Services Marketing


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  • Services Marketing

    1. 1. Marketing Services Winning with Quality By Arun Kottolli
    2. 2. Service Industry <ul><li>A guest at Holiday Inn Hotel </li></ul><ul><li>You traveling on a plane </li></ul><ul><li>A credit card customer calling to enquire his balance </li></ul><ul><li>A fortune 10 company building a new IT system </li></ul><ul><li>All these are the examples of various types of services and repeat business depends on the customer satisfaction </li></ul>
    3. 3. Traditional Marketing <ul><li>Traditional Marketing emphasized on: </li></ul><ul><ul><li>Product, Price, Place & Promotion – 4P’s </li></ul></ul><ul><ul><li>A product based marketing strategy </li></ul></ul><ul><li>Marketing of Services emphasize in: </li></ul><ul><ul><li>Segmentation, Targeting, Positioning and Quality – STPQ </li></ul></ul><ul><ul><li>Effective services marketing is a strong service concept delivered well, a desired service performed excellently. </li></ul></ul>
    4. 4. Services Marketing <ul><li>Synergy of Strategy and Execution </li></ul><ul><ul><li>CNN, FedEx, Domino’s Pizza, EDS, Infosys </li></ul></ul><ul><li>The big idea alone or strategy alone offers only a temporary advantage </li></ul><ul><ul><li>Pioneers often see competitors imitate their strategy </li></ul></ul><ul><ul><li>Superior execution is vital to sustaining success </li></ul></ul><ul><ul><li>Quality of service is not easy to copy, unlike the idea </li></ul></ul>
    5. 5. Quality - A differentiator <ul><li>When the end service or products are similar, performance becomes the core product </li></ul><ul><ul><li>Customers pay for performance </li></ul></ul><ul><ul><li>Quality earns customer’s confidence </li></ul></ul><ul><ul><li>Reinforces branding, advertising, selling and pricing </li></ul></ul><ul><ul><li>Quality of service determines brand value </li></ul></ul><ul><li>Quality is the foundation for services marketing </li></ul>
    6. 6. Nature & Roles of Services Marketing Word of Mouth Communication Post-Sale Marketing Consumption Production Pre-Sale Marketing Create Awareness Induce Trail Demonstrate Benefits Build Brand Preference
    7. 7. Nature of Services Marketing <ul><li>Services are consumed as it is produced </li></ul><ul><li>Services marketing has limited influence on customers prior to purchase than goods </li></ul><ul><ul><li>Need to experience intangible service to know it </li></ul></ul><ul><ul><li>Experience influences Post-Sale marketing </li></ul></ul><ul><ul><li>Experience influences word-of-mouth communication </li></ul></ul><ul><li>Services marketers can create brand awareness & induce trial </li></ul><ul><li>Experience of benefits builds brand preference and brand value </li></ul>
    8. 8. Nature of Services Marketing <ul><li>Services marketing is also done by service providing personnel </li></ul><ul><ul><li>How they conduct themselves with customers </li></ul></ul><ul><ul><li>What they say, What they don’t say </li></ul></ul><ul><ul><li>How they behave, How they act </li></ul></ul><ul><ul><li>Overall appearance </li></ul></ul><ul><li>All these influences customer satisfaction and customer retention </li></ul><ul><li>Delivering excellent quality service is the key!! </li></ul>
    9. 9. An Integrative Framework Turning Marketing into A Line Function Identifying the right services Doing the service Right the first time Doing the service Right every time Managing & Exceeding Customer Expectations Marketing to New customers Managing Experience Branding the firm Marketing to Existing Customers Marketing to Employees Maximize market Potential Delivering Quality Service Building a Marketing Organization
    10. 10. Doing it Right <ul><li>Service reliability – performing the service dependably and accurately – is the heart of services marketing excellence </li></ul><ul><ul><li>We want pilots to be dependable </li></ul></ul><ul><ul><li>Surgeon to know their stuff </li></ul></ul><ul><li>Reliability is of paramount importance to service customers </li></ul><ul><li>Doing it right the First Time sets off customer relations on good footing </li></ul>
    11. 11. Dimensions of Customer Satisfaction <ul><li>Reliability : Ability to perform as promised </li></ul><ul><li>Tangibles : Appearance of physical facilities, equipment, personnel, & communications material </li></ul><ul><li>Responsiveness : Willingness to help customers and provide prompt service </li></ul><ul><li>Assurance : Ability to convey trust and confidence </li></ul><ul><li>Empathy: Caring, individualized attention to customers </li></ul>
    12. 12. Foundation for Services Marketing Excellence Service Reliability Service Marketing Excellence Quality Service
    13. 13. Benefits of Service Reliability Improved Service Reliability HIGHER PROFITS Higher Retention of current Customers Positive word of mouth marketing Opportunity for charging Premium Prices Reduced cost of redoing service Higher Employee Morale & Enthusiasm Lower Employee Turnover Improved Marketing Effectiveness & higher Sales Revenue Increased Productivity and Lower Costs
