service marketing book
TRANSCRIPT
McGraw-Hill © 2000 The McGraw-Hill Companies
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SM
McGraw-Hill © 2000 The McGraw-Hill Companies
McGraw-Hill © 2000 The McGraw-Hill Companies
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SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 1
INTRODUCTION
TO
SERVICES
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SMA note on the A note on the
PowerPoint Slides...PowerPoint Slides...
These PowerPoint slides contain selected exhibits, figures and tables from the chapters as well as objectives for the chapters. For many chapters, we include extra lecture slides and in-class exercises that we have compiled and used in our classes. The lecture slides are not intended to provide full outlines or complete lectures for the chapters, but rather may be used selectively to enhance class sessions.
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SM Objectives for Chapter 1:Objectives for Chapter 1:Introduction to ServicesIntroduction to Services
• Explain what services are and identify service trends• Explain the need for special services marketing
concepts and practices• Outline the basic differences between goods and
services and the resulting challenges for service businesses
• Introduce the service marketing triangle• Introduce the expanded services marketing mix• Introduce the gaps model of service quality
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SM Challenges for ServicesChallenges for Services
• Defining and improving quality• Communicating and testing new services• Communicating and maintaining a consistent
image• Motivating and sustaining employee commitment• Coordinating marketing, operations and human
resource efforts• Setting prices• Standardization versus personalization
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SMExamples of Service Examples of Service
IndustriesIndustries• Health Care
– hospital, medical practice, dentistry, eye care• Professional Services
– accounting, legal, architectural• Financial Services
– banking, investment advising, insurance• Hospitality
– restaurant, hotel/motel, bed & breakfast, – ski resort, rafting
• Travel– airlines, travel agencies, theme park
• Others:– hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club
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SMFigure 1-1Figure 1-1
Tangibility SpectrumTangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
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SMFigure 1-2 Figure 1-2
Percent of Percent of U.S. Labor Force by IndustryU.S. Labor Force by Industry
01020304050607080
1929 1948 1969 1977 1984 1996
Perc
ent o
f GD
P
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
Services Manufacturing Mining & Agriculture
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SM
01020304050607080
1948 1959 1967 1977 1987 1996
Figure 1-3 Figure 1-3
Percent of U.S. Gross Domestic Percent of U.S. Gross Domestic Product by IndustryProduct by Industry
Perc
ent o
f GD
P
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.
Services Manufacturing Mining & Agriculture
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SM Differences BetweenDifferences Between Goods and Services Goods and Services
Intangibility
PerishabilitySimultaneous
Productionand
Consumption
Heterogeneity
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SM Implications of IntangibilityImplications of Intangibility
Services cannot be inventoried Services cannot be patented Services cannot be readily displayed
or communicated Pricing is difficult
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SM Implications of HeterogeneityImplications of Heterogeneity
Service delivery and customer satisfaction depend on employee actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted
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SM Implications of Simultaneous Implications of Simultaneous Production and ConsumptionProduction and Consumption
Customers participate in and affect the transaction
Customers affect each otherEmployees affect the service outcomeDecentralization may be essentialMass production is difficult
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SM Implications of PerishabilityImplications of Perishability
It is difficult to synchronize supply and demand with services
Services cannot be returned or resold
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SM Table 1-2 Table 1-2
Services are DifferentServices are DifferentGoods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.
Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend onemployee actions.Service quality depends on many uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.
Productionseparate fromconsumption
Simultaneousproduction andconsumption
Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.Decentralization may be essential.Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.
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.
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SMFigure 1-5Figure 1-5
The Services Marketing TriangleThe Services Marketing Triangle
Internal Marketing
Interactive Marketing
External Marketing
Company(Management)
CustomersEmployees
“enabling thepromise”
“delivering the promise”
“setting thepromise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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SM Services Marketing Triangle Services Marketing Triangle Applications ExerciseApplications Exercise
• Focus on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle?
• How is each type of marketing being carried out currently?
• Are the three sides of the triangle well aligned?• Are there specific challenges or barriers in any of
the three areas?
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SM Ways to Use the Ways to Use the Services Marketing TriangleServices Marketing Triangle
Overall Strategic Assessment• How is the service
organization doing on all three sides of the triangle?
• Where are the weaknesses?
• What are the strengths?
Specific Service Implementation• What is being promoted
and by whom?
• How will it be delivered and by whom?
• Are the supporting systems in place to deliver the promised service?
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SM
Source: Adapted from A. Parasuraman
Company
CustomersProviders
Technology
Figure 1-6 Figure 1-6
The Services Triangle The Services Triangle and Technologyand Technology
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SM Services Marketing Mix:Services Marketing Mix:7 Ps for Services7 Ps for Services
• Traditional Marketing Mix
• Expanded Mix for Services: 7 Ps
• Building Customer Relationships Through People, Processes, and Physical Evidence
• Ways to Use the 7 Ps
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SM Traditional Marketing MixTraditional Marketing Mix
• All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:
Product Price Place Promotion
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SM Expanded Mix for Services --Expanded Mix for Services --the 7 Psthe 7 Ps
• Product• Price• Place• Promotion• People• Process• Physical Evidence
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SMTable 1-3Table 1-3
Expanded Marketing Mix for Expanded Marketing Mix for ServicesServices
PRODUCT PLACE PROMOTION PRICEPhysical goodfeatures
Channel type Promotionblend
Flexibility
Quality level Exposure Salespeople Price level
Accessories Intermediaries Advertising Terms
Packaging Outlet location Salespromotion
Differentiation
Warranties Transportation Publicity Allowances
Product lines Storage
Branding
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SM
PEOPLE PHYSICALEVIDENCE
PROCESS
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicatingculture and values
Signage Level of customerinvolvement
Employee research Employee dress
Other tangibles
Table 1-3 (Continued)Table 1-3 (Continued)
Expanded Marketing Mix for Expanded Marketing Mix for ServicesServices
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SM Ways to Use the 7 PsWays to Use the 7 Ps
Overall Strategic Assessment
• How effective is a firm’s services marketing mix?
• Is the mix well-aligned with overall vision and strategy?
• What are the strengths and weaknesses in terms of the 7 Ps?
Specific Service Implementation
• Who is the customer?• What is the service?• How effectively does the
services marketing mix for a service communicate its benefits and quality?
• What changes/improvements are needed?
