Transcript Marketing Service Organisations

Marketing Service
Organisations
BM404 – 2006
Lecture 2
Overview
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Defining services
Understanding the services economy
The service sector in Australia
Mega-trends and the service sector:
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Professional services
Characteristics of services
Marketing implications
Defining services?
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Any act, performance or experience that one
party can offer another; one that is essentially
intangible, and does not result in the
ownership of anything. Its production may or
may not be tied to a physical product
Lovelock (2004)
Characteristics of Services
Compared to Goods
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability
Challenges for Services
 Defining
and improving quality
 Designing and testing new services
 Communicating and maintaining a consistent
image
 Accommodating fluctuating demand
 Ensuring the delivery of consistent quality
Challenges for Services (cont.)
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Motivating and sustaining employee
commitment
Coordinating marketing, operations, and
human resource efforts
Setting prices
Finding a balance between standardization
versus personalization
Further challenges for services managers
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Differentiation and competitive advantage may be
difficult to achieve
Marketing orientation is still relatively new to many
managers
Operations management, rather than marketing,
continues to dominate
Customer service management and marketing is
often in the hands of lower paid subordinates,
possibly in multiple locations
Limited data on competitive performance is available
Problems in determining costs for pricing purposes
An expanded marketing mix for services
People
Place,
Place
&
CyberTime
space
& Time
Product
(Service)
Customers
Customers
customers
Promotion
Physical Evidence
Process
Price
Price
A framework for analysing services
marketing
Organisation
Internal
marketing
Traditional
marketing
Satisfaction; Quality;
Brand Loyalty
Employees
Relationship
management
Customers
Managing the 7Ps Requires Collaboration between
Marketing, Operations, and HR Functions (Fig. 1.14)
Operations
Management
Marketing
Management
Customers
Human Resources
Management
Gaps model of service quality
Zeithaml, Bitner and Gremler (2006)
The Gaps model of service quality
(Zeithaml, Parasuraman & Berry 1990)
The Customer Gap
Difference between customer expectations
and perceptions
Expected
service
Customer Gap
Perceived
service
Gaps Model of Service Quality
 Provider
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Gap 1 (The Knowledge Gap):
not knowing what customers expect
 Provider
Gap 2 (The Service Design &
Standards Gap):
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not having the right service designs and standards
 Provider
Gap 3 (The Service Performance
Gap):
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not delivering to service standards
 Provider
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Gap 4 (The Communication Gap):
not matching performance to promises
Key Factors Leading
to the Customer Gap
Customer
Gap
Customer
Expectations
 Provider Gap 1: Not knowing what customers expect
 Provider Gap 2: Not selecting the right service designs and standards
 Provider Gap 3: Not delivering to service standards
 Provider Gap 4: Not matching performance to promises
Customer
Perceptions
Figure 2.2
Key Factors Leading to Provider Gap
1
Customer Expectations
Gap
1
 Inadequate marketing research orientation
Insufficient marketing research
Research not focused on service quality
Inadequate use of market research
 Lack of upward communication
Lack of interaction between management and customers
Insufficient communication between contact employees and managers
Too many layers between contact personnel and top management
 Insufficient relationship focus
Lack of market segmentation
Focus on transactions rather than relationships
Focus on new customers rather than relationship customers
 Inadequate service recovery
Lack of encouragement to listen to customer complaints
Failure to make amends when things go wrong
No appropriate recovery mechanisms in place for service failures
Company Perceptions of
Customer Expectations
Figure 2.3
Key Factors Leading to Provider Gap
Customer-Driven Service
2
Designs and Standards
Gap
2
 Poor service design
Unsystematic new service development process
Vague, undefined service designs
Failure to connect service design to service positioning
 Absence of customer-driven standards
Lack of customer-driven service standards
Absence of process management to focus on customer
requirements
Absence of formal process for setting service quality goals
 Inappropriate physical evidence and servicescape
Failure to develop tangibles in line with customer expectations
Servicescape design that does not meet customer and
employee needs
Inadequate maintenance and updating of the servicescape
Management Perceptions of
Customer Expectations
Figure 2.4
Key Factors Leading to Provider Gap
Customer-Driven Service
3
Designs and Standards
Gap
3
 Deficiencies in human resource policies
Ineffective recruitment
Role ambiguity and role conflict
Poor employee-technology job fit
Inappropriate evaluation and compensation systems
Lack of empowerment, perceived control, and teamwork
 Customers who do not fulfill roles
Customers who lack knowledge of their roles and responsibilities
Customers who negatively impact each other
 Problems with service intermediaries
Channel conflict over objectives and performance
Difficulty controlling quality and consistency
Tension between empowerment and control
 Failure to match supply and demand
Failure to smooth peaks and valleys of demand
Inappropriate customer mix
Overreliance on price to smooth demand
Service Delivery
