MRKT 55030: SERVICES MARKETING

WEEK 5: Delivering and Performing Service:

The Roles of the New 3Ps of Marketing in Service Delivery

Dr. Okey Peter ONYIA

TODAYS OUTLINE:

Service standards and standardization / customization of services

Hard and soft service standards The roles of the 3 new elements of Marketing in Services Marketing:

The role of People in Service Delivery The role of Process in Service Delivery The role of Physical Evidence in Services Delivery

Developing a Blueprint of Service Offerings The Servicescape:

Roles of the Servicescape Dimensions of the Servicescape Customer responses to the Servicescape

Strategizing with the Physical Evidence Mid-term Exam.

Intended Learning Outcomes (ILOs):

At the end of this session, you should be able to:

Demonstrate a good understanding of service standards and the standardization or customization of services.
Discuss the roles of the 3 new marketing-mix elements (people, process and physical evidence) in services marketing. Evaluate the strategy of blueprinting service offerings.

Analyze the physical evidence of a service firm and the roles of the physical evidence dimensions in service delivery.
Assess the servicescape of a service firm and the roles of the servicescape dimensions in service delivery.

Service Standards
Service Standards refer to:

The level and quality of service-activities stipulated by a service company for its employees to attain in serving the customers. The prescribed sequence of work process and service-employee behavior that employees must follow in producing and delivering service.
The overall quality of service production and delivery tasks performed by a company, as defined and expected by its customers.

Standardization
Standardization of service behaviors and
activities is

The translation of customer expectations

into specific service-quality standards. Streamlining the tasks and behaviors of service employees into a routinized work procedure specified for attaining uniform outcomes and customer satisfaction.

Different from Customization which refers to the adaptation or tailoring of the service
process to suit each individual customers needs.

Factors Necessary for Appropriate Service Standards

Standardization of service behaviors and actions:
Standardization usually implies a non-varying sequential process similar to the production of goods. Customization usually refers to some level of adaptation or tailoring of the process to the individual customer.

Formal service targets and goals:

Service companies set specific target-standards for individual behaviors and actions of their employees. Example: the Customer Service Standards set by Puget Sound Energy (Figure 9.1in the next slide).

Customer Service Report Card

Puget Sound Energys

Source: Zeithaml et al. (2013)

Service Standards
Standards are based on the
most important customer expectations, and reflect the customers view of these expectations.

Customer-defined Standards

SOURCES: Customer Expectations Customer Process Blueprint Customer Experience Observations SOURCES: Productivity Implications Cost Implications Company Process Blueprint Company View of Quality

Company-defined Standards

Hard and Soft Standards

HARD STANDARDS AND MEASURES
Things that can be counted, timed, or observed through audits (time, numbers of events)

SOFT STANDARDS AND MEASURES

Opinion-based measures that cannot be observed and must be collected by talking to customers (perceptions, beliefs)

Examples of Hard Customer-Defined Standards

Source: Zeithaml et al. (2013)

Examples of Soft Customer-Defined Standards

Source: Zeithaml et al. (2013)

Group Discussions:
In your small groups, read and discuss the
following Hard and soft customer-focused standards of the 4 companies shown in the following 5 slides (also provided for you):

Also, select one service company you know and

write out the customer-focused standards you think they follow in delivering quality services to their customers.
company follows them to the class.
(20 minutes)

Then, present your standards and how the

Group Discussions: Hard Standards at Zappos.com

Zappos expect their employees to:
Respond to 80 percent of all incoming calls within 20 seconds. Respond to all e-mail messages in less than four hours. Respond to live (online) chats in less than 10 seconds.

Group Discussions: Soft Standards at Toyota in Japan

Standards for Toyota salespeople are patterned after Samurai behaviors: Assume the samurai warriors waiting position by leaning five to ten degrees forward when a customer is looking at a car. Stand with left hand over right, fingers together and thumbs interlocked, as the Samurais did to show they were not about to draw their swords. Display the Lexus Face, a closedmouth smile intended to put customers at ease.

Group Discussions: Soft Standards at Toyota in Japan

Standards for Toyota salespeople are patterned after Samurai behaviors:

When serving coffee or tea, kneel on the

floor with both feet together and both knees on the ground.

Bow more deeply to a customer who has

purchased a car than a casual window shopper.

Stand about two arms lengths from

customers when they are looking at a car and come in closer when closing a deal.

Point with all five fingers to a car doors

handle, right hand followed by left, then gracefully open the door with both hands

Group Discussions: Hard and Soft Service Standards at Ford Motors

Appointment available within one day of customers requested service day. Write-up begins within four minutes. Service needs are courteously identified, accurately recorded on repair order, and verified with customer. Service status provided within one minute of inquiry. Vehicle serviced right on first visit.

