service marketing part1

8/16/2019 Service Marketing Part1

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Service Marketing


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Service Marketing-

Mazhar Hayat

Service Marketing

• Part one:

Chapter 1: Introduction to services

Chapter 2: Consumer behavior inservices

Chapter 3: Customer expectations of

services

Chapter 4: Customer Perception ofservices


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Introduction to Services

• Chapter outline

– Nature of services

– Why ervice !ar"etin# – $ifferences in %oods &s service

mar"etin#

– ervice !ar"etin# !ix

Service Marketing-

Mazhar Hayat


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Service Marketing-

Mazhar Hayat

What are Services

• ervices are simply $eeds' (ctions

Processes and Performances)

e)#) the core offerin# of *ospitals'

courier firms' ban"s' hotels comprise

of deeds or actions performed forcustomers)


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Service Marketing-

Mazhar Hayat

What are Services (cont’d)

• + (n act of performance ,hich one

party offers to another ,hich isintan#ible and doesn-t result in the

transfer of o,nership.)

i)e) o,nership of service remains ,ith the serviceprovider


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Service Marketing-

Mazhar Hayat

What are Services (cont’d)

• +is an economic activity ,hose

output is not a physical product' is#enerally consumed at the time it is

produced and provides added value

that is intan#ible for it/s purchaser.)


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Service Marketing-

Mazhar Hayat

Service Vs Customer Service

• ervice is ran#in# over many

industries' such as 0elenor

telecommunications' ( ban"

financial services' (ir blue

transportation' !arriot hotels'

567 insurance and so on8)


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Service Marketing-

Mazhar Hayat

Service Vs Customer Service (cont’d)

• Customer service is service provided in

support of a company/s core product)

– (ns,erin# 9uestions – 0a"in# orders

– $ealin# ,ith billin# issues

– *andlin# complaints

– !ana#in# product repairs and maintenances

– 6(s and telephonic in9uiries


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Service Marketing-

Mazhar Hayat

Industries classiied !ithin service sector • 0ransportation and Public utilities

– ;ailroad transits

– 0ruc"in# and ,arehousin#

–


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Service Marketing-

Mazhar Hayat

"angi#ility s$ectrum o %roduct

Pure

Goods Major good

Minor service

Pure

Service

Major ServiceMinor Good

Hybrid Product


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Service Marketing-

Mazhar Hayat

Why Service Marketing&

• ervice based economy

• ervice is essential for

manufacturin#• Professional service needs

• ervice e9uals profits

• ervice needs a different !ar"etin#(pproach


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Service Marketing-

Mazhar Hayat

'ierences in oods Vs service

Marketing

• Intan#ibility

• *etero#eneity• Inseperability imultaneous

Production and Consumption

• Perishability


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Service Marketing-

Mazhar Hayat

Intangi#ility and marketing Im$lications

• ervices cannot be inventoried)

• Cannot be easily patented)

• Cannot be displayed and communicated to

customers• uality of service is difficult to assess by

customers

• (ctual cost of unit of service are hard todetermine and Price> 9uality relationshipis complex)


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Service Marketing-

Mazhar Hayat

Inse$era#ility and marketing Im$lications

• !ass production is not possible

• ervice depends on ,hat happens in

real time)• Cannot be contained or pac"a#ed)

• ervices cannot be stored)


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Service Marketing-

Mazhar Hayat

%erisha#ility and marketing Im$lications

• ervice plannin# is difficult)

• $emand forecastin# and capacityutili@ation is a challen#e)

• (bsence of stoc" mana#ement'inventories and batch productions)

• ervice cannot be returned or resold)

• tron# ;ecovery system is re9uiredin case of a problem)


