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Services Marketing
[object Object],[object Object],[object Object]
Contact: +923006641921 Usman Waheed Chapter 1 INTRODUCTION   TO SERVICES S M
Objectives for Chapter 1: Introduction to Services ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Introduction ,[object Object],[object Object],[object Object],[object Object]
Challenges for Services ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Examples of Service Industries ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 1-1 Tangibility Spectrum Tangible Dominant Intangible Dominant Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines Investment Management Consulting Teaching Fast-food Outlets Fast-food Outlets            
Figure 1-2  Percent of  U.S. Labor Force by Industry 0 10 20 30 40 50 60 70 80 1929 1948 1969 1977 1984 1996 Percent of GDP Source:  Survey of Current Business,  April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C;  Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,”  Scientific American , 244,3 (1981): 31-39.  Year ,[object Object],[object Object],[object Object]
0 10 20 30 40 50 60 70 80 1948 1959 1967 1977 1987 1996 Figure 1-3  Percent of U.S. Gross Domestic  Product by Industry Percent of GDP Year Source:  Survey of Current Business,  August 1996, Table 11, April 1998, Table B.3;  Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,”  Scientific American , 244,3 (1981): 31-39.  ,[object Object],[object Object],[object Object]
Differences Between  Goods and Services Intangibility Perishability Simultaneous Production and Consumption Heterogeneity
Implications of Intangibility ,[object Object],[object Object],[object Object],[object Object]
Implications of Heterogeneity ,[object Object],[object Object],[object Object]
Implications of Simultaneous Production and Consumption ,[object Object],[object Object],[object Object],[object Object],[object Object]
Implications of Perishability ,[object Object],[object Object]
Table 1-2  Services are Different Source : Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”  Journal of Marketing  49 (Spring 1985): 33-46.
Figure 1-5 The Services Marketing Triangle Internal Marketing Interactive Marketing External Marketing Company (Management) Customers Employees “ enabling the promise” “ delivering the promise” “ setting the promise” Source:  Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Ways to Use the  Services Marketing Triangle ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Source:  Adapted from A. Parasuraman Company Customers Providers Technology Figure 1-6  The Services Triangle  and Technology
Services Marketing Mix: 7 Ps for Services ,[object Object],[object Object],[object Object],[object Object]
Traditional Marketing Mix ,[object Object],[object Object],[object Object],[object Object],[object Object]
Expanded Mix for Services -- the 7 Ps ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Table 1-3 Expanded Marketing Mix for Services
Table 1-3 (Continued) Expanded Marketing Mix for Services
Ways to Use the 7 Ps ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Services Marketing Triangle Applications Exercise ,[object Object],[object Object],[object Object],[object Object]
Part 1 FOCUS ON THE CUSTOMER S M
Perceived Service Expected  Service CUSTOMER COMPANY Customer Gap GAP 1 GAP 2 Gaps Model of Service Quality GAP 3 External Communications to Customers GAP 4 Service Delivery Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations Part 1 Opener
Gaps Model of Service Quality ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Part 1 Opener
The Customer Gap Expected Service Perceived Service GAP Part 1 Opener
Chapter 2 CONSUMER BEHAVIOR IN SERVICES S M
Objectives for Chapter 2: Consumer Behavior in Services ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Consumer Evaluation  Processes for Services ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 2-1 Continuum of Evaluation for Different Types of Products Clothing Jewelry Furniture Houses Automobiles Restaurant meals Vacations Haircuts Child care Television repair Legal services Root canals Auto repair Medical diagnosis Difficult to evaluate Easy to evaluate { High in search qualities High in experience qualities High in credence qualities { { Most Goods Most Services
Figure 2-2 Categories in Consumer  Decision-Making and Evaluation of Services Information Search Evaluation of Alternatives Purchase and Consumption Post-Purchase Evaluation    Use of personal sources    Perceived risk    Evoked set    Emotion and mood    Service provision as drama    Service roles and scripts    Compatibility of customers    Attribution of dissatisfaction    Innovation diffusion    Brand loyalty
Figure 2-3   Categories in Consumer Decision-Making and Evaluation of Services Information Search Evaluation of Alternatives Purchase and Consumption Post-Purchase Evaluation    Use of personal sources    Perceived risk    Evoked set    Emotion and mood    Service provision as drama    Service roles and scripts    Compatibility of customers    Attribution of dissatisfaction    Innovation diffusion    Brand loyalty Culture ,[object Object],[object Object],[object Object],[object Object],[object Object]
Information search ,[object Object],[object Object],[object Object],[object Object]
Perceived Risk ,[object Object],[object Object],[object Object]
Evoked Set ,[object Object],[object Object],[object Object],[object Object],[object Object]
Emotion and Mood ,[object Object],[object Object],[object Object],[object Object]
Service Provision as Drama ,[object Object],[object Object],[object Object]
Global Feature: Differences in the Service Experience in the U.S. and Japan ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Chapter 3 CUSTOMER EXPECTATIONS OF SERVICES S M
Objectives for Chapter 3: Customer Expectations of Service ,[object Object],[object Object],[object Object],[object Object],[object Object]
DEFINITIONS ,[object Object],[object Object],[object Object],[object Object]
Figure 3-1 Dual Customer  Expectation Levels (Two levels of expectations) Adequate Service Desired Service Zone of Tolerance
Figure 3-2 The Zone of Tolerance   Adequate Service Desired Service Zone of Tolerance
Figure 3-3 Zones of Tolerance  VARY  for Different Service Dimensions Most Important Factors Least Important Factors Level  of  Expectation Source:  Berry, Parasuraman, and Zeithaml (1993) Adequate Service Desired Service Zone of Tolerance Desired Service Adequate Service Desired Service Adequate Service Zone  of  Tolerance
Figure 3-4 Zones of Tolerance  VARY  for First-Time and Recovery Service First-Time Service Outcome Process Outcome Process Recovery Service Expectations LOW HIGH Source:  Parasuraman, Berry and Zeithaml (1991)
Figure 3-5 Factors that Influence Desired Service Desired Service Adequate Service Zone  of  Tolerance Enduring Service Intensifiers Personal Needs
[object Object],[object Object],[object Object]
Figure 3-6 Factors that Influence Adequate Service Desired Service Adequate Service Zone  of  Tolerance Self-Perceived Service Role Situational  Factors Perceived Service Alternatives Transitory Service Intensifiers
[object Object],[object Object],[object Object],[object Object]
Figure 3-7 Factors that Influence Desired and Predicted Service Desired Service Adequate Service Zone  of  Tolerance Predicted Service Explicit Service Promises Implicit Service Promises Word-of-Mouth Past Experience
Chapter 4 CUSTOMER PERCEPTIONS OF SERVICE S M
Objectives for Chapter 4: Customer Perceptions of Service ,[object Object],[object Object],[object Object]
Figure 4-1 Customer Perceptions of  Service Quality and  Customer Satisfaction   Service Quality Reliability Responsiveness Assurance Empathy Tangibles Product Quality Price Personal Factors Customer Satisfaction Situational Factors
Factors Influencing  Customer Satisfaction ,[object Object],[object Object],[object Object],[object Object],[object Object]
Outcomes of  Customer Satisfaction ,[object Object],[object Object],[object Object]
Figure 4-3  Relationship between Customer Satisfaction and Loyalty in Competitive Industries Source : James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger,  The Service Profit Chain , (New York, NY: The Free Press, 1997), p. 83.
