Service

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Service

  1. 1. SERVICES MARKETING: People, Technology, Strategy 5/e Christopher Lovelock and Jochen Wirtz PRENTICE HALL, 2004Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 1
  2. 2. 20 Years of “Services Marketing” 1984 – Lovelock, 1st edition 1991 – Lovelock, 2nd edition 1996 - Lovelock, 3rd edition 2001 - Lovelock, 4th edition 2002 - Lovelock, Wirtz, and Keh, Services Marketing in Asia 2004 - Lovelock & Wirtz, 5th editionSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 2
  3. 3. What’s New? New co-author – Jochen Wirtz New streamlined structure – slimmed down from 18 chapters to 15, more tightly written Coverage of latest research and developments in management practice (check the references!) New examples New readings – 6 of 8 are new New cases – 12 of 15 are new, balance all updatedSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 3
  4. 4. Jochen Wirtz, PhDAssociate Professor, National University of Singapore Born in Germany PhD in services marketing, London Business School (chair: John Bateson) Winner of six best paper awards, including (with Patricia Chew) most outstanding article of 2002 in International Journal of Service Industry, 2002 Co-author, Services Marketing in Asia (Prentice Hall 2001) Six awards for outstanding teaching, including university-wide award, 2003Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 4
  5. 5. Jochen and family at Awards Banquet for NUS Outstanding Educator Award, 2003NUS OutstandingEducator Award,(university-wide)2003(Only two awardseach year among2,700 NUS faculty)Previous teachingAwards at NUSBusiness School,1996, 1998, 1999,2001, 2002 TSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 5
  6. 6. Target Markets for SM5 Primary targets MBA courses in services marketing, service management Upper division undergraduate courses (same) Secondary targets (with supplementary readings and cases) MBA courses in public and nonprofit marketing Courses in tourism, hotel and restaurant marketing Courses in marketing at other professional schools (e.g., architecture, public health) Can also be used in executive education courses that emphasize services marketing/managementSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 6
  7. 7. Services Marketing 5/e: A Simple, Intuitive Structure Students Understand Right Away Part I Part I Understanding Service Products, Consumers & Markets Understanding Services, Consumers & Markets Understanding Services, Consumers & Markets Introduction to Services Marketing Introduction to Services Marketing Consumer Behavior and Service Encounters Consumer Behavior and Service Encounters Positioning Services in Competitive Markets Positioning Services in Competitive Markets Part IIII Part Part III Part III Key Elements of Services Marketing Key Elements of Services Marketing Managing the Service Delivery Process Managing the Service Delivery Process Creating the Service Product Creating the Service Product Designing and Managing Service Processes Designing and Managing Service Processes Designing the Service Communications Mix Designing the Service Communications Mix Balancing Demand and Capacity Balancing Demand and Capacity Pricing and Revenue Management Pricing and Revenue Management Planning the Service Environment Planning the Service Environment Distributing Services Distributing Services Managing People for Service Advantage Managing People for Service Advantage Part IV Part IV Implementing Services Marketing Implementing Services Marketing Managing Relationships and Building Loyalty Managing Relationships and Building Loyalty Customer Feedback and Service Recovery Customer Feedback and Service Recovery Improving Service Quality and Productivity Improving Service Quality and Productivity Organizing for Service Leadership Organizing for Service LeadershipSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 7
  8. 8. Implementation in a Course SM5 offers an integrative package: 15 chapters of text (with lots of examples) 8 readings 15 cases Not built around a central conceptual framework that must be built through a pre-defined sequence of chapters Instead, offers a “toolbox” of important concepts and theoretical constructs that have practical application to management Very flexible—after Part 1, chapters can be taught in multiple sequences; certain topics can be omitted in short courses Links research findings to good managerial practice End-chapter questions, cases study questions, and suggested student papers/projects get students to work through concepts, come up with detailed analysis and practical solutionsSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 8
  9. 9. SM5 CONTENT HIGHLIGHTS Chapters, Readings, Cases, Pedagogical AidsSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1- 9
