MRKT 55030: SERVICES MRKT 55030: SERVICES MARKETINGMARKETING

WEEK 5:WEEK 5: Delivering and Performing Service: Delivering and Performing Service: The Roles of the New 3PThe Roles of the New 3Pss of Marketing in of Marketing in

Service DeliveryService Delivery

Dr. Okey Peter ONYIADr. Okey Peter ONYIA

TODAY’S OUTLINE: TODAY’S OUTLINE: Service standards and standardization /

customization of services

Hard and soft service standards The roles of the 3 new elements of Marketing in

Services Marketing: The role of People in Service Delivery The role of Process in Service Delivery The role of Physical Evidence in Services Delivery

Developing a Blueprint of Service Offerings

The Servicescape: Roles of the Servicescape Dimensions of the Servicescape Customer responses to the Servicescape

Strategizing with the Physical Evidence

Mid-term Exam.

Intended Learning Outcomes (ILOs):At the end of this session, you should be able to:

Demonstrate a good understanding of service standards and the standardization or customization of services.

Discuss the roles of the 3 new marketing-mix elements (people, process and physical evidence) in services marketing.

Evaluate the strategy of blueprinting service offerings.

Analyze the physical evidence of a service firm and the roles of the physical evidence dimensions in service delivery.

Assess the servicescape of a service firm and the roles of the servicescape dimensions in service delivery.

Service StandardsService Standards …refer to:

The level and quality of service-activities stipulated by a service company for its employees to attain in serving the customers.

The prescribed sequence of work process and service-employee behavior that employees must follow in producing and delivering service.

The overall quality of service production and delivery tasks performed by a company, as defined and expected by its customers.

StandardizationStandardization of service behaviors and activities …is …

The translation of customer expectations into specific service-quality standards.

Streamlining the tasks and behaviors of service employees into a routinized work procedure specified for attaining uniform outcomes and customer satisfaction.

Different from Customization … which refers to the adaptation or tailoring of the service process to suit each individual customer’s needs.

Standardization of service behaviors and actions:

Standardization usually implies a non-varying sequential process similar to the production of goods.

Customization usually refers to some level of adaptation or tailoring of the process to the individual customer.

Formal service targets and goals: Service companies set specific target-standards for

individual behaviors and actions of their employees. Example: the Customer Service Standards set by Puget Sound Energy (Figure 9.1in the next slide).

Factors Necessary for Appropriate Service Standards

Puget Sound Energy’sCustomer Service Report Card

Source: Zeithaml et al. (2013)

Standards are based on the

most important customer expectations,

and reflect the customer’s view of these expectations.

Customer-defined Standards

Customer-defined Standards

SOURCES:Customer ExpectationsCustomer Process BlueprintCustomer Experience Observations

Company-defined Standards

Company-defined Standards

SOURCES:Productivity ImplicationsCost ImplicationsCompany Process BlueprintCompany View of Quality

Service Standards

Hard and Soft Standards

SOFT STANDARDS AND MEASURESOpinion-based measures that cannot be observed and must be collected bytalking to customers (perceptions, beliefs)

HARD STANDARDS AND MEASURESThings that can be counted, timed,or observed through audits (time,numbers of events)

Examples of Hard Customer-Defined Standards

Source: Zeithaml et al. (2013)

Examples of Soft Customer-Defined Standards

Source: Zeithaml et al. (2013)

In your small groups, read and discuss the

following Hard and soft customer-focused standards of the 4 companies shown in the

following 5 slides (also provided for you):

Also, select one service company you know and write out the customer-focused standards you think they follow in delivering quality services

to their customers.

Then, present your standards and how the company follows them to the class.

(20 minutes)

Group Discussions:

Group Discussions:Hard Standards at Zappos.com

Zappos expect their employees to:

Respond to 80 percent of all incoming calls within 20 seconds.

Respond to all e-mail messages in less than four hours.

Respond to live (online) chats in less than 10 seconds.

Group Discussions:Soft Standards at Toyota in Japan

Standards for Toyota salespeople are patterned after Samurai behaviors:

Assume the samurai warrior’s “waiting position” by leaning five to ten degrees forward when a customer is looking at a car.