Service Quality ,[object Object],[object Object]
The Five Dimensions of  Service Quality ,[object Object],[object Object],[object Object],[object Object],[object Object],T angibles R eliability R esponsiveness A ssurance E mpathy
Exercise to  Identify Service Attributes In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions.  Be certain the requirements reflect the customer’s point of view. Reliability: Assurance: Tangibles: Empathy: Responsiveness:
SERVQUAL Attributes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],RELIABILITY RESPONSIVENESS ,[object Object],[object Object],[object Object],[object Object],ASSURANCE ,[object Object],[object Object],[object Object],[object Object],[object Object],EMPATHY ,[object Object],[object Object],[object Object],[object Object],TANGIBLES
The Service Encounter ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 4-4   A Service Encounter  Cascade for a Hotel Visit Check-In Request Wake-Up Call Checkout Bellboy Takes to Room  Restaurant Meal
Sales Call Ordering Supplies Billing Delivery and Installation  Servicing Figure 4-5 A Service Encounter  Cascade for an Industrial Purchase
Critical Service Encounters Research ,[object Object],[object Object],[object Object],[object Object]
Sample Questions for Critical Incidents Technique Study ,[object Object],[object Object],[object Object],[object Object],[object Object]
Common Themes in Critical Service Encounters Research Recovery: Adaptability: Spontaneity: Coping: Employee Response to Service Delivery System Failure Employee Response to Customer Needs and Requests Employee Response to Problem Customers Unprompted and Unsolicited Employee Actions and Attitudes
Recovery ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],DO   DON’T
Adaptability ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],DO   DON’T
Spontaneity ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],DO   DON’T
Coping ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],DO   DON’T
Figure 4-6  Evidence of Service from the Customer’s Point of View People Process Physical Evidence ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Part 2 LISTENING TO CUSTOMER REQUIREMENTS S M
Provider GAP 1 Company Perceptions of Consumer Expectations Expected Service CUSTOMER COMPANY GAP 1 Part 2 Opener
Chapter 5 UNDERSTANDING CUSTOMER EXPECTATIONS AND PERCEPTIONS THROUGH MARKETING RESEARCH S M
Objectives for Chapter 5: Understanding Customer Expectations  and Perceptions through  Marketing Research ,[object Object],[object Object],[object Object],[object Object]
Common Research Objectives  for Services ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 5-1 Criteria for An Effective Services Research Program Research Objectives Includes Qualitative Research Includes Quantitative Research Includes Perceptions  and Expectations of Customers Includes Measures of Loyalty or Behavioral Intentions Balances Cost and Value of Information 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 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 5-5 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 O O O O Zone of Tolerance  S.Q. Perception O O
Service Quality Perceptions  Relative to Zones of Tolerance by Dimensions Computer Manufacturer 10 8 6 4 2 0 Reliability  Responsiveness  Assurance  Empathy  Tangibles  O O O O O Zone of Tolerance  S.Q. Perception O
Figure 5-6  Importance/Performance Matrix HIGH HIGH LOW Performance Importance           Attributes to Improve Attributes to Maintain High Leverage Attributes to De-emphasize Attributes to Maintain Low Leverage
Chapter 6 BUILDING  CUSTOMER RELATIONSHIPS  S M
Objectives for Chapter 6: Building Customer Relationships ,[object Object],[object Object],[object Object],[object Object],[object Object]
Relationship Marketing ,[object Object],[object Object],[object Object],[object Object],[object Object]
Lifetime Value of a Customer ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
A Loyal Customer is One Who... ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Customer Loyalty Exercise ,[object Object],[object Object],[object Object]
Benefits to the Organization of Customer Loyalty ,[object Object],[object Object],[object Object],[object Object]
Benefits to the Customer ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
“ The Customer Isn’t Always Right” ,[object Object],[object Object],[object Object],[object Object]
Strategies for Building Relationships ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 6-1  Customer Goals of  Relationship Marketing Getting Satisfying Retaining Enhancing
Figure 6-3 Underlying Logic of Customer Retention Benefits to the Organization Customer Retention & Increased Profits Employee Loyalty Quality Service Customer Satisfaction
Figure 6-5 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 Figure 6-6   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
Chapter 7 SERVICE RECOVERY S M
Objectives for Chapter 7: Service Recovery ,[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 7-1 Unhappy Customers’  Repurchase Intentions 95% 70% 46% 37% 82% 54% 19% 9% Complaints Resolved Quickly Complaints Resolved Complaints Not Resolved Minor complaints ($1-$5 losses) Major complaints (over $100 losses) Unhappy Customers Who  Don’t  Complain Unhappy Customers Who  Do  Complain Percent of Customers Who Will Buy Again Source:  Adapted from data reported by the Technical Assistance Research Program.
Figure 7-3   Customer Response Following Service Failure Service Failure Do Nothing Take Action Stay with Provider Switch Providers Complain to Provider Complain to Family & Friends Complain to Third Party Stay with Provider Switch Providers
Figure 7-5 Service Recovery Strategies Learn from Recovery Experiences Treat Customers Fairly Learn from Lost Customers Welcome and Encourage Complaints Fail Safe the Service Act Quickly Service Recovery Strategies
Figure 7-6 Causes Behind Service Switching Service Switching Behavior ,[object Object],[object Object],[object Object],[object Object],Pricing ,[object Object],[object Object],[object Object],Inconvenience ,[object Object],[object Object],[object Object],Core Service Failure ,[object Object],[object Object],[object Object],[object Object],Service Encounter Failures ,[object Object],[object Object],[object Object],Response to Service Failure ,[object Object],Competition ,[object Object],[object Object],[object Object],[object Object],Ethical Problems ,[object Object],[object Object],Involuntary Switching Source:  Sue Keaveney
Service Guarantees ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Table 7-7   Characteristics of an Effective Service Guarantee Source : Christopher W.L. Hart, “The Power of Unconditional Guarantees,”  Harvard Business Review , July-August, 1988, pp. 54-62.