    14. 14. Delivering Reliable Service <ul><li>Building a “ Zero Defects” culture is critical in services </li></ul><ul><li>Performing service right the first time requires a greater immediacy & discipline than manufacturing </li></ul><ul><li>Services are less concrete and more subjective – making real time delivery of defect less service difficult </li></ul><ul><li>Leadership will be tested and needed </li></ul>
    15. 15. Service Leadership <ul><li>Believe that 100% reliability is feasible and worthwhile goal </li></ul><ul><li>Frequently and effectively communicate their belief company wide </li></ul><ul><li>Reward error-free service </li></ul><ul><li>Empower frontline employees </li></ul><ul><li>Never content with status quo and strive for continuous improvement </li></ul>
    16. 16. Three Pillars of service Reliability Service Leadership Service Reliability Through Service Testing Infrastructure for Error-free Service
    17. 17. Action Checklist for Mangers <ul><li>Do we believe in 100% reliability is a worthwhile goal? </li></ul><ul><li>Do we understand the challenges of delivering 100% reliability? </li></ul><ul><li>Do we demonstrate our commitment to service reliability to all our employees? </li></ul><ul><li>Do we rigorously test new services prior to introduction? </li></ul><ul><li>Do we continuously reevaluate our service after introduction? </li></ul><ul><li>Are we doing enough to keep employees motivated for 100% reliability </li></ul><ul><li>Do we encourage, facilities & require teamwork and communication across all units </li></ul>
    18. 18. Service Recovery <ul><li>Even the best service company can’t avoid snafus </li></ul><ul><li>Mistakes are a critical part of every service especially when services are performed in customer’s presence </li></ul><ul><li>Inevitability of service errors motivates firm to improve service reliability </li></ul><ul><li>Service recovery is critical for a quality based services firm </li></ul>
    19. 19. Resolve Problems Effectively <ul><li>Prepare employees for Recovery </li></ul><ul><ul><li>Communication skills </li></ul></ul><ul><ul><li>Creativity </li></ul></ul><ul><ul><li>Competence </li></ul></ul><ul><ul><li>Understanding Customer’s Expectations </li></ul></ul><ul><li>Empower Employees </li></ul><ul><li>Facilitate Employees </li></ul><ul><li>Reward Employees for service recovery </li></ul>
    20. 20. Make Amends for Hassle Factor <ul><li>Service problem is at best an inconvenience to customer, at worst it can be a major problem </li></ul><ul><li>Customer incurs some cost even when the problem is resolved </li></ul><ul><li>Make amends for customer’s hassle </li></ul><ul><ul><li>A suggestion box </li></ul></ul><ul><ul><li>On-the-spot mitigations ( a reward or gift) </li></ul></ul><ul><ul><li>Try to exceed customer’s expectations </li></ul></ul>
    21. 21. Learn from Service Recovery <ul><li>Conduct Root-Cause Analysis </li></ul><ul><ul><li>To prevent recurrent problems or defects from reaching the customer </li></ul></ul><ul><ul><li>Blame systems & not people </li></ul></ul><ul><li>Modify Service-Process Monitoring </li></ul><ul><ul><li>Monitoring service process is a strategy for proactive identification of service problems </li></ul></ul><ul><li>Set up problem Tracking System </li></ul><ul><ul><li>Nature of customer problem </li></ul></ul><ul><ul><li>An ongoing system to capture information pertaining to service recovery </li></ul></ul><ul><ul><li>Nature of problem, Actions taken in response </li></ul></ul>
    22. 22. Service Recovery & Customer <ul><li>Even companies with excellent reputation will experience service failures </li></ul><ul><li>A strong recovery effort can restore customer confidence & gain customer loyalty </li></ul><ul><li>Yet, Many firms respond reluctantly which often reinforces customers’ negative feelings </li></ul><ul><li>Customers are more emotionally involved & more attentive observers of recovery service than routine service </li></ul><ul><li>Service recovery excellence with a reputation for service reliability is a powerful, profitable strategy for gaining & retaining customers </li></ul>
    23. 23. Managing and Exceeding Customers’ Expectations <ul><li>Customers’ expectations play a pivotal role in judging a company’s service </li></ul><ul><li>Firms earn reputation for quality service by surpassing customer expectations </li></ul><ul><li>Customers are the sole judges of service quality </li></ul><ul><li>Customer expectations has two parts: </li></ul><ul><ul><li>What customers want to occur ? </li></ul></ul><ul><ul><li>What customers believe will occur ? </li></ul></ul>
