Marketing 8 services marketing (reviewer)


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a Brief Reviewer for Marketing 8: Services Marketing

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Marketing 8 services marketing (reviewer)

  1. 1. marketing8-servicesmarketingreviewer-130410100554-phpapp02.docx BSBA -MARKETING DEPARTMENTPART 1 : FOUNDATIONS FOR SERVICES MARKETING New Ways to Deliver Service – technology is providing vehicles forMODULE 1 : INTRODUCTION TO SERVICES delivering existing services in more accessible, convenient, and productive ways. The following are some of the benefits of technologyWHAT ARE SERVICES? in service sector: 1. Technology facilitates basic customer service functions.Services are deeds, process, and performances provided or 2. Technology facilitates business transactions.coproduced by one entity or person for another entity or person. 3. Technology facilitates easy learning. 4. Technology facilitates empowerment to customers andServices are mostly not tangible things that can be touched, seen, and employees.felt, but rather are intangible deeds and performances provided and/or 5. Technology facilitates efficient communications.coproduced for its customers. CHARACTERISTICS OF SERVICESServices can be divided into four distinct categories: Service Industriesand companies, services as products, customer service, and derived Intangibility – is the most basic distinguishing characteristics ofservice. services. Services are performances or actions rather than objects, they cannot be seen, felt, tasted or touched in the same manner thatService industries and companies – include those industries and you can sense tangible goods. Here are the resulting marketingcompanies typically classified within the service sector whose core implications: Services cannot be inventoried, cannot be easilyproduct is a service. The total services sector comprises a wide range patented, cannot be readily displayed, and is difficult to put a price.of service industries. Companies in these industries sell services astheir core offering. Heterogeneity – since services are performances and are frequently produced by humans, no two services will be precisely alike.Services as products – represents a wide range of intangible product Heterogeneity in services is largely the result of human interaction. Theofferings that customers value and pay for in the marketplace. Service resulting marketing implications: Satisfaction depend on the employeeproducts are sold by service companies and by non-service companies and customer actions, Quality depends on uncontrollable factors, andsuch as manufacturers and technology companies. Delivery depends on actual performance.Customer Service – is the service provided in support of a company’s Production and Consumption – most services are sold first and thencore products. These services are not usually charged. produced and consumed simultaneously. The resulting marketing implications are: Customers participates and affect the transactions,Derived Services – the value derived from physical goods is really the customers affect each other, employees affect the service outcome,services provided by the goods, not the good itself. All products and decentralization may be essential, and mass production is difficult.physical goods are valued for the services they provide. Perishability - refers to the fact that services cannot be saved, stored,WHY SERVICE MARKETING? resold, or returned. The resulting marketing implications are:Many forces have led to the growth of services marketing, and many Synchronization of supply and demand is difficult, and services cannotindustries, companies, and individuals have defined the scope of the be returned or resold.concepts, frameworks, and strategies that define the field. The field ofservices marketing and management has evolved as a result of these SERVICE MARKETING MIXcombined forces. Traditional Marketing Mix – the elements an organization controls that can be used to satisfy or communicate with customers. TheThe combined forces that led to the growth of services marketing are: traditional marketing mix is composed of the four Ps: Product, Place,Growth of service industries, growth in trade services, growth in Promotion, and price.service sector, service as a business imperative in manufacturing andinformation technology, and services coming from deregulated Expanded Marketing Mix – because services are intangible,industries and professional services. customers are looking for any tangible cue to help them understand the nature for the service experience. The expanded marketing mixServices marketing address the concerns and needs of any business help marketers define these intangible for tangible which service is an integral part of the offering. These are composed of: People, Physical evidence, and process. 