Balance

Peter Prevos

Marketing ManagementThe Importance of Customer Service

Customer Service
Hypotheses

Retail setting and staff influences buying behaviour

When product, price and promotion are identical, the better service provider will be more successful

Customer Service
Marketing Mix

Product

Price

Place

Promotion

People

Process

Physical Evidence

Mary Jo Bitner, services marketing guru.

Now generally accepted as a absolute truth in marketing.

Marketing mix originally proposed by Neil H. Borden in 1964: The Concept of the marketing mix:Product Planning, Pricing, Branding, Channels of Distribution, Personal Selling, Advertising, Promotions, Packaging, Display, Servicing, Physical Handling, Fact Finding Analysis

E. Jerome McCarthy simplified the system and grouped them in four categories, now known as the Four Ps of Marketing.

The basic marketing mix does not recognise the service aspect of marketing appropriately.

Booms and Bitner extended the marketing mix in 1981 to add three aspects to cover the specific nature of a service.

People: how do staff behave? How do other consumers behave?

Process: How long does it take to complete the service? Is it a pleasant experience?

Physical evidence: In retailing the physical evidence is the product.

Effectively all products should be viewed as services because of the importance of retail.

Note that customer service is not part of the marketing mix as such.

Customer service in retail is related to:Place

People

Process

Customer Service
Place

ServicescapeEnvironmental dimensions

Holistic environment

Moderators

Internal responses

Behaviours

Atmospherics

Gruen Transfer

Cluttered display of books stimulates buying.

One of the issues in marketing of services is the inseparability of the provision of the service and the place of the service. Products are not produced at the same place and time they are consumed. Some services can be delivered at arm's length (such as online retail).

In consumer behaviour the focus is on the customer while in organisational behaviour the focus is on staff. To market services you need to look at both. Bitner analysed existing literature and created a conceptual model.Environmental dimensions: the five senses and signs, symbols and artefacts

Holistic environment: how the space is perceived in our mind

Moderators: Cognitive control and personality of staff and customers

Internal responses: cognitive, emotional (staff satisfaction) or physiological

Behaviours: approach or avoidance for consumers. For staff: productivity, staff turnover)

Phil Kotler introduced the term 'atmospherics': "the conscious designing of space to create certain effects in buyers that enhance his purchase probabilities

Gruen Transfer: the moment consumers unwittingly respond to cues in the shopping environment that are designed to disorientate. lighting, sounds, temperature and the spatial arrangements of stores and displays interact, leading the customer to lose control of their critical decision making processes. Our eyes glaze over, our jaws slacken, we forget what we came for and become impulse buyers. Named after Victor Gruen, inventor of the shopping mall. Coined by marketing critic Douglass Rushkoff.

Other research shows for example that:The level of background noise affects both the intensity of flavour and the perceived crunchiness of foods (Woods et al. 2006) This is why airline food tastes so bad.

The material of a drinking cup influences the taste it has (Kishna and Morrin 2008): Beer in a plastic cup.

Mechanism: All neurons are connected to provide one consistent version of reality. Synesthesia: stimulation of one sensory or cognitive pathway leads to automatic, involuntary experiences in a second sensory or cognitive pathway

Customer Service
People

Genuine smiles impacts the bottom line

Emotional contagion

Mirror Neurons

Path model and associated correlations (Gountas et al. 2007).

Extensive research has shown expressive displays such as smiling, displaying friendliness and genuine concern for clients produce positive outcomes such as reported satisfaction and intention to repurchase.

Sandra and her husband John Gountas, together with Michael Ewing researched the connection between expressive displays and the likelihood of repurchasing. Customer satisfaction survey (10 point likert scale) with a national airline in 2003 (n=1160). Five hypotheses:The service provider's expressive display positively influences services satisfaction.

The perception of a service provider's real smile positively influences service satisfaction.

Service provider's expressive displays positively influence consumers to choose a service again

The service provider's expressive display positively influences reported satisfaction with life.

Overall service satisfaction positively influences satisfaction with life.

All hypotheses, except the last one, were confirmed at statistical significant levels

Our brains are wired to respond positively to smiles. Emotional contagion. We see this very clearly in infants. We have so called mirror neurons that activate when we see certain things. When we see smiles, our smile mirror neurons fire. This kinda explains how people can get enthralled in film and suspend disbelief.

Customer Service
Process

How staff and customers behaveSocialisation

Procedures

Apple uses a long waiting time as a signal for quality created through promotion.

Convenience is an important aspect for customers.

The service process needs to be analysed (mapped).

Time is an important consideration when planing a service process. The major quality determinants of a service are (SERVQUAL by Parasuraman, Zeithaml and Berry in the eighties):Reliability

Assurance

Tangibles

Empathy

Responsiveness

Behaviour of staff controlled by:Socialisation

Training (procedures)

Customer Service
Online Retail

Price competition

Information availability

Convenience

Dissatisfaction with retail

Success of home making

Online stores provide strong competition for 'brick and mortar' stores.

