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CRM Concepts from services
Mktg
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Characteristics of Services
Intangibility - A service cannot be seen, touched,
held, or put on a shelf.
Simultaneity - The production and consumptionof the service performance occur simultaneously.
Heterogeneity - Service offerings are variable.Services vary across customers and providers, and
over time. Perishability - Services cannot be held in
inventory.
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FUNDAMENTAL DIFFERENCES
BETWEEN GOODS AND SERVICES
Lack the ability to be stored
Not protected by patents
Not easily displayed or communicated
Pricing is difficult
INTANGIBILITY
ASSOCIATED PROBLEMS:
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FUNDAMENTAL DIFFERENCES
BETWEEN GOODS AND SERVICES
Use tangible clues/physical evidence
Utilize personal sources of information
Create a strong organizational image
INTANGIBILITY
SUGGESTED SOLUTIONS:
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FUNDAMENTAL DIFFERENCES
BETWEEN GOODS AND SERVICES
Service provider is involved in the production
process
Other customers are involved in the production
process (shared experience)
The mass production of services presentsspecial challenges
INSEPARABILITYASSOCIATED PROBLEMS:
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FUNDAMENTAL DIFFERENCES
BETWEEN GOODS AND SERVICES
Customer is involved in the production process:impact on the type of service desired
length of the delivery process
cycle of service demand
service factory must be built with the customerspresence in mind
INSEPARABILITY
ASSOCIATED PROBLEMS:
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FUNDAMENTAL DIFFERENCES
BETWEEN GOODS AND SERVICES
Focus on the training and selection of public
contact personnel
Develop strategies to manage consumers
Develop multi-site locations
INSEPARABILITY
SUGGESTED SOLUTIONS:
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FUNDAMENTAL DIFFERENCES
BETWEEN GOODS AND SERVICES
Standardization and quality control are difficult
to achieve
HETEROGENEITY
ASSOCIATED PROBLEMS:
SUGGESTED SOLUTIONS:
Customization
Standardization
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Classification Based onServices Fields
1. Health Care Services
2. Hospitality, Travel, and Tourism Services
3. Financial Services
4. Professional Services5. Sports, Arts, and Entertainment Services
6. Channel, Physical Distribution, Rental and Leasing Services
7. Educational and Research Services
8. Telecommunication Services9. Personal and Repair and Maintenance Services
10. Governmental, Quasi-Governmental, and Non-Profit Services
Source: Fisk & Tansuhaj (1985)
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Lovelock's Classification
Tangible acts on a person - Services such ashealth care, personal care, vacations, hotels, andairlines.
Intangible acts on a person - Services such aseducation, entertainment shows, and legalservices.
Tangible acts on a thing - Services such as housecleaning, appliance repair, landscaping services,etc.
Intangible acts on a thing - Services such as
financial services, insurance, and tax preparation.
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TangibleDominant
IntangibleDominant
saltsoft drinks
detergents
automobiles
cosmetics
fast food
fast food
advertisingagencies
airlines
investmentmanagement
consulting
teaching
Degree of Tangibility
Source: From Breaking Free from Product
Marketing by Lynn G. Shostack, From Journal ofMarketing, 41, April 1977, pp. 73-80. Reprinted bypermission from the American MarketingAssociation.
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DEMAND AND SUPPLY SCENARIOS
Demand exceeds maximum available supply
Demand exceeds optimum supply level
Demand is below optimal levels of supply
Demand and supply are at optimal levels
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STRATEGIES FOR ALTERING
DEMAND AND SUPPLY
Creative pricing strategies
Reservation systems
Complementary services
Developing nonpeak demand
utilizing nonpeak periods to prepare for peak
periodsappeal to different market segments with
different demand patterns
DEMAND STRATEGIES:
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STRATEGIES FOR ALTERING
DEMAND AND SUPPLY
Utilize part-time employees Share capacity
Prepare in advance for expansion
Utilize third-parties
SUPPLY STRATEGIES:
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STRATEGIES FOR ALTERING
DEMAND AND SUPPLY
Increase customer participation
Advantages:convenience
price
customization
Disadvantages:loss of control over service quality
may be perceived as an attempt to distance formfrom customer
SUPPLY STRATEGIES:
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THE MARKET-FOCUSED
MANAGEMENT MODEL
Purpose of the firm is to serve the customer
Service delivery is the focus of the system
and the overall differential advantage interms of competitive advantage
The services triangle provides a framework
for the services model
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THE SERVICES TRIANGLE
Theservice
strategy
The
customer
The
systemsThe
people
The organization
exists to serve the
needs of the people
who serve thecustomer
The company
exists to serve
the customer
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THE SERVICES TRIANGLE
1. Communicate the service strategy to the
customer
2. Customer/employee interaction:
greatest opportunity for gains and losses
moments-of-truth
critical incidents
3. Customer/procedures & physical hardware
A.T.M. machines
cramped airline seats
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4. Organizational systems may preventemployees from giving good service
5. Physical and administrative systems
should flow logically from the servicestrategy
6. Good service starts at the top
*MGT. should Walk What They Talk and provide:
-sense of focus
-clarity
-priorities
THE SERVICES TRIANGLE
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Discretionary Effort
MaximumEffort
MinimumEffort
Difference Between Maximum EffortOne Can Bring to a Job and
Minimum Effort to Avoid Being Fired
Discretionary Effort
Source: Based on Berry, Leonard (1988), How to Improve the Quality of Service
(audiotape presentation), Chicago: Tech Em, Inc.
