NOT enough – You need to apply the concepts of SQ to the case or scenarios
  4. 4. The cases for Section C • There are TWO cases in Section C • One is a one-paragraph scenario and there are two questions (two questions totaling to 20 marks) related to that case/scenario. • The other, student will need to read a newspaper article then answer all the questions associated with the case (four questions totaling to 20 marks). Take around 20 -25 minutes to finish these 2 questions These will be short answers, be concise, get to the point and APPLY. Estimate around 5 minutes to answer each question.
  5. 5. Techniques for doing well in mini-cases • Read the case in detail • Pick out the key issues; try to assess WHICH area of SQ is it referring to – there are so many areas that is possible. The questions will give you the hints of course. • Apply the relevant SM (service marketing) concept BUT do not elaborate too much on what the concept is BUT how it is RELEVANT to the case study issues. Application more important than regurgitation of theory!
  6. 6. Time management • Do justice to each Part; don’t over-write on one area even if you know a lot because you will sacrifice the quality of later questions • Write the content in proportion to the marks • Assuming you take 15 minutes to finish MCQ then you have 105 minutes to do Parts A and B; proportion half for each part – around 50 minutes • Part B – 2 Discussion Questions 20 marks each; take 25 minutes to finish each question • Part C – Two Case Studies (take 50 minutes to finish this part)
  7. 7. 7 Here is a sample of what a case study from a newspaper cutting might look like (this is NOT coming out for your exam) You can see that this case is about the SQ gaps. So questions will appear on that. But more importantly, read the case in detail, find out what are the problems. Can you link these to any of the service 4 characteristics? Is the service high or low contact? Which box does it belong to in the Lovelock matrix? Who are the target customers and what is the buyer behavior? What aspect of the 7 Ps are relevant in your case study and why? Are there any special SM issues such as CRM, Change Leadership, Capacity Management and Queues, etc, etc can be applied here. THINK – THINK – APPLY!
  8. 8. The following are just extract of slides from my lectures DO NOT interpret these as being the only content that you need to read!! COVER all the text chapters AND my lecture notes on the exam-assigned chapters of the text And practice the end of chapter questions + the sample exam questions that have been given. Review of content from the key chapters8
  9. 9. Chapter One – Introduction to Services Marketing 9  You must also know:  Characteristics of services  The Lovelock Classification Model  The External Factors affecting the Service Industry  Be prepared to give good examples for each Marketing Mix element  And show how each element helps to address one or more of the characteristics of service
  10. 10. Government Policies Business Trends Social Changes Advances in IT Globalization Innovation in service products & delivery systems, stimulated by better technology Customers have more choices and exercise more power Success hinges on: ● Understanding customers and competitors ● Viable business models ● Creation of value for customers and firm ● New markets and product categories ● Increase in demand for services ● More intense competition Forces Transforming the Service Economy 10
  11. 11. Four Categories Of Services (Fig 1.10) 11 11
  12. 12. Characteristics of Services Compared to Goods Intangibility Perishability Simultaneous Production and Consumption Heterogeneity Learn the meaning of each of these terms well!
  13. 13. Services Pose Distinctive Marketing Challenges  Marketing management tasks in the service sector differ from those in the manufacturing sector.  The eight common differences are: 1. Most service products cannot be inventoried 2. Intangible elements usually dominate value creation 3. Services are often difficult to visualize and understand 4. Customers may be involved in co-production 5. People may be part of the service experience 6. Operational inputs and outputs tend to vary more widely 7. The time factor often assumes great importance 8. Distribution may take place through nonphysical channels 13
  14. 14. Differences, Implications, and Marketing-Related Tasks (1) (Table 1.2) Difference  Most service products cannot be inventoried  Intangible elements usually dominate value creation  Services are often difficult to visualize & understand  Customers may be involved in co- Production Implications  Customers may be turned away  Harder to evaluate service & distinguish from competitors  Greater risk & uncertainty perceived  Interaction between customer & provider; but poor task execution could affect satisfaction Marketing-Related Tasks  Use pricing, promotion, reservations to smooth demand; work with ops to manage capacity  Emphasize physical clues, employ metaphors and vivid images in advertising  Educate customers on making good choices; offer guarantees  Develop user-friendly equipment, facilities & systems; train customers, provide good support 14 14
  15. 15. Implications  Behavior of service personnel & customers can affect satisfaction  Hard to maintain quality, consistency, reliability  Difficult to shield customers from failures  Time is money; customers want service at convenient times  Electronic channels or voice telecommunications Difference  People may be part of service experience  Operational inputs and outputs tend to vary more widely  Time factor often assumes great importance  Distribution may take place through nonphysical channels Marketing-Related Tasks  Recruit, train employees to reinforce service concept  Shape customer behavior  Redesign for simplicity and failure proofing  Institute good service recovery procedures  Find ways to compete on speed of delivery; offer extended hours  Create user-friendly, secure websites and free access by telephone Differences, Implications, and Marketing-Related Tasks (2) (Table 1.2) 15 15
  16. 16. Traditional 4 Ps Applied to Services (1)  Product elements  Service products are at the heart of services marketing strategy  Marketing mix begins with creating service concept that offers value  Service product consists of core and supplementary elements  Core products meet primary needs  Supplementary elements are value-added enhancements 16 Note: as part of your preparations make sure you understand all the 7 Services Marketing Ps
  17. 17. Traditional 4 Ps Applied to Services (2)  Place and time  Service distribution can take place through physical and non-physical channels  Some firms can use electronic channels to deliver all (or at least some) of their service elements  Information-based services can be delivered almost instantaneously electronically  Delivery Decisions: Where, When, How  Time is of great importance as customers are physically present  Convenience of place and time become important determinants of effective service delivery 17
  18. 18. Traditional 4 Ps Applied to Services (3)  Price and other user outlays  From the firm’s perspective, pricing generates income and creates profits  From the customer’s perspective, pricing is key part of costs to obtained wanted benefits  Marketers must recognize that customer costs involve more than price paid to seller  Identify and minimize non-monetary costs incurred by users:  Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.)  Time expenditures, especially waiting  Unwanted mental and physical effort  Negative sensory experiences  Revenue management is an important part of pricing 18
  19. 19. Traditional 4 Ps Applied to Services (4)  Promotion and Education  Plays three vital roles:  Provide information and advice  Persuades the target customers of merit of service product or brand  Encourages customer to take action at specific time  Customers may be involved in co-production so:  Teach customer how to move effectively through the service process  Shape customers’ roles and manage their behavior 19
  20. 20. Extended Mix for Managing the Customer Interface (1)  Process  How firm does things may be as important as what it does  Customers often actively involved in processes, especially when acting as co-producers of service  Operational inputs and outputs vary more widely  Quality and content varies among employees, between employees  Variations can be with different customers  Variations from time of the day  Variability can be reduced by:  Standardized procedures  Implementing rigorous management of service quality  Training employees more carefully  Automating tasks  Train employees in service recovery procedures  Manage process design and “flow of customers 20
  21. 21. Extended Mix for Managing the Customer Interface (2)  Physical environment  Design the servicescape and provide tangible evidence of service performances  Create and maintain physical appearances  Buildings/landscaping  Interior design/furnishings  Vehicles/equipment  Staff grooming/clothing  Sounds and smells  Other tangibles  Manage physical cues carefully— can have profound impact on customer impressions 21
  22. 22. Extended Mix for Managing the Customer Interface (3)  People  Interactions between customers and contact personnel strongly influence customer perceptions of service quality  Well-managed firms devote special care to selecting, training and motivating service employees  Other customers can also affect one’s satisfaction with a service 22
  23. 23. How would you LINK the 4 characteristics of services to the 7 Ps? 23 Intangibility Perishability Heterogeneity Inseparability PRODUCT X X PRICE X PROMOTION X X PLACE X PEOPLE X PHYSICAL EV X PROCESS X X This is just an illustration to show how the different elements of the marketing mix can address the challenges of the services characteristics; the links are not necessarily definitive but rather indicative. What do you think? My favorite diagram: remember in whatever question you handle in the SQ paper, whatever topic it may be, always LINK back to one or more of the problems that services marketing mix is trying to address.
