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SERVICES MARKETING:
People, Technology, Strategy 5/e
Christopher Lovelock and Jochen Wirtz
PRENTICE HALL, 2004
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 1
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20 Years of Services Marketing
1984 Lovelock, 1st edition
1991 Lovelock, 2nd edition
1996 - Lovelock, 3rd edition
2001 - Lovelock, 4th edition
2002 - Lovelock, Wirtz, and Keh, Services Marketing in Asia
2004 - Lovelock & Wirtz, 5th edition
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 2
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Whats New?
New co-author Jochen Wirtz
New streamlined structure slimmed down from18 chapters to 15, more tightly written
Coverage of latest research and developmentsin management practice (check the references!)
New examples
New readings 6 of 8 are newNew cases 12 of 15 are new, balance all updated
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Jochen Wirtz, PhDAssociate Professor, National University of Singapore
Born in Germany PhD in services marketing, London
Business School (chair: John Bateson)
Winner of six best paper awards,including (with Patricia Chew) mostoutstanding article of 2002 inInternational Journal of ServiceIndustry, 2002
Co-author, Services Marketing in Asia(Prentice Hall 2001)
Six awards for outstanding teaching,including university-wide award, 2003
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 4
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1 - 5Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
EE
Jochen and family at Awards Banquet forNUS Outstanding Educator Award, 2003
NUS OutstandingEducator Award,(university-wide)2003
(Only two awardseach year among2,700 NUS faculty)
Previous teaching
Awards at NUSBusiness School,1996, 1998, 1999,2001, 2002
T
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7/421 - 6Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/EEE
Target Markets for SM5
Primary targets MBA courses in services marketing, service management Upper division undergraduate courses (same)
Secondary targets (with supplementary readings and cases) MBA courses in public and nonprofit marketing Courses in tourism, hotel and restaurant marketing Courses in marketing at other professional schools
(e.g., architecture, public health)
Can also be used in executive education coursesthat emphasize services marketing/management
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Part II
Key Elements of Services Marketing
Creating the Service Product
Designing the Service Communications Mix
Pricing and Revenue Management
Distributing Services
Part I
Understanding Services, Consumers & Markets
Introduction to Services Marketing
Consumer Behavior and Service Encounters
Positioning Services in Competitive Markets
Part III
Managing the Service Delivery Process
Designing and Managing Service Processes
Balancing Demand and Capacity
Planning the Service Environment
Managing People for Service Advantage
Part IV
Implementing Services Marketing
Managing Relationships and Building Loyalty
Customer Feedback and Service Recovery
Improving Service Quality and Productivity
Organizing for Service Leadership
Part I
Understanding Services, Consumers & Markets
Part II
Key Elements of Services Marketing
Part III
Managing the Service Delivery Process
Part IV
Implementing Services Marketing
Part III
Managing the Service Delivery Process
Designing and Managing Service Processes
Balancing Demand and Capacity
Planning the Service Environment
Managing People for Service Advantagegg
1 - 7Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
Services Marketing 5/e: A Simple, IntuitiveStructure Students Understand Right Away
Part IUnderstanding Service Products, Consumers & Markets
Introduction to Services Marketing
Consumer Behavior and Service Encounters
Positioning Services in Competitive Markets
Part IIKey Elements of Services Marketing
Creating the Service Product
Designing the Service Communications Mix
Pricing and Revenue Management
Distributing Services
Part IV
Implementing Services Marketing
Managing Relationships and Building Loyalty
Customer Feedback and Service Recovery
Improving Service Quality and Productivity
Organizing for Service Leadership
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9/421 - 8Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
Implementation in a Course
SM5 offers an integrative package: 15 chapters of text (with lots of examples) 8 readings 15 cases
Not built around a central conceptual framework that must bebuilt through a pre-defined sequence of chapters
Instead, offers a toolbox of important concepts andtheoretical constructs that have practical application tomanagement
Very flexibleafter Part 1, chapters can be taught inmultiple sequences; certain topics can be omitted in shortcourses
Links research findings to good managerial practice
End-chapter questions, cases study questions, and suggestedstudent papers/projects get students to work through concepts, come
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up with detailed analysis and practical solutions
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SM5 CONTENT HIGHLIGHTS
Chapters, Readings, Cases,
Pedagogical Aids
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 9
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tt
Part 1: Understanding Service Products,Consumers and Markets
1. Introduction to Services Marketing
Differences among services are as important as differencesbetween goods and services
Service success requires focus on both customers and competitive
markets
2. Consumer Behavior in Service Encounters
3. Positioning Services in Competitive Markets
Positioning distinguishes a service brand from its competitors Using positioning maps to plot competitive strategy
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 10
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Four Categories of ServicesEmploying Different Underlying Processes (Fig. 1.5)
What is the
Nature of the
Service Act?