Stand with left hand over right, fingers together and thumbs interlocked, as the Samurais did to show they were not about to draw their swords.

Display the “Lexus Face,” a closed-mouth smile intended to put

customers at ease. Samurai warrior “waiting position”

Group Discussions:Soft Standards at Toyota in Japan

Standards for Toyota salespeople are patterned after Samurai behaviors:

When serving coffee or tea, kneel on the floor with both feet together and both knees on the ground.

Bow more deeply to a customer who has purchased a car than a casual window shopper.

 

Stand about two arms’ lengths from customers when they are looking at a car and come in closer when closing a deal.

Point with all five fingers to a car door’s handle, right hand followed by left, then gracefully open the door with both hands 

Samurai warrior “waiting position”

Group Discussions:Hard and Soft Service Standards

at Ford MotorsAppointment available within one day of customer’s requested service day.

Write-up begins within four minutes.

Service needs are courteously identified, accurately recorded on repair order, and verified with customer.

Service status provided within one minute of inquiry.

Vehicle serviced right on first visit.

Vehicle ready at agreed-upon time.

Thorough explanation given of work done, coverage, and charges.

Group Discussions:Standards at Four Seasons

Seven Service- Culture Standards at Four Seasons:

1. Smile

2. Eye

3. Recognition

4. Voice

5. Informed

6. Clean

7. Everyone

Core Worldwide Service Operating Standards:Reservations

Hotel Arrival

Messages and Paging

Guest Room Evening Service

Breakfast

Room

Exceptions are permitted if they make local sense.

The Marketing Mix:(With the new 3-Ps of Services Marketing)

TARGET CUSTOMERS

TARGET CUSTOMERS

PEOPLEEmployees

Interns Commission Agents

Dealers’ staff Franchise employees

Supplier employees

PROMOTION• Advertising

• Personal Selling• Sales Promotions

• Sponsorships• Direct/Events Mktg. Comm

• Merchandizing• Public Relations• Word of Mouth

PRODUCT• Variety• Quality• Design• Feature

• Brand name• Packaging• Services

PHYSICAL EVIDENCE

Website designsCorporate colours

Logos and trademarks Outlets decor

Frontal signage

PLACEDistribution channels

Geographical coverage Assortments

Outlet locations Inventory

Transportation Logistics

PRICE• Price list

• Discounts• Allowances

• Payment periods• Credit terms

PROCESSAdmin operations

Production operations Order processing

Sales support services Delivery operations After-sales services

The roles of the 3 new elements of Marketing in Services:

5. People:The human beings who play various roles in the production,

processing, and delivery of services. They include employees whose activities influence the customers’ perceptions of the firm, its personnel, and its services. Also included are all the customers in the service environment.

6. Physical Evidence:The environment in which the service is delivered and where the

firm’s employees and customers interact. Also, the tangible components of the place where service is produced and delivered that facilitate performance, communication, and perception of the service.

7. Process:The actual procedures, mechanisms, and flows of activities

involved in the production and delivery of services. The operating and delivery systems for producing, processing and delivering services.

The Role of People in Service Delivery

Source: Lovelock and Wirtz (2010)

The encounter between service staff and customers is the most important aspect of a service delivery.

Frontline Service People’s activities are very important sources of differentiation and competitive advantage.

Frontline service is an important driver of customer loyalty.

How service people contribute to customer loyalty:

Anticipating customer needs Customizing service delivery Building personalized

relationships

The Role of People in Service Delivery

The Gaps Model of Service Quality

Many routinized transactions are now conducted without involving frontline staff; but now with technology as frontline:

ATMs (Automated Teller Machines) IVR (Interactive Voice Response)

systems Websites for reservations/ordering,

payment, etc.

However, frontline employees remain crucially important.

“Moments of truths” drive customer’s perception of the

service firm. Source: Lovelock and Wirtz (2010)

Multiplicity of service employees’ roles often results in service employees having to pursue both operational and marketing goals.

Management’s expectations of service staff:

Delight the customers.

Be fast and efficient in executing operational tasks.

Do selling, cross-selling, and up-selling.

Enforce pricing schedules and rate integrity.

