Marketing Services

Winning with Quality

By Arun Kottolli
Service Industry
A guest at Holiday Inn Hotel
You traveling on a plane
A credit card customer calling to enquire
his balance
A fortune 10 company building a new IT
system
All these are the examples of various types
of services and repeat business depends on
the customer satisfaction
Traditional Marketing
Traditional Marketing emphasized on:
Product, Price, Place & Promotion 4Ps
A product based marketing strategy
Marketing of Services emphasize in:
Segmentation, Targeting, Positioning and
Quality STPQ
Effective services marketing is a strong
service concept delivered well, a desired
service performed excellently.
Services Marketing
Synergy of Strategy and Execution
CNN, FedEx, Dominos Pizza, EDS, Infosys
The big idea alone or strategy alone offers
only a temporary advantage
Pioneers often see competitors imitate their
strategy
Superior execution is vital to sustaining
success
Quality of service is not easy to copy, unlike
the idea
Quality - A differentiator
When the end service or products are
similar, performance becomes the core
product
Customers pay for performance
Quality earns customers confidence
Reinforces branding, advertising, selling and
pricing
Quality of service determines brand value

Quality is the foundation for services
marketing
Nature & Roles of
Services Marketing
Word of Mouth
Communication
Post-Sale Marketing
C
o
n
s
u
m
p
t
i
o
n

Production
Pre-Sale
Marketing
Create Awareness
Induce Trail
Demonstrate Benefits
Build Brand Preference
Nature of Services Marketing
Services are consumed as it is produced
Services marketing has limited influence on
customers prior to purchase than goods
Need to experience intangible service to know it
Experience influences Post-Sale marketing
Experience influences word-of-mouth communication
Services marketers can create brand awareness &
induce trial
Experience of benefits builds brand preference
and brand value
Nature of Services Marketing
Services marketing is also done by service
providing personnel
How they conduct themselves with customers
What they say, What they dont say
How they behave, How they act
Overall appearance
All these influences customer satisfaction
and customer retention
Delivering excellent quality service is the
key!!
An Integrative Framework
Turning Marketing into
A Line Function
Identifying the right services

Doing the service
Right the first time
Doing the service
Right every time
Managing &
Exceeding Customer
Expectations
Marketing to
New customers
Managing Experience
Branding the firm
Marketing to
Existing Customers
Marketing to
Employees
Maximize
market
Potential

Delivering
Quality Service
Building a
Marketing
Organization
Doing it Right
Service reliability performing the service
dependably and accurately is the heart of
services marketing excellence
We want pilots to be dependable
Surgeon to know their stuff
Reliability is of paramount importance to
service customers
Doing it right the First Time sets off
customer relations on good footing
Dimensions of Customer
Satisfaction
Reliability: Ability to perform as promised
Tangibles: Appearance of physical facilities,
equipment, personnel, & communications
material
Responsiveness: Willingness to help customers
and provide prompt service
Assurance: Ability to convey trust and
confidence
Empathy: Caring, individualized attention to
customers
Foundation for Services
Marketing Excellence
Service
Reliability
Service
Marketing Excellence
Quality
Service
Benefits of Service Reliability
Improved Service Reliability
HIGHER PROFITS
Higher
Retention of
current
Customers
Positive
word of
mouth
marketing
Opportunity
for charging
Premium
Prices
Reduced
cost of
redoing
service
Higher
Employee
Morale &
Enthusiasm
Lower
Employee
Turnover