1. People – all human actors who play a part in serviceSERVICE AND TECHNOLOGY delivery and thus influence the buyer’s perceptions:New Service Offerings – technology has been the basic force behind namely, the firm’s personnel, the customers, and otherservice innovations such as automated voice mail, interactive voice customers in the service environment.response systems, fax machines, automated teller machines, and 2. Physical evidence – The environment in which theother common services were possible because of new technologies. service is delivered and where the firm and customerBecause of these new service offerings the need for services interact, and any tangible components that facilitatemarketing are rapidly rowing. performance or communication of the service.Designed Developed by: Andrei John Cantilleps 1 of 6Based on: Services Marketing Integrating Customer Focus Across the Firm 5th EditionAuthors: Zeithaml . Bitner . Gremler
  2. 2. marketing8-servicesmarketingreviewer-130410100554-phpapp02.docx BSBA -MARKETING DEPARTMENT 3. Process – the actual procedures, mechanism, and flow CONSUMER CHOICE of activities by which the service is delivered – the It is important that marketers concern themselves on how coustomers service delivery and operating systems. choose and make decisions and the steps that lead to purchase of a particular service.STAYING FOCUS ON THE CUSTOMERAll strategies are developed with an eye on the customer, and all Customer follow a logical sequence, including need recognition,implementations are carried out with an understanding of their impact information search, evaluation of alternatives, and purhase. Theon the customer. Decisions regarding new services and following stages in consumer decision making and evaluation processcommunication plans will integrate the customer’s point of view; of services are:operations and human resource decisions will be considered in terms 1. Need Recognition – The process of buying a service beginsof their impact on customers. with the recognition that a need or want exists. a. Physiological needs – are biological needs suchPART 2 : FOCUS ON THE CUSTOMER as food, water, and sleep.MODULE No. 3 : Consumer Behavior in Services b. Safety and Security needs – include shelter, protection, and security.The primary objectives of services producers and marketers are to c. Social Needs – are social needs such as affection,develop and provide oferings that satisfy consumer needs and friendship, and acceptence.expectations, thereby ensuring their own economic survival. To d. Ego Needs – are needs that tackles prestige,achieve these objectives, service providers need to understand how success, accomplishment, and self-esteem.consumers choose, experience, and evaluate their service offerings. e. Self-Actualization – involves self-fulfillment and enriching experiences.Much of what is known about consumer evaluation processes pertains 2. Information Search – consumers use both personal sourcesspecifically to goods. The assumption appears to be that services, if and non-personal sources to gain information about goodsnot identical to goods, are at least similar enough in the consumer’s and services. Seeking information is a way of reducing risk,mind that they are chosen, experienced, and evaluated in the same helping consumers feel more confident about their choices.manner. a. Personal and Nonpersonal Sources – Personal sources are the consumers way to verify theThis module challenges that assumption and shows that services’ services they wish to purchase by asking theircharacteristics result in some differences in consumer choice and friends or experts while nonpersonal sources areevaluation processes compared with those used in assessing goods. information easily obtained through mass media,Recognizing these differences and thoroughly understanding websites and others.consumer evaluation processes are critical for the customer focus in b. Perceived Risk – the intangible nature of serviceswhich effective services marketing is based. and their high level of experience qualities imply that services generally must be selected on theFRAMEWORK FOR ISOLATING DIFFERNCES basis of less prepurchase information than is theOne framework for isolating differences in evaluation processes case of goods.between goods and services is a classification of properties of 3. Evaluation of Alternatives – The evoked set of alternatives –offerings proposed by economists. Economists first disinguished that set of products that a consumer considers acceptable inbetween two categories or properties of consumer products a given product categoy – is likely to be smaller with services than with goods. Search Qualities Experience Qualities Credence Qualities 4. Service Purchase – following consideration of alternatives consumers make the decision to purchase a particular 1. Search Qualities service or to do it themselves. - attributes that a customer can determine before purchasing a product. CONSUMER EXPERIENCE - this include color, style, price, fit, feel, hardness, Services are high in experience and credence qualities relative to and smell. goods; thus, how customers evaluate the actual experience of the - e.g. Automobiles, clothing, furniture, and jewelry service is critical in their evaluation process and their decision to 2. Experience Qualities repurchase later. - attributes that can be discerned only after There are basic elements of consumer behavior that are relevant to purchase or during consumption. understanding service experiences and how customers evaluate them. - these include taste and wearability. 