Figure 2.5
Key Factors Leading to Provider Gap
4
Service Delivery
Gap
4
 Lack of integrated services marketing communications
Tendency to view each external communication as independent
Not including interactive marketing in communications plan
Absence of strong internal marketing program
 Ineffective management of customer expectations
Absence of customer expectation management through all forms of
communication
Lack of adequate education for customers
 Overpromising
Overpromising in advertising
Overpromising in personal selling
Overpromising through physical evidence cues
 Inadequate horizontal communications
Insufficient communication between sales and operations
Insufficient communication between advertising and operations
Differences in policies and procedures across branches or units
External Communications to
Customers
Figure 2.6
Gaps Model of Service Quality
Expected
Service
CUSTOMER
Customer
Gap
COMPANY
Perceived
Service
Service
Delivery
Gap 3
Customer-Driven
Service Designs and
Standards
Gap 1
Gap 2
Company Perceptions
of Consumer
Expectations
External
Communications
Gap 4
to Customers
Consumer behaviour in services
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Examine how consumers choose and
evaluate services
Identify the elements of consumer behaviour
that services marketers must understand:
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Choice behaviour
Consumer experiences
Post-purchase evaluation
Consumer Evaluation
Processes for Services
 Search
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Qualities
attributes a consumer can determine prior to
purchase of a product
 Experience
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attributes a consumer can determine after
purchase (or during consumption) of a product
 Credence
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Qualities
Qualities
characteristics that may be impossible to evaluate
even after purchase and consumption
Figure 3.2
Continuum of Evaluation for Different
Types of Products
Most
Goods
Most
Services
Easy to evaluate
Difficult to evaluate
High in search High in experience High in credence
qualities
qualities
qualities
Figure 3.3
Stages in Consumer Decision Making and
Evaluation of Services
Issues to Consider in Examining the
Consumer’s Service Experience
 Services
as processes
 Service
provision as drama
 Service
roles and scripts
 The
compatibility of service customers
 Customer
 Emotion
coproduction
and mood
Post purchase evaluation
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Captured in measures of satisfaction, service
quality, loyalty, emotional engagement:
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Word of mouth communication
Attribution of dissatisfaction
Positive or negative bias
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positivity bias for services
Brand loyalty
Customer expectations of service
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Identify the different types of expectations
customers hold for service performance
Sources of customer expectations
Figure 4.2
Possible Levels of Customer Expectations
Figure 4.3
Dual Customer Expectation Levels
Desired Service
Adequate Service
Figure 4.4
The Zone of Tolerance
Desired Service
Zone of
Tolerance
Adequate Service
Figure 4.5
Zones of Tolerance for Different
Service Dimensions
Desired Service
Level
of
Expectation
Zone
of
Tolerance
Desired Service
Adequate Service
Zone
of
Tolerance
Adequate Service
Reliability
Tangibles
Source: L. L. Berry, A. Parasuraman, and V. A. Zeithaml, “Ten Lessons for Improving Service Quality,”
Marketing Science Institute, Report No. 93-104 (May 1993).
Figure 4.6
Factors That Influence Desired Service
Lasting Service
Intensifiers
Desired Service
Personal Needs
Zone
of
Tolerance
Adequate Service
Figure 4.7
Factors That Influence Adequate Service
Temporary Service
Intensifiers
Desired Service
Perceived Service
Alternatives
Self-Perceived
Service Role
Situational
Factors
Zone
of
Tolerance
Adequate Service
Predicted
Service
Figure 4.8
Factors That Influence Desired
and Predicted Service
Explicit Service
Promises
Implicit Service
Promises
Word-of-Mouth
Desired Service
Zone
of
Tolerance
Adequate Service
Past Experience
Predicted
Service
Frequently Asked Questions
About Customer Expectations
 What
does a service marketer do if customer
expectations are “unrealistic”?
 Should
a company try to delight the
customer?
 How
does a company exceed customer
service expectations?
 Do
customer service expectations continually
escalate?
Customer perceptions
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Identify the factors which influence
consumers’ perceptions
Examine the factors which influence
satisfaction
Develop an understanding of the dimensions
of service quality
Examine the importance of service
encounters
Customer Perceptions of Quality and
Customer Satisfaction
Factors Influencing
Customer Satisfaction
 Product/service
quality
 Specific product or service features
 Consumer emotions
 Attributions for service success or failure
Factors Influencing
Customer Satisfaction
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Perceptions of equity or fairness
Other consumers, family members, and
coworkers
Price
Personal factors
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the customer’s mood or emotional state
situational factors
Outcomes of
Customer Satisfaction
 Increased
customer retention
 Positive word-of-mouth communications
 Increased revenues
ASCI and Annual Percentage Growth
in S&P 500 Earnings
Source: C. Fornell “Customer Satisfaction and Corporate Earnings,“ commentary appearing on ACSI website, May 1, 2001,
http://www.bus.umich.edu/research/nqre/Q1-01c.html.
Figure 5.4
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.
Models of service quality
Service Quality
 The
customer’s judgment of overall excellence
of the service provided in relation to the quality
that was expected.
