services marketing(2)

8/8/2019 Services Marketing(2)

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MARKETING OF SERVICES


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L EARNING OBJECTIVES

Increasing importance of services in economiesAll principles of marketing apply to services

The nature and special characteristics of servicesManaging service quality, productivity and

personnel


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How to position a service organization and a brand

The service marketing mix

How businesses should manage service encountersand service recovery

Innovations in services

Learning Obj ectives (Co ntd.)


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Difficult to provide a single definition of service

Concept of service has to be understood either as an

exclusive offering from a company that is primarilyintangible, or as a part of the service-product mixthat a company offers

Learning Obj ectives (Co ntd.)


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SERVICE L EVE L S

Service is an intangible offering with little or no transfer of physical products to the customer

Service is one part of product-service mix being offered

to customersThe main offering is the product but the supplier also

provides some services

Every product or service or any combination of a mix of the two, ultimately is supposed to provide service for customers


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INCREASING IMPORTANCE OF

SERVICESAdvances in technology

Growth in per capita income

A trend towards outsourcing

Deregulation

Increasing growth in retailing due to increase in propensity to consumer


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ALL PRINCIP L ES OFMARKETING APP LY TO

SERVICES


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Services impact customers more directly than products do

Marketing of services has to be more deliberateand considered

Service provider has to carefully audit hisresources and competencies

Positioning must be razor sharp

Services more intractable than products

All P rincip les of M arketing App ly to S ervices (Co ntd.)


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Service provider must define service very preciselyand also design the appropriate service-product mix

Promotion more challenging due to intangible natureof services

Same basic service can be provided in vastly differentservice facilities providing different levels of amenities and luxuries



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Same service can be delivered in variousways

Marketing mix conveys the positioning of aservice



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NATURE OF SERVICESIntangibility

Inseparability

Presence of other consumers

VariabilityPerishability


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Services M arketing

tangibleintangible

saltdinner in arestaurant hair style

Services are a form of products .


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Services M arketing

but they have different attributes that affect marketingstrategies:

PerishableCannot be stored or shipped

Inseparable

Consumer is present when service is produced.Cannot separate service from service provider.


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Services M arketing

Service Attributes (cont.)

HeterogeneityQuality varies over time.Demand varies over time.

SubstitutabilityYou can always do it yourself.

PostponabilityYou can always stall.


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Services M arketing

Gap Theory:

Satisfaction is a function of the gap between expected service and perceived service.

An extension of buyer behavior What you thought was going to happen versus your perception of what

happened

Key is to minimize the gapGive the customer what they expect ?


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MANAGING SERVICESManaging service qualityCompanies rated higher on service quality perform

better in terms of market share growth

Big gap exists between the expectations of thecustomers and the level of the service they get Real

barriers while matching expected and perceived servicelevels of customers


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Does not understand customer requirements:Misconception barriers arise when companiesmisunderstand customer expectations

No resources: A company may understandcustomer expectations but is unwilling to provide resources to meet them

Bad delivery: The company is not able todeliver the expected service

M anaging Services (Co ntd.)


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Managements will: A managementeager to improve quality is able to do

it

Exaggerated expectations: Exaggerated promises may become a problem

M anaging Services (Co ntd.)


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M eeting cust om er expectati ons

Important to understand and meet customer expectations

Consumers of services value not only theoutcome of the service encounter but also theexperience of taking part in it

Access: Is the service provided at convenient

locations and at convenient times, with little waiting period in availing the service ?


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Reliability: Service provider should be able to deliver the promised serviceeach time the customer decides toavail of it

Credibility: Can customers trust theservice company and its staff ?

Security: Can the services be usedwithout risk ?

M eeting C ust om er E xpectati ons (Co ntd.)


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U nderstanding customer: If thecompany understands the expectationsand also has the capability to serve them,the customer is satisfied with the serviceoutcome

Responsiveness: How quickly do servicestaff respond to customer problems,requests and questions ?

Behavior of employees: Do service staff act in a friendly and polite manner ?



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Competence: Performance of the primaryservice will depend on the knowledge andcompetencies of the service providers

Communication: Is the service describedclearly and accurately ?

Physical evidence: The company should provide physical evidence to customers

which will assure customers that they will be provided a good service



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M anaging service pr oductivit y

Measure of relationship between thevarious types of inputs that are required to

produce the service and the service output

Conflict between improving service productivity and raising service quality

Technology can be used to improve productivity and service qualitysimultaneously


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Customer involvement in productioncan be increased

Important to balance supply anddemand

By smoothing demand or increasingflexibility of supply, both productivityand service quality can be achieved

M anaging Service P r oductivit y (Co ntd.)