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SMSMPart 1
FOCUS ON THE CUSTOMER
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SM
PerceivedService
Expected Service
CUSTOMER
COMPANY
CustomerGap
GAP 1
GAP 2
Gaps Model of Service QualityGaps Model of Service Quality
GAP 3
External Communications
to CustomersGAP 4Service Delivery
Customer-Driven Service Designs and Standards
Company Perceptions of Consumer Expectations
Part 1 Opener
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SMGaps Model of Service Gaps Model of Service
QualityQuality
• Customer Gap:• difference between expectations and perceptions
• Provider Gap 1:• not knowing what customers expect
• Provider Gap 2:• not having the right service designs and
standards• Provider Gap 3:
• not delivering to service standards• Provider Gap 4:
• not matching performance to promises
Part 1 Opener
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SM The Customer GapThe Customer Gap
ExpectedService
PerceivedService
GAP
Part 1 Opener
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SMSMChapter 2
CONSUMER BEHAVIOR IN SERVICES
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SMObjectives for Chapter 2:Objectives for Chapter 2:
Consumer Behavior in Consumer Behavior in ServicesServices
• Overview the generic differences in consumer behavior between services and goods
• Introduce the aspects of consumer behavior that a marketer must understand in five categories of consumer behavior:• Information search• Evaluation of service alternatives• Service purchase and consumption• Postpurchase evaluation• Role of culture
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SM Consumer Evaluation Consumer Evaluation Processes for ServicesProcesses for Services
• Search Qualities– attributes a consumer can determine prior to
purchase of a product• Experience Qualities
– attributes a consumer can determine after purchase (or during consumption) of a product
• Credence Qualities– characteristics that may be impossible to evaluate
even after purchase and consumption
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SMFigure 2-1Figure 2-1
Continuum of Evaluation for Continuum of Evaluation for Different Types of ProductsDifferent Types of Products
Cl o
t hi n
g
Jew
elry
Furn
it ur e
Ho u
ses
Au t
omob
i les
Re s
taur
ant m
eals
Vac
atio
ns
Ha i
r cu t
s
Ch i
l d c
a re
Tele
visi
on r e
pair
Leg a
l se r
vic e
s
Roo
t ca n
a ls
Au t
o r e
p air
Med
ical
dia
gno s
i s
Difficult to evaluateEasy to evaluate
{High in search
qualitiesHigh in experience
qualitiesHigh in credence
qualities
{{Most
GoodsMost
Services
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SMFigure 2-2Figure 2-2
Categories in Consumer Categories in Consumer Decision-Making and Evaluation of Decision-Making and Evaluation of
ServicesServicesInformation 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
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SMFigure 2-3Figure 2-3
Categories in Consumer Decision-Categories in Consumer Decision-Making and Evaluation of ServicesMaking 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 Values and attitudes Manners and customs Material culture Aesthetics Educational and social
institutions
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SMGlobal Feature:Global Feature:
Differences in the Service Differences in the Service Experience in the U.S. and JapanExperience in the U.S. and Japan
Authenticity Caring Control Courtesy Formality Friendliness Personalization Promptness
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SMSM
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Chapter 3
CUSTOMER EXPECTATIONS OF SERVICES
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SMObjectives for Chapter 3:Objectives for Chapter 3:Customer Expectations of Customer Expectations of
ServiceService
• Recognize that customers hold different types of expectations for service performance
• Discuss controllable and uncontrollable sources of customer expectations
• Distinguish between customers’ global expectations of their relationships and their expectations of the service encounter
• Acknowledge that expectations are similar for many different types of customers
• Delineate the most important current issues surrounding customer expectations
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SMFigure 3-1Figure 3-1
Dual Customer Dual Customer Expectation LevelsExpectation Levels
Adequate Service
Desired Service
Zone ofTolerance
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SM Figure 3-2Figure 3-2
The Zone of ToleranceThe Zone of Tolerance
Adequate Service
Desired Service
Zone ofTolerance
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SMFigure 3-3Figure 3-3
Zones of Tolerance forZones of Tolerance forDifferent Service DimensionsDifferent Service Dimensions
Most Important Factors Least Important Factors
Level of
Expectation
Source: Berry, Parasuraman, and Zeithaml (1993)
Adequate Service
Desired Service
Zone ofTolerance
DesiredService
AdequateService
Zone of
Tolerance
Desired Service
Adequate Service
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SMFigure 3-4Figure 3-4
Zones of Tolerance forZones of Tolerance forFirst-Time and Recovery ServiceFirst-Time and Recovery Service
First-Time Service
Outcome
Process
Outcome
Process
Recovery Service
ExpectationsLOW HIGH
Source: Parasuraman, Berry and Zeithaml (1991)
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SMFigure 3-5Figure 3-5
Factors that InfluenceFactors that InfluenceDesired ServiceDesired Service
DesiredService
AdequateService
Zone of
Tolerance
Enduring ServiceIntensifiers
Personal Needs
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SMFigure 3-6Figure 3-6
Factors that InfluenceFactors that InfluenceAdequate ServiceAdequate Service
DesiredService
AdequateService
Zone of
ToleranceSelf-PerceivedService Role
Situational Factors
Perceived ServiceAlternatives
Transitory ServiceIntensifiers
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SMFigure 3-7Figure 3-7
Factors that InfluenceFactors that InfluenceDesired and Predicted ServiceDesired and Predicted Service
DesiredService
AdequateService
Zone of
Tolerance
Predicted Service
Explicit ServicePromises
Implicit ServicePromises
Word-of-Mouth
Past Experience
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SMSM
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Chapter 4
CUSTOMER PERCEPTIONS OF SERVICE
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SMObjectives for Chapter 4:Objectives for Chapter 4:Customer Perceptions of Customer Perceptions of
ServiceService• Provide you with definitions and
understanding of customer satisfaction and service quality
• Show that service encounters or the “moments of truth” are the building blocks of customer perceptions
• Highlight strategies for managing customer perceptions of service
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SMFigure 4-1Figure 4-1
Customer Perceptions of Customer Perceptions of Service Quality and Service Quality and
Customer SatisfactionCustomer Satisfaction
ServiceQuality
Reliability
Responsiveness
Assurance
Empathy
Tangibles
ProductQuality
PricePersonalFactors
CustomerSatisfaction
SituationalFactors
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SMFactors Influencing Factors Influencing
Customer SatisfactionCustomer Satisfaction
• Product/service quality• Product/service attributes or features• Consumer Emotions• Attributions for product/service success or
failure• Equity or fairness evaluations
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SMOutcomes of Outcomes of
Customer SatisfactionCustomer Satisfaction
• Increased customer retention• Positive word-of-mouth communications• Increased revenues
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SMFigure 4-3 Figure 4-3
Relationship between Customer Relationship between Customer Satisfaction and Loyalty in Satisfaction and Loyalty in
Competitive IndustriesCompetitive Industries
0%
20%
40%
60%
80%
100%
Verydissatisfied
Dissatisfied Neithersatisfied nordissatisfied
Satisfied Verysatisfied
Satisfaction measure
Loya
lty (r
eten
tion)
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.
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SM Service QualityService Quality
• The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected.
• Process and outcome quality are both important.
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SM The Five Dimensions of The Five Dimensions of Service QualityService Quality
Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to convey trust and confidence.Physical facilities, equipment, and appearance of personnel.
Caring, individualized attention the firm provides its customers.
Willingness to help customers and provide prompt service.
Tangibles
Reliability
Responsiveness
Assurance
Empathy
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SM Exercise to Exercise to Identify Service Identify Service
AttributesAttributesIn 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:
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SMSERVQUAL AttributesSERVQUAL 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
Keeping customers informed as to when services will be performed
Prompt service to customers Willingness to help customers Readiness to respond to customers’
requests
RELIABILITY
RESPONSIVENESS
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
ASSURANCE
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
EMPATHY
Modern equipment Visually appealing facilities Employees who have a
neat, professional appearance
Visually appealing materials associated with the service
TANGIBLES
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SM The Service EncounterThe 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:
– remote encounters– phone encounters– face-to-face encounters
• is an opportunity to:– build trust– reinforce quality– build brand identity– increase loyalty
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SM
Check-In
Request Wake-Up Call
Checkout
Bellboy Takes to Room
Restaurant Meal
Figure 4-4Figure 4-4
A Service Encounter A Service Encounter Cascade for a Hotel VisitCascade for a Hotel Visit
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SM
Sales Call
Ordering Supplies
Billing
Delivery and Installation
Servicing
Figure 4-5Figure 4-5
A Service Encounter A Service Encounter Cascade for an Industrial Cascade for an Industrial
PurchasePurchase
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SMCritical Service Encounters Critical Service Encounters
ResearchResearch
• GOAL - understanding actual events and behaviors that cause customer dis/satisfaction in service encounters
• METHOD - Critical Incident Technique• DATA - stories from customers and employees• OUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service encounters
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SMSample Questions for Critical Sample Questions for Critical
Incidents Technique StudyIncidents 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?• What resulted that made you feel the interaction was
satisfying (dissatisfying)?
