Professional Documents
Culture Documents
Notes FRM Net
Notes FRM Net
Services: A service is any act or performance, one party can offer to another,
that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
Service Marketing Mix: The service marketing mix comprises off the 7ps.
These include: Product Price Place Promotion People Process Physical evidence. People: An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Process: Refers to the systems used to assist the organization in delivering the service. Physical Evidence: It is the element of the service mix which allows the consumer again to make judgments on the organization. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down! Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organizations perceptual plan of the service.
Salt
Intangible Dominant
Tangible Dominant
Teaching
Services are deeds, performance or act whose consumption take place simultaneously; they tend to perish in the absence of consumption. Hence, services cannot be stored. The services go waste if they are not consumed simultaneously i.e. value of service exists at the point when it is required. Variability: Services are highly variable, as they depend on the service provider, and where and when they are provided. Service marketers face a problem in standardizing their service, as it varies with experienced hand, customer, time and firm.
People Processing : Here the customers must physically enter the system (like Transportation) and they must be prepared to spend time actively cooperating with the service operation. The level of involvement and output quality may vary. Possession Processing: Here the service is more directed towards the goods or other possession rather towards the customer. People are less physically involved and usually there is no real need for them to enter the service for example dry cleaning. The output in each instance should be a satisfactory solution to a stated problem. Mental Stimulus Processing: these Services interact with peoples mind like education. Recipients should spend time but not necessarily be physically
present in a service factory; just mentally in communication with information being presented. Information Processing: Most intangible form of service output. The customer involvement determined more by tradition or personal desire to meet face to face and not by the needs of the operational process.
Classification Of Services
1. Nature of the organization : at the first level the purpose, structure and type of the service is identified. 2. Nature of the service: the second level, addresses the nature of the service in terms of degree of tradability and merchantability 3. Customer relationship : at the third level relationship is established it can be formal or informal 4. Nature of demand : in terms of the fourth level, nature of demand, its demand and supply, and demand trend is being analyzed 5. Service package: it addresses the group of services and goods offered by a service firm 6. Delivery method : it deals with the delivery of the services
detail in page 14-15
Positioning of Services :
Services can be positioned in 6 different ways. 1. Service attributes: it involves positioning the services in terms of what it does best. Example, Federal Express tries to position itself as the best firm for overnight delivery 2. Use or application: fitness centers are often positioned in this way, some cater to individuals who want to reduce weight, while others position themselves who want to exercise for fitness 3. Price/quality relationship: Kingfisher Red has positioned itself as the low price, no frills airline in the leisure travel market. 4. Service class: pizza hut is positioned as a dine in restaurant and not a fast food restaurant 5. Service users: Business class of Jet Airways offers the highest level of service quality to the business airline travelers 6. Competitors :
Pre-Purchase Phase: It is when the purchase options are considered and decisions are actually made. During, this phase consumers weigh the alternatives available to them and the benefits to each alternative. The decision making process is influenced by four different factors: Internal Factors: four internal factors impact a consumers decision during the pre- purchase phase. These factors are individual needs and wants of consumers, past experience, expectations and level of involvement. External Factors: Three external factors influence the purchase decision during the pre purchase phase: the competitive options available to the consumer, the social context of the purchase, and word of mouth communications. Firm Produced Factors: Promotions, Pricing and the distribution system are firm produced factors that impact the purchase decisions. Perceived Risk: Risk has two components: 1. Uncertainty (probability that a particular outcome or consequence will occur) 2. Consequences (the degree of importance that a particular importance and danger of the outcome itself). There are six types of perceived risk: Functional - Will the product perform as I expect? If the customer is buying sweet corn, this means, "Will this corn be as good as what I remember from last year or what I had last week?" If the customer is buying petunias, the risk is, "Will they make my garden look the way I want it to look?" Physical - Can the product hurt me, my children or my pets? The use of pesticides in the production of food crops is frequently the concern here, but ornamentals that bear poisonous fruit can also be a concern. Social - What will my peers think? If customers are buying sweet corn to eat in the privacy of their home, the risk here is low. If they buy petunias and plant them in the front yard and petunias are socially out this year, it's like having a big sign in your yard for five months saying, "geek lives here". Psychological - Am I doing the right thing? This can be a strong motivator in plant sales for the environ-mentally concerned or an impossible obstacle for the truly paranoid. Financial - Can I afford the purchase? This is not a major problem for most people buying sweet corn or petunias. It is a major obstacle for customers consider-ing a specimen plant or flowering trees that may cost $60 to $100. Time - How much time and effort may I expend to make this purchase? This may be the greatest perceived risk for the plant and produce retailer to overcome. Picture your potential customer in their car thinking, "Do I want to pull into that crowded parking lot? Do I want to stand in that line for a dozen ears of corn?"
