Service Marketing Pp t

Marketing Management by Arun Kumar and N Meenakshi© Vikas Publishing House Pvt. Ltd. 2006

CHAPTER 20MARKETING OF SERVICES


LEARNING OBJECTIVES

• Increasing importance of services in economies

• All principles of marketing apply to services

• The nature and special characteristics of services

• Managing service quality, productivity and personnel


• How to position a service organization and a brand

• The service marketing mix

• How businesses should manage service encounters and service recovery

• Innovations in services

Learning Objectives (Contd.)


• 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 primarily intangible, or as a part of the service-product mix that a company offers

Learning Objectives (Contd.)


SERVICE LEVELS

• 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 customers

• The 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


INCREASING IMPORTANCE OF

SERVICES • Advances in technology

• Growth in per capita income

• A trend towards outsourcing

• Deregulation

• Increasing growth in retailing due to increase in propensity to consumer


ALL PRINCIPLES OF MARKETING APPLY TO

SERVICES


• Services impact customers more directly than products do

• Marketing of services has to be more deliberate and considered

• Service provider has to carefully audit his resources and competencies

• Positioning must be razor sharp

• Services more intractable than products

All Principles of Marketing Apply to Services (Contd.)


• Service provider must define service very precisely and also design the appropriate service-product mix

• Promotion more challenging due to intangible nature of services

• Same basic service can be provided in vastly different service facilities providing different levels of amenities and luxuries



• Same service can be delivered in various ways

• Marketing mix conveys the positioning of a service



NATURE OF SERVICES

• Intangibility

• Inseparability

• Presence of other consumers

• Variability

• Perishability


MANAGING SERVICES • Managing service quality

Companies rated higher on service quality perform better in terms of market share growth

Big gap exists between the expectations of the customers and the level of the service they get Real barriers while matching expected and perceived service levels of customers


Does not understand customer requirements: Misconception barriers arise when companies misunderstand customer expectations

No resources: A company may understand customer expectations but is unwilling to provide resources to meet them

Bad delivery: The company is not able to deliver the expected service

Managing Services (Contd.)


Management’s will: A management eager to improve quality is able to do it

Exaggerated expectations: Exaggerated promises may become a problem

Managing Services (Contd.)


• Meeting customer expectations

Important to understand and meet customer expectations

Consumers of services value not only the outcome of the service encounter but also the experience 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?


Reliability: Service provider should be able to deliver the promised service each time the customer decides to avail of it

Credibility: Can customers trust the service company and its staff?

Security: Can the services be used without risk?

Meeting Customer Expectations (Contd.)


Understanding customer: If the company understands the expectations and also has the capability to serve them, the customer is satisfied with the service outcome

Responsiveness: How quickly do service staff respond to customer problems, requests and questions?

Behavior of employees: Do service staff act in a friendly and polite manner?



Competence: Performance of the primary service will depend on the knowledge and competencies of the service providers

Communication: Is the service described clearly and accurately?

Physical evidence: The company should provide physical evidence to customers which will assure customers that they will be provided a good service



• Managing service productivity

Measure of relationship between the various 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 quality simultaneously


Customer involvement in production can be increased

Important to balance supply and demand

By smoothing demand or increasing flexibility of supply, both productivity and service quality can be achieved

Managing Service Productivity (Contd.)


• Managing service staff

Quality of the service experience is heavily dependent on staff-customer interpersonal relationship

Companies need to treat their employees well if 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


Socialization allows the newly recruited service professionals to experience the culture and tasks of the organization

Maintaining a motivated workforce

Customer feedback essential to maintain high standards of service quality

Employees of service organizations must take pride in their jobs

Managing Service Staff (Contd.)


POSITIONING SERVICES

• Differentiate from competition on attributes that target customers highly value

• Entails two decisions: Choice of target market (where to

compete)Creation of differential advantage (how

to compete)


• Determine important choice criteria of customers carefully

• Most important decision of a service organization is selecting the factors on which it will compete

• Select a few factors and provide superlative performances in the chosen factors

• Target marketing

• Differential advantage

Positioning Services (Contd.)


THE SERVICES MARKETING MIX


• The 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


• Promotion

Intangible elements of service may be difficult to communicate

Sales people should develop lists of satisfied customers to be used in reference selling

Word of mouth is critical to success

Acknowledge the dominant role of personal influence in the choice process and stimulate word of mouth communication


Persuade satisfied customers to inform others of their satisfaction

Develop materials that customers can pass on to others

Target opinion leaders in its advertising campaign

Encourage potential customers to talk to current customers

Communication should also be targeted at employees

Promotion (Contd.)


• Price

An indicator of perceived quality

Important in matching demand and supply

Price sensitivity key segmentation variable


Setting fees levels:

Offset

Inducement

Divisionary

Guarantee

Predatory


• Place

Distribution channels for services are more direct

Production and consumption is simultaneous

New technologies permit service companies to provide services without customers coming to their facility


• People

Service quality is inseparable from quality of service providers

Set standards to improve quality of service provided by employees and monitor their performance

Training of employees crucial

Adopt a customer-first attitude than putting own convenience first


Employees of service organizations have to be adept in multiple roles

Have empathy to judge the service requirement and mood of the customer

Examine the role played by customers in service environment

Seek to eliminate harmful interactions

People (Contd.)


• Physical evidence

The environment in which the service is delivered

Includes any tangible goods that facilitate the performance and communication of

the service

Strengthen cues that customers search for to judge the quality of services


• Process

Procedures, mechanisms and flow of activities by which a service is delivered to customers

Control variations in services by targeting smaller segment of customers

Process and its visibility are both important for customers

Process should be employed only when it is required to provide a service and not because customers have come to expect it


SERVICE ENCOUNTERS

• A terrible ending usually dominates a person’s recollection of an experience

• Customers who are mentally engaged in a task do not notice how long it takes

• Customers desperately want to make sense of unexpected events


Study service encounters from customers’ point of view

• Finish strong

• Get the bad experience out of the way early

• Segment the pleasure, combine the pain

• Build commitment through choice

• Give people rituals and stick to them

Service Encounters (Contd.)


SERVICE RECOVERY • Well-intentioned, prompt, and apt recovery

can assuage angry customers • Everyone in the organization must have the

skill, motivation, and authority to make service recovery an integral part of service operations

• Production-oriented service-delivery systems have helped in achieving consistently high service standards


• Inevitable problems will still arise, by providing for service recovery

• Good service providers cover all the costs that a failure incurs

• Customer’s problem is an opportunity

• Companies must be responsive to customer complaints, and encourage them to complain

• Monitor areas of the organization which are likely to throw up problems more frequently

Service Recovery (Contd.)


• Solve customers’ problems fast because service problems quickly escalate

• Train frontline employees and empower them

• Give employees the authority, responsibility, and incentives to help customers in unique ways

• Let customers know about corrective measures taken and the improvement achieved

Service Recovery (Contd.)


INNOVATION IN SERVICES

• Difficulties in applying traditional methods of research and development to services

• Experiments with new services are most useful when they are conducted live , though cautiously

• Improvements should be planned and experimented incrementally


• Personnel conducting the experiments must be motivated

• Successful experiment has to be persisted with

• Experiment only when it can be finally implemented

• Conducting live experiments risky and cumbersome, but may be inevitable

Innovation in Services (Contd.)

Documents

Service Marketing Pp t