51887438 services marketing lovelock wirtz chaterjee ch 06

8/13/2019 51887438 Services Marketing Lovelock Wirtz Chaterjee Ch 06

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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 1

Chapter 6:

Educating Customersand Promoting theValue Proposition




Overview of Chapter 6

• Role of Marketing Communications • Communicating Services Presents Both Challenges

and Opportunities

• Setting Communication Objectives • The Marketing Communications Mix

• Role of Corporate Design

• Marketing Communications and the Internet




Role of Marketing Communication


http://slidepdf.com/reader/full/51887438-services-marketing-lovelock-wirtz-chaterjee-ch-06 4/71Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 4

Adding Value throughCommunication Content

• Information and consultation represent important ways to addvalue to a product

• Provide information to prospective customers

o Service options available, cost, specific features, functions,service benefits

• Persuade target customers that service offers best solution tomeet their needs and build relationship with them • Help maintain relationships with existing customers

o Requires comprehensive, up-to-date customer database andability to make use of this in a personalized way

o

Direct mail and contacts by telephone, e-mail, websites, textmessages For example, doctors sending annual checkup reminders to

patients



Communicating Services PresentsBoth Challenges and Opportunities



Overcoming Problems of Intangibility

• May be difficult to communicate service benefits tocustomers, especially when intangible

• Intangibility creates four problems: o Abstractness

No one-to-one correspondence with physical objects

o Generality Items that comprise a class of objects, persons, or events

o Nonsearchability Cannot be searched or inspected before purchase

o Mental impalpability Customers find it hard to grasp benefits of complex,

multidimensional new offerings



Advertising Strategies forOvercoming Intangibility (Table 6.1)

Intangibility problem Advertising strategy • Generality

o objective claims : Document physical system capacityCite past performance statistics

o subjective claims : Present actual service delivery incident

• Nonsearchability : Present customer testimonials • Abstractness : Display typical customers benefiting

• Impalpability : Documentary of step-by-step process,

Source: Banwari Mittal and Julie Baker, ―Advertising Strategies for Hospitality Services,‖ Cornell Hotel and Restaurant Administration Quarterly 43, April2002, 53



Using Metaphors toCommunicate Value Propositions

• Tangible metaphors help to communicate benefits ofservice offerings, for example: o Gods own Country - Kerala

• Metaphors communicate value propositions moredramatically and emphasize key points of difference

• Highlight how service benefits are actually provided • Can you suggest some examples from recent

advertising?



Facilitate Customer Involvement inProduction

• When customers are actively involved in service production, theyneed training to perform well- HOW ? -Show service delivery inaction

• Television and videos engage viewer o Dentists showing patients videos of surgical procedures before

surgery

• Advertising and publicity can make customers aware of changes inservice features and delivery systems in b2b and b2c contexts

o Sales promotions to motivate customers

o Offer incentives to make necessary changes in their behaviour o Price discounts to encourage self-service on an ongoing basis



Help Customers to Evaluate ServiceOfferings

• Customers may have difficulty distinguishing one firm fromanother o Provide tangible clues related to service performance

• Some performance attributes lend themselves better toadvertising than others

o Airlines

Boast about punctuality Do not talk overtly in advertising about safety, admission that things

might go wrong make prospective travelers nervous

Use indirect approach: promote pilot expertise, mechanic’s maintenanceskills, newness of aircraft

• If Firm’s expertise is hidden in low-contact services – Ex Importsbusiness – DHL - o Need to illustrate equipment, procedures, employee activities that

take place backstageo With 100 sales offices worldwide, the global network of DHL and special

relations to national Public Postal Operators (PPOs) DHL Global Mail

can offer you direct connections to more than 200 countries.



Stimulate or Dampen Demand toMatch Capacity

• Live service performances are time-specific and can’tbe stored for resale at a later date o For example, haircut on Tuesdays

o Advertising and sales promotions can change timing of customer use

• Examples of demand management strategies

o Reducing usage during peak demand periods- increase priceo Stimulating demand during demand during off-peak period, for

example: Run promotions that offer extra value—room upgrades, free

breakfast




Promote the Contributions ofService Personnel

• Frontline personnel are central to service delivery inhigh-contact services• Ads should show employees at work and this helps customers

understand the nature of service encounter and what to expectonce they reach the service center. Ex ICICI Banks New Ad _

Khayal Aapka • Show customers the work performed behind thescenes to ensure good delivery o To enhance trust, highlight expertise and commitment of employees

whom customers normally do not normally encountero Service personnel should be informed about the content of new

advertising campaigns or brochures before launch




Setting Communication Objectives




Checklist for Marketing CommunicationsPlanning: The ―5 Ws‖ Model

• Who is our target audience? • What do we need to communicate and achieve?