Why a Good Guarantee Works ,[object Object],[object Object],[object Object],[object Object],[object Object]
Service Guarantees ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Service Guarantees ,[object Object],[object Object],[object Object],[object Object],[object Object]
Part 3 ALIGNING STRATEGY,  SERVICE DESIGN  AND STANDARDS S M
CUSTOMER COMPANY GAP 2 Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations Provider GAP 2 Part 3 Opener
Chapter 8 SERVICE DEVELOPMENT AND DESIGN S M
Objectives for Chapter 8: Service Development and Design ,[object Object],[object Object],[object Object],[object Object]
Figure 8-1 Risks of Relying on Words Alone to  Describe Services ,[object Object],[object Object],[object Object],[object Object]
Figure 8-2  New Service Development Process Source : Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Screen ideas against new service strategy Test concept with customers and employees Test for profitability and feasibility Conduct service prototype test Test service and other marketing-mix elements Front End Planning Implementation
Figure 8-3 New Service Strategy Matrix for Identifying Growth Opportunities Markets Offerings Existing Services New Services  Current Customers New Customers SHARE BUILDING DIVERSIFICATION MARKET DEVELOPMENT SERVICE DEVELOPMENT
Figure 8-4 Service Mapping/Blueprinting ,[object Object],Service Mapping Process Points of Contact Evidence
Service Blueprint Components CUSTOMER ACTIONS line of interaction “ ONSTAGE” CONTACT EMPLOYEE ACTIONS line of visibility “ BACKSTAGE” CONTACT EMPLOYEE ACTIONS line of internal interaction SUPPORT PROCESSES
Express Mail Delivery Service Driver Picks Up Pkg. Dispatch Driver Airport Receives & Loads Sort Packages Load on Airplane Fly to Destination Unload & Sort Load On Truck SUPPORT PROCESS CONTACT  PERSON (Back Stage) (On Stage) CUSTOMER PHYSICAL EVIDENCE Customer Calls Customer Gives  Package Truck Packaging Forms Hand-held Computer Uniform Receive Package Truck Packaging Forms Hand-held Computer Uniform Deliver Package Customer Service Order Fly to Sort Center
Overnight Hotel Stay SUPPORT PROCESS CONTACT PERSON (Back Stage) (On Stage) CUSTOMER Hotel Exterior Parking Cart for Bags Desk Registration Papers Lobby Key Elevators Hallways Room Cart for Bags Room Amenities Bath Menu Delivery Tray Food Appearance Food Bill Desk Lobby Hotel Exterior Parking Arrive at Hotel Give Bags to Bellperson Check in Go to Room Receive Bags Sleep Shower Call Room Service Receive Food Eat Check out and Leave Greet and Take Bags Process Registration Deliver Bags Deliver Food Process Check Out Take Bags to Room Take Food Order Registration System Prepare Food Registration System PHYSICAL EVIDENCE
Figure 8-8 Building a Service Blueprint Step 1 Identify the process to be blue-printed. Step 2 Identify the customer or customer segment. Step 3 Map the process from the customer’s point of view. Step 4 Map contact employee actions, onstage and back-stage. Step 5 Link customer and contact person activities to needed support functions. Step 6 Add evidence of service at each customer action step.
Application of Service Blueprints ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Blueprints Can Be Used By: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Chapter 9 CUSTOMER-DEFINED SERVICE STANDARDS S M
Objectives for Chapter 9: Customer-defined Service Standards ,[object Object],[object Object],[object Object],[object Object]
Figure 9-1 AT&T’s Process Map for Measurements Reliability (40%) Easy To Use (20%) Features / Functions (40%) Knowledge (30%) Responsive (25%) Follow-Up (10%) Delivery Interval Meets Needs (30%) Does Not Break (25%) Installed When Promised (10%) No Repeat Trouble (30%) Fixed Fast (25%) Kept Informed (10%) Accuracy, No Surprise (45%) Resolve On First Call (35%) Easy To Understand (10%) Business Process Customer Need Internal Metric 30% Product 30% Sales 10% Installation 15% Repair 15% Billing % Repair Call % Calls for Help Functional Performance Test Supervisor Observations % Proposal Made on Time % Follow Up Made Average Order Interval % Repair Reports % Installed On Due Date % Repeat Reports Average Speed Of Repair % Customers Informed % Billing Inquiries % Resolved First Call % Billing Inquiries Total Quality Source: AT&T General Business Systems
Exercise for Creating Customer-Defined Service Standards ,[object Object],[object Object],[object Object],[object Object],[object Object]
Customer-Driven Standards and Measurements Exercise Service Encounter Customer Requirements Measurements Service Quality
Figure 9-2 Getting to Actionable Steps   Satisfaction  Value Relationship  Solution Provider Reliability  Empathy Assurance  Tangibles Responsiveness  Price Delivers on Time Returns Calls Quickly Knows My Industry  Delivers by Weds 11/4 Returns Calls in 2 Hrs Knows Strengths of My Competitors Requirements: Abstract Concrete  Dig  Deeper Dig  Deeper Dig  Deeper Diagnosticity: Low High General Concepts Dimensions Behaviors and Actions Attributes
Figure 9-3 Process for Setting  Customer-Defined Standards   1. Identify Existing or Desired Service Encounter Sequence 2. Translate Customer Expectations Into Behaviors/Actions 4. Set  Hard or Soft Standards 5. Develop Feedback Mechanisms 7. Track Measures Against Standards Measure by Audits or Operating Data Hard Soft Measure by Transaction- Based Surveys 3. Select Behaviors/Actions for Standards 6. Establish Measures and Target Levels 8.  Update Target Levels and Measures
Importance/Performance Matrix HIGH HIGH Performance          10.0 8.0 7.0 9.0 LOW 8.0 9.0 10.0 Importance Improve Maintain Delivers on promises specified in proposal/contract (9.49, 8.51) Gets project within budget, on time  (9.31, 7.84) Completes projects  correctly, on time  (9.29, 7.68) Does whatever it takes to  correct problems  (9.26, 7.96) Provides equipment that operates as vendor said it would (9.24, 8.14) Gets price we originally agreed upon (9.21, 8.64) Takes responsibility for their mistakes (9.18, 8.01) Delivers or installs on  promised date (9.02, 7.84) Tells me cost ahead of time  (9.06, 8.46)  Gets back to me when promised (9.04, 7.63)