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M anaging service sta ff

Quality of the service experience is heavilydependent on staff-customer interpersonalrelationship

Companies need to treat their employees wellif customers have to be served well by their employees

Nature of the job needs and appropriate personality characteristics to be defined

sharply while selecting service staff


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Socialization allows the newly recruitedservice professionals to experience theculture and tasks of the organization

Maintaining a motivated workforce

Customer feedback essential to maintain highstandards of service quality

Employees of service organizations must take pride in their jobs

M anaging Service Sta ff (Co ntd.)


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POSITIONING SERVICES

Differentiate from competition on attributesthat target customers highly value

Entails two decisions:Choice of target market (where tocompete)

Creation of differential advantage(how to compete)


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Determine important choice criteria of

customers carefullyMost important decision of a serviceorganization is selecting the factors on

which it will competeSelect a few factors and provide superlative

performances in the chosen factors

Target marketing

Differential advantage

Po siti oning Services (Co ntd.)


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THE SERVICESMARKETING MIX


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Th e service

Pure services are intangible

Higher perceived risk in decision making process

People, physical evidence and processes provide cues about the quality of the service

Brand name affects perceptions of service

Provide service trials wherever possible


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P r omo ti on

Intangible elements of service may bedifficult to communicate

Sales people should develop lists of satisfied customers to be used in referenceselling

Word of mouth is critical to success

Acknowledge the dominant role of personal influence in the choice processand stimulate word of mouthcommunication


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Persuade satisfied customers to inform

others of their satisfactionDevelop materials that customers can passon to others

Target opinion leaders in its advertisingcampaign

Encourage potential customers to talk to

current customersCommunication should also be targeted atemployees

P r omo tion (Co ntd.)


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Price

An indicator of perceived quality

Important in matching demand andsupply

Price sensitivity key segmentation

variable


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Setting fees levels:

Offset

Inducement

Divisionary

Guarantee

Predatory


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Pl aceDistribution channels for services aremore direct

Production and consumption issimultaneous

New technologies permit servicecompanies to provide services withoutcustomers coming to their facility


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Peop le

Service quality is inseparable fromquality of service providers

Set standards to improve quality of

service provided by employees andmonitor their performance

Training of employees crucial

Adopt a customer-first attitude than putting own convenience first


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Employees of service organizations haveto be adept in multiple roles

Have empathy to judge the service

requirement and mood of the customer

Examine the role played by customers inservice environment

Seek to eliminate harmful interactions

P eop le (Co ntd.)


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Phy sica l evidence

The environment in which the service isdelivered

Includes any tangible goods that facilitatethe performance and communication of theservice

Strengthen cues that customers search for to judge the quality of services


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P r ocess

Procedures, mechanisms and flow of activities by which a service is deliveredto customers

Control variations in services by targetingsmaller segment of customers

Process and its visibility are bothimportant for customers

Process should be employed only when itis required to provide a service and not

because customers have come to expect it


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SERVICE ENCOUNTERSA terrible ending usually dominates a

persons recollection of an experienceCustomers who are mentally engaged in atask do not notice how long it takes

Customers desperately want to make senseof unexpected events


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Study service encounters from customers point of view

Finish strong

Get the bad experience out of the way earlySegment the pleasure, combine the pain

Build commitment through choiceGive people rituals and stick to them

Service E nc ounters (Co ntd.)


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SERVICE RECOVER Y

Well-intentioned, prompt, and apt recoverycan assuage angry customers

Everyone in the organization must have theskill, motivation, and authority to makeservice recovery an integral part of serviceoperations

Production-oriented service-delivery systemshave helped in achieving consistently highservice standards


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Inevitable problems will still arise, by

providing for service recoveryGood service providers cover all the costs thata failure incurs

Customers problem is an opportunity

Companies must be responsive to customer complaints, and encourage them to complain

Monitor areas of the organization which arelikely to throw up problems more frequently

Service R ecover y (Co ntd.)


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Solve customers problems fast becauseservice problems quickly escalate

Train frontline employees and empower them

Give employees the authority, responsibility,and incentives to help customers in uniqueways

Let customers know about correctivemeasures taken and the improvementachieved

Service R ecover y (Co ntd.)


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INNOVATION IN SERVICESDifficulties in applying traditional methods of research and development to services

Experiments with new services are most usefulwhen they are conducted live , thoughcautiously

Improvements should be planned andexperimented incrementally


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Personnel conducting the experiments must be motivated

Successful experiment has to be persisted

withExperiment only when it can be finallyimplemented

Conducting live experiments risky andcumbersome, but may be inevitable

Inn ovati on in Services (Co ntd.)

services marketing(2)

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