1. Services as Process – because services are actions or - e.g. vacation, restaurant, performances done for and with customers, they typically 3. Credence Qualities involve a sequence of steps, actions, and activities. - includes characteristics that the consumer may 2. Service Provision as Drama – The metaphor of a theater is a find impossible to evaluate even after purchase useful framework for describing and analyzing service and consumption. performances. - e.g. medical operation, brake relinings, electrical 3. Service Roles and Scripts – Roles are combinations of social maintenance, etc. cues that guide and direct behavior in a given setting. WhileDesigned Developed by: Andrei John Cantilleps 2 of 6Based on: Services Marketing Integrating Customer Focus Across the Firm 5th EditionAuthors: Zeithaml . Bitner . Gremler
  3. 3. marketing8-servicesmarketingreviewer-130410100554-phpapp02.docx BSBA -MARKETING DEPARTMENT the script, are the logical sequence of events expected by MEANING AND TYPES OF SERVICE EXPECTATIONS the customer. The level of expectation can vary widely depending on the reference 4. The Compatibility of Service Customers – the presence, point the customer holds. Service marketers need thorough and clear behavior, and similarity of other customers receiving definition of expectations in order to comprehend, measure, and services has a strong impact on the satisfaction and manage them. dissatisfaction of any given customer. 5. Customer Coproduction – service customers also play a According to the Journal of Marketing October 1993, there are five coproduction role that can have profound influence on the possible levels of expectations, ranging from high to low: service experience. 1. Ideal Expectations or Desires. 6. Emotion and Mood – are feeling states that influence 2. Normative “Should” Expectations. people’s perceptions and evaluations of their experiences. 3. Experiece-Based Norms. 4. Acceptable Expectations.POST EXPERIENCE EVALUATION 5. Minimum Tolerable Expectations.Following the service experience, customers form an evaluation thatdetermines to a large degree whether they will return or continue to Customers hold different types of expectations about services. For thispatronize the service organization. Here are some methods on how module, we will focus on two types of service level of expectations:consumers evaluate their service experiences: 1. Desired Service – it is the level of service the customer 1. Word-of-mouth Communication – Service consumers are hopes to receive – the “wished for” level of performance. The strongly influenced by the personal opinions of others and expectation reflects the hopes and wishes of these understandiong. consumers. 2. Attribution of Dissatisfaction – consumers attribute their 2. Adequate Service – it is the level of service the customer will dissatifcation to a number of different sources, among them accept, where the customer hopes to achieve the service the producers, the retailers, or themselves. desires but recognize that this is not always possible. 3. Positive or Negative Biases – consumer remember events and services based on the emotions they felt during the Services are heterogeneous in that performance may vary across actual experience, whether negative or positive. providers, across employees from the same provider, and even with 4. Brand Loyalty – the degree to which consumers are the same service employee. The extents to which customers recognize committed to a particular brands of goods or services. and are willing to accept this variation are called the zone tolerance.SUMMARY Zone Tolerance – is the range or window in which customers do notServices possess high levels of experience and credence properties. particularly notice service performance. It represents the differenceThus, it is the marketers job to understand how consumers choose, between desired service and the level of service considered adequate,experience, and evaluate services. By underestanding the consumer and it can also expand and contract for any given customer.behavior, services marketer can provide better offerings to customer’swants and needs. There are two main aspects of variations in the range of reasonable services and zones tolerance:PART 2 : FOCUS ON THE CUSTOMER 1. Different Customers possess different Zones of Tolerance –MODULE No. 4 : Customer Expectations of Service depending on the customer, zone tolerance for each customer vary from