  24. 24. Sample Practice Exam Essay Questions 24 1. The marketing of services is different to the marketing of tangible goods”. Provide support for this statement by: (a.) Identifying and explaining the unique characteristics of services. (b.) Describing the expanded marketing mix for services, highlighting how it may be different to the “traditional marketing mix of 4Ps”.
  25. 25. 25 2. List and describe each of the expanded marketing mix elements and contrast the expanded marketing mix for services to the traditional marketing mix for tangible goods 3. List and discuss each of the four broad categories of services.  Demonstrate your understanding of these four categories of services by giving at least three examples of each and highlighting the implications of such services Sample Practice Exam Essay Questions
  26. 26. Sample Practice Exam Essay Questions 26  List and explain why the unique characteristics of services (that makes them different to tangible goods).  Classify the following two services into people/possession/mental-stimulus/information- processing services and explain your selection:  Funeral service  Online dating service
  27. 27. 27  The marketing mix for services is different to that of tangible goods. Explain the marketing mix elements applicable to service contexts, and highlight its differences to the marketing mix elements of tangible goods. Select a service that you are familiar with, and describe its marketing mix elements. Sample Practice Exam Essay Questions
  28. 28. 28 Chapter 2: Consumer Behavior in a Service Context High and Low Contact Service Systems The 3 stages of Consumer Decision Making
  29. 29. Pre-purchase Stage Service Encounter Stage Post-purchase Stage Pre-purchase Stage - Overview  Customers seek solutions to aroused needs  Evaluating a service may be difficult  Uncertainty about outcomes Increases perceived risk  What risk reduction strategies can service suppliers develop?  Understanding customers’ service expectations  Components of customer expectations  Making a service purchase decision 29 A
  30. 30. 30 Service Attributes
  31. 31. Pre-purchase Stage – Evaluation of Alternatives Service Attributes  Search attributes help customers evaluate a product before purchase  Style, color, texture, taste, sound  Experience attributes cannot be evaluated before purchase—must “experience” product to know it  Vacations, sporting events, medical procedures  Credence attributes are product characteristics that customers find impossible to evaluate confidently even after purchase and consumption  Quality of repair and maintenance work 31
  32. 32. Pre-purchase Stage – Evaluation of Alternatives Perceived Risks  Functional – unsatisfactory performance outcomes  Financial – monetary loss, unexpected extra costs  Temporal – wasted time, delays leading to problems  Physical – personal injury, damage to possessions  Psychological – fears and negative emotions  Social – how others may think and react  Sensory – unwanted impact on any of five senses 32
  33. 33. 33
  34. 34. Pre-purchase Stage – Evaluation of Alternatives Perceived Risks – Strategies for Firms to Manage Consume Perceptions of Risk 34 •Display credentials •Use evidence management (e.g., furnishing, equipment etc.) •Give customers online access to information about order status •Offer guarantees
  35. 35. Pre-purchase Stage – Evaluation of Alternatives Service Expectations – Factors Influencing Consumer Expectations of Service (Fig. 2.14) 35
  36. 36. Pre-purchase Stage – Purchase Decision  When possible alternatives have been compared and evaluated, the best option is selected  Can be quite simple if perceived risks are low and alternatives are clear  Very often, trade-offs are involved. The more complex the decision, the more trade-offs need to be made  Price is often a key factor in the purchase decision 36
  37. 37. Service Encounter Stage - Overview Pre-purchase Stage Service Encounter Stage Post-purchase Stage ● Service encounters range from high- to low-contact ● Understanding the servuction system ● Theater as a metaphor for service delivery: An integrative perspective  Service facilities  Personnel  Role and script theories 37 37 B
  38. 38. 38 Service Encounter Stage : Overview
  39. 39. Service Encounter Stage  Service encounter – a period of time during which a customer interacts directly with the service provider  Might be brief or extend over a period of time (e.g., a phone call or visit to the hospital)  Models and frameworks:  “Moments of Truth” – importance of managing touchpoints  High/low contact model – extent and nature of contact points  Servuction model – variations of interactions  Theater metaphor – “staging” service performances
  40. 40. Distinctions between High-contact and Low-contact Services  High-contact Services  Customers visit service facility and remain throughout service delivery  Active contact between customers and service personnel  Includes most people-processing services  Low-contact Services  Little or no physical contact with service personnel  Contact usually at arm’s length through electronic or physical distribution channels  New technologies (e.g. Web) help reduce contact levels  Medium-contact Services Lie in between These Two 40
  41. 41. The Servuction System (Fig 2.21) 41 41
  42. 42. Servuction System: Service Production and Delivery  Servuction System – visible front stage and invisible backstage  Service Operations (front stage and backstage)  Technical core where inputs are processed and service elements created  Includes facilities, equipment, and personnel  Service Delivery (front stage)  Where “final assembly” of service elements takes place and service is delivered to customers  Includes customer interactions with operations and other customers  Other contact points  Includes customer contacts with other customers 42
  43. 43. 43 Service Encounter Stage Theater as a Metaphor for Service Delivery “All the world’s a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts” William Shakespeare As You Like It
  44. 44. 44 Theatrical Metaphor: An Integrative Perspective  Good metaphor as service delivery is a series of events that customers experience as a performance Service facilities • Stage on which drama unfolds • This may change from one act to another Personnel • Front stage personnel are like members of a cast • Backstage personnel are support production team Roles • Like actors, employees have roles to play and behave in specific ways Scripts • Specifies the sequences of behavior for customers and employees
  45. 45. Post-encounter Stage - Overview Pre-purchase Stage Service Encounter Stage Post-purchase Stage  Evaluation of service performance  Future intentions 45 45 C
  46. 46. © Pearson Education South Asia Pte Ltd 2013. All rights reserved46 Post-purchase Stage : Overview
  47. 47. Sample Practice Exam Question: 47  Explain each of the following: Search, experience and credence attributes (6 marks) At least four out of the seven types of perceived risks involved in the purchase and/or use of services (4 marks)
  48. 48. Chapter 4 - Product 48  You should have an advantage studying this for the exam because it was the key topic used in the writing of your group report.  All areas need to be covered in this chapter- do NOT attempt to spot topics  Designing a Service Product  The Flower of Service  Branding Service Products and Experiences  New Service Development
  49. 49. Refer back also to the key concepts that underpin the service product 49  Chapter one: recall and understand the implications of the 4 characteristics of the service product  Chapter two: remember that service products being intangible are assessed by customer based on three qualities – search, experience and credence qualities  Services can be high or low contact  Service can be visible (front stage) and non-visible to the customer (back stage)  Above all, the service product is derived from the positioning of the service brand.