• How should we communicate this? • Where should we communicate this?

• When do communications need to take place?




Target Audience: 3 Broad Categories

• Prospects o Employ traditional communication mix because prospects are not

known in advance – Ex Ads, PR, telemarketing etc

• Users o More cost-effective channels.ex – relationship manager

• Employees o Secondary audience for communication campaigns through public

media

o Risk generating cynicism among employees if communication inquestion promotes levels of performance that are seen as unrealistic

o Communications may be directed specifically at employees as part of

internal marketing campaign, not accessible to customers




Common Educational and PromotionalObjectives in Service Settings (2) (Table 6.2)

• Encourage trial by offering promotional incentives • Reduce uncertainty/perceived risk by providing useful

info and advice

• Provide reassurance (e.g., promote serviceguarantees)

• Familiarize customers with service processes beforeuse

• Teach customers how to use a service to bestadvantage

• Recognize and reward valued customers andemployees




Key Planning Considerations

• Full understanding of service product and how wellprospective buyers can evaluate its characteristics inadvance

• Knowledge of target market segments o Exposure to different media

o Awareness of products and attitudes • Recognition of decisions to be made

o Content, structure, and style of message

o Manner of presentation

o Most suitable media

o

Budget, time frames o Methods of measuring and evaluating performance




The Marketing CommunicationsMix




Marketing Communications Mix

• Numerous forms of communication • Different forms have distinctive capabilities –dependingon o Types of messages that can be conveyed

o Market segments most likely to be exposed to them

• Two types of communication o Personal communications: personalized messages that move in both

directions between two parties

o Impersonal communications: messages move in only one direction

• Technology creates gray area between both o For example, combine word processing technology with information from

database to create impression of personalization; interactive software;

M k ti C i ti Mi




Marketing Communications Mixfor Services (1) (Fig 6.5)

Key: * Denotes communications originating from outside the organization

Word-of-mouth (other customers)

Personalcommunications

Selling

Customerservice

Training

Advertising

Broadcast,podcasts

Print

Internet

Outdoor

Direct mail

Sales promotion

Sampling

Coupons

Sign-uprebates

Gifts

Prize

promotions

Telemarketing

Word ofmouth

*

M k ti C i ti Mi



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 26Key: * Denotes communications originating from outside the organization

Publicity & public relations

Press

releases/kitsWebsites

Manuals

Brochures

Interactivesoftware

Voice mail

Signage

Interior decor

Vehicles

Equipment

Stationery

UniformsMedia-initiated

coverage*

Marketing Communications Mixfor Services (2) (Fig 6.5)

Press

conferences

Sponsorship

Special Events

Trade Shows, exhibitions

Instructional manuals

Corporate design

So rces of Messages Recei ed b




Sources of Messages Received byTarget Audience (Fig 6.4)

Messages originatingwithin organization

Messages originating

outside organization

Production channels

Marketing channels

Front- l ine staff

Service ou t lets

Advert is ing Sales prom ot ions Direct market ing Personal sel l ing Publ ic relations

Word of mouth

Media editor ial

A U

D I E N C

E

Sources

Source: Adapted from a diagram by Adrian Palmer, Principles of Services Marketing, London: McGraw-Hill,4th ed., 2005, p. 397

Messages Transmitted through




Messages Transmitted throughProduction Channels (1)

• Developed within organization and transmitted throughproduction channels that deliver the service itself

• Customer service from front-line staff o Shape customer’s perceptions of service experience and the firmo Responsible for delivering supplementary services such as providing

information, receiving payment, resolving problems, etc. o Firm may require customer service staff to cross-sell additional

services



Messages through Marketing Channels:




Messages through Marketing Channels:Personal Selling

• Interpersonal encounters educate customers andpromote preferences for particular brand or product o Common in b2b and infrequently purchased serviceso For example, insurance, property

• Relationship marketing strategies based on account

management programs o Customer assigned to a designated account manager o Ongoing need for advice, education, and consultation

o For example, insurance, investment, medical services

• Face-to-face selling of new products is expensive— telemarketing is lower cost alternative





Messages through Marketing Channels:Trade Shows

• Popular in b2b marketplace

• Stimulate extensive media coverage• Many prospective buyers come to shows

• Opportunity to learn about latest offerings from widearray of suppliers

o Environment is very competitive o Compare and contrasto Question company reps

• Physical evidence displayed through exhibits, samples,demonstrations





Messages through Marketing Channels:Advertising

• Build awareness, inform, persuade, and remind • Challenge: How does a firm stand out from the crowd?