Remember that "customers are always right," until they are wrong!

Management’s Expectations of Service People

Process … The actual procedures, mechanisms, and flows of

activities involved in the production and delivery of services.

The operating and delivery systems for producing, processing and delivering services.

The Role of the Process in Service Delivery

Service Process Blueprint:

To create productive operations and valued experiences for their customers, service companies produce a blueprint of their activities-flow that serves as the procedure-guidelines of their service production and delivery.

Service Process BlueprintDeveloping a Blueprint

Identify key activities in creating and delivering service.

Define the “big picture” before “drilling down” to obtain a higher level of detail of the activities.

Advantages of Blueprinting the service process:

To distinguish between “front stage” and “backstage” activities.To clarify interactions and support by backstage activities and systems. To identify potential failure points; take preventive measures; and prepare contingency actions.To pinpoint stages where customers commonly have to wait.

Define standards for

front stage activities

Specify physical evidence of

servicescape

Identify principal customer actions

Establish lines of interaction

Front stage actions by frontline

personnel

Establish lines of visibility

Backstage actions by customer -

contact personnel

Support processes

involving other personnel

Design support processes

involving IT

Objectives:

To identify failure points & risks of excessive waiting.

To set service standards

To design a fail-proof process.

Service Process Blueprint: Key Components

Blueprinting the Restaurant Experience: Act 1: Prologue & Introductory

Scenes Source: Lovelock and Wirtz (2010)

Blueprinting the Restaurant Experience: Acts 2 and 3

Act 2: Delivery of Core Product: Cocktails, seating, ordering food and wine, wine service. Potential failure points: Menu information complete? Menu

intelligible? Everything on the menu actually available? Mistakes in transmitting information is a common cause of

quality failure. Customers may not only evaluate quality of food and drink,

but how promptly it is served or the serving staff's attitudes. Act 3: The Drama Concludes: Remaining actions should move quickly and smoothly, with

no surprises at the end. Customer expectations: accurate, intelligible, and prompt

bill; payment handled politely; guests are thanked for their patronage.

Improving Reliability of Processes Through Fail-proofing

Anticipate and identify potential failure points.

Analyze the reasons for previous and potential failures.

Doing so reveals the opportunities for failure-proofing to reduce or eliminate future errors.

Institute fail-safe methods for both employees and customers, including:

Following the set service procedures.

Maintaining the set service standards.

Acting out the roles as efficiently and faithfully as designed.

Aiming for customer-service excellence at all times.

Testing and reviewing the corrective measures in case of failure.

Training and retraining staff on the service procedures/standards.

In your small groups, read and discuss the article “Strategy Insight: The Customer Is

Always Right: Rethinking an Old Tenet” in pages 170 and 171 of the textbook.

Also, discuss these two statements: “The customers are always right, even when

they are wrong.”“The customers are always right, until they are

wrong.”

Then, present your group’s viewpoints about the statements to the class.

(15 minutes)

Group Discussions:

The Role of the Physical Evidence in Service Delivery

Physical Evidence … is…

Any environment in which service is delivered and where the firm and the customers interact; and the tangible materials that facilitate the performance or communication of the service.

The Physical facility and features in the environment where the service is delivered are collectively called the Servicescape.

Examples

of Physical Evidence:

From the

Customer’s

Point of View

As Part of its Physical Evidence, Speedi-Lube Spells Out its Service Offering in Giant Wall-to-wall Poster

Flow of the service process – Easy access; user-friendliness; speed and accuracy of production and delivery; etc.

Meaning – Ease of understanding of the service involvements, requirements, and outcomes. Customer’s perception of the abilities of the service staff.

Satisfaction – Customer’s confidence in the ability of the firm to do a complete and efficient job in delivering the required service, based on how the customer feels inside and about the servicescape.

Emotional connections to company – Feelings associated with (and evoked by) the firm’s tangibles. Positive, if the customer has been very satisfied over time. Negative, if the customer has been repeatedly dissatisfied.

How Does Physical Evidence Affect Customer Experience?