  50. 50. Designing a Service Concept (1)  Core Product  Central component that supplies the principal, problem-solving benefits customers seek  Supplementary Services  Augment the core product, facilitating its use and enhancing its value and appeal  Delivery Processes  Used to deliver both the core product and each of the supplementary services 50
  51. 51. Designing a Service Concept (2)  Service concept design must address the following issues: How the different service components are delivered to the customer The nature of the customer’s role in those processes How long delivery lasts The recommended level and style of service to be offered 51
  52. 52. Integration of Core Product, Supplementary Elements and Delivery Process (Fig. 4.3) 52 52
  53. 53. The Flower of Service (Fig 4.4) (1) Core Information Consultation Order-Taking Hospitality Payment Billing Exceptions Safekeeping Facilitating elements Enhancing elements KEY: 53 53
  54. 54. Managerial Implications  Not every core product is surrounded by supplementary elements from all eight clusters  Nature of product helps to determine:  Which supplementary services must be offered  Which might usefully be added to enhance value and ease of doing business with the organization  People-processing and high contact services tend to have more supplementary services  Firms that offer different levels of service often add extra supplementary services for each upgrade in service level 54
  55. 55. Make sure you have some examples ready for illustrating the different elements of the Flower or Service (example SISTIC) 55 Efficient and reliable event ticket services Online, telephone and counter service Hotline and counter staff to provide advice on best seatsPayment and billing done online- instantaneous transaction Detailed website with all event details Customer hotline and email for feedback and after-sales Special bookings for corporate and group sales (prepare your own examples!) (your answer?)
  56. 56. Product Lines And Brands  Most service organizations offer a line of products rather than just a single product.  They may choose among 3 broad alternatives: Single brand to cover all products and services A separate, stand-alone brand for each offering Some combination of these two extremes 56
  57. 57. Spectrum of Branding Alternatives (Fig 4.18) Source: derived from Aaker and Joachimsthaler 57 57
  58. 58. A Hierarchy of New Service Categories (1) 1. Style changes Visible changes in service design or scripts 2. Service improvements Modest changes in the performance of current products 3. Supplementary service innovations Addition of new or improved facilitating or enhancing elements 4. Process-line extensions Alternative delivery procedures 58
  59. 59. A Hierarchy of New Service Categories (2) 5. Product-line extensions Additions to current product lines 6. Major process innovations Using new processes to deliver existing products with added benefits 7. Major service innovations New core products for previously undefined markets 59
  60. 60. Achieving Success in Developing New Services  In developing new services, Core product is of secondary importance Ability to maintain quality of the total service offering is key Accompanying marketing support activities are vital Market knowledge is of utmost importance 60
  61. 61. Sample Exam Question  Draw a diagram of the Flower of Service model, distinguishing between the ‘facilitating’ and ‘enhancing’ supplementary elements. (4 marks)  Explain and give examples of each of the eight petals/elements (16 marks) 61
  62. 62. Practice Exam Question  List and explain the five(5) of the seven types of a ‘new service’. 62
  63. 63. Practice Exam Question : A Case Situation 63  Café Rende is a small café well known among the locals for its delicious cakes, well blended coffee and nice décor. To cater for rising customer expectations, the owner has decided to update her shop by painting the walls, changing the furniture and also installing credit card payment facility because she noted that more customers ask to pay by credit card. She also introduced, due to popular demand, a series of cake baking classes. She also introduced home delivery service for locations within a 3 km radius and for purchases of more than $50. Question for discussion:  There are seven new service development categories. Categorize and define each of the new services introduced at Café Rende. This is a good example of a scenario-type applied question
  64. 64. Chapter 8 – Service Processes  Flowcharting Service Delivery  Blueprinting Services to Create Valued Experiences and Productive Operations  Service Process Redesign  The Customer as Co-Producer  Self-Service Technologies (SST) 64
  65. 65. Developing a Blueprint  Identify key activities in creating and delivering service  Define “big picture” before “drilling down” to obtain a higher level of detail Advantages of Blueprinting  Distinguish between “front-stage” and “backstage”  Clarify interactions between customers and staff, and support by backstage activities and systems  Identify potential fail points; take preventive measures; prepare contingency  Pinpoint stages in the process where customer commonly have to wait Blueprinting 65
  66. 66. Key Components of a Service Blueprint 1. Define standards for front-stage activities 2. Specify physical evidence 3. Identify main customer actions 4. Line of interaction (customers and front-stage personnel) 5. Front-stage actions by customer-contact personnel 6. Line of visibility (between front stage and backstage) 7. Backstage actions by customer contact personnel 8. Support processes involving other service personnel 9. Support processes involving IT - Identify fail points and risks of excessive waits - Set service standards and do failure-proofing 66
  67. 67. Identify ‘Fail Points’  Analysis of reasons for failure often reveals opportunities for failure proofing to reduce/eliminate future risk of errors  Need fail-safe methods for both employees and customers  Have poka-yokes to ensure service staff do things correctly, as requested, or at the right speed  Customer poka-yokes focus on preparing the customer for:  The encounter  Understanding and anticipating their roles  Selecting the correct service or transaction  See Service Insights 8.1 – Framework to prevent customer failures 67
  68. 68. Why Redesign?  Revitalizes process that has become outdated  Changes in external environment make existing practices obsolete and require redesign of underlying processes  Creation of brand-new processes to stay relevant  Rusting occurs internally  Natural deterioration of internal processes; creeping bureaucracy; evolution of spurious, unofficial standards  Symptoms: - Extensive information exchange - Data that is not useful - High ratio of checking or control activities to value-adding activities - Increased exception processing - Customer complaints about inconvenient and unnecessary procedures 68
  69. 69. Levels of Customer Participation (2)  3 levels  Low – Employees and systems do all the work - Often involves standardized service - Medium – Customer helps firm create and deliver service - Provide needed information and instructions - Make some personal effort; share physical possessions  High – Customer works actively with provider to co-produce the service - Service cannot be created without customer’s active participation - Customer can jeopardize quality of service outcome (e.g. weight loss, marriage counseling) 69
  70. 70.  Customers can influence productivity and quality of service processes and outputs  Customers not only bring expectations and needs, they also need to have relevant service production competencies  Customers also need to be recruited as they are “partial employees”. Firms need to get those with the skills to do the tasks  For the relationship to last, both parties need to cooperate with each other Customers as Partial Employees 70
  71. 71. Self-Service Technologies (SSTs) Many companies and government organizations seek to divert customers from employee contact to Internet- based self-service Disadvantages:  Anxiety and stress experienced by customers who are uncomfortable with using them  Some see service encounters as social experiences and prefer to deal with people Advantages:  Time and Cost savings  Flexibility  Convenience of location  Greater control over service delivery  High perceived level of customization 71 PsychologicalFactorsRelatedtoUseof SSTs
  72. 72. • You are about to open a cafeteria business. To ensure that all your service staff understands the service process you have designed for your business, you have decided to develop a blueprint to identify key activities in creating and delivering your service. • How would you explain the advantages of your blueprint to your service staff? • What are the key components of a service blueprint? • Present the service blueprint that you have developed for your cafeteria business. 72 Sample Practice Exam Essay Question:
