Transcript Chapter 15

CHAPTER 15
Organizing for Change
Management and
Service
Slide © by Lovelock, Wirtz and Chew 2009
Leadership
Essentials of Services Marketing
Chapter 1 - Page 1
Overview of Chapter 15
 Effective Marketing Lies at the Heart of Value Creation
 Integrating Marketing, Operations, and Human Resources
 Creating a Leading Service Organization
 In Search of Human Leadership
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Essentials of Services Marketing
Chapter 1 - Page 2
Effective Marketing
Lies at the Heart of
Value Creation
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Essentials of Services Marketing
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The Service Profit Chain
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(Fig. 15.3)
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Links in the Service Profit Chain
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(Table 15.1)
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Firm Value Created by Customer Satisfaction
(Fig. 15.4)
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Essentials of Services Marketing
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Integrating Marketing,
Operations, and
Human Resources
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Essentials of Services Marketing
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Interdependence Between Functions
(Fig. 15.5)
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Essentials of Services Marketing
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Service Leaders Integrate Functions
 Implementation of Service Profit Chain requires
complete understanding of how marketing,
operations and human resource functions relate to a
firm’s strategy
 Integrated functions create value for the firm
 Strategies are defined and driven by a strong,
effective leadership team
 Has a coherent vision of what it takes to succeed
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Essentials of Services Marketing
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Defining the Three Functions
 Marketing Function

Target “right” customers and build relationships

Offer solutions that meet their needs

Define quality package with competitive advantage
 Operations Function

Create, deliver specified service to target customers

Adhere to consistent quality standards

Achieve high productivity to ensure acceptable costs
 Human Resource Function

Recruit and retain the best employees for each job

Train and motivate them to work well together

Achieve both productivity & customer satisfaction
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Essentials of Services Marketing
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Creating a Leading
Service Organization
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Essentials of Services Marketing
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From Losers to Leaders: Four Levels of Service
Performance (1)
 Service Losers

Bottom of the barrel from both customer and managerial perspectives

Customers patronize them because there is no viable alternative

New technology introduced only under duress; uncaring workforce
 Service Nonentities

Dominated by a traditional operations mindset

Unsophisticated marketing strategies

Consumers neither seek out nor avoid them
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Essentials of Services Marketing
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From Losers to Leaders: Four Levels of Service
Performance (2)
 Service Professionals

Clear market positioning strategy

Customers within target segment(s) seek them out

Research used to measure customer satisfaction

Operations and marketing work together

Proactive, investment-oriented approach to HRM
 Service Leaders

The crème da la crème of their respective industries

Names synonymous with outstanding service, customer delight

Service delivery is seamless process organized around customers

Employees empowered and committed to firm’s values and goals
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Moving to a Higher Level of Performance
 Firms can move either up or down the
performance ladder
 Organizations that are devoted to satisfying their
current customers may miss important shifts in
the marketplace
 As a result, they may face difficulties
attracting demanding new consumers with
different expectations
 Companies defending their control of their
competitive edge may have encouraged
competitors to find higher-performing alternatives
 Organizations with a service-oriented culture may
turn otherwise as a result of a merger or
acquisition that brings in new leaders who
emphasize short-term profits
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Essentials of Services Marketing
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In Search of
Human Leadership
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Essentials of Services Marketing
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Leadership vs. Management
 Leadership

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Concerned with development of vision and strategies, and
empowerment of people to overcome obstacles, make vision happen
Emphasis on emotional and spiritual resources
Works through people and culture
Produces useful change, especially non-incremental change
 Management

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Involves keeping current situation operating through planning,
budgeting, organizing, staffing, controlling, and problem solving
Emphasizes physical resources—raw materials, technology, capital
Works through hierarchy and systems
Keeps current system functioning
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Setting Direction vs. Planning
 Planning
 a management process, designed to produce orderly results, not
change
 Setting direction
 involves creating visions and strategies that describe a business,
technology, or corporate culture in terms of what it should
become over long term and articulating feasible way of achieving
goal
 Many of best visions and strategies combine basic insights and
translate them into realistic competitive strategy
 “Stretch” – a challenge to attain new levels of performance and
competitive advantage that might as first seem to be beyond the
organization’s reach
 Planning follows and complements direction setting, serving as useful
reality check and road map for strategic execution
 See Service Insights 15.2 : Can Cirque du Soleil Stretch Further?
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Individual Leadership Qualities
 Love for the business
 See service quality as foundation for
competing
 Recognize key role of employees
 Driven by a set of core values they pass on
 Make communication a priority
 Work with a team on decision-making
 Know when to change when necessary
 Walk the talk
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Leadership, Culture and Climate (1)
 Leadership traits are needed of everyone in
supervisory or managerial positions, including those
heading teams
 Effective communication is essential for a leader
 Organizational culture:
 Shares understanding regarding what is important in the
organization
 Shares values about what is right or wrong
 Shares understanding about what works and what doesn’t
work
 Shares beliefs, and assumptions about why things are
important
 Shares styles of working and relating to others
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Leadership, Culture and Climate (2)
 Organizational climate
 The tangible surface layer on top of the
organization’s underlying culture
 Factors of influence:
- Flexibility, Responsibility, Standards that
people set, Perceived aptness of rewards, Clarity
people have about mission and values, Level of
commitment to a common purpose
 Creating a new climate for service, based
on understanding of what is needed for
market success, may require
 radical rethinking of HRM activities,
operational procedures, and the firm’s reward
and recognition policies
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Essentials of Services Marketing
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Summary of Chapter 15: Change Management
and Service Leadership (1)
 Service profit chain provides useful summary of behaviors
required of service leaders to manage effectively
 Marketing, operations, and human resource management
functions need to be closely coordinated and integrated in
service businesses
 Four levels of service performance
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Service losers
Service nonentitites
Service professionals
Service leaders
 Service leadership is not based on outstanding
performance within a single dimension, but must cut
across marketing, operations and human resources
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Essentials of Services Marketing
Chapter 1 - Page 21
Summary of Chapter 15: Change Management
and Service Leadership (2)
 To be effective, leaders need to understand difference
between leadership vs. management, as well as
setting direction vs. planning
 Role modeling is one of traits of successful leaders
 Leaders play a big part in nurturing an effective
organizational culture that transforms an organization
into a successful one
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Essentials of Services Marketing
Chapter 1 - Page 22