PASIG CATHOLIC COLLEGEMKTG 29 – : Service Marketing Management Part 2 – Customer Involvement in Service Processes Professor: Mr. Abelito T. Quiwa. MBA School Year 2012 – 2013
“ After-sales service is more important than assistance before sales. It is through such service that one gets permanent customers.” -Konosuke Matsushita, founder , Matsushita Electric Industrial Company. Ltd.,Japan
We will explore the followingquestions in this particular chapter In what managerially-relevant ways to serviced differ from one another? How are services classified? What are the underlying processes by which services are created and delivered? How does the nature of a customer’s contact with a service vary according to the underlying process? Why do different service processes require different marketing approaches?
How does services differ from oneanother? As noted by Shelby Hunt, a researcher in marketing, “ the purpose of theory is to increase scientific understanding through a systematized structure capable of both explaining and predicting phenomena”. Classification schemes, he said , “play fundamental roles in the development of a discipline, since they are the primary means for organizational phenomena into classes or groups that are amenable to systematic investigation and theory development.” Marketing practitioners have long recognized the value of developing distinctive strategies for different types of goods. Another major classification is that of the durable goods. Durability is closely associated with frequency of purchase which has important implications for the development of distribution and communications strategies.
How does services differ fromone another? Yet, another classification is a consumer goods( those purchased for personal or household use) versus industrial goods (those purchased by companies and other organizations). While these goods-based classification schemes are helpful, they do not really address the key strategies issues facing service managers. Service need to be classified into marketing- relevant groups, based on points of similarity between different industries. Such classification can help managers focus on marketing strategies that are relevant to specific service situation.
How Might Services Be Classified The traditional way of grouping services is by industry. This grouping help define the core products offered by the firm and enable an understanding of both customer needs and competition. Question: On a traditional way what is a grouping services by industry? Selected ways of classifying services: Extent to which service processes are tangible Who or what is the direct recipient of the service process? The place and time of service delivery Customization versus standardization Nature of the relationship with customers Extent to which demand and supply are in balance Extent to which facilities, equipment and people are part of the service experience
How Might Services Be Classified Selected ways of classifying services: The extent to which service processes are tangible. Does the service entail something physical and tangible (like sleeping in a hotel bed or dry cleaning your clothes), or are its processes more tangible (like teaching)? Different services processes not only shape the nature of the service delivery system but also affect the role of employees and the experience of customers.
How Might Services Be Classified Selected ways of classifying services: Who or what is the direct recipient of the service process? Some services, such as hair cutting or public transportation, are directed at customers who are present in person. Service to the customer in person tend to be somewhat more complex. The place and time of service delivery When designing delivery systems, service marketers must ask themselves whether customers need to visit the service organization at its own sites or whether the service goes to the customer. Delivery channels could also be physical, like postal delivery( as with applying for insurance and paying the periodic premiums) or electronic ( as with Internet based services that allow you to trans-act in cyberspace).
How Might Services Be Classified Selected ways of classifying services: Customization versus standardization Services can be classified according to the degree of customization or standardization involved in service delivery. An eye examination by an optometrist can proceed as per standardized procedure but a customized diagnosis is called for if a prescription for correction lenses is needed.
How Might Services Be Classified Selected ways of classifying services: Nature of the relationship with customers Some services involve a formal relationships, in which each customer is known to the organization ( or at least to its computer) and all transaction are individually recorded. Sometimes, companies create a special club membership or route of a frequent user programs to reward loyal users. For instance, both the hairdresser and the restaurant could record customers’ names and addresses and periodically make them special offers.
How Might Services Be Classified Selected ways of classifying services: Extent to which demand and supply are in balance. Some service industries face steady demand for their services while others encounter significant fluctuations. In such situations, either capacity must be adjusted to accommodate the level of demand or marketing strategies should be such that they can predict, manage and smooth demand levels to bring them in line with capacity. Question: What should be done if a service industries encounter significant fluctuation of demand for their services?
How Might Services Be Classified Selected ways of classifying services: Extent to which facilities, equipment and people are part of the service experience. Customers’ service experiences are shaped, in the part, by the extent to which they are exposed to tangible elements in the delivery system. ( Ex. Is hospital) By contrast, it is rare for a telephone customer to encounter physical equipment, other than the telephone handset, or company personnel. Implication of classification Schemes The service classification schemes that we have discussed can help managers better answer the following questions: What does our service operational actually do? What sorts of processes are involved in creating the core product that we offer to customers? Where do customers fit in our operation?
Howservice classification schemes that we have discussed can help The Might Services Be Classified managers better answer the following questions: What does our service operational actually do? What sorts of processes are involved in creating the core product that we offer to customers? Where do customers fit in our operation? The answer will depend on the nature of the underlying service process required to create and deliver a particular service. WE now turn to the most fundamental of the 8Ps of integrated service management: the processes by which service products are created and delivered. Our focus will be on the core service product, but it should be noted that supplementary services also require delivery and the process employed may differ from the used for the core product.
Service as Process Because customers are often involved in service production, marketers do need to understand the nature of the processes to which their customers may be exposed. A process is a particular method of operation or a series of actions, typically involving multiple steps that often need to take place in a defined sequence. Service processes range from relatively simple procedures involving only a few steps, such as filling a car’s tank with fuel, to highly complex activities such as transporting passengers on an international flight.