TANGIBLE
Who or What is the Direct Recipient of the Service?
DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS
People ProcessingPossession Processing
ACTS
INTANGIBLEACTS
e.g., airlines, hospitals,
haircutting, restaurants
hotels, fitness centers
Mental StimulusProcessing
e.g., freight, repair,
cleaning, landscaping,
retailing, recycling
Information Processing(directed at intangible assets)
e.g., broadcasting, consulting,
education, psychotherapye.g., accounting, banking,
insurance, legal, research
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 11
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Positioning after New Hotel Construction:Price vs. Service Level (Fig. 3.6)
New GrandMandarin
HeritageMarriott
Continent al
Expensive
Regency
Action?
PALACE
HighService
Shangri-LaNo action?
Atlantic
ModerateService
Sheraton
Italia
Less Expensive
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CastleAlexander IV
AirportPlaza
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Part 2: Key Elements of Services Marketing
4. Creating the Service Product Flower of Service model of core and supplementary services
5. Designing the Communications Mix for Services
6. Pricing and Revenue Management Activity based costing (ABC) Revenue management (+ Kimes & Chase reading + 2 cases) Ethical concerns and perceived fairness in pricing policies
7. Distributing Services
Place, cyberspace, and time Role of intermediaries, franchising (Aussie Pooch case) International distribution of services
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The Flower of Service:Categorizing Supplementary Services (Fig. 4-5)
Information
Payment Consultation
KEY:
Billing
Exceptions
Cor
e
Order-Taking
Hospitality
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sssssssssssssss
Facilitating elements
Enhancing elements
Safekeeping
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44444
Splitting Responsibilities for DeliveringSupplementary Services (Fig. 7.2)
As created byoriginating firm
Core
As enhancedby distributor
+
As experiencedby customer
= Core
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Part 3: Managing the Service Delivery Process
8. Designing and Managing Service Processes Detailed review and example of blueprinting The customer as productive co-producervs. the Jaycustomer as
abusive threat to profitability, quality, and safety
9. Balancing Demand and Capacity
10. Planning the Service Environment
Designing and managing the servicecape: role of music, scents,and colors (+ Haeckel, Carbone, and Berry reading)
Role of architecture and other visual design elements, illustrated byphotos
11. Managing People for Service Advantage
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Arrive,
valet park
Check-inat reception
Backstage
Front
Stage
ttttttttttttttttttttttttttttttt
1 -Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
Simplified Example: Blueprinting a Hotel Visit(extract only)
PhysicalEvidence
Line of
CustomerActions
Makereservation
Hotel exterior, lobby,employees, key
Elevator, corridor,room, bellhop
Go to
room
InteractionEmployee
Actions
Face-to-face
Doormangreets, valet
takes car
Receptionistverifies, gives
key to room
Line ofVisibility
Phone
ContactRep.
records,
confirms
Enter
data
Valet
Parks Car
Register
guest data
Make up
Room
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CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
Comparison of Hotel Lobbies(Figure 10.1)
The servicescape is part of the value proposition!
Orbit Hotel and Hostel, Los Angeles
Four Seasons Hotel, New York
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Part 4: Implementing Services Marketing
12. Managing Relationships and Building Loyalty How to calculate customer lifetime value (+ Mass Audubon case) Customer relationship management systems
13. Customer Feedback and Service Recovery
14. Improving Service Quality and Productivity
15. Organizing for Service Leadership
Integrating marketing, operations, and human resources
Moving up the service leadership ladder losers, nonentities,professionals, leaders
Individual leadership qualities, culture and climate
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1 -Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
The Wheel of Loyalty (Fig. 12.7)
Enabled through:
3. ReduceChurn Drivers
Conduct churn diagnostic
Address key churn drivers
Implement complainthandling & service
1. Build aFoundationfor Loyalty
Segment the market
Be selective in acquisition
Use effective tiering
Frontlinestaff
Accountmanagers
Membership
programs
CRM
Systems
recovery
Increaseswitching costs
Buildhigher levelbonds
Customer
Loyalty
2. Create LoyaltyBonds
Giveloyalty
rewards
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1 -Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E
of service.