Figure 9-5 Linkage between Soft Measures and Hard Measures for Speed of Complaint Handling S A T I S F A C T I O N 2  4  6  8  12  16  20  24 W O R K I N G  H O U R S Large Customers Small Customers 10 9 8 7 6 5 4 3 2 1 0
Figure 9-6   Aligning Company Processes with Customer Expectations Customer Expectations Customer Process Blueprint Company Process Blueprint Company Sequential Processes A B C D E F G H 40 Days New Card Mailed Lost Card Reported Report Lost Card Receive New Card 48 Hours
Chapter 10 PHYSICAL EVIDENCE AND THE SERVICESCAPE S M
Objectives for Chapter 10: Physical Evidence and the Servicescape ,[object Object],[object Object],[object Object],[object Object],[object Object]
Table 10-1 Elements of Physical Evidence
Table 10-2  Examples of Physical Evidence from the Customer’s Point of View
Table 10-3  Typology of Service Organizations  Based on Variations in Form  and Use of the Servicescape
Figure 10-3   A Framework for Understanding Environment-user Relationships  in Service Organizations Source : Adapted from Mary Jo Bitner, “Servicescapes.” PHYSICAL ENVIRONMENTAL DIMENSIONS HOLISTIC ENVIRONMENT INTERNAL RESPONSES BEHAVIOR Ambient Conditions Space/Function Signs, Symbols, and Artifacts Perceived Servicescape Cognitive Emotional Physiological Cognitive Emotional Physiological Employee Responses Customer Responses Individual Behaviors Social Interactions between and among customer and employees Individual Behaviors
Part 4 DELIVERING AND PERFORMING SERVICE S M
CUSTOMER COMPANY Provider GAP 3 Service Delivery GAP 3 Customer-Driven Service Designs and  Standards Part 4 Opener
Chapter 11 EMPLOYEES’ ROLES IN SERVICE DELIVERY S M
Objectives for Chapter 11: Employees’ Roles in Service Delivery ,[object Object],[object Object],[object Object],[object Object]
Service Employees ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Service Employees ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 11-3  Boundary Spanners Interact  with Both Internal  and External Constituents Internal Environment External Environment
Figure 11-4  Sources of Conflict for  Boundary-Spanning Workers ,[object Object],[object Object],[object Object],[object Object]
Figure 11-5  Human Resource Strategies for Closing GAP 3 Customer- oriented Service Delivery Hire the Right People Provide Needed Support Systems Retain the Best People Develop People to Deliver Service Quality Compete for the Best People Hire for Service Competencies and Service Inclination Provide Supportive Technology and Equipment Treat Employees as Customers Empower Employees Be the Preferred Employer Train for Technical and Interactive Skills Promote Teamwork Measure Internal Service Quality Develop Service- oriented Internal Processes Measure and Reward Strong Service Providers Include Employees in the Company’s Vision
Empowerment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Service Culture ,[object Object]
Chapter 12 CUSTOMERS’ ROLES IN SERVICE DELIVERY S M
Objectives for Chapter 12: Customers’ Roles in Service Delivery ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Importance of  Other  Customers in Service Delivery ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
How Customers Widen Gap 3 ,[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 12-2  Customer Roles in Service Delivery Productive Resources Contributors to Quality and Satisfaction Competitors
Customers as Productive Resources ,[object Object],[object Object],[object Object],[object Object],[object Object]
Customers as Contributors to Service Quality and Satisfaction ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Customers as Competitors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Technology Spotlight: Services Production Continuum 1 2 3 4 5 6 Gas Station Illustration 1. Customer pumps gas and pays at the pump with automation 2. Customer pumps gas and goes inside to pay attendant 3. Customer pumps gas and attendant takes payment at the pump 4. Attendant pumps gas and customer pays at the pump with automation 5. Attendant pumps gas and customer goes inside to pay attendant 6. Attendant pumps gas and attendant takes payment at the pump Customer Production   Joint Production   Firm Production
Figure 12-3 Strategies for Enhancing Customer Participation Effective Customer Participation Recruit, Educate, and Reward  Customers Define Customer Jobs Manage the Customer Mix
Strategies for Enhancing Customer Participation 1.   Define customers’ jobs - helping himself - helping others - promoting the company 2.   Individual differences:  not everyone wants to participate
Strategies for Recruiting, Educating and Rewarding Customers 1.   Recruit the right customers 2.   Educate and train customers to perform effectively 3.   Reward customers for their contribution 4.   Avoid negative outcomes of inappropriate customer participation Manage the Customer Mix
Chapter 14 MANAGING DEMAND AND CAPACITY S M
Objectives for Chapter 14: Managing Demand and Capacity ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
  Understanding Capacity Constraints and Demand Patterns ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Capacity Constraints Demand Patterns
  Figure 14-3 Strategies for Shifting Demand  to Match Capacity ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Demand Too High Demand Too Low Shift Demand
Figure 14-4  Strategies for Flexing Capacity  to Match Demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Demand Too High Demand Too Low Flex Capacity
Table 14-1  What is the Nature of Demand Relative to Supply? Source : Christopher H. Lovelock, “Classifying Services to Gain Strategic Marketing Insights,”  Journal of Marketing , 47, 3 (Summer 1983): 17.
Table 14-2  What is the Constraint on Capacity?