Elements of Physical Evidence: The Servicescape and other Tangibles

The Servicescape

Source: Zeithaml et al. (2013)

Understanding Physical Environment-Service User Relationships

Source: Zeithaml et al. (2013)

Roles of the Servicescape As part of the Service Package:

Conveys expectations and assurance of a good service Influences perceptions of care, convenience, friendliness, etc.

As a Service Facilitator: Facilitates the flow of the service delivery process:

Providing information (how am I to act/what am I to do?) Facilitating the ordering process (how does this work?) Facilitating service delivery (what/when/where/how do I

expect?)

As a Socializer: Facilitates interactions between:

Customers and employees Customers and fellow customers

As a Differentiator: Sets the provider apart from competition in the minds of

consumers: Enabling competitive advantage

Individual Behaviors in the Servicescape

Environmental psychologists suggest that people react to places of public service in two general and opposite forms of behavior:

Approach: all positive behaviors that might be directed at a place of service:

Desire to stay, explore, work in, and affiliate with it Shopping enjoyment, spending time and money

Avoidance: negative behaviors directed at a place based on previous bad experiences or negative word-of-mouth:

Desire not to stay, patronize, work in, etc.

Social Interactions in the Servicescape

All social interactions are affected by the physical environment in which they occur:

Customer-employee interactions Customer-customer interactions

Scripts (particular progression of events)Physical proximitySeating arrangementsSize of spaceFlexibility of movement

Cognition: The environment can affect beliefs about a place and the people and products found in that place.

Emotion: Color, décor, music, and scent can affect the mood in a place:

Pleasure/displeasureDegree of arousal (amount of stimulation)

Physiology: The volume, temperature, air quality, space, and lighting in a place can cause physical discomfort and even pain:

Ergonomics

Intrapersonal Responses to the Servicescape

Variations in Individual Responsesto the Servicescape

Personality differences: Arousal seekers vs. arousal avoiders

Environmental screeners

Purpose for being in the servicescape:Business or pleasureUtilitarian (functional effectiveness) or hedonistic

(self-indulgence/pleasure seeking)

Temporary mood state

Environmental Dimensions of the Servicescape

Ambient Conditions: The ambience of a service place can affect any of our 5 senses, but may be imperceptible or affect us subconsciously.

Temperature, lighting, noise, music, scent, color, etc.

Spatial Layout and Functionality: The size, shape, and arrangements of store- or service-spaces, machinery, equipment, and furnishings; and the ability of such arrangements to facilitate the attainment of customer and employee objectives.

Accessibility, aesthetics, seating comfort, etc.

Signs, Symbols, Artifacts: The explicit or implicit communication of meaning; often culturally embedded; important in forming first impressions on customers:

Way-finding, labels, rules of behavior, creating aesthetic impression, providing clarity of information.

Guidelines for strategizing with the Physical Evidence

Recognize the strategic impact of the physical evidence dimensions and tangibles.

Blueprint the physical evidence of the service.

Clarify strategic roles of the Servicescape.

Assess and identify physical evidence opportunities.

Update and modernize the physical evidence and the Servicescape.

Apply the service strategies cross-functionally.

Group Case-Study Homework : (Due in the next class)

In your small groups, read up and discuss Case 6 on pages 572 – 590 of the textbook.

Answer the following questions and come prepared to make a 5-minute presentation of your answers (5 PP- slides)

and to take questions in the next class (10 points max.):

1. What changes did the bank make to get to its new position as the most customer-focused bank?

2. Analyze Jyske Bank’s success using the Service Quality Gaps Model. What strategies did the bank use to close each of the gaps in the model?

3. In your opinion, can Jyske Bank sustain its growth and success based on its current strategy? How?

4. Describes the change process that Jyske Bank went through over the 8-year period.

Mid-term Exams:SECTION A: Answer all 20

multiple-choice questions on the Scantron cards provided

(2 points each).

SECTION B: Answer 3 short-essay questions out of 5

(10 points each).

Next class pre-work:

Topic: Employees’ and Customers’ Roles in Employees’ and Customers’ Roles in Service Delivery and Management Service Delivery and Management of Customer Demandsof Customer Demands

Read up all of: … chapters 11 and 12 of the

textbook.

Be ready for your group’s 5-minute power-point presentation.