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Service Marketing-

Mazhar Hayat

Service Marketing Mi

Price

Placement

Promotion

PeoplePhysical

evidence

Process

Product

Service

Marketing Mix


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Service Marketing-

Mazhar Hayat

Service Marketing Mi

•Product – 6eatures – uality

– (ccessories

– Pac"a#in#

– Warranties

– randin#

• Price – 6lexibility

– Price


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Service Marketing-

Mazhar Hayat

Service Marketing Mi• People

– 5mployees• ;ecruitment• 0rainin#• !otivation• 0eam,or"• ;e,ards

– Customers• 5ducation• 0rainin#

• Physical evidence – 6acility desi#n – 59uipment

– 5nvironment – 5mployee dress – ?ther tan#ibles

• roachers andcustomer #uides

• usiness cards

• %uarantees• tatements

•Process – 6lo, of activities

• tandardi@ed• Customi@ed

– Number of steps• imple

• Complex – Customer involvement


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Service Marketing-

Mazhar Hayat

*nderstanding Customer

Satisaction or Services Marketing

atisfaction is a function of the #ap

bet,een expected service and

perceived service)

(n extension of buyer behavior

What you thou#ht ,as #oin# to happen &syour perception of ,hat happened


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Service Marketing-

Mazhar Hayat

"hree core conce$ts

Customer Satisfaction

Customer ExpectationsService uality


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Service Marketing-

Mazhar Hayat

• 0hree core concepts to consider:

• ervice uality – Controllable for !ar"eter

– ervice $elivery !echanism

• Customer satisfaction – Partially controllable for the !ar"eter

– 7ltimate aim of !ar"eter

• Customer 5xpectations – 7ncontrollable for the !ar"eter

– $rivin# force for service delivery


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Service Marketing-

Mazhar Hayat

Customer Satisaction +ormula

• Identify Customer 5xpectations

• !easure Customer 5xpectations

• Convert 5xpectations intooperational and detailed service

standards

• 6ulfill standards for ervice uality


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Service Marketing-

Mazhar Hayat

C,S, +ormula (con’t)

Customer atisfaction A

Customer 5xpectations ervice uality

Service

uality

Customer

.$ectations

Customer

Satisaction


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Service Marketing-

Mazhar Hayat

/% "heory or Services

• 4 0ypes of %aps:• %ap bet,een Customer expectations and

!ana#ement perception)

• %ap bet,een !ana#ement perception and9uality standards)

• %ap bet,een 9uality standards and service

delivery)

• %ap bet,een service delivery and externalcommunications


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Service Marketing-

Mazhar Hayat

ey is to minimi@e the #ap%ive the customer ,hat they expect88)


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Cha$ter 0

Customer expectations

of services


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Service Marketing-

Mazhar Hayat

What is Customer e$ectations&

• Customer/s eliefs or understandin#sabout experiences or benefits related toservice delivery)

• erves as a standard or referencepoints a#ainst ,hich performance is Bud#ed)

• 5xact "no,led#e about customerexpectations is crucial step indeliverin# 9uality service)


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Service Marketing-

Mazhar Hayat

What does $oor kno!ledge o

Customer e$ectations means&

• Not understandin# expectations accuratelymeans losin# customers)

• (llo,in# competitors to ,in mar"et share)

• Incorrect positionin# strate#y)

• 5xpendin# money' time and other resources onissues not related to customer)

• Poor service delivery resultin# in poor customersatisfaction)

• ad ,ords of mouth)• Poor service ima#e)

• $eclinin# sales resultin# in lo,er profits)


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Service Marketing-

Mazhar Hayat

%ossi#le level o customer

e$ectationsIdeal .$ectations

or desires

1ormative 2should

#e3 e$ectations

.$erience #ased

norms

/cce$ta#le

e$ectations

Min, tolerance

e$ectations 4o!

HighI need to have an /5c in a

#ank that oers the most

advanced 6 su$erior

7uality services !ith #est

value or money,

My #ank should oer

good services and $ersonal

attention to old customerslike mysel,

My #ank oers $rom$t

services #ut some o the

sta is not riendly or

#ank does not oer online

#anking

I am holding an /5c in this

#ank #ecause at least sta

is !elcoming,

I am holding an /5c in this

#ank only #ecause it is the

nearest $ossi#le #ranch,


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Service Marketing-

Mazhar Hayat

4evels o .$ectations

• !ar"eters 6ocus on t,o of the

important levels)

'esired Service

/de7uate Service

8one o "olerance


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Service Marketing-Mazhar Hayat

'esired Service

• ( blend of ,hat customer thin"s

+can be. or +should be.)