Vehicle ready at agreed-upon time.

Thorough explanation given of work done, coverage, and charges.

Group Discussions: Standards at Four Seasons

Seven ServiceCulture Standards at Four Seasons:
1. Smile 2. Eye 3. Recognition 4. Voice 5. Informed 6. Clean 7. Everyone

Core Worldwide Service Operating Standards:

Reservations Hotel Arrival Messages and Paging Guest Room Evening

Service Breakfast Room
Exceptions are permitted if they make local sense.

The Marketing Mix:

PRODUCT
Variety Quality Design Feature Brand name Packaging Services

(With the new 3-Ps of Services Marketing)

PRICE
Price list Discounts Allowances Payment periods Credit terms

PROMOTION
Advertising Personal Selling Sales Promotions Sponsorships Direct/Events Mktg. Comm Merchandizing Public Relations Word of Mouth

TARGET CUSTOMERS

PLACE
Distribution channels Geographical coverage Assortments Outlet locations Inventory Transportation Logistics

PEOPLE
Employees Interns Commission Agents Dealers staff Franchise employees Supplier employees

PROCESS
Admin operations Production operations Order processing Sales support services Delivery operations After-sales services

PHYSICAL EVIDENCE
Website designs Corporate colours Logos and trademarks Outlets decor Frontal signage

5. People:

The roles of the 3 new elements of Marketing in Services:

The human beings who play various roles in the production, processing, and delivery of services. They include employees whose activities influence the customers perceptions of the firm, its personnel, and its services. Also included are all the customers in the service environment.

6. Physical Evidence:
The environment in which the service is delivered and where the firms employees and customers interact. Also, the tangible components of the place where service is produced and delivered that facilitate performance, communication, and perception of the service.

7. Process:
The actual procedures, mechanisms, and flows of activities involved in the production and delivery of services. The operating and delivery systems for producing, processing and delivering services.

The Role of People in Service Delivery

The encounter between service staff and customers is

the most important aspect of a service delivery.

Frontline Service Peoples activities are very important

sources of differentiation and competitive advantage.

Frontline service is an important driver of

customer loyalty.

How service people

contribute to customer loyalty:
Anticipating customer needs Customizing service delivery Building personalized relationships

Source: Lovelock and Wirtz (2010)

The Role of People in Service Delivery

Many routinized transactions are now conducted

without involving frontline staff; but now with technology as frontline:
ATMs (Automated Teller Machines) IVR (Interactive Voice Response) The Gaps
payment, etc.

Model systems of Service Quality Websites for reservations/ordering,

However, frontline employees

remain crucially important.

Moments of truths drive

customers perception of the service firm.
Source: Lovelock and Wirtz (2010)

Managements Expectations of Service People Multiplicity of service employees roles often

results in service employees having to pursue both operational and marketing goals.

Managements expectations of service staff:

Delight the customers. Be fast and efficient in executing operational tasks. Do selling, cross-selling, and up-selling. Enforce pricing schedules and rate integrity. Remember that "customers are always right," until they are wrong!

The Role of the Process in Service Delivery

Process
The actual procedures, mechanisms, and flows
of activities involved in the production and delivery of services. processing and delivering services.

The operating and delivery systems for producing,

Service Process Blueprint:

To create productive operations and valued

experiences for their customers, service companies produce a blueprint of their activities-flow that serves as the procedure-guidelines of their service production and delivery.

Service Process Blueprint Developing a Blueprint

Identify key activities in creating and delivering service. Define the big picture before drilling down to obtain a
higher level of detail of the activities.

Advantages of Blueprinting the service process:

To distinguish between front stage and backstage

activities. To clarify interactions and support by backstage activities and systems. To identify potential failure points; take preventive measures; and prepare contingency actions. To pinpoint stages where customers commonly have to wait.

Service Process Blueprint: Key Components

Objectives:

To
identify failure points & risks of excessive waiting.

Define standards for front stage activities

Specify physical evidence of servicescape

Identify principal customer actions

To set
service standards

Establish lines of visibility

Front stage actions by frontline personnel

Establish lines of interaction

To design
a failproof process.

Backstage actions by customer contact personnel

Support processes involving other personnel

Design support processes involving IT

Blueprinting the Restaurant Experience: Act 1: Prologue & Introductory Scenes

Source: Lovelock and Wirtz (2010)

Blueprinting the Restaurant Experience: Acts 2 and 3

Act 2: Delivery of Core Product:

Cocktails, seating, ordering food and wine, wine service. Potential failure points: Menu information complete? Menu
intelligible? Everything on the menu actually available? Mistakes in transmitting information is a common cause of quality failure. Customers may not only evaluate quality of food and drink, but how promptly it is served or the serving staff's attitudes.