Waiting Line Issues  and Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Part 5 MANAGING SERVICE PROMISES S M
CUSTOMER COMPANY External Communications to Customers GAP 4 Service Delivery Provider GAP 4 Part 5 Opener
Chapter 15 INTEGRATED MARKETING COMMUNICATION S M
Objectives for Chapter 15: Integrated Services  Marketing Communications ,[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 15-1 Communications and the  Services Marketing Triangle Internal Marketing  Vertical Communications Horizontal Communications Interactive Marketing   Personal Selling  Customer Service Center  Service Encounters  Servicescapes External Marketing  Communication   Advertising  Sales Promotion  Public Relations  Direct Marketing Company Customers Employees Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
Approaches for Integrating Services Marketing Communication Goal: Delivery  greater than  or equal to promises Improve  Customer Education Manage Service  Promises Manage Customer Expectations Manage Internal  Marketing Communication Figure 15-3
Goal: Delivery  greater than  or equal to promises Offer Service Guarantees Create  Effective Services  Communications MANAGING SERVICE PROMISES Make Realistic Promises Coordinate  External Communication Figure 15-4 Approaches for Managing Service Promises
Communicate Criteria for  Service Effectiveness Create Tiered-Value Offerings Figure 15-8 Approaches for Managing Customer Expectations Negotiate Unrealistic Expectations Goal: Delivery  greater than  or equal to promises Offer Choices
Goal: Delivery  greater than  or equal to promises Prepare Customers  for  the Service Process Clarify  Expectations after the Sale Figure 15-9 Approaches for Improving Customer Education Teach Customers to Avoid  Peak Demand Periods and Seek Slow Periods Confirm Performance to Standards
Goal: Delivery  greater than  or equal to promises Figure 15-10 Approaches for Managing Internal Marketing Communications Create Effective Vertical Communications Align Back  Office Personnel w/ External Customers Create Effective Horizontal Communications Create Cross-Functional Teams
Chapter 17 THE FINANCIAL AND ECONOMIC IMPACT OF SERVICE QUALITY S M
Objectives for Chapter 17: The Financial and Economic Impact of Service ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Figure 17-1 The Direct Relationship between  Service and Profits Profits ? Service Quality
Figure 17-2 Offensive Marketing Effects of  Service on Profits Profits Market Share Reputation Sales Price Premium Service Quality
Figure 17-3 Defensive Marketing Effects of  Service on Profit Margins Profits Customer Retention Costs Price Premium Word of Mouth Volume of Purchases Service Quality
Figure 17-5 Perceptions of Service, Behavioral  Intentions and Profits Customer Retention Costs Price Premium Word of Mouth Margins Profits Volume of Purchases Service Behavioral Intentions Sales
Figure 17-6 The “80/20” Customer Pyramid Most Profitable Customers Least Profitable Customers What segment spends more with us over time, costs less to maintain, spreads positive word of mouth? What segment costs us in time, effort and money yet does not provide the return we want?  What segment is difficult to do business with? Other Customers Best Customers
Figure 17-7 The Expanded Customer Pyramid Most Profitable Customers Least Profitable Customers What segment spends more with us over time, costs less to maintain, spreads positive word of mouth? What segment costs us in time, effort and money yet does not provide the return we want?  What segment is difficult to do business with? Gold Iron Lead Platinum
Figure 17-8 The Key Drivers of Service Quality, Customer Retention, and Profits Key Drivers Service Quality Service Encounter Service Encounter Service Encounter Customer Retention Behavioral Intentions Profits Service Encounter Service Encounters
Figure 17-9 Sample Measurements for the  Balanced Scorecard Adapted from Kaplan and Norton Innovation and Learning Perspective Customer Perspective Service Perceptions  Service Expectations Perceived Value Behavioral Intentions: Operational Perspective: Right first time  (% hits) Right on time  (% hits) Responsiveness  (% on time) Transaction time (hours, days) Throughput time Reduction in waste Process quality Financial Measures Price Premium Volume Increases Value  of Customer Referrals Value of Cross Sales Long-term Value of Customer % Loyalty % Intent to Switch #  Customer Referrals #  Cross Sales #  of Defections Number of new products Return on innovation Employee skills Time to market Time spent talking to customers
Figure 17-10 Service Quality Spells Profits Service Quality Customer Retention Costs Price Premium Word of Mouth Margins Profits Defensive Marketing Volume of Purchases Market Share Reputation Sales Price Premium Offensive Marketing

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Services Marketing

  • 2.
  • 3. Contact: +923006641921 Usman Waheed Chapter 1 INTRODUCTION TO SERVICES S M
  • 4.
  • 5.
  • 6.
  • 7.
  • 8. Figure 1-1 Tangibility Spectrum Tangible Dominant Intangible Dominant Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines Investment Management Consulting Teaching Fast-food Outlets Fast-food Outlets            
  • 9.
  • 10.
  • 11. Differences Between Goods and Services Intangibility Perishability Simultaneous Production and Consumption Heterogeneity
  • 12.
  • 13.
  • 14.
  • 15.
  • 16. Table 1-2 Services are Different Source : Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,” Journal of Marketing 49 (Spring 1985): 33-46.
  • 17. Figure 1-5 The Services Marketing Triangle Internal Marketing Interactive Marketing External Marketing Company (Management) Customers Employees “ enabling the promise” “ delivering the promise” “ setting the promise” Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
  • 18.
  • 19. Source: Adapted from A. Parasuraman Company Customers Providers Technology Figure 1-6 The Services Triangle and Technology
  • 20.
  • 21.
  • 22.
  • 23. Table 1-3 Expanded Marketing Mix for Services
  • 24. Table 1-3 (Continued) Expanded Marketing Mix for Services
  • 25.
  • 26.
  • 27. Part 1 FOCUS ON THE CUSTOMER S M
  • 28. Perceived Service Expected Service CUSTOMER COMPANY Customer Gap GAP 1 GAP 2 Gaps Model of Service Quality GAP 3 External Communications to Customers GAP 4 Service Delivery Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations Part 1 Opener
  • 29.
  • 30. The Customer Gap Expected Service Perceived Service GAP Part 1 Opener
  • 31. Chapter 2 CONSUMER BEHAVIOR IN SERVICES S M
  • 32.
  • 33.
  • 34. Figure 2-1 Continuum of Evaluation for Different Types of Products Clothing Jewelry Furniture Houses Automobiles Restaurant meals Vacations Haircuts Child care Television repair Legal services Root canals Auto repair Medical diagnosis Difficult to evaluate Easy to evaluate { High in search qualities High in experience qualities High in credence qualities { { Most Goods Most Services
  • 35. Figure 2-2 Categories in Consumer Decision-Making and Evaluation of Services Information Search Evaluation of Alternatives Purchase and Consumption Post-Purchase Evaluation  Use of personal sources  Perceived risk  Evoked set  Emotion and mood  Service provision as drama  Service roles and scripts  Compatibility of customers  Attribution of dissatisfaction  Innovation diffusion  Brand loyalty
  • 36.
  • 37.
  • 38.
  • 39.
  • 40.
  • 41.
  • 42.
  • 43. Chapter 3 CUSTOMER EXPECTATIONS OF SERVICES S M
  • 44.
  • 45.
  • 46. Figure 3-1 Dual Customer Expectation Levels (Two levels of expectations) Adequate Service Desired Service Zone of Tolerance
  • 47. Figure 3-2 The Zone of Tolerance Adequate Service Desired Service Zone of Tolerance
  • 48. Figure 3-3 Zones of Tolerance VARY for Different Service Dimensions Most Important Factors Least Important Factors Level of Expectation Source: Berry, Parasuraman, and Zeithaml (1993) Adequate Service Desired Service Zone of Tolerance Desired Service Adequate Service Desired Service Adequate Service Zone of Tolerance
  • 49. Figure 3-4 Zones of Tolerance VARY for First-Time and Recovery Service First-Time Service Outcome Process Outcome Process Recovery Service Expectations LOW HIGH Source: Parasuraman, Berry and Zeithaml (1991)
  • 50. Figure 3-5 Factors that Influence Desired Service Desired Service Adequate Service Zone of Tolerance Enduring Service Intensifiers Personal Needs
  • 51.