narrow to greater range of service.Customer expectations are beliefs about service delivery that serve as 2. Zones of Tolerance vary for service dimensions – customer’sstandards or reference points against which performance is judged. tolerance zones vary for different service attributes orBecause customers compare their perceptions of performance with dimensions.these reference points when evaluating serve quality, thoroughknowledge about customer expectations is critical to services The fluctuations in the individual customer’s zone of tolerance is moremarketers. a function of changes in the adequate service level, which moves readily up and down because of situational circumstances, than in theAmong the expectations that need to be explored and understood for desired service level, which tends to move upward incrementallysuccessful services marketing are the following: What types of because of accumulated experiences.expectation standards do customers hold about services? What factorsmost influence the formation of these expectations? What role do FACTORS THAT INFLUENCE CUSTOMER EXPECTATIONS OFthese factors play in changing expectations? How can a service SERVICEcompany meet or exceed customer expectations? Expectations play such a critical role in customer evaluation of services so marketers need and want to understand the factors that shapeIn this module framework for thinking about customer expectations them.were provided. The module is divided into three main sections: (1) the 1. Sources of Desired Service Expectations – are influencesmeaning and types of expected service, (2) factors that influence that are long-term and are more stable that affect thecustomer expectations of service, and (3) current issues involving customers’ expectation of service.customer service expectations. a. Personal Needs – are those states or conditions essential to the physical or psychological well-Designed Developed by: Andrei John Cantilleps 3 of 6Based on: Services Marketing Integrating Customer Focus Across the Firm 5th EditionAuthors: Zeithaml . Bitner . Gremler
  4. 4. marketing8-servicesmarketingreviewer-130410100554-phpapp02.docx BSBA -MARKETING DEPARTMENT being of the customer and are pivotal factors that ISSUES INVOLVING CUSTOMERS’ SERVICE EXPECTATIONS shape what customers desire in the service. The following issues represent current topics of particular interest to b. Lasting Service Intensifiers – individual and stable services marketers about customer expectations. Here are the most factors that lead the customer to a heightened frequently asked questions about customer expectations: sensitivity to service. 1. What does a service marketers do if customer expectations i. Derived Service expectations – occur are “Unrealistic”? – Research suggests that customers’ main when customer expectations are driven expectations of service are quite simple and basic, by another person or group of people. customers expect service companies to do what they are ii. Personal service philosophy – the supposed to do. They expect fundamentals, not fanciness; customer’s underlying generic attitude performances, not empty promises. In order to control this about the meaning of service and the situation there are two options that a service marketer may proper conduct of service providers. consider: 2. Sources of Adequate Service Expectations – these a. First, if the salesperson knows that no competitor influences are short-term and tend to fluctuate more than the can meet an inflated sales promise in an industry, factors that influence desired service. he could point that fact out to customer to refute a. Temporary Service Intensifiers – consists of short- the promise made by the competitor. term individual factors that make a customer more b. Second, the provider can follow a sale with a aware of the need of service. “reality check” about service delivery. b. Perceived Service Alternatives – are other 2. Should a company try to delight the customer? – delighting providers from whom the customer can obtain customers may seem like a good idea, and can lead to service. repeat purchasing and customer loyalty, but this level of c. Self-Perceived Service Role – customer service provision comes with extra effort and cost to the firm. perceptions of the degree to which customers Therefore, the benefits of providing delight must be weighed. exert an influence on the level of service they Among the considerations are the staying power and receive. competitive implications of delight. d. Situational factors – defined as service 3. How does a company exceed customers’ service performance conditions that customers view as expectations? – it is essential to recognize that exceeding beyond the control of the service provider. customer expectations of the basics are virtually impossible. e. Predicted Services – the level of service that But there are options marketers may consider to achieve customers believe they are likely to get. This can this. also be viewed as predictions made by customers a. Develop a customer relationship about what is likely to happen during an impending b. Deliberately under promise and over deliver the transaction or exchange. service. 