This is scary! Many of the stands I visit fail to overcome this perceived risk. Their potential customers drive by. Risk Reduction strategies Performance risk: to reduce the uncertainty of performance risk, service firms must increase the perceived probability the service will perform as consumers desire. This can be done through communication, branding, and certification. To reduce the consequences of performance risk, firms should ensure that the service provider follow uniform quality control standards and procedures. By doing this chances of service failure are reduced Financial Risks: to reduce the uncertainty of financial risk, service firms should offer trial purchases, sampling and promotional incentives, as it allows the customers to evaluate the service provider with no financial risk. To reduce the consequence of financial risk, service firms can offer money back guarantees. Time loss and opportunity risk: uncertainty can be reduced by branding, the presence of the brand name will reduce the perceived chances of poor service performance, which in turn will reduce the perceived chances of time loss n the part of the consumer. To reduce the consequences of time loss risk, service firms can offer some kind of compensation in the case of service failure, and for opportunity risk, the firm must ensure that there are quality control standards and procedures in place and that these are followed by service personnel. Psychological and social risk: uncertainty can be reduced by branding and communication. Recognized brand names carry the assuarance to the customer that the service will coincide with the consumers self image and will be well recived by his or her social group. Whereas communication aimed at the customer through advertising and interaction with service personnel can reduce the uncertainty of psychological and social risk. Consequences can be reduced by following strict quality control standards and procedures, thus reducing variability of service Physical risk: uncertainty is reduced by adhering to strict safety standards, instructions and communications. Consequences are reduced by establishing and following safety standards. Service Encounter : Post Purchase Phase: the third phase of the purchase process is the post purchase phase. During this phase, customers make an evaluation of the service quality they received and their overall level of satisfaction or dissatisfaction. For satisfied customers post purchase actions include Repeat purchases Counter loyalty Positive word of mouth communication For dissatisfied customers, these actions include: Switching vendors
1. Cost Leadership In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average. 2. Differentiation In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price. 3. Focus The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others. The focus strategy has two variants. (a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segments.
1) Apologize The point is not to determine who's to blame. It's to solve the problem. The first step to problem solving is to acknowledge the fact that at least in the customers' eyesa problem exists. So start by having employees tell them, personally and sincerely, "I'm sorry." 2) Listen and empathize: This is not the time to instruct customers in the finer points of what they should have done to avoid the problem in the first place. Customers resent being lectured to. What they mostly want customers service reps people to do is just listen. Listening and empathizing helps customers unwind, get it out of their systems, and feel they're talking to someone who really cares about taking care of things.
3) "Fair fix" the problem. After listening (so they know exactly what's at issue),
employees people can work to resolve the problem. Usually, what customers want now is what they wanted originallyand the sooner the better. 4) Offer atonement. A recovery system will earn high marks from customers if it includes, even symbolically, some form of atonement that, in a manner appropriate to the issue at hand, says, "I'd like to make it up to you. Of course, the bigger the service breakdownand the more valued the customerthe more impressive the atonement will have to be to restore aggrieved customers to a state of satisfaction. 5) Keep your promises: .Recovery time is double jeopardy "where the stakes are doubled and the scores can really change." Your system has already failed once. If employees make promises they can't keep in trying to get the business back in the customer's good graces it will be throwing gas on the fire. Employees need to know how to be realistic about what they can and can't deliver, and how quickly. 6) Follow-up. In a few days, or a few weeks, employees should check back to make sure things really did work out to the customer's satisfaction. That kind of thoroughness and demonstrated concern builds loyalty that can weather future stormsand helps set the organization apart from competitors.
4. predicted service level: level of service consumers actually expect from service firm
Service Failure: these are instances when a service either is not performed
or is performed poorly. Service failure do not automatically result in firm switching behaviour and negative word of mouth communications. Customers can often be recovered. The manner in which post service failures are handled will have a greater impact on future purchase behavior then the level of dis satisfaction of the original service experience.
line of visibility is seen by the customer, while everything below it is invisible. Below the line of visibility, all of the other contact employee actions are described, both those that involve non- visible interaction with customers (e.g., telephone calls) as well as any other activities that contact employees do in order to prepare to serve customers or that are part of their role responsibilities. Support processes separated from contact employees by the internal line of interaction. These are all of the activities carried out by individuals and units within the company who are not contact employees but that need to happen in order for the service to be delivered. Vertical lines from the support area connecting with other areas of the blueprint show the inter-functional connections and support that are essential to delivering the service to the final customer. Finally, for each customer action, and every moment of truth, the physical evidence that customers come in contact with is described at the very top of the blueprint. These are all the tangibles that customers are exposed to that can influence their quality perceptions.