  • 52. Figure 3-6 Factors that Influence Adequate Service Desired Service Adequate Service Zone of Tolerance Self-Perceived Service Role Situational Factors Perceived Service Alternatives Transitory Service Intensifiers
  • 53.
  • 54. Figure 3-7 Factors that Influence Desired and Predicted Service Desired Service Adequate Service Zone of Tolerance Predicted Service Explicit Service Promises Implicit Service Promises Word-of-Mouth Past Experience
  • 55. Chapter 4 CUSTOMER PERCEPTIONS OF SERVICE S M
  • 56.
  • 57. Figure 4-1 Customer Perceptions of Service Quality and Customer Satisfaction Service Quality Reliability Responsiveness Assurance Empathy Tangibles Product Quality Price Personal Factors Customer Satisfaction Situational Factors
  • 58.
  • 59.
  • 60. Figure 4-3 Relationship between Customer Satisfaction and Loyalty in Competitive Industries Source : James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain , (New York, NY: The Free Press, 1997), p. 83.
  • 61.
  • 62.
  • 63. Exercise to Identify Service Attributes In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customer’s point of view. Reliability: Assurance: Tangibles: Empathy: Responsiveness:
  • 64.
  • 65.
  • 66. Figure 4-4 A Service Encounter Cascade for a Hotel Visit Check-In Request Wake-Up Call Checkout Bellboy Takes to Room Restaurant Meal
  • 67. Sales Call Ordering Supplies Billing Delivery and Installation Servicing Figure 4-5 A Service Encounter Cascade for an Industrial Purchase
  • 68.
  • 69.
  • 70. Common Themes in Critical Service Encounters Research Recovery: Adaptability: Spontaneity: Coping: Employee Response to Service Delivery System Failure Employee Response to Customer Needs and Requests Employee Response to Problem Customers Unprompted and Unsolicited Employee Actions and Attitudes
  • 71.
  • 72.
  • 73.
  • 74.
  • 75.
  • 76. Part 2 LISTENING TO CUSTOMER REQUIREMENTS S M
  • 77. Provider GAP 1 Company Perceptions of Consumer Expectations Expected Service CUSTOMER COMPANY GAP 1 Part 2 Opener
  • 78. Chapter 5 UNDERSTANDING CUSTOMER EXPECTATIONS AND PERCEPTIONS THROUGH MARKETING RESEARCH S M
  • 79.
  • 80.
  • 81. Figure 5-1 Criteria for An Effective Services Research Program Research Objectives Includes Qualitative Research Includes Quantitative Research Includes Perceptions and Expectations of Customers Includes Measures of Loyalty or Behavioral Intentions Balances Cost and Value of Information Includes Statistical Validity When Necessary Measures Priorities or Importance Occurs with Appropriate Frequency
  • 82. 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
  • 83.
  • 84. Figure 5-5 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 O O O O Zone of Tolerance S.Q. Perception O O
  • 85. Service Quality Perceptions Relative to Zones of Tolerance by Dimensions Computer Manufacturer 10 8 6 4 2 0 Reliability Responsiveness Assurance Empathy Tangibles O O O O O Zone of Tolerance S.Q. Perception O
  • 86. Figure 5-6 Importance/Performance Matrix HIGH HIGH LOW Performance Importance           Attributes to Improve Attributes to Maintain High Leverage Attributes to De-emphasize Attributes to Maintain Low Leverage
  • 87. Chapter 6 BUILDING CUSTOMER RELATIONSHIPS S M
  • 88.
  • 89.
  • 90.
  • 91.
  • 92.
  • 93.
  • 94.
  • 95.
  • 96.
  • 97. Figure 6-1 Customer Goals of Relationship Marketing Getting Satisfying Retaining Enhancing
  • 98. Figure 6-3 Underlying Logic of Customer Retention Benefits to the Organization Customer Retention & Increased Profits Employee Loyalty Quality Service Customer Satisfaction
  • 99. Figure 6-5 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:
  • 100. Excellent Quality and Value Figure 6-6 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
  • 101. Chapter 7 SERVICE RECOVERY S M
  • 102.
  • 103. Figure 7-1 Unhappy Customers’ Repurchase Intentions 95% 70% 46% 37% 82% 54% 19% 9% Complaints Resolved Quickly Complaints Resolved Complaints Not Resolved Minor complaints ($1-$5 losses) Major complaints (over $100 losses) Unhappy Customers Who Don’t Complain Unhappy Customers Who Do Complain Percent of Customers Who Will Buy Again Source: Adapted from data reported by the Technical Assistance Research Program.
  • 104. Figure 7-3 Customer Response Following Service Failure Service Failure Do Nothing Take Action Stay with Provider Switch Providers Complain to Provider Complain to Family & Friends Complain to Third Party Stay with Provider Switch Providers
  • 105. Figure 7-5 Service Recovery Strategies Learn from Recovery Experiences Treat Customers Fairly Learn from Lost Customers Welcome and Encourage Complaints Fail Safe the Service Act Quickly Service Recovery Strategies
  • 106.
  • 107.
  • 108. Table 7-7 Characteristics of an Effective Service Guarantee Source : Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business Review , July-August, 1988, pp. 54-62.
  • 109.
  • 110.
  • 111.
  • 112. Part 3 ALIGNING STRATEGY, SERVICE DESIGN AND STANDARDS S M
  • 113. CUSTOMER COMPANY GAP 2 Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations Provider GAP 2 Part 3 Opener
  • 114. Chapter 8 SERVICE DEVELOPMENT AND DESIGN S M
  • 115.
  • 116.
  • 117.
  • 118. Figure 8-3 New Service Strategy Matrix for Identifying Growth Opportunities Markets Offerings Existing Services New Services Current Customers New Customers SHARE BUILDING DIVERSIFICATION MARKET DEVELOPMENT SERVICE DEVELOPMENT
  • 119.