Deliverquality
service.
Deepen
therelati
onship
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Service Encounteris Dissatisfactory
Take some formof public action
Take some formof private action
Take no action
Complain to theservice firm
Complain to athird party
Take legal actionto seek redress
Defect (switchprovider)
Negative word-of-mouth
Any one or a combination ofthese responses is possible
Complain to athird party
ake legal actionto seek redress
Take some formof private action
Defect (switchprovider)
Take no action
egative word-of-
mouth
Courses of Action Open to a DissatisfiedCustomer(Figure 13.1)
Complain to theservice firm
Take some formof public action
Service Encounteris Dissatisfactory
N
Any one or a combination ofthese responses is possible
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Cause and Effect Chart forAirline Departure Delays (Fig. 14.3)
Facilities,Equipment
FrontstagePersonnel
Procedure
Arrive lateOversized bags
Aircraft late togate
MechanicalFailures
Gate agents
cannot process
fast enough
Delayed check-inprocedure
Acceptance of late
Customers
Other Causes
Weather
Late pushback
Late foodservice
Late baggage
Late/unavailable
airline crew
Late cabincleaners
passengers
DelayedD epartures
Poor announcement of
departures
Air trafficLate fuel Weight and balance
sheet late
Materials, Supp lies
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BackstagePersonnel
Information
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Eight Readings Important Insights fromThoughtful Practitioners and Leading Researchers
Selected for readability and potential tostimulate classroom discussion
On average, shorter than those in previous edition
Two carried over from 4th
edition, six new
Academic authors featured are: Len Berry, Dick Chase, Marc Epstein, Ray Fisk, Steve Grove,
Sherri Kimes, Kay Lemon, Roland Rust, Tony Simons, RobertWestbrook, Valarie Zeithaml
Topics: service theater, competing in a weak industry,service brand equity, yield management, leading thecustomer experience, investing to build customer equity,why service stinks, action-profit linkage model
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15 Terrific Classroom-Tested Cases, OfferingInstructors Lots of Choice and Flexibility
Number of cases has been increased to 15 (including a3-part case series) up from 10 in 4th edition 12 cases are new to this edition, 3 carried over from 4th
edition and updated
Students will appreciate an exceptionally up-to-dateselection all 2000 or later, most 2003 or 2004 A mix of lengths and levels of difficulty
Cases drawn from Harvard, Yale, and INSEAD collections,
as well as new cases from Lovelock and Wirtz
A broad cross-section of service industries and situations Teaching notes provide detailed analysis and teaching
suggestions to help instructors do a great job in class
1 24
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3333
Most Cases Can Be Used for Class or WrittenAssignments; Depict a Wide Array of Situations
Fast food High tech
Car insurance
e-Service
Restaurant
Environmentalorganization
Car sales and repair Telecommunications
Retail banking
Apparel retailing
Hotels
Franchised dog washing
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Aussie Pooch Mobile: When the Client is a Dog,CB means Canine Behavior
APM franchisee Elaine Bealwashes Zak the Rottweileroutside his owners home insuburban Brisbane
Slid 2004 b Ch i t h L l k d J h Wi t S i M k ti 5/E 1 26
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FF
Pedagogical Aids in the Book
Introduction to each chapter highlights key issues andquestions
Four types of boxed inserts Best Practice in Action (application of best practices)
Research Insights (summaries of research findings) Service Perspectives (in-depth examples illustrating key concepts) Management Memo (reviews of key concepts)
Review questions and application exercises
Suggested study questions for all cases Good selection of graphics (many also as PowerPoints)
Occasional cartoons use humor to make a pointSlide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 27
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Instructors Resource Material
Detailed instructors manual on course website Summaries of chapters with teaching hintsAnswers to study questions Sample course outlines
Summaries of readings with teaching hints 16 student exercises and 5 comprehensive projectsAdvice on how to succeed in case teaching Outstanding teaching notes for cases
More than 280 PowerPoint slides, organized into15 chapter-specific files
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Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 - 28