  10. 10. Part 1: Understanding Service Products, Consumers and Markets 1. Introduction to Services Marketing Differences among services are as important as differences between goods and services Service success requires focus on both customers and competitive markets 2. Consumer Behavior in Service Encounters 3. Positioning Services in Competitive Markets Positioning distinguishes a service brand from its competitors Using positioning maps to plot competitive strategySlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 10
  11. 11. Four Categories of ServicesEmploying Different Underlying Processes (Fig. 1.5) What is the Who or What is the Direct Recipient of the Service?Nature of the DIRECTED AT PEOPLE DIRECTED AT POSSESSIONSService Act? TANGIBLE People Processing Possession Processing ACTS e.g., airlines, hospitals, e.g., freight, repair, haircutting, restaurants cleaning, landscaping, hotels, fitness centers retailing, recycling INTANGIBLE Mental Stimulus Information Processing ACTS (directed at intangible assets) Processing e.g., broadcasting, consulting, e.g., accounting, banking, education, psychotherapy insurance, legal, researchSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 11
  12. 12. Positioning after New Hotel Construction: Price vs. Service Level (Fig. 3.6) Expensive Mandarin New Grand Heritage Marriott Continental Action? Regency PALACE Shangri-La High No action? Moderate Service Service Atlantic Sheraton Italia Castle Alexander IV Less Expensive Airport PlazaSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 12
  13. 13. Part 2: Key Elements of Services Marketing4. Creating the Service Product Flower of Service model of core and supplementary services5. Designing the Communications Mix for Services6. Pricing and Revenue Management Activity based costing (ABC) Revenue management (+ Kimes & Chase reading + 2 cases) Ethical concerns and perceived fairness in pricing policies7. Distributing Services Place, cyberspace, and time Role of intermediaries, franchising (Aussie Pooch case) International distribution of servicesSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 13
  14. 14. The Flower of Service: Categorizing Supplementary Services (Fig. 4-5) Information Payment Consultation Billing Core Order-Taking Exceptions Hospitality KEY: Facilitating elements Safekeeping Enhancing elementsSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 14
  15. 15. Splitting Responsibilities for Delivering Supplementary Services (Fig. 7.2) As created by As enhanced As experienced originating firm by distributor by customer Core + = CoreSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 15
  16. 16. Part 3: Managing the Service Delivery Process8. Designing and Managing Service Processes Detailed review and example of blueprinting The customer as productive co-producer vs. the “Jaycustomer” as abusive threat to profitability, quality, and safety9. Balancing Demand and Capacity10. Planning the Service Environment Designing and managing the servicecape: role of music, scents, and colors (+ Haeckel, Carbone, and Berry reading) Role of architecture and other visual design elements, illustrated by photos11. Managing People for Service AdvantageSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 16
  17. 17. Simplified Example: Blueprinting a Hotel Visit (extract only)Physical Hotel exterior, lobby, Elevator, corridor,Evidence employees, key room, bellhopStage Make Arrive, Check-in Go to Customer reservation valet park at reception room Line of Actions Interaction Employee Doorman ReceptionistFront Actions greets, valet verifies, gives Face-to-face takes car key to room Phone Contact Rep. records, confirms Line of Visibility Valet Make upBackstage Parks Car Room Enter Register data guest dataSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 17
  18. 18. Comparison of Hotel Lobbies (Figure 10.1) The servicescape is part of the value proposition! Orbit Hotel and Hostel, Los Angeles Four Seasons Hotel, New YorkSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 18
  19. 19. Part 4: Implementing Services Marketing12. Managing Relationships and Building Loyalty How to calculate customer lifetime value (+ Mass Audubon case) Customer relationship management systems13. Customer Feedback and Service Recovery14. Improving Service Quality and Productivity15. Organizing for Service Leadership Integrating marketing, operations, and human resources Moving up the service leadership ladder – losers, nonentities, professionals, leaders Individual leadership qualities, culture and climateSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 19
  20. 20. The Wheel of Loyalty (Fig. 12.7) 3. Reduce 1. Build a Churn Drivers Foundation for Loyalty Conduct churn diagnostic Segment the market Address key churn drivers Be selective in acquisitionEnabled through: Implement complaint handling & service Use effective tiering Frontline staff of service. Account recovery Customer managers Increase switching Loyalty Deliver quality Membership costs service. programs CRM Systems 2. Create Loyalty Bonds Build higher Deepen the level bonds relationship Give loyalty rewardsSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 20