  • 120. Service Blueprint Components CUSTOMER ACTIONS line of interaction “ ONSTAGE” CONTACT EMPLOYEE ACTIONS line of visibility “ BACKSTAGE” CONTACT EMPLOYEE ACTIONS line of internal interaction SUPPORT PROCESSES
  • 121. Express Mail Delivery Service Driver Picks Up Pkg. Dispatch Driver Airport Receives & Loads Sort Packages Load on Airplane Fly to Destination Unload & Sort Load On Truck SUPPORT PROCESS CONTACT PERSON (Back Stage) (On Stage) CUSTOMER PHYSICAL EVIDENCE Customer Calls Customer Gives Package Truck Packaging Forms Hand-held Computer Uniform Receive Package Truck Packaging Forms Hand-held Computer Uniform Deliver Package Customer Service Order Fly to Sort Center
  • 122. Overnight Hotel Stay SUPPORT PROCESS CONTACT PERSON (Back Stage) (On Stage) CUSTOMER Hotel Exterior Parking Cart for Bags Desk Registration Papers Lobby Key Elevators Hallways Room Cart for Bags Room Amenities Bath Menu Delivery Tray Food Appearance Food Bill Desk Lobby Hotel Exterior Parking Arrive at Hotel Give Bags to Bellperson Check in Go to Room Receive Bags Sleep Shower Call Room Service Receive Food Eat Check out and Leave Greet and Take Bags Process Registration Deliver Bags Deliver Food Process Check Out Take Bags to Room Take Food Order Registration System Prepare Food Registration System PHYSICAL EVIDENCE
  • 123. Figure 8-8 Building a Service Blueprint Step 1 Identify the process to be blue-printed. Step 2 Identify the customer or customer segment. Step 3 Map the process from the customer’s point of view. Step 4 Map contact employee actions, onstage and back-stage. Step 5 Link customer and contact person activities to needed support functions. Step 6 Add evidence of service at each customer action step.
  • 124.
  • 125.
  • 126. Chapter 9 CUSTOMER-DEFINED SERVICE STANDARDS S M
  • 127.
  • 128. Figure 9-1 AT&T’s Process Map for Measurements Reliability (40%) Easy To Use (20%) Features / Functions (40%) Knowledge (30%) Responsive (25%) Follow-Up (10%) Delivery Interval Meets Needs (30%) Does Not Break (25%) Installed When Promised (10%) No Repeat Trouble (30%) Fixed Fast (25%) Kept Informed (10%) Accuracy, No Surprise (45%) Resolve On First Call (35%) Easy To Understand (10%) Business Process Customer Need Internal Metric 30% Product 30% Sales 10% Installation 15% Repair 15% Billing % Repair Call % Calls for Help Functional Performance Test Supervisor Observations % Proposal Made on Time % Follow Up Made Average Order Interval % Repair Reports % Installed On Due Date % Repeat Reports Average Speed Of Repair % Customers Informed % Billing Inquiries % Resolved First Call % Billing Inquiries Total Quality Source: AT&T General Business Systems
  • 129.
  • 130. Customer-Driven Standards and Measurements Exercise Service Encounter Customer Requirements Measurements Service Quality
  • 131. Figure 9-2 Getting to Actionable Steps Satisfaction Value Relationship Solution Provider Reliability Empathy Assurance Tangibles Responsiveness Price Delivers on Time Returns Calls Quickly Knows My Industry Delivers by Weds 11/4 Returns Calls in 2 Hrs Knows Strengths of My Competitors Requirements: Abstract Concrete Dig Deeper Dig Deeper Dig Deeper Diagnosticity: Low High General Concepts Dimensions Behaviors and Actions Attributes
  • 132. Figure 9-3 Process for Setting Customer-Defined Standards 1. Identify Existing or Desired Service Encounter Sequence 2. Translate Customer Expectations Into Behaviors/Actions 4. Set Hard or Soft Standards 5. Develop Feedback Mechanisms 7. Track Measures Against Standards Measure by Audits or Operating Data Hard Soft Measure by Transaction- Based Surveys 3. Select Behaviors/Actions for Standards 6. Establish Measures and Target Levels 8. Update Target Levels and Measures
  • 133. Importance/Performance Matrix HIGH HIGH Performance          10.0 8.0 7.0 9.0 LOW 8.0 9.0 10.0 Importance Improve Maintain Delivers on promises specified in proposal/contract (9.49, 8.51) Gets project within budget, on time (9.31, 7.84) Completes projects correctly, on time (9.29, 7.68) Does whatever it takes to correct problems (9.26, 7.96) Provides equipment that operates as vendor said it would (9.24, 8.14) Gets price we originally agreed upon (9.21, 8.64) Takes responsibility for their mistakes (9.18, 8.01) Delivers or installs on promised date (9.02, 7.84) Tells me cost ahead of time (9.06, 8.46)  Gets back to me when promised (9.04, 7.63)
  • 134. Figure 9-5 Linkage between Soft Measures and Hard Measures for Speed of Complaint Handling S A T I S F A C T I O N 2 4 6 8 12 16 20 24 W O R K I N G H O U R S Large Customers Small Customers 10 9 8 7 6 5 4 3 2 1 0
  • 135. Figure 9-6 Aligning Company Processes with Customer Expectations Customer Expectations Customer Process Blueprint Company Process Blueprint Company Sequential Processes A B C D E F G H 40 Days New Card Mailed Lost Card Reported Report Lost Card Receive New Card 48 Hours
  • 136. Chapter 10 PHYSICAL EVIDENCE AND THE SERVICESCAPE S M
  • 137.
  • 138. Table 10-1 Elements of Physical Evidence
  • 139. Table 10-2 Examples of Physical Evidence from the Customer’s Point of View
  • 140. Table 10-3 Typology of Service Organizations Based on Variations in Form and Use of the Servicescape
  • 141. Figure 10-3 A Framework for Understanding Environment-user Relationships in Service Organizations Source : Adapted from Mary Jo Bitner, “Servicescapes.” PHYSICAL ENVIRONMENTAL DIMENSIONS HOLISTIC ENVIRONMENT INTERNAL RESPONSES BEHAVIOR Ambient Conditions Space/Function Signs, Symbols, and Artifacts Perceived Servicescape Cognitive Emotional Physiological Cognitive Emotional Physiological Employee Responses Customer Responses Individual Behaviors Social Interactions between and among customer and employees Individual Behaviors
  • 142. Part 4 DELIVERING AND PERFORMING SERVICE S M
  • 143. CUSTOMER COMPANY Provider GAP 3 Service Delivery GAP 3 Customer-Driven Service Designs and Standards Part 4 Opener
  • 144. Chapter 11 EMPLOYEES’ ROLES IN SERVICE DELIVERY S M
  • 145.
  • 146.
  • 147.
  • 148. Figure 11-3 Boundary Spanners Interact with Both Internal and External Constituents Internal Environment External Environment
  • 149.