  73. 73. 73 Sample Practice Exam Essay Question: read the following case study and answer the question (next page)
  74. 74. Question for the exam case study: • Suggest how restructured hospitals can reduce the bed crunch using the following service process redesign strategies a) Getting rid of non-value added steps b) Redesign the physical aspects of the service process c) Offering direct service 74
  75. 75. 75 a) What are SSTs? b) Give two examples of how SST have replaced traditional forms of delivery of core products, and two examples of how SST have replaced traditional forms of delivery of supplementary services c) What are some of the advantages and disadvantages of SSTs? Sample Practice Exam Essay Question:
  76. 76. (a) Identify and describe three clearly different uses of Self-Service Technologies (SSTs). Give real-life examples of each. (12 marks) (b.) What are the benefits of SSTs for customers and the service organization? (8 marks) 76 Another Sample Practice Exam Essay Question on SSTs:
  77. 77. Chapter 10 : Crafting the Service Environment  Physical environment  Design the servicescape and provide tangible evidence of service performances  Key point to note: when the service is intangible, the strategy is to create a tangible or physical environment in which service delivery takes place  Create and maintain physical appearances  Buildings/landscaping  Interior design/furnishings  Vehicles/equipment  Staff grooming/clothing  Sounds and smells  Other tangibles  Manage physical cues carefully— can have profound impact on customer impressions 77 Key Issues
  78. 78. 1. Shape customers’ experience and their behavior  Message-creating medium: symbolic cues to communicate the distinctive nature and quality of the service experience  Attention-creating medium: make servicescape stand out from competition and attract customers from target segments  Effect-creating medium: use colors, textures, sounds, scents and spatial design to enhance desired service experience 2. Support image, positioning and differentiation 3. Part of the value proposition 4. Facilitate service encounter and enhance productivity Purpose of Service Environments 78
  79. 79.  Physical surroundings help shape appropriate feelings and reactions in customers and employees  Servicescapes form a core part of the value proposition  Banyan Tree (consider all the different stimuli that help to create the total luxury spa experience)  The Transformers Ride at Universal Studios Servicescape as Part of Value Proposition 79
  80. 80. The Russell Model of Affect (Fig. 10.8) 80 80
  81. 81. An Integrative Framework: Bitner’s Servicescape Model (Fig. 10.9) 81 81
  82. 82. An Integrative Framework: The Servicescape Model 82
  83. 83. 83 Design elements in a retail store environment
  84. 84. PUTTING IT ALL TOGETHER 84
  85. 85. Selection of Environmental Design Elements  Consumers perceive service environments holistically  Design with a holistic view Servicescapes have to be seen holistically: No dimension of design can be optimized in isolation, because everything depends on everything else Holistic characteristic of environments makes designing service environment an art  Must design from a customer’s perspective 85
  86. 86. Practice Exam Question 86  Describe four core purposes of service environment (8 marks)  Explain the effects of the service environment on consumer behaviour using the servicescape model. Suggest 4 ways in which ambient conditions can be used to improve the service experience of a customer in a spa service. (12 marks) (Total = 20 marks)
  87. 87. Practice Exam Questions 87  The servicescape of a service outlet serves several important functions (in terms of influencing buyer/customer behavior). What are they?  Draw the Bitner servicescape model, and explain each of its component. Using real-life examples, contrast ‘good’ and ‘bad’ servicescape designs.
  88. 88. Chapter 11 : Managing People for Service Advantage  People  Interactions between customers and contact personnel strongly influence customer perceptions of service quality  Well-managed firms devote special care to selecting, training and motivating service employees; HR function  Empowerment for improving customer service  Other customers can also affect one’s satisfaction with a service; customers are considered part of the ‘people’ element 88 Key Issues
  89. 89. Overview of Chapter 11  Service Employees Are Extremely Important  Frontline Work Is Difficult and Stressful  Cycles of Failure, Mediocrity, and Success  Human Resources Management – How To Get It Right?  Service Leadership and Culture 89
  90. 90. Importance of Service Personnel  Help maintain firm’s positioning. They are:  A core part of the product  The staff represent the service firm  The staff are a core part of the service brand  Frontline is an important driver of customer loyalty  Anticipate customer needs  Customize service delivery  Build personalized relationships  Key driver of productivity of frontline operation  Generate sales, cross-sales and up-sales 90
  91. 91. Front Line in Low-Contact Services  Many routine transactions are now conducted without involving front-line staff, e.g.,  ATMs (Automated Teller Machines)  IVR (Interactive Voice Response) systems  Websites for reservations/ordering, payment etc.  Though technology and self-service interface is becoming a key engine for service delivery, front-line employees remain crucially important  “Moments of truth” affect customer’s views of the service firm 91
  92. 92. Boundary Spanning and Role Stress  Boundary spanners link the organization to outside world  Multiplicity of roles often results in service staff having to pursue both operational and marketing goals  Consider management expectations of service staff:  delight customers  be fast and efficient in executing operational tasks  do selling, cross selling, and up-selling  enforce pricing schedules and rate integrity
  93. 93. Boundary Spanning and Role Stress  Boundary spanners link inside of organization to outside world and often experience role stress from multiple roles they have to perform  3 main causes of role stress: a) Organization vs. Client: Dilemma whether to follow company rules or to satisfy customer demands  This conflict is especially acute in organizations that are not customer oriented b) Person vs. Role: Conflicts between what jobs require and employee’s own personality and beliefs c) Client vs. Client: Conflicts between customers that demand service staff intervention 93
  94. 94. Emotional Labor  “The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)  Occurs when there is gap between what employees feel inside, and emotions that management requires them to display to customers  Performing emotional labor in response to society’s or management’s display rules can be stressful  Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress 94
  95. 95. Cycle of Failure (1) (Fig 11.6) 95
  96. 96. Cycle Of Mediocrity (1) (Fig. 11.9) 96
  97. 97. Cycle of Success (1) (Fig. 11.11) 97
  98. 98. The Service Talent Cycle for Service Firms (Fig. 11.12) 98
  99. 99. Service employees need to learn:  Organizational culture, purpose and strategy  Get emotional commitment to core strategy and core values  Get managers to teach “why”, “what” and “how” of job  Interpersonal and technical skills  Both are necessary but neither alone is enough for performing a job well  Product/service knowledge  Staff’s product knowledge is a key aspect of service quality  Staff must explain product features and help consumers make the right choice Train Service Employees Actively 99
  100. 100. Is Empowerment Always Appropriate? Empowerment is most appropriate when:  Firm’s business strategy is based on personalized, customized service and competitive differentiation  Emphasis on extended relationships rather than short- term transactions  Use of complex and non-routine technologies  Service failures are non-routine and cannot be designed out of the system  Business environment is unpredictable, consisting of surprises  Managers are comfortable letting employees work independently for benefit of firm and customers  Employees seek to deepen skills, like working with others, and have good interpersonal and group process skills 100
  101. 101.  Suggestion involvement  Employee make recommendation through formalized programs  Job involvement  Jobs redesigned  Employees retrained, supervisors reoriented to facilitate performance  High involvement  Information is shared  Employees skilled in teamwork, problem solving etc.  Participate in management decisions  Profit sharing and stock ownership Levels of Employee Involvement 101