  21. 21. Courses of Action Open to a Dissatisfied Customer (Figure 13.1) Complain to the Complain to the service firm service firm Take some form Take some form Complain to aa Complain to of public action of public action third party third party Take legal action Take legal action Service Encounter Take some form Take some form Service Encounter to seek redress to seek redress is Dissatisfactory of private action of private action is Dissatisfactory Defect (switch Defect (switch provider) provider) Take no action Take no action Negative word-of- Negative word-of- mouth mouth Any one or aacombination of Any one or combination of these responses is possible these responses is possibleSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 21
  22. 22. Cause and Effect Chart for Airline Departure Delays (Fig. 14.3) Facilities, Frontstage Front-Stage Procedure Procedures Equipment Personnel Personnel Aircraft late to Gate agents Delayed check-in Arrive late gate cannot process procedure Oversized bags Mechanical fast enough Acceptance of late Customers Failures Customers Late/unavailable passengers Late pushback airline crew Delayed Departures Late food Late cabin service cleaners Other Causes Poor announcement of Weather Late baggage departures Air traffic Late fuel Weight and balance sheet late Materials, Materials, Supplies Backstage Information Supplies PersonnelSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 22
  23. 23. Eight Readings – Important Insights fromThoughtful Practitioners and Leading Researchers Selected for readability and potential to stimulate classroom discussion On average, shorter than those in previous edition Two carried over from 4th edition, six new Academic authors featured are: Len Berry, Dick Chase, Marc Epstein, Ray Fisk, Steve Grove, Sherri Kimes, Kay Lemon, Roland Rust, Tony Simons, Robert Westbrook, Valarie Zeithaml Topics: service theater, competing in a weak industry, service brand equity, yield management, leading the customer experience, investing to build customer equity, why service stinks, action-profit linkage modelSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 23
  24. 24. 15 Terrific Classroom-Tested Cases, Offering Instructors Lots of Choice and Flexibility Number of cases has been increased to 15 (including a 3-part case series) – up from 10 in 4th edition 12 cases are new to this edition, 3 carried over from 4th edition and updated Students will appreciate an exceptionally up-to-date selection – all © 2000 or later, most © 2003 or 2004 A mix of lengths and levels of difficulty Cases drawn from Harvard, Yale, and INSEAD collections, as well as new cases from Lovelock and Wirtz A broad cross-section of service industries and situations Teaching notes provide detailed analysis and teaching suggestions to help instructors do a great job in classSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 24
  25. 25. Most Cases Can Be Used for Class or Written Assignments; Depict a Wide Array of Situations Fast food Car sales and repair High tech Telecommunications Car insurance Retail banking e-Service Apparel retailing Restaurant Hotels Environmental organization Franchised dog washingSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 25
  26. 26. Aussie Pooch Mobile: When the Client is a Dog,CB means “Canine Behavior” APM franchisee Elaine Beal washes Zak the Rottweiler outside his owner’s home in suburban BrisbaneSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 26
  27. 27. Pedagogical Aids in the Book Introduction to each chapter highlights key issues and questions Four types of boxed inserts Best Practice in Action (application of best practices) Research Insights (summaries of research findings) Service Perspectives (in-depth examples illustrating key concepts) Management Memo (reviews of key concepts) Review questions and application exercises Suggested study questions for all cases Good selection of graphics (many also as PowerPoints) Occasional cartoons use humor to make a pointSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 27
  28. 28. Instructor’s Resource Material Detailed instructors’ manual on course website Summaries of chapters with teaching hints Answers to study questions Sample course outlines Summaries of readings with teaching hints 16 student exercises and 5 comprehensive projects Advice on how to succeed in case teaching Outstanding teaching notes for cases More than 280 PowerPoint slides, organized into 15 chapter-specific filesSlide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 28

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