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Services Marketing Strategic Planning Models
Services Marketing Strategic Planning Models
Three related models are presented to provide a framework for services marketing
planning. The models reflect strategic perspectives at both the industry and
enterprise levels. A traditional Strategic Decision Process is related to a "Service
Delivery System Model" described as a channel of cooperation and to a "Services
Marketing Planning Model. " The process and models are suggested as schema for
the elaborate use of collaborative networks of services. The schema anticipate
services marketing from a managerial viewpoint where the conceptual design of a
service enterprise is related to strategic plans and other services.
Introduction
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Strategic Planning
Similar to other models (Pearce, Robinson, 1991), Figure 1 (omitted) presents the
strategic decision process, its components, and their relationships.
The process begins with enterprise leadership which deals with both external and
internal aspects of decision making (Kerin, et al, 1990). Watchful for emergent
trends, an enterprise leader studies the external environment containing social,
economic, competitive and other forces. A mission is stated, and weighing
opportunities and threats against strengths and weaknesses, a strategy is designed.
Internally, functional tasks are then specified, and organizational arrangements
among and within groups are made to carry out enterprise strategy (Hellriegel, et
al, 1989). To do so, functional strategies and goals are determined consistent with
enterprise strategy and each other. Cultural norms develop from the decisions.
Intergroup relationships are established to assure smooth operational sequencing
while interpersonal relationships are identified for both output and well being.
Results are measured at the enterprise, functional, group, and individual levels and
monitored by leadership. Adjustments are made in the light of feedback
information and knowledge of the environments.
Uniqueness of Services
Although product and service firms alike may use such a process, there are
differences (Peter and Donnelly, 1992; Berry and Parasuraman, 1991; Gronroos,
1990). A service entity typically relies on the simultaneous occurrence of other
services in order to provide its own service (Grove and Fisk, 1983), and customer
presence in the service delivery process is assumed (Lovelock, 1991; Gronroos,
1990). Cushioned by inventories, production delays may not impede a product
business. In contrast, a service enterprise may be interrupted without consistent if
not continuous access to reservation systems (travel agencies), credit card
verification (hospitality firms) or air traffic control (air lines). Consequently, a
service enterprise's mission, strategy, and functional arrangements and
performance can be governed by interfirm relations found in a service delivery
system. Intrafirm insufficiencies lead product and service firms alike to seek
interfirm relationships based on common goals (Bowersox and Cooper, 1992).
However, a service firm's performance is immediately affected by the presence or
absence of other services.
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The entity alliance set used to accomplish an ultimate service transaction within a
delivery system is termed a channel of cooperation. Viewing a service enterprise as
part of a cooperative system closely associates its strategic planning with a greater
context and avoids a sense of enterprise isolation implied by a direct-channel-only
characterization. That is, recognition of external arrangements acknowledges
dependency on other services as a part of marketing planning. With cooperation
the rule (Heide, 1994; Bowersox and Cooper, 1992), conflict resolution between
service entities can be couched in terms of common strategic goals and relationship
governance. Figure 2 (omitted) illustrates a simplified service delivery system in
the hospitality industry.
From Figure 2, a customer who contacts a travel agency about travel arrangements
is assisted by the agency which makes arrangements with a site destination (e.g.,
convention hotel) and perhaps a transport enterprise (e.g., air line) on behalf of the
traveler. Confirmed reservations and credit terms complete the transaction
ostensibly between the agency and traveler but actually between the traveler and
the agency, the transport firm and the site destination. The channel of cooperation
consists of the agency, the transport firm, and the site destination along with the
customer. Similarly, a group of travelers may transact with an agency which
secures travel via a wholesaler's prearranged project or "package" itinerary with an
air line, a ground operator (e.g., tour bus), and each of several site destinations.
The channel of cooperation is the agency, wholesaler, air line, tour bus operator,
and each of the sites along with the group. Again, a pattern of entities is involved
in a concerted effort.
An effective marketing plan reflects the relationships a service has with various
parts of its service delivery system. A travel agency facing-the ultimate consumer
market could find its relationships with customers governed by market place
forces. Meanwhile, the same agency is involved in bilateral relationships (e.g.,
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The focus of strategic planning, of course, is the individual firm (Kerin and
Peterson, 1993). Its object is the satisfaction of customer needs (Kerin and
Peterson, 1993; Walker, et al, 1992). With a strong relationship between business
performance and competitive advantage (Cravens, 1994), firms endeavor to
possess features which provide sustained advantage. A model description of a firm
in terms of its features and their relationships to each other is a starting point to
planning.
The idea of a "core service" as part of a "service package" has been developed
(Gronroos 1990) to distinguish various parts of a service offering. An Augmented
Service Offering model is a rather extensive treatment of the service core concept
and applicable from a managerial viewpoint (Gronroos, 1990).
Similar to the augmented model, the planning model of Figure 3 reveals a series of
differentiation levels--Core, Distinctiveness, Support, Agents and Brokers, and
Perceptions. The planning model includes in its core those elements which are
consistent with intrafirm competencies and interfirm relations. Then, by including
other functions, a more complete framework is made available for planning
(Gronroos, 1980).