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SM Common Themes in CriticalCommon Themes in CriticalService Encounters Service Encounters
ResearchResearch
Recovery: Adaptability:
Spontaneity:Coping:
Employee Responseto Service Delivery
System Failure
Employee Responseto Customer Needs
and Requests
Employee Responseto Problem Customers
Unprompted andUnsolicited EmployeeActions and Attitudes
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SM RecoverRecoveryy
• Acknowledge problem
• Explain causes• Apologize• Compensate/upgrade• Lay out options• Take responsibility
• Ignore customer• Blame customer• Leave customer to
fend for him/herself• Downgrade• Act as if nothing is
wrong
DO DON’T
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SM AdaptabilityAdaptability
• Recognize the seriousness of the need
• Acknowledge• Anticipate• Attempt to accommodate• Explain rules/policies• Take responsibility• Exert effort to
accommodate
• Promise, then fail to follow through
• Ignore• Show unwillingness to
try• Embarrass the customer• Laugh at the customer• Avoid responsibility
DO DON’T
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SM SpontaneitySpontaneity
• Take time• Be attentive• Anticipate needs• Listen• Provide information
(even if not asked)• Treat customers fairly• Show empathy• Acknowledge by name
• Exhibit impatience• Ignore• Yell/laugh/swear• Steal from or cheat a
customer• Discriminate• Treat impersonally
DO DON’T
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SM CopingCoping
• Listen• Try to accommodate• Explain• Let go of the
customer
• Take customer’s dissatisfaction personally
• Let customer’s dissatisfaction affect others
DO DON’T
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SMFigure 4-6 Figure 4-6
Evidence of Service from theEvidence of Service from theCustomer’s Point of ViewCustomer’s Point of View
People
Process PhysicalEvidence
Contact employees Customer him/herself Other customers
Operational flow of activities Steps in process Flexibility vs. standard Technology vs. human
Tangible communication Servicescape Guarantees Technology
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SMSM
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Part 2
LISTENING TO CUSTOMER REQUIREMENTS
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SM Provider GAP 1Provider GAP 1
Company Perceptions of
Consumer Expectations
Expected Service
CUSTOMER
COMPANY
GAP 1
Part 2 Opener
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SMSM
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Chapter 5
UNDERSTANDING CUSTOMER EXPECTATIONS AND PERCEPTIONS THROUGH MARKETING RESEARCH
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SMObjectives for Chapter 5:Objectives for Chapter 5:
Understanding Customer Expectations Understanding Customer Expectations and Perceptions throughand Perceptions through
Marketing Research Marketing Research• Present the types of and guidelines for marketing
research in services• Show the ways that marketing research information
can and should be used for services• Describe the strategies by which companies can
facilitate interaction and communication between management and customers
• Present ways that companies can and do facilitate interaction between contact people and management
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SM Common Research ObjectivesCommon Research Objectives for Services for Services
• To identify dissatisfied customers• To discover customer requirements or expectations• To monitor and track service performance• To assess overall company performance compared to
competition• To assess gaps between customer expectations and perceptions• To gauge effectiveness of changes in service• To appraise service performance of individuals and teams for
rewards• To determine expectations for a new service• To monitor changing expectations in an industry• To forecast future expectations
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SMFigure 5-1Figure 5-1
Criteria for An Effective Criteria for An Effective Services Research ProgramServices Research Program
ResearchObjectives
Includes
Qualitative
Research
IncludesQuantitative
Research IncludesPerceptions
and Expectations
of Customers
IncludesMeasures
ofLoyalty orBehavioralIntentions
Balances Cost
and Value of
InformationIncludesStatisticalValidity
When Necessary
Measures Priorities
or Importance
Occurswith
AppropriateFrequency
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SM Portfolio of Services Portfolio of Services ResearchResearch
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 ResearchTo forecast future expectations of customersTo develop and test new service ideas
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SMStages in the Research Stages in the Research
ProcessProcess
• Stage 1 : Define Problem• Stage 2 : Develop Measurement Strategy• Stage 3 : Implement Research Program• Stage 4 : Collect and Tabulate Data• Stage 5 : Interpret and Analyze Findings• Stage 6 : Report Findings
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SMFigure 5-5Figure 5-5
Service Quality Perceptions Service Quality Perceptions Relative to Zones of Tolerance Relative to Zones of Tolerance
by Dimensionsby Dimensions
Retail Chain
9 8 7 6 5 4 3 2 1 0 Reliability Responsiveness Assurance Empathy Tangibles
OO OO
Zone of Tolerance S.Q. PerceptionO
O
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SMService Quality Perceptions Service Quality Perceptions
Relative to Zones of Tolerance by Relative to Zones of Tolerance by DimensionsDimensions
Computer Manufacturer
10
8
6
4
2
0Reliability Responsiveness Assurance Empathy Tangibles
OO O OO
Zone of Tolerance S.Q. PerceptionO
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SMFigure 5-6 Figure 5-6
Importance/Performance MatrixImportance/Performance Matrix
HIGH
HIGHLOWPerformance
Impo
rtan
ce
Attributes to Improve Attributes to Maintain
HighLeverage
Attributes to De-emphasizeAttributes to Maintain
LowLeverage
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SMSM
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Chapter 6
BUILDING
CUSTOMER
RELATIONSHIPS
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SMObjectives for Chapter 6:Objectives for Chapter 6:
Building Customer Building Customer RelationshipsRelationships
• Explain relationship marketing, its goals, and the benefits of long-term relationships for firms and customers
• Explain why and how to estimate customer lifetime value• Specify the foundations for successful relationship
marketing--quality core services and careful market segmentation
• Provide you with examples of successful customer retention strategies
• Introduce the idea that “the customer isn’t always right”
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SM Relationship MarketingRelationship Marketing
• is a philosophy of doing business that focuses on keeping and improving current customers
• does not necessarily emphasize acquiring new customers• is usually cheaper (for the firm)--to keep a current
customer costs less than to attract a new one • goal = to build and maintain a base of committed
customers who are profitable for the organization• thus, the focus is on the attraction, retention, and
enhancement of customer relationships
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SM Lifetime Value of a CustomerLifetime Value of a Customer
• Assumptions• Income
– Expected Customer Lifetime– Average Revenue (month/year)– Other Customers convinced via WOM– Employee Loyalty??
• Expenses– Costs of Serving Customer Increase??
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SM A Loyal Customer is One Who...A Loyal Customer is One Who...• Shows Behavioral Commitment
– buys from only one supplier, even though other options exist
– increasingly buys more and more from a particular supplier– provides constructive feedback/suggestions
• Exhibits Psychological Commitment– wouldn’t consider terminating the relationship--
psychological commitment– has a positive attitude about the supplier– says good things about the supplier
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SM Customer Loyalty ExerciseCustomer Loyalty Exercise
• Think of a service provider you are loyal to.• What do you do (your behaviors, actions, feelings)
that indicates you are loyal?• Why are you loyal to this provider?
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SMBenefits to the Organization Benefits to the Organization
of Customer Loyaltyof Customer Loyalty
• loyal customers tend to spend more with the organization over time
• on average costs of relationship maintenance are lower than new customer costs
• employee retention is more likely with a stable customer base
• lifetime value of a customer can be very high
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SM Benefits to the CustomerBenefits to the Customer
• inherent benefits in getting good value• economic, social, and continuity benefits
– contribution to sense of well-being and quality of life and other psychological benefits
– avoidance of change– simplified decision making – social support and friendships– special deals
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SM““The Customer Isn’t Always The Customer Isn’t Always
Right”Right”
• Not all customers are good relationship customers:
– wrong segment
– not profitable in the long term
– difficult customers
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87
SMStrategies for Building Strategies for Building
RelationshipsRelationships
• Foundations: – Excellent Quality/Value– Careful Segmentation
• Bonding Strategies:– Financial Bonds– Social & Psychological Bonds– Structural Bonds– Customization Bonds
• Relationship Strategies Wheel
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SM
Getting
Satisfying
Retaining
Enhancing
Figure 6-1Figure 6-1
Customer Goals of Customer Goals of Relationship MarketingRelationship Marketing
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SMFigure 6-3Figure 6-3
Underlying Logic of Customer Underlying Logic of Customer Retention Benefits to the Retention Benefits to the
OrganizationOrganization
Customer Retention &Increased Profits
Employee Loyalty
QualityService
Customer Satisfaction
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SMFigure 6-5Figure 6-5
Steps in Market Segmentation Steps in Market Segmentation and and
Targeting for ServicesTargeting for Services
IdentifyBases forSegmentingthe Market
STEP 1:DevelopProfiles ofResultingSegments
STEP 2: DevelopMeasuresof SegmentAttractive-ness
STEP 3: Select the
TargetSegments
STEP4:Ensure thatSegmentsAre Compatible
STEP 5:
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SM
ExcellentQuality
andValue
Figure 6-6Figure 6-6 Levels of Retention StrategiesLevels of Retention Strategies
I. Financial Bonds
II. Social Bonds
IV. Structural
Bonds
III. CustomizationBonds
Volume and Frequency Rewards
Bundling and Cross Selling
Stable Pricing
Social Bonds Among Customers
Personal Relationships
Continuous Relationships
Customer Intimacy
Mass Customization
Anticipation/ Innovation
SharedProcesses and Equipment
Joint Investments
Integrated Information Systems
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SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 7
SERVICE RECOVERY
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SMObjectives for Chapter 7:Objectives for Chapter 7:
Service RecoveryService Recovery
• Illustrate the importance of recovery from service failures in building loyalty
• Discuss the nature of consumer complaints and why people do and do not complain
• Provide evidence of what customers expect and the kind of responses they want when they complain
• Provide strategies for effective service recovery• Discuss service guarantees
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SMFigure 7-1Figure 7-1
Unhappy Customers’ Unhappy Customers’ Repurchase IntentionsRepurchase 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.
