Services Marketing

What are Services? Services are deeds, Processes, and performances. all economic activities whose output is not a physical product is generally consumed at the time it is produced, and provides added value in forms that are essentially intangible concerns of its

Four Distinct categories of Services: 1. Service Industries and Companies: Ex: Taj Hotel 2. Services as products: Ex: IBM 3. Customer Service: - In support of companies product. 4. Derived Service:

Tangibility Spectrum: Trends in Service Sector: - GDP - Employment Why services Marketing? 1. Service Based Economies; - GDP- 60.7

2. Service as a Business Imperative in Manufacturing and IT:

Banking , transportation, and health care - GE, IBM, HP

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3. Deregulated Industries and Professional Services Needs.

Services Marketing is Different: - New concepts, tools, strategies Service Equals Profits: - Strategies But Services Stinks: - Technology based services - Customer expectations are higher

Too lean and too understaffed - Competitive job Market - Lip service to customer - Difficult to maintain the consistency
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Service and Technology: - Potential for New service offerings; - eBay.com, Amazon.com

Difference in goods and service in marketing

Goods 1. Tangible 2. Standardized 3. Production separate from consumption 4. Nonperishable Services 1. Intangible 2. Heterogeneous 3. Simultaneous production and consumption 4. perishable

Challenges :
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2.
3. 4. 5. 6.

How can service quality be defined and improved? How can new services be designed and tested effectively How does the firm accommodate fluctuating demand? How can the firm best motivate and select service employees? How should prices be set? How does the firm communicate quality to the customers

Myths about Services

Myth1: A service economy produces services at the expense of other sectors; Myth 2: Services jobs are low paying and Menial Myth 3: Service Production is Labour intensive and low in productivity. Myth 4: The growth of government is the reason we are a service economy.

Myth 5: Service is a Necessary Evil for Manufacturing Firms.

Myth 6: Managing services is just like managing manufacturing business.

The services Marketing Triangle

The service Marketing Mix:

Tranditional Marketing Mix: 1. Product; Physical good features Quality level Accessories Packaging Warranties Product line

2. Place; Channel type Exposure Outlet location Transportation Storage

3. Promotion Sales people Training Incentives Advertising Media types publicity

4. Price Flexibility Price level Terms Discounts Allowances

The Gaps Model of Service Quality

Viewing services in a structured, integrated way

The Customer GAP: Difference between customer expectations and perceptions. - Competitiveness - Processes of goods and services
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The Provider GAPS

Gap1: Not knowing what customers expect Gap2: Not selecting the right service designs and standards Gap 3: Not delivering to service designs and standards Gap4: Not matching performance to promises

Provider Gap1: Not knowing what customers expect

No direct interaction Unwilling Not ready Interviews, survey research, complaint systems, and customer panels Retain and strengthen Service Recovery

Customer Expectations

Inadequate marketing research orientation Lack of upward communication Insufficient relationship focus Inadequate service recovery
Company perceptions of customer expectations

Provider Gap2: Not having the right service quality designs and standards
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Difficulties in translating Poor service design Unsystematic new service development process Vague, undefined service designs Failure to connect service design to service positioning Absence of customer-driven standards Lack of customer driven service standards Absence of process management Absence of formal process

Inappropriate physical evidence and servicescape - Servicescape design that does not meet customer and employee needs - Inadequate maintenance and updating of the servicescape

Provider Gap3: Not delivering to service designs and standards - System , process and people - Franchisers

Deficiencies in human resources policies Ineffective recruitment Role ambiguity and role conflict Poor employee technology job fit Inappropriate evaluation and compensation system Lack of empowerment , perceived control, and teamwork Customers who do not fulfill roles Customers who lack knowledge of their roles and responsibilities Customers who negatively impact each other

Problems with service intermediaries - Channel conflict over objectives and performance - Difficulty controlling quality and consistency - Tension between empowerment and control

Failure to match supply and demand - Inappropriate customer mix - Overreliance on price to smooth demand

Provider Gap4: Not matching performance to promises

Lack of integrated service marketing communications - Absence of interactive marketing in communications plan - Absence of strong internal marketing program Ineffective management of customer expectations - Lack of adequate education for customers

Overpromising - Overpromising in advertising , personal selling

Inadequate horizontal communications - Insufficient communication between sales and operations - Insufficient communication between advertising and operations - Differences in policies and procedures across branches or units.

Module-2 Consumer Behavior in Services:

Search qualities Experience qualities Credence qualities

Consumer Choice
1. Need Recognition
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Physiological needs Safety and security needs Social needs Ego needs Self- actualization

2. Information Search - Personal and Non personal Sources

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Perceived Risk

3. Evaluation of service Alternatives

4. Service Purchase

Consumer Experience:
* Services as Processes: * Service Provision as Drama: - Direct personal contact - Service involve in repeat contact - Determining the nature of service

Sincere or Cynical - Physical Setting

Service Roles and Scripts: The Compatibility of Service Customers:

Customer Coproduction

Emotion and Mood:

Post Experience Evaluation:

Word of Mouth Communication;

Attribution of Dissatisfaction; - Information - Warranties, guarantees

Positive or Negative Biases; - Individual service

Brand Loyalty; - Factors, unaware

Understanding Differences Among Consumers: * Global Differences: The Role of Culture;

Values and Attitudes differ across cultures; Manners and Customs; Material Culture; Aesthetics; Educational and Social Institutions; Group Decision Making: Households;

Unilateral decision Suggestions Children's decision

Organizations; - Small no. of buyers - Initiator - Gatekeeper - Decider - Buyer - User

Customer Expectations of Service:

Meaning and Types of Service Expectations; Expected service: levels of Expectations; - Restaurants

Ideal Expectations Normative expectations Experience based norms Acceptable expectations Minimum tolerable expectations

The Zone of Tolerance;

Different consumers possess different Zones of Tolerance. - Price

Zones of Tolerance vary for service Dimensions;

Desired Service

Factors that influence customer expectations of service: Sources of Desired service Expectations;

Zone of Tolerance

Adequate Service

Personal and philosophies

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Lasting services intensifiers

Desired Service

physical, psychological, social.