  • 150. Figure 11-5 Human Resource Strategies for Closing GAP 3 Customer- oriented Service Delivery Hire the Right People Provide Needed Support Systems Retain the Best People Develop People to Deliver Service Quality Compete for the Best People Hire for Service Competencies and Service Inclination Provide Supportive Technology and Equipment Treat Employees as Customers Empower Employees Be the Preferred Employer Train for Technical and Interactive Skills Promote Teamwork Measure Internal Service Quality Develop Service- oriented Internal Processes Measure and Reward Strong Service Providers Include Employees in the Company’s Vision
  • 151.
  • 152.
  • 153. Chapter 12 CUSTOMERS’ ROLES IN SERVICE DELIVERY S M
  • 154.
  • 155.
  • 156.
  • 157. Figure 12-2 Customer Roles in Service Delivery Productive Resources Contributors to Quality and Satisfaction Competitors
  • 158.
  • 159.
  • 160.
  • 161. Technology Spotlight: Services Production Continuum 1 2 3 4 5 6 Gas Station Illustration 1. Customer pumps gas and pays at the pump with automation 2. Customer pumps gas and goes inside to pay attendant 3. Customer pumps gas and attendant takes payment at the pump 4. Attendant pumps gas and customer pays at the pump with automation 5. Attendant pumps gas and customer goes inside to pay attendant 6. Attendant pumps gas and attendant takes payment at the pump Customer Production Joint Production Firm Production
  • 162. Figure 12-3 Strategies for Enhancing Customer Participation Effective Customer Participation Recruit, Educate, and Reward Customers Define Customer Jobs Manage the Customer Mix
  • 163. Strategies for Enhancing Customer Participation 1. Define customers’ jobs - helping himself - helping others - promoting the company 2. Individual differences: not everyone wants to participate
  • 164. Strategies for Recruiting, Educating and Rewarding Customers 1. Recruit the right customers 2. Educate and train customers to perform effectively 3. Reward customers for their contribution 4. Avoid negative outcomes of inappropriate customer participation Manage the Customer Mix
  • 165. Chapter 14 MANAGING DEMAND AND CAPACITY S M
  • 166.
  • 167.
  • 168.
  • 169.
  • 170. Table 14-1 What is the Nature of Demand Relative to Supply? Source : Christopher H. Lovelock, “Classifying Services to Gain Strategic Marketing Insights,” Journal of Marketing , 47, 3 (Summer 1983): 17.
  • 171. Table 14-2 What is the Constraint on Capacity?
  • 172.
  • 173. Part 5 MANAGING SERVICE PROMISES S M
  • 174. CUSTOMER COMPANY External Communications to Customers GAP 4 Service Delivery Provider GAP 4 Part 5 Opener
  • 175. Chapter 15 INTEGRATED MARKETING COMMUNICATION S M
  • 176.
  • 177. Figure 15-1 Communications and the Services Marketing Triangle Internal Marketing Vertical Communications Horizontal Communications Interactive Marketing Personal Selling Customer Service Center Service Encounters Servicescapes External Marketing Communication Advertising Sales Promotion Public Relations Direct Marketing Company Customers Employees Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
  • 178. Approaches for Integrating Services Marketing Communication Goal: Delivery greater than or equal to promises Improve Customer Education Manage Service Promises Manage Customer Expectations Manage Internal Marketing Communication Figure 15-3
  • 179. Goal: Delivery greater than or equal to promises Offer Service Guarantees Create Effective Services Communications MANAGING SERVICE PROMISES Make Realistic Promises Coordinate External Communication Figure 15-4 Approaches for Managing Service Promises
  • 180. Communicate Criteria for Service Effectiveness Create Tiered-Value Offerings Figure 15-8 Approaches for Managing Customer Expectations Negotiate Unrealistic Expectations Goal: Delivery greater than or equal to promises Offer Choices
  • 181. Goal: Delivery greater than or equal to promises Prepare Customers for the Service Process Clarify Expectations after the Sale Figure 15-9 Approaches for Improving Customer Education Teach Customers to Avoid Peak Demand Periods and Seek Slow Periods Confirm Performance to Standards
  • 182. Goal: Delivery greater than or equal to promises Figure 15-10 Approaches for Managing Internal Marketing Communications Create Effective Vertical Communications Align Back Office Personnel w/ External Customers Create Effective Horizontal Communications Create Cross-Functional Teams
  • 183. Chapter 17 THE FINANCIAL AND ECONOMIC IMPACT OF SERVICE QUALITY S M
  • 184.
  • 185. Figure 17-1 The Direct Relationship between Service and Profits Profits ? Service Quality
  • 186. Figure 17-2 Offensive Marketing Effects of Service on Profits Profits Market Share Reputation Sales Price Premium Service Quality
  • 187. Figure 17-3 Defensive Marketing Effects of Service on Profit Margins Profits Customer Retention Costs Price Premium Word of Mouth Volume of Purchases Service Quality
  • 188. Figure 17-5 Perceptions of Service, Behavioral Intentions and Profits Customer Retention Costs Price Premium Word of Mouth Margins Profits Volume of Purchases Service Behavioral Intentions Sales
  • 189. Figure 17-6 The “80/20” Customer Pyramid Most Profitable Customers Least Profitable Customers What segment spends more with us over time, costs less to maintain, spreads positive word of mouth? What segment costs us in time, effort and money yet does not provide the return we want? What segment is difficult to do business with? Other Customers Best Customers
  • 190. Figure 17-7 The Expanded Customer Pyramid Most Profitable Customers Least Profitable Customers What segment spends more with us over time, costs less to maintain, spreads positive word of mouth? What segment costs us in time, effort and money yet does not provide the return we want? What segment is difficult to do business with? Gold Iron Lead Platinum
  • 191. Figure 17-8 The Key Drivers of Service Quality, Customer Retention, and Profits Key Drivers Service Quality Service Encounter Service Encounter Service Encounter Customer Retention Behavioral Intentions Profits Service Encounter Service Encounters
  • 192. Figure 17-9 Sample Measurements for the Balanced Scorecard Adapted from Kaplan and Norton Innovation and Learning Perspective Customer Perspective Service Perceptions Service Expectations Perceived Value Behavioral Intentions: Operational Perspective: Right first time (% hits) Right on time (% hits) Responsiveness (% on time) Transaction time (hours, days) Throughput time Reduction in waste Process quality Financial Measures Price Premium Volume Increases Value of Customer Referrals Value of Cross Sales Long-term Value of Customer % Loyalty % Intent to Switch # Customer Referrals # Cross Sales # of Defections Number of new products Return on innovation Employee skills Time to market Time spent talking to customers
  • 193. Figure 17-10 Service Quality Spells Profits Service Quality Customer Retention Costs Price Premium Word of Mouth Margins Profits Defensive Marketing Volume of Purchases Market Share Reputation Sales Price Premium Offensive Marketing