The Core is that service which is designed to meet the primary demand need of a
specifically described target market. It is the reality of that which is offered and
accomplished in an enterprise mission statement. As such, it is an integral part of a
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service delivery system. For an air line, the core is relatively long distance travel in
a relatively short time. With an airplane and flight personnel the core can be
performed.
Service Distinctiveness
Closely related to site is the process occurring in it. Physical accessibility to the
service itself is a combination of these two features (Gronroos, 1990), a
competitive aspect of no small importance. Process refers to the sequence of
encounters between customers and service providers, however brief, which
accomplish the service. It also includes the intrafirm coordination between
functions and between groups within functions whether in front-office or back-
office situations (Lovelock, 1991). Persons not normally known as service
providers often are nevertheless in contact with customers, and their secondary
roles are part of process.
Price in Figure 3 refers to the rates and fees charged to customers, a traditional
ingredient in a marketing program. It also involves warranties, payment, and other
terms of exchange such as conditions under which refunds are made outside of
warranty circumstances. Another traditional marketing program ingredient is
Promotion the communication effort of the service offer. Period is the timing of a
service as it pertains to such things as schedule(s), hours of operation, seasons, and
trends. It also pertains to the offer of a service in relation to phenomena like
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Because customers (e.g., air line passengers) and/or their assets (e.g, baggage) are
present when a service is performed, the Customer element is part of the planning
model. Customer behavior is a component in the service experience, becoming part
of a service's ambiance. A service process is affected by the amount and type of
customer served. Certification is the performance credibility awarded to a service
by others, evidence of ability to perform. Official and legal certifications are
awarded through licensing, but other forms of certification add to a bona fide
offering. Certification in a particular service delivery system, for example, could
be based on that which is gained by such membership. A continuous quest for
certifications via customer testimonials and industry awards is desirable.
After a service is provided there are Residuals both tangible and intangible.
Examples of tangible residuals are in-flight magazines taken home and concert
ticket stubs kept as souvenirs. An example of an intangible residual is the memory
of the service experience. Opportunities to provide follow-up through residuals are
competitive ones, even if a residual must be created. Followup communication
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Perceptions
Discussion
Two observations about the planning model itself are its flexibility of use and its
application at various levels of service delivery. First, with regard to flexibility, a
planner with managerial insights may elect to place an element described above
into another differentiation level of the model. In the U.S., retail eyeglass
operations formerly in a back-office mode have been placed closer to and in full
view of the customer. Operations became more of a service distinctiveness. The
model can be applied to all types of services, but not all services can utilize any
one element to the same extent. This leaves competitive, creative maneuverability
for a planner to develop.
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Second, the model can be used at various levels of a service delivery system. In
fact, it can be applied to a service delivery system itself.
On the other hand, the planning model can be applied to a component within an
enterprise. An ancillary service has its own core and differentiating levels,
acquiring its certification from its host enterprise. Applying the strategic planning
model, the ancillary service manager would develop its task, group composition,
performance norms, intergroup and interpersonal relations in line with the host's
features.
References
Cravens, David W., Strategic Marketing, Fourth Edition, Irwin, Burr Ridge, IL.:
1994.
Grove, Stephen J., and Fisk, Raymond P., The Dramaturgy of Services Exchange:
An Analytical Framework for Services Marketing, in Services Marketing,
Christopher H. Lovelock, ed., Prentice- Hall, Englewood Cliffs, NJ. 1991, pp. 59-
68.
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Hellriegel, Don, Slocum, John W., Jr., and Woodman, Richard W., Organizational
Behavior, 5 ed., West, St. Paul, MN. 1989.
Lans, Maxine S., Sports team logos are big business, Marketing News, 29, Number
12, (June 6, 1995): p. 6.
Light, Donald H., A Guide for New Distribution Channel Strategies for Service
Firms, J. of Bus. Strategy, 7, (Summer, 1986): pp. 56-64.
Palmer, Adrian, and Cole, Catherine, Services Marketing: Principles and Practice,
Prentice-Hall, Englewood Cliffs, NJ. 1995.
Pearce, John A., and Robinson, Richard B., Strategic Management: Formulation,
Implementation, and Control, Irwin, Homewood, IL. 1991.
Peter, J. Paul, and Donnelly, James H., Jr. Marketing Management: Knowledge
and Skills, Irwin, Homewood, IL. 1992.
Peterson, Robert A., Strategic Marketing Problems, Allyn and Bacon, Needham
Heights, MA. 1993.
Stem, Louis W., El-Ansary, Adel I., and Brown, James R., Management in
Marketing Channels, Prentice-Hall, Englewood Cliffs, NJ. 1989,
Walker, Orville C., Jr., Boyd, Harper W., Jr., and Larreche, JeanClaude, Marketing
Strategy: Planning and Implementation, Irwin, Homewood, IL. 1992.
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