  102. 102. Motivate And Energize The Frontline  Use full range of available rewards effectively, including:  Job content  People are motivated and satisfied knowing they are doing a good job  Feedback and recognition  People derive a sense of identity and belonging to an organization from feedback and recognition  Goal achievement  Specific, difficult but attainable and accepted goals are strong motivators 102
  103. 103. SERVICE LEADERSHIP AND CULTURE 103
  104. 104. Service Leadership and Culture  Charismatic/transformational leadership: Change front line’s values, goals to be consistent with firm Motivate staff to perform their best  Service culture can be defined as: Shared perceptions of what is important Shared values and beliefs of why they are important  A strong service culture focuses the entire organization on the frontline and top management is informed and actively involved 104
  105. 105. The Inverted Organizational Pyramid (Fig. 11.25) 105
  106. 106. Sample Practice Exam Essay Question 106 The owner of “Tasty Restaurant” noticed that profits had been decreasing over the last year. Staff turnover had also been particularly high. In an effort to ‘fix’ this situation, he decided to hire a marketing manager (i.e. you) for advice. As the newly appointed marketing manager of this restaurant, you found out that the owner had been focusing on cost-cutting to maximize revenues. (a) Drawing on the most appropriate services marketing theories, what will you say to this owner to convince him of the links between investing in human resources and profitability, and vice-versa (i.e. the link between poor human resource management and negative profit performance)? (b) How will you implement Human Resource Management (HRM) to move the restaurant towards success as a service organization (Describe five clearly different HR tasks to be implemented)?
  107. 107. Sample Exam Question: 107  Draw and explain in detail all the three of the HRM cylces (eg Cycle of Success, Cycle of Mediocrity and Cycle of Failure). Why is good HRM (Human Resource Management) important within service organizations? Give examples of good HRM practices.
  108. 108. Chapter 12 : Managing Relationships and Building Loyalty  The Search for Customer Loyalty  The Wheel of Loyalty  Building a Foundation for Loyalty  Strategies for Developing Loyalty Bonds with Customers  Strategies for Reducing Customers Defections  CRM: Customer Relationship Management Systems  What a Comprehensive CRM Strategy Includes 108
  109. 109. Why Is Customer Loyalty Important to A Firm’s Profitability?  Customers become more profitable the longer they remain with a firm:  Increase purchases and/or account balances  Customers / families purchase in greater quantities as they grow  Reduced operating costs  Fewer demands from suppliers and operating mistakes as customer becomes experienced  Referrals to other customers  Positive word-of-mouth saves firm from investing money in sales and advertising  Price premiums  Long-term customers willing to pay regular price  Willing to pay higher price during peak periods 109
  110. 110. © Pearson Education South Asia Pte Ltd 2013. All rights reserved110 Assessing the Value of a Loyal Customer • Must not assume that loyal customers are always more profitable than those making one-time transactions  Large customers may expect price discounts in return for loyalty  Revenues don’t necessarily increase with time for all types of customers • Tasks:  Determine costs and revenues for customers from different market segments at different points in their customer lifecycles  Predict future profitability
  111. 111.  Customers stay loyal when we create value for them  Value can be created for customers through  Confidence benefits Confidence in correct performance Ability to trust the provider Lower anxiety when purchasing Knowing what to expect and receive Why are Customers Loyal? (1) (Service Insights 12.1) 111
  112. 112. Why are Customers Loyal? (2) (Service Insights 12.1)  Social benefits Mutual recognition and friendship between service provider and customer  Special treatment  Better price  Discounts not available to most customer  Extra services  Higher priority when there is a wait 112
  113. 113. The Wheel of Loyalty (Fig. 12.6) 113 113 Learn all sections of this model!
  114. 114. 114  Service companies should consider the financial value to the firm of each customer, rather than just count how many customers can be served. Heavy users (who buy more frequently and in larger volumes) are generally more profitable than occasional users. And because customers interact with each other in many services, managers need to think about whether different target segments are compatible with one another.  Attracting the right customers is important as they bring in long-term revenues, continued growth in referrals, etc. Emphasis must also be given to prevent attracting the wrong customers that typically results in costly churn, a diminished company reputation and disillusioned employees. Targeting the Right Customers and Searching for Value, Not Volume
  115. 115. Effective Tiering of Service :The Customer Pyramid (Fig 12.8) 115 115
  116. 116. 116  Service tiering, building loyalty bonds, and creating membership programs are three of the strategies.  Customer tiers can be developed around different levels of profit contribution, needs (including sensitivities to variables such as price, comfort, and speed), and identifiable personal profiles such as demographics. Each customer tier requires significantly different service levels based on customer requirements and customer value to the firm.  Slicing the customer base per se allows the firm to see clearly where the profits and the loss making segments are and tailor their marketing accordingly in response. Effective Tiering of Service :The Customer Pyramid (Fig 12.8) Read up on the four tiers of customers (platinum, gold, iron and lead (page 369)
  117. 117. Relationship between Satisfaction and Loyalty 117 The satisfaction-loyalty relationship can be divided into three zones:  zone of defection—occurs at low satisfaction levels  zone of indifference—found at moderate satisfaction levels  zone of affection—occurs at very high satisfaction where customers do not find the need to seek alternative service providers
  118. 118. The Customer Satisfaction Loyalty Relationship (Fig. 12.10) 118 118
  119. 119. Strategies for Developing Loyalty Bonds with Customers (1)  Deepening the relationship  Bundling/Cross-selling services makes switching a major effort that customer is unwilling to go through unless extremely dissatisfied with service provider  Customers benefit from buying all their various services from the same provider One-stop-shopping, potentially higher service levels, higher service tiers etc 119
  120. 120. Strategies for Developing Loyalty Bonds with Customers (2)  Reward Based Bonds  Can be financial or non-financial bonds or a combination of both  Financial bonds  Discounts on purchases, loyalty program rewards (e.g. frequent flier miles), cash-back programs  Non-financial rewards  Priority to loyalty program members for waitlists and queues in call centers; higher baggage allowances, priority upgrading, access to airport lounges for frequent flyers  Intangible rewards  Special recognition and appreciation  Reward-based loyalty programs are relatively easy to copy and rarely provide a sustained competitive advantage 120 See example of rewards used by British Airways in Service Insights 12.4 on page 375 of the text (see Table 12.1)
  121. 121. 121 ServiceInsight12.4
  122. 122. Strategies for Developing Loyalty Bonds with Customers (3)  Social Bonds  Based on personal relationships between providers and customers  Harder to and takes a longer time to build, but also harder to imitate and thus, better chance of retention in the long term  Customization Bonds  Customized service for loyal customers  e.g. Starbucks  Customers may find it hard to adjust to another service provider who cannot customize service 122
  123. 123. Analyze Customer Defections and Monitor Declining Accounts  Understand reasons for customer switching  Churn Diagnostics common in mobile phone industry  Analysis of data warehouse information on churned and declining customers  Exit interviews: Ask a short set of questions when customer cancels account; in-depth interviews of former customers by third party agency 123
  124. 124. What Drives Customers to Switch? (Fig 12.14) 124 124