o Yankelovitch study shows 65% of people feel ―constantly bombarded‖by ad messages; 59% feel ads have little relevance

o TV, radio broadcasts, newspapers, magazines, Internet, many

physical facilities, transit vehicles—all cluttered with ads o Wide array of paid advertising media

o Ads reinforced by direct marketing tools

o Many e-tailers now using electronic recommendation agents (RI 6.2)

• Effectiveness remains controversial • Research suggests that less than half of all ads

generate a positive return on their investment





• Mailings, recorded telephone messages, faxes, e-mail • Potential to send personalized messages to highlytargeted microsegments o Need detailed database of information about customers and

prospects

Messages through Marketing Channels:Direct Marketing (1)





• Advance in on-demand technologies empowerconsumers to decide how and when they prefer to bereached, and by whom o For example, e-mail spam filters, pop-up blockers, podcasting

• Permission marketing: customers encouraged to ―raise

their hands‖ and agree to learn more about a companyand its products in anticipation of receiving somethingof value o Enables firms to build strong relationships with customers

o For example, people invited to register at a firm’s website and specify

what type of information they like to receive via e-mail

Messages through Marketing Channels:Direct Marketing (2)





• Defined as ―communication attached to an incentive‖

• Should be specific to a time period, price, or customergroup

• Motivates customers to use a specific service sooner, in

greater volume with each purchase, or more frequently • Provides a ―competitive edge‖ during periods when

demand would be weak

Messages through Marketing Channels:Sales Promotion (1)




• PR/publicity involves efforts to stimulate positive interestin an organization and its products through third parties o For example, press conferences, news releases, sponsorships

• Corporate PR specialists teach senior managers how topresent themselves well at public events, especially when

faced with hostile questioning • Unusual activities can present an opportunity to promote

company’s expertise o For example, FedEx safely transported two giant pandas from Chengdu,

China, to the National Zoo in Washington, D.C. in a FedEx aircraft

renamed FedEx PandaOne

Messages through Marketing Channels:Public Relations

Messages Originating from Outside the




g g gOrganization (1)

• Word of Mouth (WOM) o Recommendations from other customers viewed as more credible

o Strategies to stimulate positive WOM Referencing other purchasers and knowledgeable individuals

Creating exciting promotions that get people talking about firm’sgreat service

Developing referral incentive schemes Offering promotions that encourage customers to persuade others

to join them in using the service

Presenting and publicizing testimonials that stimulate WOM

• Pass along e-mails—consumers’ motivation, attitudes,and behaviors

Messages Originating from Outside the




g g gOrganization (2)

• Blogs—a new type of online WOM

• Editorial coverage o Compares, contrasts service offerings from competing organizations

o Advice on ―best buys‖

Ethical Issues in Communication




Ethical Issues in Communication

• Advertising, selling, and sales promotion all lendthemselves easily to misuse

• Poor internal communications between operations andmarketing personnel concerning level of serviceperformance

• Deliberately exaggerated promises to secure sales • Deceptive promotions

• Unwanted intrusion by aggressive marketers intopeople’s personal lives




Role of Corporate Design

Strategies for Corporate Design (1)





• Many service firms employ a unified and distinctivevisual appearance for all tangible elements o For example, logos, uniforms, physical facilities

• Provide a recognizable theme linking all the firm’soperations in a branded service experience through

strategic use of physical evidence o e.g., BP’s bright green and yellow service stations

• Use of trademarked symbol as primary logo, with namesecondaryo Shell’s yellow scallop shell on a red background

o MacDonald’s ―Golden Arches‖





• International companies need to select designscarefully to avoid conveying a culturally inappropriatemessage




FedEx: Use of Company Name In




Corporate Design (2)

• Created ―FedEx family of companies‖ consisting ofsubbrands for different services o FedEx Express

o FedEx Ground

o FedEx Home Deliveryo FedEx Freight o FedEx Custom Critical o FedEx Supply Chain Services

o FedEx Kinko’s

• Each subbrand has different color scheme forsecond word to create differentiation for subbrandso Express is red/orange o Ground is green




Marketing Communications andthe Internet

Marketing Communications andth I t t




the Internet

• Can be accessed from almost anywhere in the world • Simplest form of international market entry available

“The firm cannot avoid creating interest in its offeringsoutside its local or national market”Chris t ian Grönro os

Internet Marketing Offers PowerfulO t iti f I t ti it (1)




Opportunities for Interactivity (1)