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SMFigure 7-3Figure 7-3
Customer Response Customer Response Following Service FailureFollowing Service Failure
Service Failure
Do NothingTake Action
Stay with ProviderSwitch Providers
Complain to Provider
Complain to Family & Friends
Complain to Third Party
Stay with ProviderSwitch Providers
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SMFigure 7-5Figure 7-5
Service Recovery StrategiesService Recovery Strategies
Learn fromRecovery Experiences
Treat Customers Fairly
Learn fromLost C
ustomers
Welcome and
Encourage ComplaintsFail S
afe the Service
Act Q
uickly
Service Recovery Strategies
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97
SMFigure 7-6Figure 7-6
Causes Behind Service Causes Behind Service SwitchingSwitching
Service Switching Behavior
• High Price• Price Increases• Unfair Pricing• Deceptive Pricing
Pricing
• Location/Hours• Wait for Appointment• Wait for Service
Inconvenience
• Service Mistakes• Billing Errors• Service Catastrophe
Core Service Failure
• Uncaring• Impolite• Unresponsive• Unknowledgeable
Service Encounter Failures
• Negative Response• No Response• Reluctant Response
Response to Service Failure
• Found Better ServiceCompetition
• Cheat• Hard Sell• Unsafe• Conflict of Interest
Ethical Problems
• Customer Moved• Provider Closed
Involuntary SwitchingSource: Sue Keaveney
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SM Service GuaranteesService Guarantees
• guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary)
• for products, guarantee often done in the form of a warranty
• services are often not guaranteed– cannot return the service– service experience is intangible
–(so what do you guarantee?)
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SMTable 7-7Table 7-7
Characteristics of an Characteristics of an Effective Service GuaranteeEffective Service Guarantee
Unconditional The guarantee should make its promise unconditionally -
no strings attached.Meaningful
It should guarantee elements of the service that areimportant to the customer.
The payout should cover fully the customer'sdissatisfaction.
Easy to Understand and Communicate For customers - they need to understand what to expect. For employees - they need to understand what to do.
Easy to Invoke and Collect There should not be a lot of hoops or red tape in the way
of accessing or collecting on the guarantee.
Source: Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business Review, July-August, 1988, pp. 54-62.
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SMWhy a Good Guarantee Why a Good Guarantee
WorksWorks
• forces company to focus on customers
• sets clear standards
• generates feedback
• forces company to understand why it failed
• builds “marketing muscle”
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SM Service GuaranteesService Guarantees
• Does everyone need a guarantee?
• Reasons companies do NOT offer guarantees:– guarantee would be at odds with company’s image– too many uncontrollable external variables– fears of cheating by customers– costs of the guarantee are too high
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SM Service GuaranteesService Guarantees
• service guarantees work for companies who are already customer-focused
• effective guarantees can be BIG deals - they put the company at risk in the eyes of the customer
• customers should be involved in the design of service guarantees
• the guarantee should be so stunning that it comes as a surprise -- a WOW!! factor
• “it’s the icing on the cake, not the cake”
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SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Part 3
ALIGNING STRATEGY, SERVICE DESIGN
AND STANDARDS
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SM
CUSTOMER
COMPANY
GAP 2
Customer-Driven Service Designs and
Standards
Company Perceptions of
Consumer Expectations
Provider GAP 2Provider GAP 2
Part 3 Opener
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SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 8
SERVICE DEVELOPMENT AND DESIGN
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106
SMObjectives for Chapter 8:Objectives for Chapter 8:Service Development and Service Development and
DesignDesign
• Describe the challenges inherent in service design• Present steps in the new service development
process• Show the value of service blueprinting and quality
function deployment (QFD) in new service design and service improvement
• Present lessons learned in choosing and implementing high-performance service innovations
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SMFigure 8-1Figure 8-1
Risks of Relying on Words Risks of Relying on Words Alone to Alone to
Describe ServicesDescribe Services
Oversimplification Incompleteness Subjectivity Biased Interpretation
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SMFigure 8-2 Figure 8-2
New Service Development ProcessNew Service Development Process
Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.
Business Strategy Development or Review
New Service Strategy Development
Idea Generation
Concept Development and Evaluation
Business Analysis
Service Development and Testing
Postintroduction Evaluation
Commercialization
Market Testing
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
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SMFigure 8-3Figure 8-3
New Service Strategy Matrix New Service Strategy Matrix for Identifying Growth for Identifying Growth
OpportunitiesOpportunitiesMarkets
Offerings
ExistingServices
NewServices
Current Customers New Customers
SHARE BUILDING
DIVERSIFICATION
MARKETDEVELOPMENT
SERVICEDEVELOPMENT
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SMFigure 8-4Figure 8-4
Service Mapping/BlueprintingService Mapping/Blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view.
ServiceMapping
ProcessPoints of ContactEvidence
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111
SM Service Blueprint ComponentsService Blueprint ComponentsCUSTOMER ACTIONS
line of interaction
“ONSTAGE” CONTACT EMPLOYEE ACTIONSline of visibility
“BACKSTAGE” CONTACT EMPLOYEE ACTIONSline of internal interaction
SUPPORT PROCESSES
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SM
DriverPicksUp Pkg.
DispatchDriver
AirportReceives& Loads
SortPackages
Load onAirplane
Fly toDestinati
on
Unload&
Sort
LoadOn
Truck
Express Mail Delivery ServiceExpress Mail Delivery ServiceSU
PPOR
T PR
OCES
SCO
NTAC
T P
ERSO
N(B
ack
Stag
e)(O
n St
age)
CUST
OME
RPH
YSIC
ALEV
IDEN
CE
CustomerCalls
CustomerGives
Package
TruckPackagingFormsHand-held ComputerUniform
ReceivePackage
TruckPackagingFormsHand-held ComputerUniform
DeliverPackage
CustomerServiceOrder
Fly toSort
Center
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SM Overnight Hotel StayOvernight Hotel StaySU
PPOR
T PR
OCES
SCO
NTAC
T PE
RSON
(Bac
k St
age)
(On
Stag
e)CU
STOM
ER
HotelExteriorParking
Cart for Bags
DeskRegistrationPapersLobbyKey
ElevatorsHallwaysRoom
Cart for Bags
RoomAmenitiesBath
Menu DeliveryTrayFoodAppearance
FoodBillDeskLobbyHotelExteriorParking
Arriveat
Hotel
Give Bagsto
BellpersonCheck in Go to
RoomReceive
BagsSleep
Shower
CallRoom
Service
ReceiveFood
EatCheck out
andLeave
Greet andTakeBags
ProcessRegistration
DeliverBags
DeliverFood
ProcessCheck Out
Take Bagsto Room
TakeFoodOrder
RegistrationSystem
PrepareFood
RegistrationSystem
PHYS
ICAL
EVID
ENCE
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SM Figure 8-8Figure 8-8
Building a Service BlueprintBuilding 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 customerand contact person activities to needed support functions.
Step 6
Add evidence of service at each customer action step.
