IM 9e pp CH11

Managing Services for Business Markets

Developed by Cool Pictures and MultiMedia Presentations

Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

1

From a Product to a Solutions PerspectiveProduct Perspective Solutions Perspective

Value Proposition

Win by creating innovative products and enriching features of existing products

Win by creating and delivering superior customer solutions

Value Creation

Firm creates value.

Customer and firm co-create Value. Start with customer problem, and then assemble required products and services to solve problem. Interaction-based and centered on co-creating solutions

Designing Offerings

Start with product or service, and then target customer segments

Company-Customer Relationship

Transaction-based

Focus on Quality

Quality of internal processes and company offerings

Quality of customer firm interactions 2

Source: Adapted from Mohanbir Sawhney, Going Beyond the Product: Defining, Designing, and Delivering Customer Solutions, Working paper, Kellogg School of Management, Northwestern University, December 2004; and C. K. Prahalad and Venkat Ramaswamy, The Future of Competition: Co-Creating Unique Value with Customers (Boston, MA: Harvard Business School Press, 2004).Developed by Cool Pictures and MultiMedia Presentations


UPS solutions United parcel service of America began by mastering a narrower set of activities in the package delivery system. Picking up, shipping, tacking and delivering packages. Designed transportation networks for their client like Ford to reduce time of delivery of vehicles from plants to dealers. Partnering with Nike and managing al the back-office processes for direct selling from order mgt. and delivery to customer support. Example of DuPont- selling paint to Ford but now runs Fords paint shop.Developed by Cool Pictures and MultiMedia Presentations Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

3

Benefits of solution marketing Example of Jet engines GE transportation manufactures jet engines of the capacity 14000 pound thrust to 115000 pound thrust that power Boeing777. Real profits comes from the service package. jet engine is a commodity. Airlines buyers decides that which engines is to be placed in the aircraft rather than manufacturer. Creative strategy of GE at China-training of B2B marketing for sales and marketing managers.Developed by Cool Pictures and MultiMedia Presentations Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

4

Services are Different Deeds Processes Performances Services are intangible



5

Useful tool for understanding product-service definitional problem. Continuum suggest very few pure products or pure services. Business Product-Service Classification Based on Tangibility



6

Business services are intangible-dominant market offerings. Few services are totally intangible--they often contain elements with tangible properties. Service buyer uses but do not own, the service purchased.

Unique Service Characteristics



7

The Dimensions of Service Quality

Customers focus on five dimensions in evaluating service quality. Among these dimensions, reliability--delivery on promises-is most important to customers.Developed by Cool Pictures and MultiMedia Presentations Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

8

Customer Satisfaction and LoyaltyCustomer-Linking Processes Basic elements of product or service that customers expect all competitors to provide. Basic support services, such as technical assistance or training. A recovery process for quickly fixing product or service problems. Extraordinary services that so excel in solving customers unique problems or in meeting customer needs that these services make the product or service seem customized.Developed by Cool Pictures and MultiMedia Presentations Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

9

Return on service quality

It is difficult to determine that how much to spend on improving service quality. Expenditure on quality have diminishing returns- at some point expenditure do not increase returns. How to calculate return on investing in quality. The relationship between the expenditure and customer satisfaction is measured by the judgment of the managers and then through market testing. Quality improvement should be treated as investment. They must pay-off.



10

Segmenting ServicesFirst, service segments often narrower because customer looks at customization. Second, service segmentation focuses on what business buyers expect as opposed to what they need. Third, segmenting service markets helps firm adjust service capacity more effectively. segmentation usually reveals that total demand is made up of numerous small predictable demand patterns. Ex. Hotel capacity prediction



11

Conceptualizing the Service Product Service packageproduct dimension of service. Service package must consider some factors unique to services-personnel, physical product, and process of providing service.



12

Major stumbling block to creating and launching new service is difficulty in tangibilizing the service concept. Traditional approaches--product prototyping,etc.--do not work effectively with services because firm cant prototype services often customized for individual buyers.

Steps for Enhancing the New Service Development Process



13

New Service Projects That Succeed Customized, Expert Service: New services relatively straightforward and inexpensive-customized to fit client firms needs and operating systems Planned, Pioneering Venture: First-to-market services--unique, complex, and expensive. Improved Service Experience: Equipmentbased improvements made to current service offering that increase speed and reliability of service process.Developed by Cool Pictures and MultiMedia Presentations Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

14

New Service Projects That Fail Peripheral, Low Market Potential Service: New services peripheral to firms core offerings; fail to provide customer with any added value, and enter market with very limited potential. Poorly Planned Industrialized Clone: Complex new services that rely on hard technology for production and delivery.



15

Self assessment exercise Simultaneous production and consumption is a unique service characteristic. From the following list, choose the marketing implication most closely related to this characteristic. a. planning capacity on the basis of peak demand b. buyer-seller interaction requires that the service be done "right c. focusing promotion on the advantages of non-ownership d. using pricing and promotion to even out demand peaks and valleys e. developing systems that minimize deviations and human error When the marketer emphasizes reductions in staff, overhead, and capital as potential benefits to the purchaser, this relates to the service characteristic of: a. variability. b. perish ability. c. simultaneous production and consumption. d. intangibility. e. lack of ownership.



16

The interaction of the individual service provider with the customer may be the key element in the firm's entire marketing strategy. This is an explicit recognition of which characteristic unique to business services? a. simultaneous production and consumption b. lack of ownership c. no standardized output d. inability to stockpile e. the dominance of intangible elementsDeveloped by Cool Pictures and MultiMedia Presentations

In evaluating service quality, customers focus on: a. empathy. b. responsiveness. c. assurance. d. reliability. e. all of the above


17

"Delivering on promises" relates to which of the following dimensions of service quality? a. empathy b. responsiveness c. assurance d. reliability e. all of the above

The customer benefit concept refers to: a. a detailed listing of which services will be provided. b. guidelines for the delivery of the service product. c. the core benefit that the customer will derive from the service. d. the general benefits the service company will provide to the customer. e. none of the aboveCopyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.


18

The ____ defines the general benefits the service company will provide in terms of the bundle of goods and services sold to the customer. a. customer-benefit concept b. service offer c. cross-selling concept D .mixed bundling concept e. service concept

____ refers to selling a new service to customers who buy an existing service. a. Pure bundling b. Cross selling c. Direct selling d. Customer extension e. Mixed bundling



19

From the following list, identify the item that is least likely to be considered a pure service. a. market research b. security and protection services c. after-sales equipment repair and maintenance d. insurance e. consulting

Many business offerings are composed of a combination of product and service elements. From the following, choose the correct ordering, from tangible dominant to intangible dominant, of the items listed. a. executive management seminars, industrial grease, convention hotel b. convention hotel, industrial grease, executive management seminars c. convention hotel, executive management seminars, industrial grease d. industrial grease, convention hotel, executive management seminarsCopyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.


20

IM 9e pp CH11

Documents

Transcript of IM 9e pp CH11