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Source: Based on Berry, Leonard (1988), How to Improve the Quality of Service
(audiotape presentation), Chicago: Tech Em, Inc.
WillingnessHigh Low
Ideal Worker
Needs Training
Needs Motivation
Major Problem
Ability
Service Worker Profile
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Services Marketing Concept
PositioningTarget Market
Services Operations Concept(All Productive Factors)
Staff
Equipment
Facility
Time
Service Delivery Process
Blueprint the Process
Service Product Strategy
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CHARACTERISTICS OF THE
MARKET-FOCUSED MODEL
Believes employees want to do good workinvests in people as much as machines
technology is used to assist people (not to
monitor there every activity)
data is made available to the front-line
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CHARACTERISTICS OF THE
MARKET-FOCUSED MODEL
(continued)
Recognizes that employee turnover and
customer satisfaction are closely related
tie pay to performance
focus on selection and training of personnel
Ryder Truck
no training (41% turnover)
received training (19% turnover)
better trained, provide better service, require
less supervision
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CHARACTERISTICS OF THE
MARKET-FOCUSED MODEL
(continued)
Employ more full-time employees
better for customers and employees
companies that pay more are finding that as apercentage of sales, labor costs are actually
lower than industry averages
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SERVICE-PROFIT CHAIN
Internal Service Quality =>
workplace design
job design
employee selection and development
employee rewards and recognition
tools for serving the customer
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SERVICE-PROFIT CHAIN
Employee satisfaction =>
Employee retention & productivity =>
External service value=>
results for customers
Customer satisfaction=>
Customer loyalty=>
retention, repeat business, referrals
Revenue growth & productivity
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Services Theater
Actors (service workers) are those whowork together to produce the service for an
audience (customers). Setting (service environment) is where the
action or service performance unfolds.
Performance is the dynamic result of theinteraction of the actors, audience, andsetting.
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Performance
Setting
Actors Audience
The Services Theater Model
Source: Adapted from Grove, Stephen J., Raymond P. Fisk, and Mary Jo Bitner (1992), Dramatizing the Service
Experience: A Managerial Approach, in Advances in Services Marketing and Management: Research and Practice, Vol.1, Teresa A. Swartz, David E. Bowen, and Stephen W. Brown, eds., Greenwich, CT: JAI Press Inc., 91-121.
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Servuction
Invisible organization and system - Aspects contributing to theservice production beyond the customers view.
The visible elements include
The inanimate environment(the physical setting in which
the service is performed) The contact personnel(the employees who directly interact
with the customer to provide the service)
Customer A (the customer receiving the service) and
customer B (others who may be present in the visible area) The bundle of service benefitsa customer receives grows out
of the interaction with the contact personnel (e.g., their courtesyand competence) and the inanimate service environment (e.g., itscomfort and decor).
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Bundle of ServiceBenefits Received
by Customer A
Customer A
Customer B
InanimateEnvironment
Contact Personnelor Service Provider
VisibleInvisible
InvisibleOrganizationand System
The Servuction Framework
Source: From Services Marketing: New Insights fromConsumers and Managersby E. Langeard, et. al.Copyright 1981 by Marketing Science Institute,Cambridge, Mass. Reprinted by permission.
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Production
Has at its core a line of visibility that separates theinteractive partof the experience (visible) from the support
part(totally invisible).
The interactive part consists ofcontact persons, physicalresources and equipment, and systemsand operationalresources (e.g., the routines that the customer must gothrough to participate in the service production, such asfilling out order forms or waiting in a queue).
The support part includes the behind-the-scenes technology,management or supervision, and supportfunctions/personsthat help create the service interaction.
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CORPORATE CULTURE
Support Part
Technology andSystems Know-How
Systems Support
Managers andSupervisors
Management Support
Support Functionsand Support Persons
Physical Support
PreviousExperiences
Corporate/LocalImage
MarketCommunications
Word of Mouth
Absence ofCommunications
Personal NeedsInteractive Part
Systems andOperationalResources
Contact Persons
Physical Resourcesand Equipment
The Service Production System Framework
Source: From Service Management and Marketing: Managing the Moments of Truth in Service Competitionby ChristianGrnroos, p. 208. Copyright 1990 by Lexington Books. Reprinted by permission from Christian Grnroos.