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SMApplication of Service Application of Service
BlueprintsBlueprints
• New Service Development• concept development• market testing
• Supporting a “Zero Defects” Culture• managing reliability• identifying empowerment issues
• Service Recovery Strategies• identifying service problems• conducting root cause analysis• modifying processes
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SMBlueprints Can Be Used By:Blueprints Can Be Used By:
• Service Marketers– creating realistic customer
expectations• service system design• promotion
• Operations Management– rendering the service as promised
• managing fail points• training systems• quality control
• Human Resources– empowering the human element
• job descriptions• selection criteria• appraisal systems
• System Technology– providing necessary tools:
• system specifications• personal preference databases
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117
SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 9
CUSTOMER-DEFINED SERVICE STANDARDS
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118
SMObjectives for Chapter 9:Objectives for Chapter 9:Customer-defined Service Customer-defined Service
StandardsStandards• Differentiate between company-defined and
customer-defined service standards• Distinguish among one-time service fixes and
“hard” and “soft” customer-defined standards• Explain the critical role of the service encounter
sequence in developing customer-defined standards• Illustrate how to translate customer expectations
into behaviors and actions that are definable, repeatable, and actionable
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119
SMFigure 9-1Figure 9-1
AT&T’s Process Map for MeasurementsAT&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 HelpFunctional Performance Test
Supervisor Observations% Proposal Made on Time% Follow Up Made
Average Order Interval% Repair Reports% Installed On Due Date
% Repeat ReportsAverage Speed Of Repair% Customers Informed
% Billing Inquiries% Resolved First Call% Billing Inquiries
TotalQuality
Source: AT&T General Business Systems
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SMExercise for Creating Exercise for Creating
Customer-Defined Service Customer-Defined Service StandardsStandards
• Form a group of four people• Use your school’s undergraduate or graduate
program, or an approved alternative• Complete the customer-driven service standards
importance chart• Establish standards for the most important and
lowest-performed behaviors and actions• Be prepared to present your findings to the class
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SMService Encounter Customer Requirements Measurements
ServiceQuality
Customer-Driven Standards and Customer-Driven Standards and Measurements ExerciseMeasurements Exercise
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122
SMFigure 9-2Figure 9-2
Getting to Actionable StepsGetting to Actionable Steps
Satisfaction ValueRelationship Solution Provider
Reliability EmpathyAssurance Tangibles Responsiveness Price
Delivers on TimeReturns Calls QuicklyKnows My Industry
Delivers by Weds 11/4Returns Calls in 2 HrsKnows Strengths of My Competitors
Requirements:
Abstract
Concrete
Dig Deeper
Dig Deeper
Dig Deeper
Diagnosticity:
Low
High
General Concepts
Dimensions
Behaviors and Actions
Attributes
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SMFigure 9-3Figure 9-3
Process for Setting Process for Setting Customer-Defined StandardsCustomer-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 FeedbackMechanisms
7. Track Measures Against Standards
Measure byAudits or
Operating DataHard Soft
Measure byTransaction-
Based Surveys
3. Select Behaviors/Actions for Standards
6. Establish Measures and Target Levels
8. Update Target Levels and Measures
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SM Importance/Performance MatrixImportance/Performance MatrixHIGH
HIGH
Performance
10.0
8.0
7.0
9.0
LOW
8.0 9.0 10.0
Importance
Improve MaintainDelivers 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 whenpromised (9.04, 7.63)
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SMFigure 9-5Figure 9-5
Linkage between Soft Measures and Linkage between Soft Measures and Hard Measures for Speed of Hard Measures for Speed of
Complaint HandlingComplaint HandlingSATISFACTION
2 4 6 8 12 16 20 24 W O R K I N G H O U R S
Large Customers
Small Customers
109876543210
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SMFigure 9-6Figure 9-6 Aligning Company Processes Aligning Company Processes
with Customer Expectationswith Customer Expectations
Customer Expectations
Customer Process Blueprint
Company Process Blueprint Company Sequential Processes
A B C D E F G H40 Days
New Card Mailed
Lost Card Reported
Report Lost Card
Receive New Card
48 Hours
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127
SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 10
PHYSICAL EVIDENCE AND THE SERVICESCAPE
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128
SMObjectives for Chapter 10:Objectives for Chapter 10:Physical Evidence and the Physical Evidence and the
ServicescapeServicescape
• Explain the impact on customer perceptions of physical evidence, particularly the servicescape
• Illustrate differences in types and roles of servicescapes and their implications for strategy
• Explain why the servicescape affects employee and customer behavior
• Analyze four different approaches for understanding the effects of physical environment
• Present elements of an effective physical evidence strategy
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129
SMTable 10-1Table 10-1
Elements of Physical Elements of Physical EvidenceEvidence
Servicescape Other tangibles
Facility exteriorExterior designSignageParkingLandscapeSurrounding environment
Facility interiorInterior designEquipmentSignageLayoutAir quality/temperature
Business cardsStationeryBilling statementsReportsEmployee dressUniformsBrochuresInternet/Web pages
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SM
Table 10-2 Table 10-2 Examples of Physical Evidence from the Examples of Physical Evidence from the
Customer’s Point of ViewCustomer’s Point of ViewService Physical evidence
Servicescape Other tangiblesInsurance Not applicable Policy itself
Billing statementsPeriodic updatesCompany brochureLetters/cards
Hospital Building exteriorParkingSignsWaiting areasAdmissions officePatient care roomMedical equipmentRecovery room
UniformsReports/stationeryBilling statements
Airline Airline gate areaAirplane exteriorAirplane interior (décor, seats, airquality)
TicketsFoodUniforms
Express mail Not applicable PackagingTrucksUniformsComputers
Sportingevent
Parking, Seating, RestroomsStadium exteriorTicketing area, Concession AreasEntrance, Playiing Field
SignsTicketsProgramUniforms
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SMTable 10-3 Table 10-3
Typology of Service Organizations Typology of Service Organizations Based on Variations in Form Based on Variations in Form and Use of the Servicescapeand Use of the Servicescape
Complexity of the servicescape evidenceServicescapeusage
Elaborate Lean
Self-service(customer only)
Golf LandSurf 'n' Splash
ATMTicketronPost office kioskInternet servicesExpress mail drop-off
Interpersonalservices(both customer andemployeee)
HotelRestaurantsHealth clinicHospitalBankAirlineSchool
Dry cleanerHot dog standHair salon
Remote service(employee only)
Telephone companyInsurance companyUtilityMany professional services
Telephone mail-order deskAutomated voice-messaging-based services
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SMFigure 10-3Figure 10-3
A Framework for UnderstandingA Framework for UnderstandingEnvironment-user Relationships Environment-user Relationships
in Service Organizationsin Service Organizations
Source: Adapted from Mary Jo Bitner, “Servicescapes.”
PHYSICALENVIRONMENTAL
DIMENSIONS
HOLISTICENVIRONMENT
INTERNALRESPONSES
BEHAVIOR
Ambient Conditions
Space/Function
Signs, Symbols, and Artifacts
PerceivedServicescape
Cognitive
Emotional
Physiological
Cognitive
Emotional
Physiological
Employee Responses
Customer Responses
Individual Behaviors
Social Interactions
between and among
customer and employees
Individual Behaviors
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SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Part 4
DELIVERING AND PERFORMING SERVICE
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SM
CUSTOMER
COMPANY
Provider GAP 3Provider GAP 3
Service DeliveryGAP 3
Customer-Driven Service Designs and
Standards
Part 4 Opener
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135
SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 11
EMPLOYEES’ ROLES IN SERVICE DELIVERY
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136
SMObjectives for Chapter 11:Objectives for Chapter 11:
Employees’ Roles in Employees’ Roles in Service DeliveryService Delivery
• Illustrate the critical importance of service employees in creating customer satisfaction and service quality
• Demonstrate the challenges inherent in boundary-spanning roles
• Provide examples of strategies for creating customer-oriented service delivery
• Show how the strategies can support a service culture where providing excellent service is a way of life
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SM Service EmployeesService Employees
• They are the service• They are the firm in the customer’s eyes• They are marketers• Importance is evident in
– The Services Marketing Mix (People)– The Service-Profit Chain– The Services Triangle
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SM Service EmployeesService Employees
• Who are they?– “boundary spanners”
• What are these jobs like?– emotional labor– many sources of potential conflict
• person/role• organization/client• interclient• quality/productivity
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139
SMFigure 11-3Figure 11-3
Boundary Spanners Interact Boundary Spanners Interact with Both Internal with Both Internal
and External Constituentsand External Constituents
Internal Environment
External Environment
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SMFigure 11-4Figure 11-4
Sources of Conflict for Sources of Conflict for Boundary-Spanning WorkersBoundary-Spanning Workers
• Person vs. Role
• Organization vs. Client
• Client vs. Client
• Quality vs. Productivity
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141
SMFigure 11-5 Figure 11-5
Human Resource Strategies for Closing GAP 3Human Resource Strategies for Closing GAP 3
Customer-oriented Service Delivery
Hire theRight People
ProvideNeeded Support
Systems
Retain theBest
People
DevelopPeople to
DeliverServiceQuality
Compete for
the Best
People
Hire for Service
Competencies and Service Inclination
Provide Supportive Technology
and Equipment
Trea
t Em
ploy
ees
as
Cus
tom
ers
Empow
er Em
ployees
Be the Preferred
Employer Train for
Technical and
Interactive
Skills
Prom
ote
Team
work
Measure
Internal
Service
Quality
Develop Service-
oriented Internal
Processes
Mea
sure
and
Re
ward
St
rong
Se
rvic
e Pr
ovid
ers
Include
Employees in
the
Company’s
Vision
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SM Service CultureService Culture
“A culture where an appreciation for good service exists, and where giving good service to internal as well as ultimate, external customers, is considered a natural way of life and one of the most important norms by everyone in the organization.”