• Ideal state of affairs)• 5)#) When a customer is enterin# a

ban" to dra, some money he

expects personal attention and

prompt service delivery)


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/de7uate Service

• 0he level of service the customer ,illaccept or consider is #ood enou#h)

• Principle of +bounded rationality.)

• ( blend of acceptable expectationand min) tolerable expectation levels)

• 5)#) if customer #ets money dra,n

even after ,aitin# in a 9ueue for 1mins)' and consider it acceptable)


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8one o "olerance

• 0he extent to ,hich customers

reco#ni@e a variation and are ,illin#

to accept it)

• 5)#) customer consider ,aitin# for

money acceptable because it is a

!onday or early hours of an" timin#

or ban" representative hasapolo#i@ed for the delay)


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4evels o .$ectations (cont’d)

• If service drops belo, ade9uate servicecustomer is frustrated)

• If service is hi#her than desired levelcustomer ,ill be deli#hted or even surprised)

In some cases people consider this acoincidence)

• Done of tolerance is a ran#e or ,indo, in,hich a customer do not notice the serviceperformance)

• When service falls outside the ran#e eitherlo, or hi#h the service #ets customer/sattention in either a positive or ne#ative ,ay)


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Considerations or

8ones o "olerance

• $ifferent customer possess different@ones of 0olerance)

e)#) a busy customer ,ould al,ays be pressin# forprompt response by the company' and desires short

,ait times' i)e) this customer has a much narro,@one of tolerance than other customers)

• Dones of 0olerance varies from service$imensions)

i)e) customers hold hi#her expectations re#ardin#important dimensions of service' and less tolerantfor these dimensions such as price variations'service failure' 6ast delivery etc)


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!ost Important 6actors


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+actors that inluence customer

.$ectations o service

• 6actors influencin# $esired ervice

5xpectations)

• 6actors influencin# (de9uate

ervice 5xpectations)


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+actors that inluence 'esired

Service .$ectations o customer

'esired Service

/de7uate Service

8one o "olerance

%ersonal 1eeds

4asting Service

Intensiiers


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%ersonal 1eeds

• tates ,hich are essential to a

customers ,ell>bein#)

•6all into several cate#ories such as• Physical

• ocial

• Psycholo#ical

• 6unctional


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4asting Service Intensiiers

• Individual stable factors that lead the customer to#reater sensitivity)

• (lso "no,n as derived service expectations i)e)these expectations are driven by another person

or #roup of people)• ( customer/s individual expectations are

intensified because they represent other parties,ho ,ill receive the service)

5)#) ( spouse selectin# vacation plan' (nemployee selectin# an office for his firm' ( fatherchoosin# educational institution for children etc)


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+actors that inluence /de7uate

Service .$ectations o customer

'esired Service

/de7uate Service

8one o "olerance

"em$orary Service

Intensiiers

%erceived Service

/lternatives

Sel-$erceivedservice roles

Situational +actors


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"em$orary Service Intensiiers

• Individual short term factors that ma"e acustomer more a,are of a service need orintensifies his need)

• 0here are certain times ,hen a customerholds hi#her expectations for a service)

• 5)#) a customer orderin# home delivery of food mayexpect 9uic" delivery ,hen he is hostin# #uests athome or ,hen he is feelin# hun#ry)

• Personal emer#ency situations ,here

service is ur#ently needed)• 5)#) rea" do,n of office e9uipment on a busy day)• (n accident and need for car insurance


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%erceived Service /lternatives

• no,led#e about other providers

from ,hom customer can obtain the

service)

• If customer has multiple service

providers to choose from' their level

of ade9uate service is hi#her and

vice versa)


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Sel-$erceived service roles

• It is the customer/s perception of the de#ree to,hich he or she exerts influence on the level ofservice they receive)