  125. 125. Address Key Churn Drivers  Deliver quality service  Reduce inconvenience and non-monetary costs  Have fair and transparent pricing  Industry specific drivers  Cellular phone industry: handset replacement a common reason for subscribers discontinuing services – offer handset replacement programs  Take active steps to retain customers  Save teams: specially trained call center staff to deal with customers who want to cancel their accounts  Be careful about how save teams are rewarded (see Service Insights 12.5) 125
  126. 126. Other Ways to Reduce Churn  Implement Effective Complaint Handling and Service Recovery Procedures  Increase Switching Costs  Natural switching costs  e.g. Changing primary bank account – many related services tied to account  Can be created by instituting contractual penalties for switching  Must be careful not to be perceived as holding customers hostage  High switching barriers and poor service quality likely to generate negative attitudes and bad word of mouth 126
  127. 127. Common Applications Of CRM Systems (1) (Service Insights 12.6)  Data collection  Customer data such as contact details, demographics, purchasing history, service preferences, and the like  Data analysis  Data captured is analyzed and categorized  Used to tier customer base and tailor service delivery accordingly  Sales force automation  Sales leads, cross-sell and up-sell opportunities can be effectively identified and processed  Entire sales cycle from lead generation to close of sales and after- sales service can be tracked and facilitated through CRM system 127
  128. 128. Common Objectives Of CRM Systems (2) (Service Insights 12.6)  Marketing automation  Mining of customer data enables the firm to target its market  Goal to achieve one-to-one marketing and cost savings, often in the context of loyalty and retention programs  Results in increasing the ROI on its marketing expenditure  CRM systems also allows firms to judge effectiveness of marketing campaigns through the analysis of responses  Call center automation  Call center staff have customer information at their finger tips and can improve their service levels to all customers  Caller ID and account numbers allow call centers to identify the customer tier the caller belongs to, and to tailor the service accordingly  For example, platinum callers get priority in waiting loops. 128
  129. 129. © Pearson Education South Asia Pte Ltd 2013. All rights reserved129 What a Comprehensive CRM Strategy Includes Integrated Framework for CRM Strategy Development Strategy Development • Assessment of business strategy • Business strategy guides development of customer strategy
  130. 130. Implementation of CRM- key questions to ask when defining customer relationship strategy:  How should our value proposition change to increase customer loyalty?  How much customization or one-to-one marketing and service delivery is appropriate and profitable?  What is the increase in profit from increasing share-of- wallet with current customers? How much does this vary by customer tier and/or segment?  How much time and resources can we provide to CRM right now?  If we believe in customer relationship management, why haven’t we taken more steps in that direction in past?  What can we do today to develop customer relationships without spending on technology? 130
  131. 131. Practice Examination Questions 131  The implementation of profitable service strategies can include building relationships and customer loyalty as well as putting effective complaint handling/service recovery processes in place. Describe the various strategies for building customer loyalty (10 marks) and complaint handling/service recovery (10 marks)
  132. 132. Practice Examination Question 132  As a graduate who has undertaken and successfully completed the MKTG 1268 Service Quality course, and a potential manager and owner of your own service business, you know the importance of building customer loyalty for the long-term success of your business, as well as good service recovery strategies when ‘things go wrong’. Recall and list the key theories and concepts you have learnt that are important to building customer loyalty and implementing good service recovery, and give examples of how these may be implemented.
  133. 133. Practice Exam Question 133  Café Rende is a small café well known among the locals for its delicious cakes, well blended coffee and nice décor. To cater for rising customer expectations, the owner has decided to update her shop by painting the walls, changing the furniture and also installing credit card payment facility because she noted that more customers ask to pay by credit card. She also introduced, due to popular demand, a series of cake baking classes. She also introduced home delivery service for locations within a 3 km radius and for purchases of more than $50.  Question: Discuss the customer feedback collection took from which the owner’s service improvement ideas evolved and suggest TWO other feedback collection tools that can potentially be implemented in the future (by a small business like Café Rende), identifying each of their strengths and weaknesses. This is a good example of a scenario-type applied question
  134. 134. Chapter 13: Service Recovery  Customer Complaining Behavior  Customer Responses to Effective Service Recovery  Principles of Effective Service Recovery Systems  Service Guarantees  Discouraging Abuse and Opportunistic Customer Behavior 134
  135. 135. Customer satisfaction formula: linking the topics 135 Service Quality (chapter 14) This chapter (13) Chapter 12
  136. 136. Customer response to service failures 1. Do nothing 2. Complain in some form to the service firm 3. Take some kind of overt action with a third party (e.g. complain to a consumer claims tribunal) 4. Defect and simply not patronise this firm again 136
  137. 137. Customer Response Categories to Service Failures (Fig. 13.3) 137
  138. 138. Why do customers complain?  Compensation for a monetary loss—either in the form of a refund and/or by having a service performed again.  Complain to rebuild self-esteem. When customers feel service employees have mistreated them, their self-esteem, self-worth, or sense of fairness may be negatively affected.  Help to improve the service  Because of concern for others 138
  139. 139. The types of ‘justices’ (see page 342 and Figure 13.7) 139  Procedural justice  Concerns policies and rules that customer has to go through in order to seek service recovery  Interactional justice  Dealing with employees of the firm; their behaviors towards the aggrieved customer  Outcome justice  Compensation received by the customer
  140. 140. 3 Dimensions of Perceived Fairness in Service Recovery Process (Fig. 13.6) 140
  141. 141. Dealing with Complaining Customers and Recovering from Service Failure  Take complaints professionally and not personally  Be prepared to deal with angry customer who may behave in an insulting way to service personnel who may not be at fault  Take the perspective that customer complaints allow firm a chance to  Correct problems,  Restore relationships  Improve future satisfaction for all  Develop effective service recovery procedures 141
  142. 142. Service recovery Service recovery involves actions taken by the organisation to put things right for the customer following a service (core or supplementary) failure. 142
  143. 143. Importance of Service Recovery  Plays a crucial role in achieving customer satisfaction  Tests a firm’s commitment to satisfaction and service quality  Employee training and motivation is highly important  Impacts customer loyalty and future profitability  Complaint handling should be seen as a profit center, not a cost center 143
  144. 144. The Service Recovery Paradox  Customers who experience a service failure that is satisfactorily resolved may be more likely to make future purchases than customers without problems (Note: not all research supports this paradox)  If second service failure occurs, the paradox disappears—customers’ expectations have been raised and they become disillusioned  Severity and “recoverability” of failure (e.g., spoiled wedding photos) may limit firm’s ability to delight customer with recovery efforts  Best strategy: Do it right the first time 144
  145. 145. Principles of effective service recovery systems 145  Table 13.1 recommends some strategies companies can adopt to reduce customer complaint barriers. The activities suggested have three main objectives;  (1) Making feedback easy and convenient—make feedback tools easily accessible to customers,  (2) reassuring customers that their feedback would taken seriously and acted upon—publish feedback from customers and subsequent actions in company newsletters/publications, and  (3) make the feedback process a positive experience for the customers—training frontline staff to make customers feel comfortable giving feedback; thanking customers for feedback.