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144
SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 12
CUSTOMERS’ ROLES IN SERVICE DELIVERY
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145
SMObjectives for Chapter 12:Objectives for Chapter 12:
Customers’ Roles in Service Customers’ Roles in Service DeliveryDelivery
• Illustrate the importance of customers in successful service delivery
• Enumerate the variety of roles that service customers play• Productive resources• Contributors to quality and satisfaction• Competitors
• Explain strategies for involving service customers effectively to increase both quality and productivity
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SMImportance of Importance of OtherOther
Customers in Service Customers in Service DeliveryDelivery
• Other customers can detract from satisfaction• disruptive behaviors• excessive crowding• incompatible needs
• Other customers can enhance satisfaction• mere presence• socialization/friendships• roles: assistants, teachers, supporters
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SM How Customers Widen Gap 3How Customers Widen Gap 3
• Lack of understanding of their roles• Not being willing or able to perform their roles• No rewards for “good performance”• Interfering with other customers• Incompatible market segments
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148
SMFigure 12-2Figure 12-2
Customer Roles in Service Customer Roles in Service DeliveryDelivery
Productive Resources
Contributors to Quality and Satisfaction
Competitors
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149
SM Customers as Productive Customers as Productive ResourcesResources
• “partial employees”– contributing effort, time, or other resources to
the production process• customer inputs can affect organization’s
productivity• key issue:
– should customers’ roles be expanded? reduced?
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SMCustomers as Contributors Customers as Contributors
to Service Quality and to Service Quality and SatisfactionSatisfaction
• Customers can contribute to– their own satisfaction with the service
• by performing their role effectively• by working with the service provider
– the quality of the service they receive• by asking questions• by taking responsibility for their own satisfaction• by complaining when there is a service failure
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SM Customers as CompetitorsCustomers as Competitors
• customers may “compete” with the service provider• “internal exchange” vs. “external exchange”• internal/external decision often based on:
– expertise– resources– time– economic rewards– psychic rewards– trust– control
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SMTechnology Spotlight:Technology Spotlight:
Services Production ContinuumServices Production Continuum
1 2 3 4 5 6Gas Station Illustration1. Customer pumps gas and pays at the pump with automation2. Customer pumps gas and goes inside to pay attendant3. Customer pumps gas and attendant takes payment at the pump4. Attendant pumps gas and customer pays at the pump with automation5. Attendant pumps gas and customer goes inside to pay attendant6. Attendant pumps gas and attendant takes payment at the pump
Customer Production Joint Production Firm Production
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SMFigure 12-3Figure 12-3
Strategies for Enhancing Strategies for Enhancing Customer ParticipationCustomer Participation
EffectiveCustomer
ParticipationRecruit, Educate,
and Reward Customers
Define CustomerJobs
Manage theCustomer
Mix
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SMStrategies for EnhancingStrategies for EnhancingCustomer ParticipationCustomer Participation
1. Define customers’ jobs- helping himself- helping others- promoting the company
2. Individual differences: not everyone wants to participate
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SMStrategies for Recruiting,Strategies for Recruiting,Educating and Rewarding Educating and Rewarding
CustomersCustomers
1. Recruit the right customers2. Educate and train customers to perform effectively3. Reward customers for their contribution4. Avoid negative outcomes of inappropriate customer participation
Manage the Customer Mix
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Chapter 13
DELIVERING SERVICE THROUGH INTERMEDIARIES AND ELECTRONIC CHANNELS
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SMObjectives for Chapter 13:Objectives for Chapter 13:Delivering Service through Delivering Service through
Intermediaries and Electronic Intermediaries and Electronic ChannelsChannels
• Identify the primary channels through which services are delivered to end customers
• Provide examples of each of the key service intermediaries• View delivery of service from two perspectives--the
service provider and the service deliverer• Identify the benefits and challenges of each method of
service delivery• Outline the strategies that are used to manage service
delivery through intermediaries
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SM Service Provider ParticipantsService Provider Participants
• service principal (originator)– creates the service concept
• (like a manufacturer)
• service deliverer (intermediary)– entity that interacts with the customer in the
execution of the service• (like a distributor/wholesaler)
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SM Key Issues Key Issues Involving IntermediariesInvolving Intermediaries
• conflict over objectives and performance
• conflict over costs and rewards
• control of service quality
• empowerment versus control
• channel ambiguity
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SM Services IntermediariesServices Intermediaries
• franchisees– e.g., Jiffy Lube, H&R Block, McDonald’s
• agents and brokers– e.g., travel agents, independent insurance agents
• electronic channels– e.g., ATMs, university video courses, TaxCut
software
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SMExhibit 13-4Exhibit 13-4
Summary of Benefits and Challenges Summary of Benefits and Challenges for Franchisers of Servicefor Franchisers of Service
• Leverages the business format to gain expansion and revenues
• Maintains consistency in outlets
• Gains knowledge of local markets
• Shares financial risk and frees up capital
• Difficulty in maintaining and motivating franchisees
• Highly publicized disputes and conflict
• Possibility of inconsistent quality that can undermine the company name
• Control of customer relationship by intermediary
Benefits Challenges
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SMSummary of Benefits and Summary of Benefits and
Challenges for Franchisees of Challenges for Franchisees of ServiceService
• Obtaining an established business format on which to base a business
• Receiving national or regional brand marketing
• Minimizing the risks of starting a business
• Disappointing profits and revenues
• Encroachment and franchise saturation
• High failure rates and unfair terminations
• Lack of perceived control• High fees and rigid contracts• Unrealistic expectations
Benefits Challenges
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SMExhibit 13-6Exhibit 13-6
Summary of Benefits and ChallengesSummary of Benefits and Challenges in Distributing Services through in Distributing Services through
Agents and BrokersAgents and Brokers
• Reduced selling and distribution costs
• Intermediary’s possession of special skills and knowledge
• Wide representation• Knowledge of local
markets• Customer choice
• Loss of control over pricing and other aspects of marketing
• Representation of multiple service principals
Benefits Challenges
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SMExhibit 13-7Exhibit 13-7
Summary of Benefits and Challenges in Summary of Benefits and Challenges in Electronic Distribution of ServicesElectronic Distribution of Services
• Consistent delivery for standardized services
• Low cost• Customer convenience• Wide distribution• Customer choice and ability to
customize• Quick customer feedback
• Customers are active, not passive• Lack of control of electronic
environment• Price competition• Inability to customize with
standardized services• Lack of consistency with
customer involvement• Security concerns• Competition from widening
geographies
Benefits Challenges
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SM Strategies for Effective Service Strategies for Effective Service Delivery through IntermediariesDelivery through Intermediaries
• Measurement• Review
Control Strategies
• Alignment of goals• Consultation and
cooperation
• Help the intermediary develop customer-based service processes
• Provide needed support• Develop the
intermediary to deliver service quality
• Change to a cooperative management structure
Empowerment Strategies
Partnering Strategies
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Chapter 14
MANAGING DEMAND AND CAPACITY
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SMObjectives for Chapter 14:Objectives for Chapter 14:
Managing Demand and Managing Demand and CapacityCapacity
• Explain:• the underlying issue for capacity-constrained services• the implications of capacity constraints • the implications of different types of demand patterns on
matching supply and demand• Lay out strategies for matching supply and demand through:
• shifting demand to match capacity or• flexing capacity to meet demand
• Demonstrate the benefits and risks of yield management strategies• Provide strategies for managing waiting lines
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SM Understanding Capacity Understanding Capacity Constraints and Demand Constraints and Demand
PatternsPatterns
• Time, labor, equipment and facilities
• Optimal versus maximal use of capacity
• Charting demand patterns
• Predictable cycles• Random demand
fluctuations• Demand patterns by
market segment
Capacity Constraints Demand Patterns
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SM Figure 14-3Figure 14-3
Strategies for Shifting Demand Strategies for Shifting Demand to Match Capacityto Match Capacity
• Use signage to communicate busy days and times
• Offer incentives to customers for usage during non-peak times
• Take care of loyal or regular customers first• Advertise peak usage times and benefits of
non-peak use• Charge full price for the service--no discounts
• Use sales and advertising to increase business from current market segments
• Modify the service offering to appeal to new market segments
• Offer discounts or price reductions
• Modify hours of operation• Bring the service to the
customer
Demand Too High Demand Too LowShift Demand
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SM
Figure 14-4Figure 14-4
Strategies for Flexing Capacity Strategies for Flexing Capacity
to Match Demandto Match Demand
• Stretch time, labor, facilities and equipment• Cross-train employees• Hire part-time employees• Request overtime work from employees• Rent or share facilities• Rent or share equipment• Subcontract or outsource activities
• Perform maintenance renovations
• Schedule vacations• Schedule employee training• Lay off employees
Demand Too High Demand Too LowFlex Capacity
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SMTable 14-1 Table 14-1
What is the Nature of Demand What is the Nature of Demand Relative to Supply?Relative to Supply?Extent of demand fluctuations over time
Extent to whichsupply isconstrained
Wide Narrow
Peak demand canusually be metwithout a majordelay
1ElectricityNatural gasTelephoneHospital maternity unitPolice and fireemergencies
2InsuranceLegal servicesBankingLaundry and dry cleaning
Peak demandregularly exceedscapacity
4Accounting and taxpreparationPassenger transportationHotels and motelsRestaurantsTheaters
3Services similar to those in2 but which haveinsufficient capacity fortheir base level of business
Source: Christopher H. Lovelock, “Classifying Services to Gain Strategic Marketing Insights,” Journal of Marketing, 47, 3 (Summer 1983): 17.