• When customer perceives #reater control over

service' he becomes less tolerant)• If customer believes he is performin# his role inservice delivery' the @one of tolerance is narro,and vice versa)

• 0here can be many roles a customer can be

performin# such as complainin# ,hen service ispoor' or specifyin# the level of service he ,antsbefore the service is even delivered)


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Situational +actors

• everal performance conditions that

a customer vie,s as beyond the

control of provider' such as• Natural disasters

• ?ver cro,din# on special events

• 5mer#encies


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.ercise to identiy +actors

inluencing /de7uate service levelIn groups of four, choose a services industry and spend15 minutes

brainstorming to identify specific situations of customers in eachof the four factors influencing adequate service level ofcustomers. (Thin of practical e!amples from the industry"

Be certain the requirements reflect the customer’s point ofview.

"em$orary Service Intensiiers

%erceived Service /lternatives

Sel-$erceived service roles

Situational +actors


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Cha$ter 9 :

Customer Perceptions

of ervice


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Customer %erce$tion o Service

• Customer Perceived service is a

result of t,o importance dimensions

of service:

• Customer atisfaction

• ervice uality


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Customer %erce$tion (Satisaction Vs uality)

• Customer atisfaction

– ;epresents a broader

concept' ,hich

includes severaldimensions and

aspects related to the

Product) 5)#) Product

features' Price'

customer value etc)

• ervice uality

– 6ocuses specifically on

service dimensions)

– It is a component of

customer satisfaction)


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Customer %erce$tion (Satisaction Vs uality)

Service

uality

%roduct

uality

%rice

Customer

Satisaction

Customer

4oyalty

Situational

actors

%ersonal

actors

;es$onsiveness

/ssurance

.m$athy

"angi#les

;elia#ility

%ersonal

actors

%ersonal

actors

Situational

actors

%ersonal

actors


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"y$es o Customer %erce$tions

• 0ransaction Perception:• Perception about sin#le' transaction specific issue of a

service

e)#) behavior of the sales person durin# customer visit)• 7nderstandin# these can help provider in "no,in# the

service problems and ma"in# immediate chan#es forimprovement

• Cumulative Perception:• Perception about the company based on all their

experiences and overall aspect of service)

• 0hese help the provider to identify customer loyalty andmana#e overall company ima#e• 0ransaction perceptions help to form cumulative

perception)• oth can be different or same varyin# from customer to

customer and time to time)


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Service uality 'imensions

• ;eliability

• ;esponsiveness

• (ssurance

• 5mpathy

• 0an#ibles

"angi#les

.m$athy /ssurance

;es$onsiveness

;elia#ility

Service

uality


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!eliability

• (bility to perform the promised

service accurately)

• When a company is committed andable to deliver on promises)

• Promises about delivery' price'

problem resolution etc)


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!esponsiveness

• Willin#ness to help customer andprovide prompt services)

• ;elates to Promptness of service)

• Customer measures responsivenessthrou#h the len#th of time he has to,ait for a service' or company/s

response to his 9uestions or servicefailure and assistance etc)


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"ssurance

• 5mployee/s "no,led#e and courtesy

and their ability to inspire trust and

confidence)

• 0his dimension is related to services

,here customer perceives hi#h

ris"s' e)#) an"in#' courier'

Insurance' medical' bro"era#e etc)


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Empathy

• Company/s commitment to care for

customers and provide individuali@ed

attention to customers)• ( service provider can convey this

dimension throu#h customi@ed services

and understandin# individual needs of

customers and #ivin# attention to them)


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#angibles

• ;epresents company physicals)

• (ppearance of physical facilities'e9uipment' personnel and ,ritten

material etc)

• Provider can use this dimension torepresent superior service 9uality)


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Service uality 'imensions

• Customers develop perceptions about service9uality based on these dimensions)

• ?ne of the dimension can be more important for a

customer in a specific situation)e)#) (ssurance is important for a customer ta"in# a treatment

at hospital' or ( customer sendin# a birthday #ift to friendthrou#h courier is considerin# reliability more than otherdimensions)