  146. 146. Strategies to Reduce Customer Complaint Barriers (Table 13.1) 146 146
  147. 147. How to Enable Effective Service Recovery  Be proactive  On the spot, before customers complain  Plan recovery procedures  Identify most common service problems and have prepared scripts to guide employees in service recovery  Teach recovery skills to relevant personnel  Empower personnel to use judgment and skills to develop recovery solutions 147
  148. 148. The Power of Service Guarantees • Force firms to focus on what customers want • Set clear standards • Require systems to get & act on customer feedback • Force organizations to understand why they fail and to overcome potential fail points • Reduce risks of purchase and build loyalty 148
  149. 149. How to Design Service Guarantees  Unconditional  Easy to understand and communicate  Meaningful to the customer  Easy to invoke  Easy to collect  Credible 149 See Service Insights 13. 3 on page 408
  150. 150. Types of Service Guarantees 150
  151. 151. 151
  152. 152. Seven Types of Jaycustomers: (1) The Cheat and Thief  The Cheat: thinks of various way to cheat the firm  The Thief: No intention of paying--sets out to steal or pay less  Services lend themselves to clever schemes to avoid payment  e.g., bypassing electricity meters, circumventing TV cables, riding free on public transportation  Firms must take preventive actions against thieves, but make allowances for honest but absent-minded customers 152
  153. 153. Seven Types of Jaycustomers: (2) The Rulebreaker  Many services need to establish rules to guide customers safely through the service encounter  Government agencies may impose rules for health and safety reasons  Some rules protect other customers from dangerous behavior  e.g. ski patrollers issue warnings to reckless skiers by attaching orange stickers on their lift tickets  Ensure company rules are necessary, not should not be too much or inflexible 153
  154. 154.  Shouts loudly, maybe mouthing insults, threats and curses  Service personnel are often abused even when they are not to be blamed  Confrontations between customers and service employees can easily escalate  Firms should ensure employees have skills to deal with difficult situations Seven Types of Jaycustomers: (3) The Belligerent Confrontations between Customers and Service Employees Can Easily Escalate  In a public environment, priority is to remove person from other customers  May be better to support employee’s actions and get security or the police if necessary if an employee has been physically attacked 154
  155. 155.  Family Feuders: People who get into arguments with other customers – often members of their own family  The Vandal:  Service vandalism includes pouring soft drinks into bank cash machines; slashing bus seats, breaking hotel furniture  Bored and drunk young people are a common source of vandalism  Unhappy customers who feel mistreated by service providers take revenge  Prevention is the best cure Seven Types Of Jaycustomers: (4) Family Feuders And Vandals 155
  156. 156. Seven Types Of Jaycustomers: (5) The Deadbeat  Customers who fail to pay (as distinct from “thieves” who never intended to pay in the first place)  Preventive action is better than cure--e.g., insisting on prepayment; asking for credit card number when order is taken  Customers may have good reasons for not paying - If the client's problems are only temporary ones, consider long-term value of maintaining the relationship 156
  157. 157. Consequences of Dysfunctional Customer Behavior  Employees:  Mood or temper negatively affected  Long-term psychological damage  Staff morale will fall, affecting productivity  Other Customers:  Positive – rally to support an employee who is perceived to be abused  Negative – Contagious bad behavior might escalate the situation 157
  158. 158. Practice Exam Question 158  You are the chief marketing officer at XCel Pte Ltd. From your perspective, for the benefit of the organization, it is worthy to have service guarantees in place. However, you need approval from the executive board before you proceed with designing the service guarantees. Explain to the executive board: (a) the power of service guarantees (b) how to design a service guarantee (c) present the different types of service guarantees to the board for consideration
  159. 159. Practice Examination Question 159  As a graduate who has undertaken and successfully completed the MKTG 1268 Service Quality course, and a potential manager and owner of your own service business, you know the importance of building customer loyalty for the long-term success of your business, as well as good service recovery strategies when ‘things go wrong’. Recall and list the key theories and concepts you have learnt that are important to building customer loyalty and implementing good service recovery, and give examples of how these may be implemented.
  160. 160. Practice Examination Question: 160  Research suggests that many dissatisfied customers never complain but simply defect to a competitor. What are the management implications of this finding and how might managers try to minimise such defections?
  161. 161. Practice Examination Question: 161  Using the most appropriate theory/conceptual model taught in this course, explain why a customer may be ‘satisfied’ with consistently poor levels of service (quality) they experience from the same service provider.
  162. 162. Chapter 14 – Service Quality and Productivity  Integrating Service Quality and Productivity Strategies  What is Service Quality?  The GAP Model – A Conceptual Tool to Identify and Correct Service Quality Problems  Measuring and Improving Service Quality  Learning From Customer Feedback 162
  163. 163. Overview of Chapter 14 (cont’d)  Hard Measures of Service Quality  Tools to Analyze and Address Service Quality Problems  Return on Quality  Defining and Measuring Productivity  Improving Service Productivity 163
  164. 164. Productivity and quality in a service context 164  Service managers need to focus on both productivity and quality from the customer’s point of view to ensure long-term financial success. Service quality is the extent to which a service meets or exceeds customer expectations.  Productivity measures how efficiently a service firm can turn inputs into outputs. Productivity and quality were historically seen as issues for operations managers, so companies focused on making internal process improvements that were not necessarily linked to customer service priorities. Continuing efforts to understand and improve quality reinforces the idea that quality is customer defined.