3. Sources of Both Desired and Predicted Service Expectations c. Position unusual service as unique rather than the – these external and internal influences affect both the standard. desired and adequate service expectations through the 4. Do customers’ service expectations continually escalate? – predicted services factor. Service expectations are dynamic, adequate service a. Explicit Service Promises – are personal and non- expectations rise as quickly as service delivery or promises personal statements about the service made by rise. Thus, service companies need to monitor adequate the organization to customers. They shape what service expectations continually – the more turbulent the customers desire in general as well as what they industry, the more frequent the monitoring needed. predict will happen in the next service encounter 5. How does a service company stay ahead of competition in from a particular service provider or in a certain meeting customer expectations? – to develop a true service encounter. customer loyalty, companies must not only consistently b. Implicit Service Promises – are service-related exceed the adequate service level but also reach the desired cues other than explicit promises that lead to service level. Exceptional service can intensify customers’ interferences about what the service should and loyalty to a point at which they are impervious to competitive will be like. These qualities cues are dominated by options. price and the tangibles associated with the service. c. Word-of-Mouth Communication – these personal SUMMARY and sometimes non-personal statements made by Customer expectations are better understood using conceptual parties others than the organization convey to framework. Where it is illustrated that the customers held two general customers what the service will be like and types of service expectations, that the difference between these two influence both predicted and desired service. levels – called zone tolerance, varies across customers, and that there d. Past Experience – the customers’ previous are several factors – which are the same for end consumers and exposure to service is another force that shapes business consumers, that affect or influence these expectations. the desired and predicted services.Designed Developed by: Andrei John Cantilleps 4 of 6Based on: Services Marketing Integrating Customer Focus Across the Firm 5th EditionAuthors: Zeithaml . Bitner . Gremler
  5. 5. marketing8-servicesmarketingreviewer-130410100554-phpapp02.docx BSBA -MARKETING DEPARTMENTPART 2 : FOCUS ON THE CUSTOMER 4. Sources of Pleasure and Displeasure in Service EncountersMODULE No. 5 : Customer Perceptions of Service 5. Technology-Based Service Encounters 6. The Evidence of ServiceCUSTOMER PERCEPTIONSPerceptions are always considered relative to expectations. How SUMMARYcustomers perceive services, how they assess whether they haveexperiences quality service, and whether they are satisfied will be the PART3 : UNDERSTANDING CUSTOMERcore discussion in this module. REQUIREMENTS MODULE6 : Listening to Customers throughBecause expectations are dynamic, evaluations may also shift over Researchtime – from person to person and from culture to culture. What isconsidered quality service or the things that satisfy customers today Using Marketing Research to Understand Customer Expectationsmay be different tomorrow. 1. Research Objectives for Services 2. Criteria for an Effective Services Research ProgramSATISFACTION versus SERVICE QUALITYSatisfaction and Service quality are often used interchangeably but Elements in an Effective Services Marketing Research Programthese two concepts are fundamentally different in terms of their 1. Complaint Solicitationunderlying causes and outcomes. 2. Critical Incident Studies 3. Requirements ResearchSatisfaction – is generally viewed as broader concept and is more 4. Relationship and SERVQUAL Surveysinclusive: it is influenced by perceptions of service quality, product 5. Trailer Calls of Post transaction Surveysquality, and price, as well as situational factors and personal factors. 6. Service Expectation Meetings and Reviews 7. Process Checkpoint EvaluationsService Quality – focuses specifically on dimensions of service. It is a 8. Market Oriented Ethnographyfocused evaluation that reflects the customer’s perception of reliability, 9. Mystery Shoppingassurance, responsiveness, empathy, and tangibles. 