• ometimes a customer uses all of these

dimension and sometime not)e)#) 5mpathy is not applicable in case of (0! use) ?r

0an#ibles ,ill not be considered by customer #ivin# atelephonic order)


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< ildi #l k C t


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Sales CallSales Call

Ordering SuppliesOrdering Supplies

BillingBilling

Delivery and InstallationDelivery and Installation

ServicingServicing

/ Service .ncounter

Cascade or an Industrial %urchase


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"y$es o Service .ncounters

• ;emote 5ncounters

• Phone 5ncounters• 6ace to 6ace 5ncounters

S i . t "h


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Service .ncounter "hemes(Sources o $leasure and dis$leasure in service .ncounters)

• ;ecovery – 5mployee response to service delivery system failure

• (daptability – 5mployee response to customer Needs and re9uests

• pontaneity – 7nprompted and unsolicited employee actions

• Copin# – 5mployee response to problem customers


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. ti i # h i


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.ective service #ehavior (/da$ta#ility)

• $os – ;eco#ni@e the

seriousness of the need) – (c"no,led#e) – (ttempt to accommodate)

– (dBust the system) – 5xplain rulesFpolicies) – %ive other favors if

customer re9uest is notpossible)

– 0a"e responsibility)

• $on/ts – I#nore customer) – !a"e false

claimsFpromises) – ho, un,illin#ness to tr)

– !a"e a fun of customer) – pea" rudely) – (void responsibility) – 6or#et the promise done

,ith customer) –


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.ective service #ehavior (S$ontaneity)

• $os

– 0a"e time) – e attentive)

– (nticipate needs) –


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.ective service #ehavior (Co$ing)

• $os

–


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.ercise to

Identiy .ective Service


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Cha$ter 9 =

Customer ;elationship

!ana#ement C;! for services


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>#?ectives o C;M

/c7uiring

Satisying

;etaining

.nhancing

C u s t o m

e r


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4evels o Customer ;elationshi$

Sus$ect

%artner

/dvocate

%ros$ect

+irst time

#uyer

;e$eat

customer

Client

Mem#er

Inactive

customer


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Customer %yramid

%latinum

customers

%latinum

customers

old customersold customers

Iron customersIron customers

4ead customers4ead customers

Most $roita#le

customers

%roita#le #ecause they

s$end more over time@

cost less to maintain

and s$read $ositive

!ord o mouth

4east $roita#le

customers

.$ensive to serve in

terms o time@ eort

and money


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%latinum customers

• !ost profitable customers

• *eavy users

• 0ypically not price sensitive• Willin# to invest in and try ne,

offerin#s of the company

•


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Iron customers

• 5ssential customers ,ho provide the

volume needed to utili@e the firm/s

capacity)

• pendin# level is lo,)

• 0heir loyalty and profitability is not

#od enou#h for special treatments

and favors)


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4ead customers

• 0hese customers are costin# thecompany money to serve them)

• 0hey demand more attention and

favor than they deserve)• uy in small 9uantity and price

sensitive' resultin# in poor profits)

• ometimes problem customers i)e)complainin# about the firm to others)

;elationshi$ 'evelo$ment


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;elationshi$ 'evelo$ment

Model

Customer loyalty

>utcomes

!elationship $onds

A+inancial #onds

ASocial #ondsACustomization #onds

AStructural #onds

Core service Provisions

ASatisaction

A%erceived service 7uality

S%itching barriers

ACustomer inertia

AS!itching costs

Customer $enefits

AConidence #eneitsASocial #eneits

AS$ecial treatment #eneits

&irm $enefits

A.conomic #eneits

ACustomer #ehavior #eneitsAH;M #eneits

;elationshi$ 'rivers


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+inancial #onds

• %olume & 'requency reards

• )table pricing

• *undling & +ross selling


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Social #onds

• +ontinuous relationships

• )ocial bond among customers

• ersonal relationships


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Customization #onds

• +ustomer intimacy

• -ass customiation

• /nticipation0 innovation


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Structural #onds

• Integrated information systems

• oint investments

• )hared processes & equipment

service marketing part1

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