Counterargument: online retail has same product and often same price, but people still prefer this low service variety.

Recent publicity surrounding internet shopping versus brick and mortar shopping have focussed on price and more specifically the GST.

Customers have different channel preferences.

The success of online retail could be seen as a counter argument against the claim that customer service influences sales because the elements of people and place have been reduced.

However, on the aspect of process online retail has many advantages there is no need to go anywhere. People's home are centres of entertainment, there is no need to go outside.

But, this does not diminish the argument as online retailers compete on price, which they can do because of lower overheads that outweigh shipping cost. The service argument is only valid when competing on equal product, price and promotion.

All SERVQUAL elements can be covered with online shopping.

One aspect of the preference of online shopping is cognitive control self determination, i.e. NOT wanting service.

Customer Service
Summary

Claim: Retail setting and staff influences buying behaviour

Qualifier: Equal product, price and promotion

Rebuttal: Success of online retail

Data (Grounds): Behaviour and place affects perception of quality and repurchase intention

Warrant: Human behaviour is non rational

Backing: Virgin Blue

Toulmin model for sound arguments (Toulmin 1969).

The Toulmin model can be used to summarise a line of reasoning (would normally not add in presentation).

Other supporting aspects are that are purchasing behaviour is never fully rational. Not irrational! Bounded rationality: we can never fully perceive all aspects of our world.

Also: Our free will is an illusion. Research shows that intentions to act are formed.

Libet experiment: the intention starts in the brain .5 seconds before the action. We are only aware of the action .3 seconds before the act.

We have free won't, i.e. we have cognitive control over our actions. When this cognitive control is not present we show deviant behaviour such as addiction

Thus: we are influenced by environmental cues such as the surroundings we are in and the behaviour of others/

Virgin Blue started to compete on price (market penetration strategy). Now that price has almost equalised they are still successful Examples are hard to find because product, price and promotion is never equal between offerings

Customer Service
Managerial Implications

Recruitment

Training

Store design

Service blueprinting

Service Blueprint.

The place, people and process aspects of marketing overlap.

Staff uniforms can be both people and place.

Staff behaviour can be both people and process.

Importance of service blueprinting. A flow chart that starts with customer demand and ends with customer satisfaction.

Recent research shows that customers are ageist, i.e. they rate people in their own generation as better service providers than others. This could have implications for recruitment, i.e. gender AND generational balance.

Bitner, Mary Jo (1992) Servicescapes: The Impact of Physical Surroundings on Customers and Employees. Journal of Marketing 56(2), 57-71.

Booms, B.H. and Bitner, M.J. (1981), Marketing strategies and organization structures for service firms, in Donnelly, J.H. and George, W.R. (Eds), Marketing of Services, American Marketing Association, Chicago.

Borden, Neil H. (1964) The concept of the marketing mix. Schwartz, George (ed.) Science in Marketing, New York: John Wiley.

Gountas, Sandra, Ewing, Michael T., and Gountas, John I. (2007) Testing airline passengers' responses to flight attendants' expressive displays: The effects of positive affect, Journal of Business Research 60, 8183.

Krishna, Aradhna, and Morrin, Maureen (2008) Does touch affect taste? The perceptual transfer of product container haptic cues, Journal of Consumer Research 34, 807818.

Lovelock, C., Patterson, P. and Walker, R. (2007) Services Marketing 4th ed. Person Education.

Macknik, Stephen L. and Martinez-Conde, S. (2010) Sleights of Mind. New-York: Henry Holt.

Toulmin, S. (1969). The Uses of Argument, Cambridge, England: Cambridge University Press.

Woods, A.T., Poliakoff, E., Lloyd, D.M., Kuenzel, J., Hodson, R., Gonda, H., Batchelor, J., Dijksterhuis, G.B., and Thomas, A (2011): Effect of background noise on food perception, Food Quality and Preference 22(1), 4247.

Customer Service
References

Two types of literature research:Snowballing: using references from a paper you use. Disadvantage you can only go backwards in time.

Bibliographic research: Using specific topical bibliographies. These have been surpassed by database systems.

Database research: Keyword search. Unintelligent data, i.e. no editor to collate the appropriate articles and books, based on key words.

Two types of papers:Literature review: Somebody writes what others have written and has a new perspective on this.

Empirical research: Undertaking experiments, surveys, focus groups and so on

Types of researchQualitative: Describing a quality based on logic.

Quantitative: Using statistical analysis

Types of publications:Peer reviewed journals: Double blind review and so on to reduce bias and 'group think'

Non peer reviewed journals

Magazines, newspapers

Online: Blogs are great to find out about social reality (dogs in Mauritius)

Wikipedia is a great starting point, but can not be used as a reference