Improved Marketing
Effectiveness & higher
Sales Revenue
Increased
Productivity and
Lower Costs
Delivering Reliable Service
Building a Zero Defects culture is
critical in services
Performing service right the first time
requires a greater immediacy & discipline
than manufacturing
Services are less concrete and more
subjective making real time delivery of
defect less service difficult
Leadership will be tested and needed
Service Leadership
Believe that 100% reliability is feasible
and worthwhile goal
Frequently and effectively communicate
their belief company wide
Reward error-free service
Empower frontline employees
Never content with status quo and strive
for continuous improvement
Three Pillars of service
Reliability
Service
Leadership
Service
Reliability
Through Service
Testing
Infrastructure for
Error-free
Service
Action Checklist for Mangers
Do we believe in 100% reliability is a worthwhile goal?
Do we understand the challenges of delivering 100%
reliability?
Do we demonstrate our commitment to service reliability
to all our employees?
Do we rigorously test new services prior to introduction?
Do we continuously reevaluate our service after
introduction?
Are we doing enough to keep employees motivated for
100% reliability
Do we encourage, facilities & require teamwork and
communication across all units
Service Recovery
Even the best service company cant avoid
snafus
Mistakes are a critical part of every service
especially when services are performed in
customers presence
Inevitability of service errors motivates
firm to improve service reliability
Service recovery is critical for a quality
based services firm
Resolve Problems Effectively
Prepare employees for Recovery
Communication skills
Creativity
Competence
Understanding Customers Expectations
Empower Employees
Facilitate Employees
Reward Employees for service recovery
Make Amends for Hassle Factor
Service problem is at best an
inconvenience to customer, at worst it can
be a major problem
Customer incurs some cost even when the
problem is resolved
Make amends for customers hassle
A suggestion box
On-the-spot mitigations ( a reward or gift)
Try to exceed customers expectations
Learn from Service Recovery
Conduct Root-Cause Analysis
To prevent recurrent problems or defects from
reaching the customer
Blame systems & not people
Modify Service-Process Monitoring
Monitoring service process is a strategy for proactive
identification of service problems
Set up problem Tracking System
Nature of customer problem
An ongoing system to capture information pertaining
to service recovery
Nature of problem, Actions taken in response
Service Recovery & Customer
Even companies with excellent reputation will
experience service failures
A strong recovery effort can restore customer
confidence & gain customer loyalty
Yet, Many firms respond reluctantly which often
reinforces customers negative feelings
Customers are more emotionally involved &
more attentive observers of recovery service than
routine service
Service recovery excellence with a reputation for
service reliability is a powerful, profitable
strategy for gaining & retaining customers
Managing and Exceeding
Customers Expectations
Customers expectations play a pivotal role
in judging a companys service
Firms earn reputation for quality service by
surpassing customer expectations
Customers are the sole judges of service
quality
Customer expectations has two parts:
What customers want to occur?
What customers believe will occur?
Structure of Customers
Expectations
Two Levels of Expectations
A Desired Level: What a customer hopes to
receive.
An Adequate Level: What the customer
believes can be or should be
A zone of tolerance separates the desired
level and what is deemed adequate
Performance level above the tolerance
zone will surprise customers & increase
loyalty
Two Levels of Expectations
Desired Level of Service
Zone
of
Tolerance
Adequate Service
Zone of Tolerance
Consider a bank customer who wishes to
cash a check in 3 minutes ( desired level)
In the past, customers have waited for up
to 10 minutes ( adequate level)
The range between 3 minutes to 10
minutes is Range of Tolerance
Service time below3 minutes will thrill
customers
Service time above 10 minutes will annoy
customers
Changes in Expectation Levels
Customers expectation levels are dynamic
& fluctuate in response to a variety of
factors
Desired level of service tends to change
more slowly and in smaller amounts
Adequate service level appears to move
readily up and down into zone to
tolerance
Changing Expectation Levels
E
x
p
e
c
t
a
t
i
o
n

L
e
v
e
l
s

Desired Service
Desired Service
Adequate Service
Adequate Service
Tolerance Zone
Tolerance Zone
Outcome
Dimension
Process
Dimension
Influencing Expectation Levels
Factors that influence customers expectation
levels:
Enduring Service Intensifiers
Personal Needs
Transitory Service Intensifiers
Perceived Service Alternatives
Self-perceived Service Role
Explicit Service Promises
Implicit Service Promises
Past Experiences
Word of Mouth Communications
Establishing Customer Franchise
Ensure Promises
Reflect Reality
Establish
Customer Franchise
Communicate
With Customers
Capitalize on
Service Recovery
Place a premium
On Reliability
Excel in
Service Delivery
Manage
Expectations
Exceed
Expectations
Expectation levels &
Service Recovery
Outcome
Dimension
E
x
p
e
c
t
a
t
i
o
n

L
e
v
e
l
s

Process
Dimension
Outcome
Dimension
Process
Dimension
First Time Service Recovery Service
Desired
Service
Desired
Service
Desired
Service
Desired
Service
Adequate
Service
Adequate
Service
Adequate
Service
Adequate
Service
= Zone of Tolerance
Establish Customer Franchise
There is a gap between customer
perceptions and customer expectations
Two potential service gaps must be
assessed:
Gap between perceived & adequate service -
called Measure of Service Adequacy(MSA)
Gap between perceived & desired service
called Measure of Service superiority (MSS)
MSA & MSS score will determine a firms
competitive position from a service
standpoint
MSS, MSA &
Competitive Status
Customer
Perceptions/Expectation
levels
MSS
MSA Competitive Status
Customer
Franchise
Competitive
Advantage
Competitive
Disadvantage
MSS = Negative
MSA = Positive
MSA = Positive
MSS = Positive
MSS = Negative
MSA = Negative
Adequate Service
Perceived Service
Perceived Service
Perceived Service
Desired Service
Competitive Advantage
Companies must perform above the
adequate service level to gain competitive
advantage
This however is a temporary advantage
Customers adequate service levels will
raise rapidly when competitors deliver
higher level of service
Companies performing in the region of
competitive advantage can ill-afford
complacency
Customer Franchise
Develop true customer franchise i.e,.
Unwavering customer loyalty by:
Exceeding the desired service level
Exceptional service will build strong
customer loyalty
Constantly monitor customer expectations
Understand factors driving customer
expectations
Continuously strive for service superiority
Managers Action Checklist
Do we strive to present a realistic picture of our
service to customers?
Is performing the service right the first time a top
priority in our company?
Do we communicate effectively with customers?
Do we surprise customers during the service
process?
Do our employees regard service problems as
opportunities to impress customers?
Do we continuously evaluate & improve our
performance against customers expectations?
Thank You!!
Email comments or suggestions to:
kvarun@hotmail.com