10. Customer Panels 11. Lost Customer ResearchCUSTOMER SATISFACTION 12. Future Expectation ResearchSatisfaction is the consumer’s evaluation of a product or service interms of whether that product or service has met the customer’s needs Analyzing and Interpreting Marketing Researchand expectations. Understanding what causes customer’s satisfaction 1. Tracking of Performance, Gap Scores, and vital for services marketer. Here are basic determinants of customer 2. Zone Tolerance Chartsservice satisfaction: 3. Importance / Performances Matrices 1. Product and Service Features 2. Consumer Emotions Using Marketing Research Information 3. Attributions for Service Success or Failure 4. Perceptions of Equity or Fairness Upward Communication 5. Other Consumers, Family Members, and Coworkers. 1. Elements in an Effective Program for Upward CommunicationCustomer loyalty can fall off precipitously when customers reach a 2. Objectives of Upward Communicationparticular level of dissatisfaction or when they are dissatisfied with 3. Research for Upward Communicationcritically important service attributes. It is clear that there are linkagebetween customer satisfaction, loyalty, and firm’s profitability. SUMMARYIt is the Service Marketer’s Job to spend time and money in PART 3 : UNDERSTANDING CUSTOMERunderstanding the underpinnings of customer satisfaction and ways REQUIREMENTSthat they can improve. MODULE7 : Building Customer RelationshipsSERVICE QUALITY Relationship Marketing 1. Outcome, Interaction, and Physical Environment Quality 1. The Evolution of Customer Relationships 2. Environment Quality 2. The Goal of Relationship Marketing 3. Service Quality Dimension 3. Benefits for Customer and Firms 4. E-Service Quality Relationship Value of CustomersSERVICE ENCOUNTERS: The Building Blocks for Customer 1. Factors that Influence Relationship ValuePerceptions 2. Estimating Customer Lifetime Value 1. Service Encounters 3. Linking Customer Relationship Values to Firm Value 2. Importance of Service Encounters 3. Types of Service EncountersDesigned Developed by: Andrei John Cantilleps 5 of 6Based on: Services Marketing Integrating Customer Focus Across the Firm 5th EditionAuthors: Zeithaml . Bitner . Gremler
  6. 6. marketing8-servicesmarketingreviewer-130410100554-phpapp02.docx BSBA -MARKETING DEPARTMENTCustomer Profitability Segments PART 4 : ALIGNING SERVICE DESIGN 1. Profitability Tiers – the Customer Pyramid AND STANDARDS 2. The Customer’s View of Profitability Tiers MODULE9 : Service Innovation and Design 3. Making Business Decisions Using Profitability Tiers Types of Service Innovation and DevelopmentRelationship Development Strategies 1. Major or Radical Innovations 1. Core Service Provision 2. Start-up Business 2. Switching Barriers 3. New Services for the currently served market 3. Relationship Bonds 4. Service-line extensions 5. Service ImprovementsRelationship Challenges 6. Style Changes 1. The Customer is Not Always Right 2. Ending Business Relationships Stages in Service Innovation and Development 1. Front-End PlanningSUMMARY a. Business Strategy Development or Review b. New Service Strategy DevelopmentPART 3 : UNDERSTANDING CUSTOMER c. Idea GenerationREQUIREMENTS d. Service Concept Development and EvaluationMODULE8 : Service Recovery e. Business Analysis 2. ImplementationThe Impact of Service Failure and Recovery a. Service Prototype Development and Testing 1. Service Recovery Effects b. Market Testing 2. The Service Recovery Paradox c. Commercialization d. Post-introduction EvaluationHow Customers Respond to Service Failures 1. Why People Do (and Do Not) Complain Service Blueprinting 2. Types of Customer Complaint Action 1. What is a Service Blueprint 3. Types of Complainers 2. Blueprint Components a. Customer ActionCustomer Recovery Expectations b. Onstage/visible contact employee actions 1. Understanding and Accountability c. Backstage/invisible contact employee actions 2. Fair Treatment d. Support process 3. Building a BlueprintSwitching versus Staying following Service Recovery a. Step1: Identify the Service Process to be BlueprintedService Recovery Strategies b. Step2: Identify the Customer or Customer 1. Make the Service Fail-Safe – do it right the first time. Segment Experiencing the Service 2. Encourage and Track Complaints c. Step3: Map the Service Process from the 3. Act Quickly Customer’s Point of View 4. Provide Adequate Explanations d. Step4: Map the Contact Employee Actions and/or 5. Treat Customers Fairly Technology Actions. 6. Cultivate Relationships with Customers e. Step5: Link Contact Activities to Needed Support 7. Learn from Recovery Experiences Functions. 8. Learn from Lost Customers f. Step6: Add Evidence of Service at each Customer Action StepService Guarantees 1. Characteristics of Service Guarantees High-Performance Service Innovations 2. Types of Service Guarantees 1. Choose the Right Projects 3. Benefits of Service Guarantees 2. Integrate New Services 4. When to Use (or Not Use) a Guarantee 3. Consider Multiple Measure of Success 5. Questions to Consider in Implementing a Service Guarantee 4. Maintain Some FlexibilitySUMMARY SUMMARYDesigned Developed by: Andrei John Cantilleps 6 of 6Based on: Services Marketing Integrating Customer Focus Across the Firm 5th EditionAuthors: Zeithaml . Bitner . Gremler