2. The complexity of the servicescape has two environments: Lean (simple, few elements, few spaces, and few pieces of equipments) Elaborate (very complicated, many elements, and many forms)
For lean servicescapes, design decisions are relatively straightforward, especially in self-service or remote service situations in which there is no interaction among employees and customers. For elaborate servicescapes, the full range of marketing and organizational objectives can be approached through careful management of the servicescape. Roles of Servicescape: 1. Package: wrap the service and convey an external image. It extends to the appearance of contact personnel through their uniforms or dress and their elements of their outward appearances. 2. Facilitator: Aiding the performances of persons in the environment. Make service a pleasure to experience from the customers point of view and a pleasure to perform from the employees.
3. Socializing: Aid in socializing of both employees and customers by conveying the expected roles, behaviors, and relationships through office assignments, quality of furnishings and location in organization. 4. Differentiator: Exclusive positioning as differentiated from its competitors and signal the market segment the service it intends to provide. Use of colors, music, sprice differentiation through variation of physical luxurious settings and sittings.s
Customers
The Model
Company Management
University/Registry
Directorate Registry managers/management team All registry staff
Employees
Customers
Students University staff External bodies Consultation with Customers to identify needs and obtain feedback on performance: Course Organisers Forum Student Union Liaison meetings Student Services Committee Undergraduate Student Questionnaire Enrolment review
Service Statements/Plans:
Culture & philosophy Staff recruitment Staff development/training Motivation and involvement in planning Team meetings/briefings Technical resources The serviscape and service encounter: Delivery of service Physical environment Meetings Telephone
Quality: Service quality is an assessment of the quality dimensions made by the service consumer during service consumption over time, spanning multiple
transactions and interactions with the service provider and its services. Service quality is based on expectations across the five dimensions of a service. Service quality for a service and satisfaction for any service encounter arises from perceptions made by users around one or more of the following five dimensions also known as the Service Quality Dimension: 1. Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials. 2. Reliability: Ability to perform the promised service dependably and accurately. 3. Responsiveness: Willingness to help customers and provide prompt service. 4. Assurance: Knowledge and courtesy of employees and their ability to convey trust and confidence. 5. Empathy: Caring, individualized attention the firm provides its customers. Quality and satisfaction are different things altogether, yet many confuse these basic concepts; contributing to the ever-widening gap between business and IT. The difference between these concepts is that one may be satisfied and still feel that service quality is low. Vice versa, one may be dissatisfied and feel that service is of high quality. Service quality is a complex judgment about the overall superiority of a service whereas satisfaction is related to contentment regarding a specific transaction.
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physician may keep visiting the patient to show care, but the patient may interpret this as an indication that something really is wrong. Strategies for reducing Customer GAP Reducing GAP 1: service firms has four strategies available to them to reduce the size of GAP 1. These strategies are : communicating with the customers, conducting marketing research, encouraging upward communication in he organization, and decreasing the layers of management. Reducing GAP 2: 1. service firms must have the commitment of top management, 2. setting service quality goals, these goals must be set with the customer, the service contact provider and management in mind. 3. Task standardization also reduces the GAP, this can be achieved through hard technology( substituting machines or computers for people) or soft technology ( improving work methods) Reducing GAP 3: 1. Ensuring teamwork among the employees 2. Ensure there is good technology job fit 3. Developing a supervisory control system that reward employees for providing service according to the specifications. Reducing GAP 4: 1. Increase horizontal communications between the marketing department and service personnel 2. Avoid the propensity to over promise to obtain a sale 3. Inform service personnel of promises made by salespeople and marketing communications Reducing GAP 5: ROQ analysis page no 103
Your customer service guarantees must contain the following five key success factors: 1. Must be unconditional : A good service guarantee has no conditions. They are for every customer, first-time or long-standing. If you cannot guarantee all elements of a specific service unconditionally, don't bother developing one. 2. Must be specific and easy to understand : A good service guarantee is written in simple, concise language that pinpoints the promise. 3. Must be meaningful: A good service guarantee process is meaningful in two respects. It guarantees those aspects of your service that are most important to your customers, and it has financial significance to your customers by providing a payout when a service promise is not kept. 4. Don't over-promise: It's important to offer customer service guarantees within your capacity to deliver. If you can't consistently meet your service guarantee, it will advertise to your customers that you have a service weakness. 5. Provide employee service guarantee training: Before introducing your service guarantees to your customers, you must first provide thorough customer service guarantee training to all your employees. Every employee should be encouraged and empowered to administer customer service guarantees.