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SMTable 14-2 Table 14-2
What is the Constraint on Capacity?What is the Constraint on Capacity?
Nature of the constraint Type of serviceTime Legal
ConsultingAccountingMedical
Labor Law firmAccounting firmConsulting firmHealth clinic
Equipment Delivery servicesTelecommunicationUtilitiesHealth club
Facilities HotelsRestaurantsHospitalsAirlinesSchoolsTheatersChurches
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SM Waiting Line Issues Waiting Line Issues and Strategiesand Strategies
• unoccupied time feels longer• preprocess waits feel longer• anxiety makes waits seem longer• uncertain waits seem longer than finite waits• unexplained waits seem longer• unfair waits feel longer• longer waits are more acceptable for “valuable”
services• solo waits feel longer
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Part 5
MANAGING SERVICE PROMISES
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SM
CUSTOMER
COMPANYExternal
Communications to CustomersGAP 4
Service Delivery
Provider GAP 4Provider GAP 4
Part 5 Opener
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SMSM
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Chapter 15
INTEGRATED MARKETING COMMUNICATION
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SMObjectives for Chapter 15:Objectives for Chapter 15:
Integrated Services Integrated Services Marketing CommunicationsMarketing Communications
• Introduce the concept of Integrated Services Marketing Communication
• Discuss the key reasons for service communication problems• Present four key ways to integrate marketing communication
in service organizations• Present specific strategies for managing promises, managing
customer expectations, educating customers, and managing internal communications
• Provide perspective on the popular service objective of exceeding customer expectations
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SMFigure 15-1Figure 15-1
Communications and the Communications and the Services Marketing TriangleServices Marketing Triangle
Internal MarketingInternal 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
CustomersEmployees
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
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SMApproaches forApproaches for
Integrating Services Marketing Integrating Services Marketing CommunicationCommunication
Goal:Delivery
greater than or equal to promises
Improve CustomerEducation
ManageService
Promises
ManageCustomer
Expectations
ManageInternal
MarketingCommunication
Figure 15-3Figure 15-3
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SM
Goal:Delivery
greater than or equal to promises
OfferService
Guarantees
Create EffectiveServices
Communications
MANAGING SERVICE PROMISES
MakeRealisticPromises
Coordinate External
Communication
Figure 15-4Figure 15-4
Approaches forApproaches forManaging Service PromisesManaging Service Promises
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SM
Communicate Criteria for Service Effectiveness
Create Tiered-ValueOfferings
Figure 15-8Figure 15-8Approaches forApproaches for
Managing Customer ExpectationsManaging Customer Expectations
NegotiateUnrealistic
Expectations
Goal:Delivery
greater than or equal to promises
Offer Choices
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SM
Goal:Delivery
greater than or equal to promises
Prepare Customers
for the Service Process
Clarify Expectationsafter the Sale
Figure 15-9Figure 15-9Approaches forApproaches for
Improving Customer EducationImproving Customer Education
Teach Customers to Avoid
Peak Demand Periods
andSeek Slow
Periods
Confirm Performanceto Standards
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SMGoal:
Delivery greater than or equal to promises
Figure 15-10Figure 15-10Approaches for ManagingApproaches for Managing
Internal Marketing CommunicationsInternal Marketing Communications
Create EffectiveVertical
Communications
Align Back Office Personnel
w/ External Customers
Create EffectiveHorizontal
Communications
CreateCross-Functional
Teams
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SMSM
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Part 5
MANAGING SERVICE PROMISES
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SM
CUSTOMER
COMPANYExternal
Communications to CustomersGAP 4
Service Delivery
Provider GAP 4Provider GAP 4
Part 5 Opener
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SMSM
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Chapter 15
INTEGRATED MARKETING COMMUNICATION
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SMObjectives for Chapter 15:Objectives for Chapter 15:
Integrated Services Integrated Services Marketing CommunicationsMarketing Communications
• Introduce the concept of Integrated Services Marketing Communication
• Discuss the key reasons for service communication problems• Present four key ways to integrate marketing communication
in service organizations• Present specific strategies for managing promises, managing
customer expectations, educating customers, and managing internal communications
• Provide perspective on the popular service objective of exceeding customer expectations
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SMFigure 15-1Figure 15-1
Communications and the Communications and the Services Marketing TriangleServices Marketing Triangle
Internal MarketingInternal 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
CustomersEmployees
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
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SMApproaches forApproaches for
Integrating Services Marketing Integrating Services Marketing CommunicationCommunication
Goal:Delivery
greater than or equal to promises
Improve CustomerEducation
ManageService
Promises
ManageCustomer
Expectations
ManageInternal
MarketingCommunication
Figure 15-3Figure 15-3
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SM
Goal:Delivery
greater than or equal to promises
OfferService
Guarantees
Create EffectiveServices
Communications
MANAGING SERVICE PROMISES
MakeRealisticPromises
Coordinate External
Communication
Figure 15-4Figure 15-4
Approaches forApproaches forManaging Service PromisesManaging Service Promises
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SM
Communicate Criteria for Service Effectiveness
Create Tiered-ValueOfferings
Figure 15-8Figure 15-8Approaches forApproaches for
Managing Customer ExpectationsManaging Customer Expectations
NegotiateUnrealistic
Expectations
Goal:Delivery
greater than or equal to promises
Offer Choices
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SM
Goal:Delivery
greater than or equal to promises
Prepare Customers
for the Service Process
Clarify Expectationsafter the Sale
Figure 15-9Figure 15-9Approaches forApproaches for
Improving Customer EducationImproving Customer Education
Teach Customers to Avoid
Peak Demand Periods
andSeek Slow
Periods
Confirm Performanceto Standards
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SMGoal:
Delivery greater than or equal to promises
Figure 15-10Figure 15-10Approaches for ManagingApproaches for Managing
Internal Marketing CommunicationsInternal Marketing Communications
Create EffectiveVertical
Communications
Align Back Office Personnel
w/ External Customers
Create EffectiveHorizontal
Communications
CreateCross-Functional
Teams
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Chapter 16
PRICING OF SERVICES
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SMObjectives for Chapter 16:Objectives for Chapter 16:
Pricing of ServicesPricing of Services
• Discuss three major ways that service prices differ from goods prices for customers
• Demonstrate what value means to customers and the role that price plays in value
• Articulate the key ways that pricing of services differs from pricing of goods
• Delineate strategies that companies use to price services
• Give examples of pricing strategy in action
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SMFigure 16-2Figure 16-2
What Do Customers Know about What Do Customers Know about the Prices of Services?the Prices of Services?
Pet Sitter?
Nutritionist?
WeddingAdvisor?
Braces?