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General
Framework
Additional 3Ps
Framework
Theatrical
Framework
Servuction
Framework
Service Production
System Framework
Setting Physical evidence Setting:
Backstage
Frontstage
Invisible area
Visible area
Support part
(invisible)
Interactive part
(visible)
Workers Actors Contact personnel Contact persons
Customers Audience Customer A
(focal customers)
Customer B
other customers
Customers
Process Performance Bundle of benefits (An implicit function
of the components)
Booms and Bitner (1981) Grove and Fisk (1983) Langeard et al. (1981) Grnroos (1990)
Comparison of Different Frameworks of
the Service Encounter
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The Three-Tiered Services Model
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The Three Tiered Services Model
Cross-functional, service logic
Management espouses service values
Service-focused routines and behaviors
Service coordination team
Employee involvement
Coordination Tier
Boundary Tier
Recruitment / selection
Training / socializationReward systems
Servicescapes
Operations management
Marketing
Human resources management
Customer Tier
Customer expectations
Customer needsCustomer talents
Market segment focus
Measurement systems with feedback
Service Quality Culture
A passion for service
Source: Benjamin Schneider and David E. Bowen, Winning the Service Game (Boston: Harvard Business School Press, 1995), p. 244.
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THE THREE-CORNERED FIGHT
FOR CONTROL
Internal logics
implicit and explicit principles of individual
departments that drive organizationalperformance
Operations logic
stresses cost containment and reduction throughmass production.
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THE THREE-CORNERED FIGHT
FOR CONTROL
Marketing logic
stresses providing customers with options that
better enable the service offering to meetindividual needs
Human resources logic
stresses recruiting personnel and developingtraining to enhance the performance of existing
personnel
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BUILDING THE SERVICE LOGIC
THROUGH CULTURAL CHANGE
Changing Culture through Structure
utilizing the marketing department as change agents
Real danger associated with this approachChanging Culture through Systems
Reward structures
Marketing planning
Certainly useful to start with
Can become a mind-numbing bureaucratic exercise
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BUILDING THE SERVICE LOGIC
THROUGH CULTURAL CHANGE
Changing Culture through People
Bringing in a Champion
Cross-functional transfers
Changing Culture Directly
Programs ranging from broad-scale educationalexercises to process reengineering
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Categorizing Culture Change Initiatives
Group
Empowerment
Source: John E. G. Bateson,Managing Services Marketing: Text and Readings, 3rd ed. (Fort Worth, TX: The Dryden Press.
Low
High
Putting the Customer First Orientation Change
Change the Way You Work Change the Way We Work
Mixed Family
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BUILDING THE SERVICE LOGIC
THROUGH CULTURAL CHANGE
Changing Culture Directly
Mixed groups
Cross-sectional
Family groups
Departmental
Low empowerment
Ability to change individual behavior
High empowerment
Ability to change the organization
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BUILDING THE SERVICE LOGIC
THROUGH CULTURAL CHANGE
Changing Culture Directly (via Programs)
Putting the Customer First
Mixed/LowPossible problems associated with the return to
work syndrome
Orientation Change
Family/LowProcesses individuals as families
Still stuck within the organization
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BUILDING THE SERVICE LOGIC
THROUGH CULTURAL CHANGE
Changing Culture Directly
Change the Way You Work
Mixed/HighImplies active empowerment of persons attending
the session
Change the Way We Work
Family/High
Total processes are reengineered to better serve the
customer
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The Service Audit:
The Profit and Growth Component
1. How does the firm define customer loyalty?
2. Does the firm measure profits from
referrals?
3. What proportion of the firms developmentfunds are spent on retaining customers as
opposed to attracting new ones?
4. When customers do not return, do we knowwhy?
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The Service Audit:
The Customer Satisfaction Component
5. Is customer satisfaction data collected in a
systematic manner?
6. What methods are utilized to obtain
customer feedback?
7. How is customer satisfaction data used?
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The Service Audit:
The External Service Value Component
8. How does the firm measure value?
9. How is information on customer perceptions
of the firms value shared within the company?
10. Does the firm actively measure the gapbetween customer expectations and perceptions
of services delivered?
11. Is service recovery an active strategydiscussed among management and employees?
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The Service Audit:
The Employee Productivity Component
12. How does the firm measure employee
productivity?
13. Does the firm actively pursue strategies to
promote employee loyalty?
14. Does the firm set employee retention
goals?
THE EMPLOYEE LOYALTY COMPONENT
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The Service Audit:
The Employee Satisfaction Component15. Are employee satisfaction measures linked
to customer satisfaction measures?
16. Are customer and organizational needs
considered when hiring?
17. Are employee reward programs tied tocustomer satisfaction, customer loyalty, and
quality of employee performance?
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The Service Audit:
The Employee Satisfaction Component
18. Are employees aware of internal andexternal customers?
19. Do employees have the support necessary
to do their jobs?
THE INTERNAL SERVICE QUALITY COMPONENT
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The Service Audit:
The Firms Leadership Component
20. Does the firms leadership help or hinder
the service delivery process?
21. Is the firms leadership creating a
corporate culture that helps employees as
they interact with customers?
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The Service Audit:
The Firms Leadership Component
THE MEASUREMENT RELATIONSHIP COMPONENT
22. How do the preceding measures ofservice performance in the service audit
relate to the firms overall profitability?