Personal Needs

Zone of Tolerance

1. derived service expectations - 2. personal service philosophy

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Adequate Service

Sources of Adequate Service Expectations; 1. Temporary service intensifiers; - Short term, individual factors

2. Perceived service alternatives; - Other providers 3. Self-Perceived service; - How well they believe they are performing their role
4. Situational Factors; - Beyond control of service provider

5. Predicted Service: - Estimate or calculation of the service Sources of both Desired and Predicted Service expectations: Explicit service promises 2. Implicit service promises 3. Word of mouth communications and 4. Past experience
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Issues involving Customer Expectations:

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2. -

What does a services marketer do if customer expectations are unrealistic? Address the issues Educate the customers Reality check Should a company try to delight the customer? Musts Satisfiers delights

3. 4. 5.

Extra efforts , costs Expectations raises

How does a company exceed customer service expectations? Information collection Do customer service expectations continually escalate? Monitoring How does a company stay ahead of competition in meeting customer expectations? Need for service increase

Customer Perceptions

Satisfaction versus service quality; Transaction versus Cumulative perceptions

Customer Satisfaction: It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfillment.

What determines customer satisfaction? Product and Service Features;

Consumer Emotions; Attribution of service success or failure; Perception of Equity of fairness; Other consumers, family members, and Coworkers;

National customer satisfaction indexes; - Health of the nations economy

Outcomes of the customer satisfaction;

Service Quality: Reliability- Delivering on promises Responsiveness- being willing to help Assurance- inspiring trust and confidence Empathy- Treating customers as individuals

E-Service Quality: Extent to which a website facilitates efficient and effective shopping, purchasing and delivery. Four Core dimensions; 1. Efficiency 2. Fulfillment 3. Reliability 4. Privacy

Three dimensions on recovery service; 1. Responsiveness; 2. Compensation; 3. Contact; Service Encounters : the building blocks for customer perceptions: Service encounters and there importance:

Types of Encounters: 1. Remote encounters 2. Phone encounters 3. Face to face encounters

Sources of pleasure and Displeasure in service Encounters: 1. Recovery; Employee response to service delivery system failures 2. Adaptability; Employee response to customer needs and requests 3. Spontaneity; Unprompted and unsolicited employee actions

4. Coping; Employee response to problem customers Technology-Based service Encounters; For satisfying SSTs - Solved and intensified need - Better than the alternatives - Did its job
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For Dissatisfying SSTs Technology failure Process failure Poor design Customer driven failure

Module-3 Understanding customer Requirements:

Listening to customers through Research: Using marketing research to understand customer expectations; Research objective for services; - Discover customer requirements or expectations for service - Monitor and track service performance - Assess the performance - Assess the gap - Identify dissatisfied customer - Identify the effectiveness

To appraise the individuals To determine customer expectations for a new service To monitor changing expectations To forecast the future expectations of customers Criteria for an effective services research program; Includes qualitative and quantitative research Includes both perceptions and expectations of customers Balances the cost of the research and the value of the information Includes statistical validity when necessary

Measures priorities or importance - Occurs with appropriate frequency - Includes measures of loyalty, behavioral intentions, or behavior Elements in an effective services marketing research program: Complaint Solicitation;
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Critical incidents Studies: - Data collection - Employees behavior - Topic is new

Requirements Research: - Structured brainstorming - What , why , how - Across the industry

Relationship and SERVQUAL Surveys; - Customers relationship - Strengths and weaknesses - Comparing - 21 service attributes - Average gap score - Assess the company service quality - Track - Compare - Customer segment

Assess the internal service Consumer service context; Industrial product context. Trailer Calls or post transaction surveys; Service expectation meetings and reviews; Process checkpoint evaluations; Market oriented ethnography; Mystery shopping; Customer panels; Lost customer research; Future expectations research;

Building Customer Relationships through segmentation and retention strategies.

Relationship Marketing: Attract , keep them

Goals of Relationship Marketing: - Build and maintain a base of committed customers who are profitable for the organization.

attraction, retention and enhancement of customer relationship

Benefits of Customer Retention: Benefits for customers: - Value - Wellbeing and quality of life - Stress reduce - Learn to expect

Cost saving - Time saving - Social support system

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Benefits for the organizations: - Increasing purchases; - Lower costs - Free advertising through word of mouth; - Employee retention;

Lifetime value of a customer; The customer is not always right:

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Customer satisfaction

- The wrong segment; Not profitable in the long term; - Segment, history, time
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Customer Quality Retention Services

Difficult customers;

Employee loyalty

The Foundation for Relationship Marketing: Market Segmentation; behavior, expectation, and perception Some service firms offer one service to all

Market segmentation - Market targeting

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Process for Market Segmentation and Targeting in Services; Step1; Identify Bases for Segmenting the Market; - Demographic Segmentation ;
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Geographic Segmentation;

Psychographic Segmentation;( lifestyle, personality, social classes)

Behavioral Segmentation;(knowl edge, attitude, uses)

Step 2: Develop Profiles of Resulting Segments; - Benefits to be derived,