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SMFigure 16-3Figure 16-3
Customers Will Trade Money for Customers Will Trade Money for Other Service CostsOther Service Costs
Effort
=Time
or or
Psychic Costs
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SMFigure 16-4Figure 16-4
Three Basic Price Structures and Three Basic Price Structures and Difficulties Associated with Usage for Difficulties Associated with Usage for
ServicesServices
Demand-BasedCost-Based
Com
petit
ion-
Base
d
PROBLEMS: 1. Costs difficult to trace 2. Labor more difficult to price than materials 3. Costs may not equal value
PROBLEMS: 1. Small firms may charge too little to be viable 2. Heterogeneity of services limits comparability 3. Prices may not reflect customer value
PROBLEMS: 1. Monetary price must be adjusted to reflect the value of non-monetary costs 2. Information on service costs less available to customers, hence price may not be a central factor
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SM Figure 16-5Figure 16-5
Four Customer Definitions of ValueFour Customer Definitions of Value
“Value is Low Price” “Value is EverythingI Want in a Service”
“Value is theQuality I Get for the Price I Pay”
“Value is All thatI Get for All that I Give”
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SMFigure 16-6Figure 16-6
Pricing Strategies When the Pricing Strategies When the Customer Defines Value as Low PriceCustomer Defines Value as Low Price
“Value is Low Price” Discounting Odd Pricing Synchro-pricing Penetration Pricing
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SMFigure 16-7Figure 16-7
Pricing Strategies When the Pricing Strategies When the Customer Defines Value as Customer Defines Value as
Everything Wanted in a ServiceEverything Wanted in a Service
“Value is EverythingI Want in a Service”
Prestige Pricing Skimming Pricing
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SMFigure 16-8Figure 16-8
Pricing Strategies When thePricing Strategies When the Customer Defines Value as Customer Defines Value as
Quality for the Price PaidQuality for the Price Paid
“Value is the Quality I Get for the Price I Pay”
Value Pricing Market Segmentation Pricing
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SMFigure 16-9Figure 16-9
Pricing StrategiesPricing Strategies When the Customer Defines Value as When the Customer Defines Value as
All that is Received for All that is GivenAll that is Received for All that is Given
“Value is All thatI Get for All that I Give”
Price Framing Price Bundling Complementary Pricing Results-based Pricing
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SMFigure 16-10Figure 16-10
Summary of Service Pricing Strategies Summary of Service Pricing Strategies for Four Customer Definitions of Valuefor Four Customer Definitions of Value
“Value is Low Price” “Value is EverythingI Want in a Service”
“Value is the Quality I Get for the Price I Pay”
“Value is All thatI Get for All that I Give”
Discounting Odd Pricing Synchro-pricing Penetration Pricing
Prestige Pricing Skimming Pricing
Value Pricing Market Segmentation Pricing
Price Framing Price Bundling Complementary Pricing Results-based Pricing
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Chapter 17
THE FINANCIAL AND ECONOMIC IMPACT OF SERVICE QUALITY
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SMObjectives for Chapter 17:Objectives for Chapter 17:
The Financial and Economic The Financial and Economic Impact of ServiceImpact of Service
• Examine the direct effects of service on profits• Consider the impact of service on getting new customers• Evaluate the role of service in keeping customers• Examine the link between perceptions of service and
purchase intentions• Emphasize the importance of selecting profitable
customers• Discuss what is know about the key service drivers of
overall service quality, customer retention and profitability• Discuss the balanced performance scorecard to focus on
strategic measurement other than financials
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SMFigure 17-1Figure 17-1
The Direct Relationship between The Direct Relationship between Service and ProfitsService and Profits
Profits?ServiceQuality
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SMFigure 17-2Figure 17-2
Offensive Marketing Effects of Offensive Marketing Effects of Service on ProfitsService on Profits
ProfitsMarketShare
Reputation Sales
PricePremium
ServiceQuality
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SMFigure 17-3Figure 17-3
Defensive Marketing Effects of Defensive Marketing Effects of Service on ProfitService on Profit
Margins
Profits
CustomerRetention
Costs
PricePremium
Word ofMouth
Volume ofPurchasesService
Quality
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SMFigure 17-5Figure 17-5
Perceptions of Service, Perceptions of Service, Behavioral Behavioral
Intentions and ProfitsIntentions and Profits
CustomerRetention
Costs
PricePremium
Word ofMouth
Margins
Profits
Volume ofPurchases
Service BehavioralIntentions
Sales
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SMFigure 17-6Figure 17-6
The “80/20” Customer PyramidThe “80/20” Customer Pyramid
Most ProfitableCustomers
Least ProfitableCustomers
What segment spends more withus over time, costs less to maintain,spreads positive word of mouth?
What segment costs us intime, effort and money yetdoes not provide the returnwe want? What segment isdifficult to do business with?
OtherCustomers
BestCustomers
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SMFigure 17-7Figure 17-7
The Expanded Customer PyramidThe Expanded Customer Pyramid
Most ProfitableCustomers
Least ProfitableCustomers
What segment spends more withus over time, costs less to maintain,spreads positive word of mouth?
What segment costs us intime, effort and money yetdoes not provide the returnwe want? What segment isdifficult to do business with?
Gold
Iron
Lead
Platinum
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SMFigure 17-8Figure 17-8
The Key Drivers of Service Quality, The Key Drivers of Service Quality, Customer Retention, and ProfitsCustomer Retention, and Profits
Key Drivers
ServiceQuality
ServiceEncounter
ServiceEncounter
ServiceEncounter
Customer Retention
BehavioralIntentions Profits
ServiceEncounter
Service Encounters
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SMFigure 17-9Figure 17-9
Sample Measurements for the Sample Measurements for the Balanced ScorecardBalanced Scorecard
Adapted from Kaplan and Norton
Innovation andLearning Perspective
CustomerPerspective
Service Perceptions Service ExpectationsPerceived ValueBehavioral Intentions:
Operational Perspective:
Right first time (% hits)Right on time (% hits)Responsiveness (% on time)Transaction time (hours, days)Throughput timeReduction in wasteProcess quality
Financial Measures
Price PremiumVolume IncreasesValue of Customer ReferralsValue of Cross SalesLong-term Value of Customer
% Loyalty % Intent to Switch # Customer Referrals # Cross Sales # of Defections
Number of new productsReturn on innovationEmployee skillsTime to marketTime spent talking to customers
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SMFigure 17-10Figure 17-10
Service Quality Spells ProfitsService Quality Spells Profits
ServiceQuality
CustomerRetention
Costs
PricePremium
Word ofMouth
Margins
Profits
Defensive Marketing
Volume ofPurchases
MarketShare
Reputation
Sales
PricePremium
Offensive Marketing
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SMSM
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Part 6
THE BIG PICTURE: :
CLOSING ALL THE GAPS
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SMSM
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Chapter 18
THE INTEGRATED GAPS MODEL OF SERVICE QUALITY
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SM
PerceivedService
Expected Service
CUSTOMER
COMPANY
CustomerGap
GAP 1
GAP 2
Gaps Model of Service QualityGaps Model of Service Quality
GAP 3
External Communications
to CustomersGAP 4Service Delivery
Customer-Driven Service Designs and Standards
Company Perceptions of Consumer Expectations
Figure 18-1Figure 18-1
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SM
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 Expectations
Customer Perceptions
Figure 18-2Figure 18-2 Key Factors Leading to Key Factors Leading to
the Customer Gapthe Customer Gap
CustomerGap
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SM Customer Expectations
Company Perceptions of Customer Expectations
Inadequate Marketing Research OrientationInsufficient marketing researchResearch not focused on service qualityInadequate use of market research
Lack of Upward CommunicationLack of interaction between management and customersInsufficient communication between contact employeesand managersToo many layers between contact personnel and topmanagement
Insufficient Relationship FocusLack of market segmentationFocus on transactions rather than relationshipsFocus on new customers rather than relationshipcustomers
Inadequate Service Recovery
GAP1
Figure 18-3Figure 18-3 Key Factors Leading to Provider Gap 1Key Factors Leading to Provider Gap 1
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SM Customer-Driven Service Designs and Standards
Management Perceptions of Customer Expectations
Poor Service Design Unsystematic new service development process Vague, undefined service designs
Failure ot connect service design to servicepositioning
Absence of Customer-Driven StandardsLack of customer-driven service standardsAbsence of process management to focus oncustomer requirementsAbsence of formal process for setting servicequality goals
Inappropriate Physical Evidence and Servicescape
GAP2
Figure 18-4Figure 18-4Key Factors Leading to Provider Gap 2Key Factors Leading to Provider Gap 2
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Service Delivery
Customer-Driven Service Designs and Standards
Key Factors Leading to Provider GAP 3Key Factors Leading to Provider GAP 3Figure 18-5Figure 18-5
Deficiencies in Human Resource PoliciesIneffective recruitmentRole ambiguity and role conflictPoor employee-technology job fitInappropriate evaluation and compensation systemsLack of empowerment, perceived control and teamwork
Failure to Match Supply and DemandFailure to smooth peaks and valleys of demandInappropriate customer mixOver-reliance on price to smooth demand
Customers Not Fulfilling RolesCustomers lack knowledge of their roles and responsibilitiesCustomers negatively impact each other
Problems with Service Intermediaries Channel conflict over objectives and performance Channel conflict over costs and rewards Difficulty controlling quality and consistency Tension between empowerment and control
GAP3
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SMService Delivery
Key Factors Leading to Provider GAP 4Key Factors Leading to Provider GAP 4Figure 18-6Figure 18-6
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 ExpectationsNot managing customer expectations through all forms ofcommunicationNot adequately educating customers
OverpromisingOverpromising in advertisingOverpromising in personal sellingOverpromising through physical evidence cues
Inadequate Horizontal CommunicationsInsufficient communication between sales and operationsInsufficient communication between advertising and operationsDifferences in policies and procedures across branches or units
GAP4
External Communications to Customers