• Internet used for a variety of communications tasks o Promoting consumer awareness

o Providing information and consultation

o Facilitating two-way communications

o Enabling customers to place orders

• Can market through firm’s own websites or advertise

on other sites o Supplement conventional communications channels at reasonable

cost

Internet Marketing Offers PowerfulO t iti f I t ti it (2)




Opportunities for Interactivity (2)

• Must be part of integrated, well-designedcommunications strategy

• Able to establish rapport with individual customers o Interactive nature of the Internet can increase customer involvement o Facilitates permission marketing and ―self -service‖ marketing

Banks allow customers to pay bills electronically, apply for loans

over the Internet, and check account balances online



Website Design Considerations (2)




g ( )

• Firms must set explicit communication goals forwebsites

• Design should address attributes that affect website―stickiness‖ o Content quality

o Ease of use o Speed of download

o Frequency of update

• Memorable web address helps attract visitors to a site o Ensure that people are aware of/can guess firm’s web address

EasyJet Paints Its Website Address onEach of Its More than 200 Aircraft




Each of Its More than 200 Aircraft

Source: www.easyjet.com/EN/About/photogallery.html. © easyJet airline company limited

Effective Advertising on Internet:Banner Advertising (1)




Banner Advertising (1)

• Placing advertising banners and buttons on portalssuch as Yahoo!, Netscape and other firms’ websites

• Draw online traffic to the advertiser’s own site

• Websites often include advertisements of other related,but noncompeting services o Advertisements for financial service providers on Yahoo!’s stock

quotes page

o Small messages from Amazon.com on web pages devoted to aspecific topic

o Links relevant to e-mail content on GMail

Effective Advertising on Internet:Banner Advertising (2)




Banner Advertising (2)

• Easy for advertisers to measure how many visits to itsown website are generated by click-throughs

• Limitations o Obtaining many exposures (―eyeballs‖) to a banner does not

necessarily lead to increase in awareness, preference, or sales

o Problem of fraudulent click-throughs designed to boost apparenteffectiveness

Effective Advertising on Internet:Search Engine Advertising (1)




• Reverse broadcast network—search engines letadvertisers know exactly what consumer wantsthrough their keyword search

• Can target relevant messages directly to desiredconsumers

• Several advertising options o Pay for targeted placement of ads to relevant keyword searches

o Sponsor a short text message with a click-through link

o Buy top rankings in the display of search results

Search Engine Advertising (1)

Effective Advertising on Internet:Search Engine Advertising (2)




• Google – The New Online Marketing Powerhouse o Google AdWords—allows businesses to connect with potential

customers at the precise moment when they are looking at relatedtopics; advertisers can display their ads at websites that are part ofthe Google content network

o Google AdSense—In return for displaying relevant Google ads on

their websites, publishers receive a share of advertising revenuegenerated

Search Engine Advertising (2)



Developing an Integrated MarketingCommunications Strategy




Communications Strategy

• Isolating online marketing activities from othermarketing activities may result in conflicting message o Customers will not have a clear picture of a firm’s positioning and

value proposition

• IMC ties together and reinforces all communications todeliver a strong brand identity

• Communications in different media should form part ofa single, overall message about the service firm (needconsistency within campaigns about specific serviceproducts targeted at specific segments)



Summary of Chapter 6: Educating Customers& Promoting the Value Proposition (1)




• Marketing communications adds value through itscontent

• Communicating services presents both challenges andopportunities o Overcome problems of intangibility—use metaphors to communicate

value proposition

o Facilitate customer involvement in production

o Help customers to evaluate service offerings

o Stimulate or dampen demand to match capacity

o Promote the contribution of service personnel

• Communication planning involves knowing (5Ws) o Who is our target audience? o What do we need to communicate and achieve?

o How should we communicate this?

o Where should we communicate this?

o When do communications need to take place?





• Marketing communications originate from within the

organization through production and marketing channels • Production channels include

o Front-line employees and call center staff o Service outlets

o Self-service delivery points

• Marketing channels include o Advertising

o Public relations

o Online marketing

o Website o

Direct marketing o Sales promotion

o Personal selling





• Marketing communications originating from outside

organization include o Word of mouth

o Blogs and online ratings

o Media editorial

• Corporate design strategies are part and parcel of

communication mix • Internet is now a key communications element, offeringpowerful opportunities for interactivity o Website considerations such as ease of use and speed of download

need to be addressed

o Effective advertising involves banner advertising and search engineadvertising

• Need to coordinate all marketing communication efforts

51887438 services marketing lovelock wirtz chaterjee ch 06

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