Service as Process Categorizing Service Processes From a purely operational perspective, service can be categorized into four broad groups.1. People processing2. Possession processing3. Mental stimulus processing4. Information processing
Service As a Process From a purely operational perspective, service can be categorized into four broad groups.1. People processing involves tangible actions to people’s bodies (Ex. Transportation and hairdressing).2. Possession processing covers tangible actions to the customer’s physical possessions. (Ex. Air freight, car repair and cleaning services).3. Mental stimulus processing refers to intangible actions directed at people’s minds. (Ex. Entertainment, sport events and education)
People Processing If the customers want the benefits that a people- processing service has to offer, they must be prepared to spend time operating actively with the service provider. The output from these services, whose period of delivery can vary from minutes to months, is a customer who has reached her destination, or satisfied his hunger, or is now sporting clean and stylishly-cut hair, or has had a couple of night’s sleep away from home, or is now in better physical health. It is important for managers to think about process and output in terms of what happens to the customer because that helps them to identify what benefits are being created.
Possession Processing Possession processing services include transport and storage of goods, wholesale and retail distribution, and installation, removal and disposal of equipment; In short, the entire value-adding chain of activities during the lifetime of the object in question. Customers are less physically involved with this type of service than with people-processing services.
Mental Stimulus Processing Services that interact with people’s minds include education, news and information, professional advice, psychotherapy, entertainment and certain religious practices. Service such as entertainment and education are often created in one place and transmitted by television or radio to individual customers in distant locations. Since the core content of all services in this category is information-based (whether it is much, speech or visual imagers), they can easily be converted into digital bits, recorded for posterity and transformed into a manufactured product, such as a compact disc, videotape, or audio-cassette-much like any other physical good-or delivered via the Internet.
Information Processing Information processing has been revolutionized by the use of computers. However, not all information is processed by machines. Among the services that are highly dependent on effective collection and processing of information are financial and professional services such as accounting, law, market research, management consulting and medical diagnosis. The extent of customer involvement in both information and mental stimulus processing services is often determined more by tradition and a desire to meet the supplier face-to-face, than by the needs of the operational process. As technology improves and people continue to become more comfortable with videophones or the Internet, we can expect to see a continuing shift away from face-to-face transactions.
Service Process and TheirManagement Challenges By representing processes visually, one can clearly see the differences in customer involvement with service organization for each of the four processes in their purest forms.1. Stay at a hotel (people processing )2. Repair a VCR( possession processing )3. Weather forecast (mental stimulus processing)4. Debit card application ( information processing)
Identifying Service Benefits The key is to understand the specific benefits that customers hope to obtain from the service provider. Many firms bundle together different activities in an effort to provide good, service, but innovation in service delivery requires a constant focus on the processes underlying delivery of the core product. Operation managers need to work with marketing personnel to improve their chances of designing new processes that deliver the benefits desired by customers in user-friendly ways.
Designing the Service Factory Customer involvement in the core activity of services may vary sharply for each of the four categories of service processes. When customer visit a service factory, their satisfaction will be influenced by such factors as the following: Appearance and features of service facilities-both exterior and interior Encounter with service personnel Interactions with self-service equipment Characteristics and behavior of other customers Marketers need to work with HR to ensure that those employees who are in contact with customers present an acceptable profile.
Using Alternative Channels forService Delivery Managers responsible for possession-processing, mental stimulus-processing and information- processing services need to possibly include:1) Letting customers come to a user-friendly factory2) Limiting contact to a small retail office that is separate from the main factory(or” back office”)3) Coming to the customer’s home or office;4) Conducting business at arm’s length Rethinking service-delivery procedures for all but people-processing services may allow a firm to get customers out of the factory and transform a “high-contact” service into a “low-contact” one.
Making the Most of InformationTechnology Many examples of using technology to transform the nature of the core product and its delivery system are based on radio and television. Modern telecommunications and computer technologies allow customers to connect their own computers, or other input-output devices, with the service provider’s system in another location.
Balancing Supply and Demand In general, services that process people and physical objects are more likely to face capacity limitations than those that are information based. In recent years, information processing and transmission capacity have been vastly increased by greater computing power, digital switching and the replacement of coaxial cables with fibre-optic ones. The issue of demand and capacity management is so central to the productive use of assets, and thus profitability, that we will devote significant space.
Taking into Account People as Part ofthe Product In many people-processing services, customers meet lots of employees ( the people element of the 8 Ps) and often interact with them over a long period of time. Service business of this type tend to be harder to manage because of the human element. As manager, how would you get all customers to clear their tables after eating at a quick service restaurant? How would you ensure that passengers do not disturb others on the flight?
Avoiding the Risk of Over-Generalization The ninth characteristics-the ability to use electronic deliver channel-applies to the two information-based categories-mental stimulus processing and information processing. Historically, the first eight characteristics also apply quite well to many services in the two information-based categories, because the traditional delivery model used to require customers to visit a local service factory to obtain the information.
Conclusion Although not all services are the same, many do share important characteristics. Rather than focusing on broad distinctions between goods and services, it is more useful to identify different categories of services and to study the marketing, operations and human resource challenges within each of these groups. The four-way classification scheme discussed in depth in this chapter focuses on different types of service processes. Some services require direct physical contact with customers such as hairdressing and passenger transport, while others focus on contact with people’s minds such as education and entertainment. Some involves processing of physical objects such as cleaning and
Conclusion The processes that underline the creation and delivery of any services have a major impact on marketing and human resources. Process design, or re-design, is not just a task for the operations department. Both managers and employees must understand underlying processes-particularly those in which customers are actively involved-in order to run a service business that is both efficient and user-friendly.