Module 3

MBA@GIT http://www.mba.git.edu.
© Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum. pvkulkarni@git.edu.
Services Marketing
Module 3
Understand customer expectations through market
research
According to VTU syllabus,
Service Marketing, 12MBAMM 14.

Objectives
After studying this module you will be able to
1. Know the reasons for GAP 1
2. Understand types of research.
3. Learn relationship marketing concept and
strategies.
4. Assess the retention strategies adopted by
service firms.
5. Discuss market segmentation and targeting
in services.

Common Research Objectives for Services
To identify dissatisfied customers
To discover customer requirements or expectations
To monitor and track service performance
To assess overall company performance compared to
competition
To assess gaps between customer expectations and
perceptions
To gauge effectiveness of changes in service
To appraise service performance of individuals and teams
for rewards
To determine expectations for a new service
To monitor changing expectations in an industry
To forecast future expectations

Criteria for An Effective Services Research Program
Research
Objectives
Includes
Perceptions
and
Expectations
of
Customers
Includes
Measures
of
Loyalty or
Behavioral
Intentions
Includes
Statistical
Validity
When Necessary
Measures
Priorities
or
Importance
Occurs
with
Appropriate
Frequency

Portfolio of Services Research
Customer Complaint Solicitation
“Relationship” Surveys
Post-Transaction Surveys
Customer Focus Groups
“Mystery Shopping” of Service
Providers
Employee Surveys
Lost Customer Research
Identify dissatisfied customers to attempt recovery; identify
most common categories of service failure for remedial action
Obtain customer feedback while service experience is still fresh; act
on feedback quickly if negative patterns develop
Use as input for quantitative surveys; provide a forum for
customers to suggest service-improvement ideas
Assess company’s service performance compared to competitors;
identify service-improvement priorities; track service improvement
over time
Measure individual employee service behaviors for use in coaching,
training, performance evaluation, recognition and rewards; identify
systemic strengths and weaknesses in service
Measure internal service quality; identify employee-perceived
obstacles to improve service; track employee morale and
attitudes
Determine the reasons why customers defect
Research Objective Type of Research
Future Expectations Research
To forecast future expectations of customers
To develop and test new service ideas

Stages in the Research Process
Stage 1 : Define Problem
Stage 2 : Develop Measurement Strategy
Stage 3 : Implement Research Program
Stage 4 : Collect and Tabulate Data
Stage 5 : Interpret and Analyze Findings
Stage 6 : Report Findings

Service Quality Perceptions Relative to Zones
of Tolerance by Dimensions
Retail Chain
9
8
7
6
5
4
3
2
1
0
Reliability Responsiveness Assurance Empathy Tangibles
OO O
O
Zone of Tolerance S.Q. PerceptionO
O

Service Quality Perceptions
Relative to Zones of Tolerance by Dimensions
Computer Manufacturer
10
8
6
4
2
0
Reliability Responsiveness Assurance Empathy Tangibles
OO O
O
O
Zone of Tolerance S.Q. PerceptionO

Importance/Performance Matrix
HIGH
HIGH
LOW
Performance
Importance


 






Attributes to Improve Attributes to Maintain
High
Leverage
Attributes to De-emphasizeAttributes to Maintain
Low
Leverage

Relationship Marketing
is a philosophy of doing business that focuses on keeping and
improving current customers
does not necessarily emphasize acquiring new customers
is usually cheaper (for the firm)--to keep a current customer
costs less than to attract a new one
goal = to build and maintain a base of committed customers
who are profitable for the organization
thus, the focus is on the attraction, retention, and
enhancement of customer relationships

Lifetime Value of a Customer
Assumptions
Income
– Expected Customer Lifetime
– Average Revenue (month/year)
– Other Customers convinced via WOM
– Employee Loyalty??
Expenses
– Costs of Serving Customer Increase??

A Loyal Customer is One Who...
Shows Behavioral Commitment
– buys from only one supplier, even though other options
exist
– increasingly buys more and more from a particular supplier
– provides constructive feedback/suggestions
Exhibits Psychological Commitment
– wouldn’t consider terminating the relationship--
psychological commitment
– has a positive attitude about the supplier
– says good things about the supplier

Benefits to the Organization of Customer
Loyalty
loyal customers tend to spend more with the
organization over time
on average costs of relationship maintenance are
lower than new customer costs
employee retention is more likely with a stable
customer base
lifetime value of a customer can be very high

Benefits to the Customer
inherent benefits in getting good value
economic, social, and continuity benefits
– contribution to sense of well-being and quality
of life and other psychological benefits
– avoidance of change
– simplified decision making
– social support and friendships
– special deals

“The Customer Isn’t Always Right”
Not all customers are good relationship
customers:
– wrong segment
– not profitable in the long term
– difficult customers

Strategies for Building Relationships
Foundations:
– Excellent Quality/Value
– Careful Segmentation
Bonding Strategies:
– Financial Bonds
– Social & Psychological Bonds
– Structural Bonds
– Customization Bonds
Relationship Strategies Wheel

Getting
Satisfying
Retaining
Enhancing
Customer Goals of Relationship Marketing

Underlying Logic of Customer Retention
Benefits to the Organization
Customer Retention &
Increased Profits
Employee Loyalty
Quality
Service
Customer Satisfaction

Steps in Market Segmentation and
Targeting for Services
Identify
Bases for
Segmenting
the Market
STEP 1:
Develop
Profiles of
Resulting
Segments
STEP 2:
Develop
Measures
of Segment
Attractive-
ness
STEP 3:
Select the
Target
Segments
STEP4:
Ensure that
Segments
Are
Compatible
STEP 5:

Excellent
Quality
and
Value
Levels of
Retention
Strategies
I. Financial
Bonds
II.
Social
Bonds
IV.
Structural
Bonds
III. Customization
Bonds
Volume and
Frequency
Rewards
Bundling and
Cross Selling
Stable
Pricing
Social Bonds
Among
Customers
Personal
Relationships
Continuous
Relationships
Customer
Intimacy
Mass
Customization
Anticipation/
Innovation
Shared
Processes and
Equipment
Joint
Investments
Integrated
Information
Systems

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