  165. 165. Integrating Service Quality and Productivity Strategies  Quality and productivity are twin paths to creating value for both customers and companies  Quality focuses on the benefits created for customers; productivity addresses financial costs incurred by firm If service processes are more efficient and increase productivity, this may not result in better quality experience for customers Getting service employees to work faster to increase productivity may sometimes be welcomed by customers, but at other times feel rushed and unwanted  Marketing, operations and human resource managers need to work together for quality and productivity improvement 165
  166. 166. 5 Dimensions of Service Quality Responsiveness: Promptness; helpfulness Tangibles: Appearance of physical elements Reliability: Dependable and accurate performance Assurance: Competence, courtesy, credibility, security Empathy: Easy access, good communication, understanding of customer 166 166
  167. 167. 167 Table 14.1 Dimensions of Service Quality
  168. 168. Six Service Quality Gaps (Fig. 14.5) 168 168
  169. 169. Summary of the 6 Gaps 169  Gap 1, the Knowledge Gap relates to a lack of management understanding of what customers expect.  Gap 2, the Standards Gap is a failure to translate managers’ perceptions of customer expectations into the quality standards established for service delivery.  Gap 3, the Delivery Gap is the difference between specified delivery standards and the firm’s actual performance.  Gap 4, the Communications Gap is the difference between what the company communicates and what is actually delivered to the customer.  Gap 5, the Perceptions Gap is the difference between what the company has actually delivered and what the customer perceives s/he has received (note this perception may be wrong due to difficulty in evaluating the service).  Gap 6 (the overall gap) or the Service Gap is the difference between what the customer perceives and his/her original expectations.
  170. 170. Suggestions for Closing the 6 Service Quality Gaps (1) (Table 14.2) 170 170
  171. 171. Suggestions for Closing the 6 Service Quality Gaps (2) (Table 14.2) 171 171
  172. 172. Suggestions for Closing the 6 Service Quality Gaps (3) (Table 14.2) 172 172
  173. 173. Suggestions for Closing the 6 Service Quality Gaps (4) (Table 14.2) 173 173
  174. 174. Soft and Hard Measures of Service Quality  Soft measures —not easily observed, must be collected by talking to customers, employees or others  Provide direction, guidance and feedback to employees on ways to achieve customer satisfaction  Can be quantified by measuring customer perceptions and beliefs  e.g. SERVQUAL, surveys, and customer advisory panels  Hard measures —can be counted, timed or measured through audits  Typically operational processes or outcomes  Standards often set with reference to percentage of occasions on which a particular measure is achieved 174
  175. 175. SERVQUAL – See Appendix 14.1 (also see Table14.4 on page 396) 175  Service-based components: The SERVQUAL Scale  SERVQUAL (Appendix 14.1) is a survey research instrument based on the premise that customers can evaluate a firm’s service quality by comparing their service perceptions with their prior expectations.  In its basic form, the scale contains 21 perception items and 21 expectation items, reflecting five dimensions of service quality:
  176. 176. Key Objectives of Effective Customer Feedback Systems 176  Together, these allow the company to understand where it stands against the best in the market, how it is perceived by its customers, and help improve its service offering to satisfy (if not delight) its customers.
  177. 177. Customer Feedback Collection Tools  Total market surveys  Annual surveys  Transactional surveys  Service feedback cards  Mystery shopping  Unsolicited customer feedback  Focus group discussions  Service reviews 177
  178. 178. Hard Measures of Service Quality  Service quality indexes  Embrace key activities that have an impact on customers  Control charts to monitor a single variable  Offer a simple method of displaying performance over time against specific quality standards  Enable easy identification of trends  Are only good if data on which based are accurate 178
  179. 179. Tools to Analyze and Address Service Quality Problems  Fishbone diagram  Cause-and-effect diagram to identify potential causes of problems  Pareto Chart  Separating the trivial from the important. Often, a majority of problems is caused by a minority of causes (i.e. the 80/20 rule)  Blueprinting  Visualization of service delivery, identifying points where failures are most likely to occur 179 Covered in Chapter 8
  180. 180. Cause-and-Effect Chart for Flight Departure Delays (Fig. 14.10) 180 180
  181. 181. Customer-driven Ways to Improve Productivity  Change timing of customer demand  By shifting demand away from peaks, managers can make better use of firm’s productive assets and provide better service  Involve customers more in production  Get customers to self-serve  Encourage customers to obtain information and buy from firm’s corporate Websites  Ask customers to use third parties  Delegate delivery of supplementary service elements to intermediary organizations 181
  182. 182. Backstage and Front-Stage Productivity Changes: Implications for Customers  Backstage changes may impact customers  Keep track of proposed backstage changes, and prepare customers for them  e.g., new printing peripherals may affect appearance of bank statements  Front-stage productivity enhancements are especially visible in high contact services  Some improvements only require passive acceptance, while others require customers to change behavior  Must consider impacts on customers and address customer resistance to changes  See Service Insights 14.3 : Managing Customers’ Reluctance to Change 182
  183. 183. Practice Exam Essay Question: 183  List and describe each of the five service quality (e.g. SERVQUAL) dimensions.  How does/can your lecturer for MKTG1268 Service Quality (i.e. the provider of education as a form of service), demonstrate each of these five dimensions
  184. 184. 184 Sample Practice Exam Essay Question: read the following case study and answer the question (next page)
  185. 185. Question for the exam case study: 185 • Using the GAPs model, identify THREE gaps that explain why there is a difference in the satisfaction levels between subsidized and unsubsidized patients at the restructured hospitals. Suggest FOUR ways restructured hospitals can close the gaps.
  186. 186. Chapters 5 – 7 ? (the remaining Service MM elements not tested) Now what about the other chapters?186 These should be read as an overview because there will be a question about applying the 7Ps - so, in that regards, the students probably need to know those chapters to the extent of being able to explain most of the 7Ps, and to generally know what is involved in terms of the marketing decisions related to each of those P
  187. 187. Chapter 5: Distributing Services Through Physical and Electronic Channels  Place and time  Service distribution can take place through physical and non- physical channels  Some firms can use electronic channels to deliver all (or at least some) of their service elements  Information-based services can be delivered almost instantaneously electronically  Delivery Decisions: Where, When, How  Time is of great importance as customers are physically present  Convenience of place and time become important determinants of effective service delivery  There are distribution channels for services – travel agency, medical, education etc. 187 Key Issues
  188. 188. Chapter 6 : Setting Prices and Implementing Revenue Management  Price and other user outlays  From the firm’s perspective, pricing generates income and creates profits  From the customer’s perspective, pricing is key part of costs to obtained wanted benefits. Marketers must recognize that customer costs involve more than price paid to seller.  Factors affecting pricing of services  Identify and minimize non-monetary costs incurred by users:  Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.)  Time expenditures, especially waiting  Unwanted mental and physical effort  Negative sensory experiences  Revenue management is an important part of pricing  Rate fencing 188 Key Issues
  189. 189. Chapter 7: Promoting Services and Educating Customers  Difficulty of marketing communication because of intangibility issue  Promotion and Education  Plays three vital roles:  Provide information and advice  Persuades the target customers of merit of service product or brand.  Encourages customer to take action at specific time  The promotions mix used in services marketing  Customers may be involved in co-production so:  Teach customer how to move effectively through the service process  Shape customers’ roles and manage their behavior 189 Key Issues
  190. 190. And Finally…. 190  The best of luck !!  Go out there and SCORE!! SQ LO1 Class of April 2013
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