 Service quality assessments are formed on
judgments of:
outcome quality
 interaction quality
 physical environment quality
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The evolution of
service quality
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Disconfirmation of expectations
The Nordic model
The three component model
The Gaps model of service quality &
SERVQUAL
Disconfirmation of expectations (Oliver 1980)
The Nordic model
(Gronroos 1990)
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Represents the service experience on the basis of
functional and technical elements
Technical quality refers to what the customer
receives from the service
Functional quality refers to service delivery
Model emphasises companies must be careful what
they promise
The three-component model Rust &
Oliver (1994)
Source: Rust & Oliver, 1994. p. 11
The SERVQUAL dimensions
– Perceived Service Quality
(Parasuraman, Zeithaml & Berry 1988)
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Reliability (dependability, accurate performance)
Assurance (competence, courtesy, credibility & security)
Tangibles (appearance of physical elements)
Empathy (easy access, good communications & customer
understanding)
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Responsiveness (promptness & helpfulness)
SERVQUAL
SERVQUAL (cont.)
The Five Dimensions of
Service Quality
Reliability
Ability to perform the promised service
dependably and accurately.
Assurance
Knowledge and courtesy of employees
and their ability to inspire trust and
confidence.
Tangibles
Physical facilities, equipment, and
appearance of personnel.
Empathy
Caring, individualized attention the firm
provides its customers.
Responsiveness
Willingness to help customers and
provide prompt service.
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:
RELIABILITY
SERVQUAL Attributes
Providing service as promised
Dependability in handling customers’
service problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records
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EMPATHY
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RESPONSIVENESS
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Keeping customers informed as to
when services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’
requests
ASSURANCE
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Employees who instill confidence in
customers
Making customers feel safe in their
transactions
Employees who are consistently courteous
Employees who have the knowledge to
answer customer questions
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Giving customers individual attention
Employees who deal with customers in a
caring fashion
Having the customer’s best interest at heart
Employees who understand the needs of
their customers
Convenient business hours
TANGIBLES
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Modern equipment
Visually appealing facilities
Employees who have a neat,
professional appearance
Visually appealing materials associated
with the service
The Service Encounter
 is
the “moment of truth”
 occurs any time the customer interacts with
the firm
 can potentially be critical in determining
customer satisfaction and loyalty
 types of encounters:
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 is
remote encounters, phone encounters, face-to-face
encounters
an opportunity to:
build trust
 reinforce quality
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Figure 5.5
A Service Encounter Cascade
for a Hotel Visit
Check-In
Bellboy Takes to Room
Restaurant Meal
Request Wake-Up Call
Checkout
A Service Encounter
Cascade for an Industrial Purchase
Sales Call
Delivery and Installation
Servicing
Ordering Supplies
Billing
Critical Service Encounters Research
 GOAL:
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understanding actual events and behaviors that
cause customer dis/satisfaction in service
encounters
 METHOD:
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Critical Incident Technique
 DATA:
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stories from customers and employees
 OUTPUT:
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identification of themes underlying satisfaction and
dissatisfaction with service encounters
Sample Questions for Critical Incidents
Technique Study
 Think
of a time when, as a customer, you had
a particularly satisfying (dissatisfying)
interaction with an employee of
______________.
 When
did the incident happen?
 What
specific circumstances led up to this
situation?
 Exactly
what was said and done?
Common Themes in Critical
Service Encounters Research
Recovery:
Adaptability:
employee response
to service delivery
system failure
employee response
to customer needs
and requests
Coping:
Spontaneity:
employee response
to problem customers
unprompted and
unsolicited employee
actions and attitudes
Recovery
DO
 Acknowledge
problem
 Explain causes
 Apologize
 Compensate/upgrade
 Lay out options
 Take responsibility
DON’T
 Ignore
customer
 Blame customer
 Leave customer to fend
for him/herself
 Downgrade
 Act as if nothing is
wrong
 “Pass the buck”
Adaptability
DO
 Recognize
the
seriousness of the need
 Acknowledge
 Anticipate
 Attempt to accommodate
 Adjust the system
 Explain rules/policies
 Take responsibility
DON’T
 Ignore
 Promise,
but fail to follow
through
 Show unwillingness to try
 Embarrass the customer
 Laugh at the customer
 Avoid responsibility
 “Pass the buck”
Spontaneity
DON’T
DO
 Take
time
 Be attentive
 Anticipate needs
 Listen
 Provide information
 Show empathy
 Exhibit
impatience
 Ignore
 Yell/laugh/swear
 Steal
from customers
 Discriminate
Coping
DON’T
DO
 Listen
 Try
to accommodate
 Explain
 Let go of the customer
 Take
customer’s
dissatisfaction
personally
 Let customer’s
dissatisfaction affect
others
Figure 5.7
Evidence of Service from the
Customer’s Point of View
 Operational flow of
activities
People
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Contact employees
Customer him/herself
Other customers
 Steps in process
 Flexibility vs.
standard
 Technology vs.
human
Process
Physical
Evidence
 Tangible
communication
 Servicescape
 Guarantees
 Technology
Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality Handbook,
eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.
 Website