Services Marketing(2)
Transcript of 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
All P rincip les of M arketing App ly to S ervices (Co ntd.)
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Same service can be delivered in variousways
Marketing mix conveys the positioning of aservice
All P rincip les of M arketing App ly to S ervices (Co ntd.)
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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 ?
M eeting C ust om er E xpectati ons (Co ntd.)
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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
M eeting C ust om er E xpectati ons (Co ntd.)
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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.)