    24. 24. Structure of Customers Expectations <ul><li>Two Levels of Expectations </li></ul><ul><ul><li>A Desired Level : What a customer hopes to receive. </li></ul></ul><ul><ul><li>An Adequate Level : What the customer believes “can be” or “should be” </li></ul></ul><ul><li>A zone of tolerance separates the desired level and what is deemed adequate </li></ul><ul><li>Performance level above the tolerance zone will surprise customers & increase loyalty </li></ul>
    25. 25. Two Levels of Expectations Desired Level of Service Zone of Tolerance Adequate Service
    26. 26. Zone of Tolerance <ul><li>Consider a bank customer who wishes to cash a check in 3 minutes ( desired level) </li></ul><ul><li>In the past, customers have waited for up to 10 minutes ( adequate level) </li></ul><ul><li>The range between 3 minutes to 10 minutes is Range of Tolerance </li></ul><ul><li>Service time below3 minutes will thrill customers </li></ul><ul><li>Service time above 10 minutes will annoy customers </li></ul>
    27. 27. Changes in Expectation Levels <ul><li>Customers’ expectation levels are dynamic & fluctuate in response to a variety of factors </li></ul><ul><li>Desired level of service tends to change more slowly and in smaller amounts </li></ul><ul><li>Adequate service level appears to move readily up and down – into zone to tolerance </li></ul>
    28. 28. Changing Expectation Levels Expectation Levels Desired Service Desired Service Adequate Service Adequate Service Tolerance Zone Tolerance Zone Outcome Dimension Process Dimension
    29. 29. Influencing Expectation Levels <ul><li>Factors that influence customers’ expectation levels: </li></ul><ul><ul><li>Enduring Service Intensifiers </li></ul></ul><ul><ul><li>Personal Needs </li></ul></ul><ul><ul><li>Transitory Service Intensifiers </li></ul></ul><ul><ul><li>Perceived Service Alternatives </li></ul></ul><ul><ul><li>Self-perceived Service Role </li></ul></ul><ul><ul><li>Explicit Service Promises </li></ul></ul><ul><ul><li>Implicit Service Promises </li></ul></ul><ul><ul><li>Past Experiences </li></ul></ul><ul><ul><li>Word of Mouth Communications </li></ul></ul>
    30. 30. Establishing Customer Franchise Ensure Promises Reflect Reality Establish Customer Franchise Communicate With Customers Capitalize on Service Recovery Place a premium On Reliability Excel in Service Delivery Manage Expectations Exceed Expectations
    31. 31. Expectation levels & Service Recovery Outcome Dimension Expectation Levels Process Dimension Outcome Dimension Process Dimension First Time Service Recovery Service Desired Service Desired Service Desired Service Desired Service Adequate Service Adequate Service Adequate Service Adequate Service = Zone of Tolerance
    32. 32. Establish Customer Franchise <ul><li>There is a gap between customer perceptions and customer expectations </li></ul><ul><li>Two potential service gaps must be assessed: </li></ul><ul><ul><li>Gap between perceived & adequate service -called Measure of Service Adequacy( MSA) </li></ul></ul><ul><ul><li>Gap between perceived & desired service – called Measure of Service superiority ( MSS) </li></ul></ul><ul><li>MSA & MSS score will determine a firm’s competitive position from a service standpoint </li></ul>
    33. 33. MSS, MSA & Competitive Status Customer Perceptions/Expectation levels MSS MSA Competitive Status Customer Franchise Competitive Advantage Competitive Disadvantage MSS = Negative MSA = Positive MSA = Positive MSS = Positive MSS = Negative MSA = Negative Adequate Service Perceived Service Perceived Service Perceived Service Desired Service
    34. 34. Competitive Advantage <ul><li>Companies must perform above the adequate service level to gain competitive advantage </li></ul><ul><li>This however is a temporary advantage </li></ul><ul><li>Customers’ adequate service levels will raise rapidly when competitors deliver higher level of service </li></ul><ul><li>Companies performing in the region of competitive advantage can ill-afford complacency </li></ul>
    35. 35. Customer Franchise <ul><li>Develop true customer franchise i.e,. Unwavering customer loyalty by: </li></ul><ul><li>Exceeding the desired service level </li></ul><ul><li>Exceptional service will build strong customer loyalty </li></ul><ul><li>Constantly monitor customer expectations </li></ul><ul><li>Understand factors driving customer expectations </li></ul><ul><li>Continuously strive for service superiority </li></ul>
    36. 36. Manager’s Action Checklist <ul><li>Do we strive to present a realistic picture of our service to customers? </li></ul><ul><li>Is performing the service right the first time a top priority in our company? </li></ul><ul><li>Do we communicate effectively with customers? </li></ul><ul><li>Do we surprise customers during the service process? </li></ul><ul><li>Do our employees regard service problems as opportunities to impress customers? </li></ul><ul><li>Do we continuously evaluate & improve our performance against customers’ expectations? </li></ul>
    37. 37. Thank You!! <ul><li>Email comments or suggestions to: </li></ul><ul><li>[email_address] </li></ul>