Act 3: The Drama Concludes:

Remaining actions should move quickly and smoothly, with

no surprises at the end. Customer expectations: accurate, intelligible, and prompt bill; payment handled politely; guests are thanked for their patronage.

Improving Reliability of Processes Through Fail-proofing

Anticipate and identify potential failure points. Analyze the reasons for previous and potential failures. Doing so reveals the opportunities for failure-proofing to
reduce or eliminate future errors.

Institute fail-safe methods for both employees and

customers, including:
Following the set service procedures. Maintaining the set service standards.

Acting out the roles as efficiently and faithfully as designed. Aiming for customer-service excellence at all times. Testing and reviewing the corrective measures in case of failure. Training and retraining staff on the service procedures/standards.

Group Discussions:
In your small groups, read and discuss the
article Strategy Insight: The Customer Is Always Right: Rethinking an Old Tenet in pages 170 and 171 of the textbook.

they are wrong. The customers are always right, until they are wrong.

The customers are always right, even when

Also, discuss these two statements:

Then, present your groups viewpoints about the

statements to the class.
(15 minutes)

The Role of the Physical Evidence in Service Delivery

Physical Evidence is
Any environment in which service is delivered and where the firm and the customers interact; and the tangible materials that facilitate the performance or communication of the service.

The Physical facility and features in the environment where the service is delivered are collectively called the Servicescape.

Examples

of Physical Evidence:
From the Customers Point of View

As Part of its Physical Evidence, Speedi-Lube Spells Out its Service Offering in Giant Wall-to-wall Poster

How Does Physical Evidence Affect Customer Experience?

Flow of the service process Easy access; userfriendliness; speed and accuracy of production and delivery; etc.

Meaning Ease of understanding of the service involvements,

requirements, and outcomes. Customers perception of the abilities of the service staff.

Satisfaction Customers confidence in the ability of the firm

to do a complete and efficient job in delivering the required service, based on how the customer feels inside and about the servicescape.

Emotional connections to company Feelings associated with (and evoked by) the firms tangibles. Positive, if the customer has been very satisfied over time. Negative, if the customer has been repeatedly dissatisfied.

Elements of Physical Evidence: The Servicescape and other Tangibles

The Servicescape

Source: Zeithaml et al. (2013)

Understanding Physical Environment-Service User Relationships

Source: Zeithaml et al. (2013)

Roles of the Servicescape

As part of the Service Package:
Conveys expectations and assurance of a good service Influences perceptions of care, convenience, friendliness, etc.

As a Service Facilitator:
Facilitates the flow of the service delivery process: Providing information (how am I to act/what am I to do?) Facilitating the ordering process (how does this work?) Facilitating service delivery (what/when/where/how do I expect?)

As a Socializer:
Facilitates interactions between: Customers and employees Customers and fellow customers

As a Differentiator:
Sets the provider apart from competition in the minds of consumers: Enabling competitive advantage

Individual Behaviors in the Servicescape

Environmental psychologists suggest that people react to places of public service in two general and opposite forms of behavior: Approach: all positive behaviors that might be directed at a place of service:
Desire to stay, explore, work in, and affiliate with it Shopping enjoyment, spending time and money

Avoidance: negative behaviors directed at a place based on previous bad experiences or negative word-of-mouth:
Desire not to stay, patronize, work in, etc.

Social Interactions in the Servicescape

All social interactions are affected by the physical environment in which they occur:
Customer-employee interactions Customer-customer interactions

Scripts (particular progression of events) Physical proximity Seating arrangements Size of space Flexibility of movement

Intrapersonal Responses to the Servicescape

Cognition: The environment can affect beliefs

about a place and the people and products found in that place.
Emotion: Color, dcor, music, and scent can

affect the mood in a place: Pleasure/displeasure Degree of arousal (amount of stimulation)

Physiology: The volume, temperature, air quality,

space, and lighting in a place can cause physical discomfort and even pain:
Ergonomics

Variations in Individual Responses to the Servicescape

Personality differences:

Arousal seekers vs. arousal avoiders Environmental screeners

Purpose for being in the servicescape:

Business or pleasure Utilitarian (functional effectiveness) or hedonistic

(self-indulgence/pleasure seeking)

Temporary mood state

Environmental Dimensions of the Servicescape

Ambient Conditions: The ambience of a service place can
affect any of our 5 senses, but may be imperceptible or affect us subconsciously.

Temperature, lighting, noise, music, scent, color, etc. Spatial Layout and Functionality: The size, shape, and
arrangements of store- or service-spaces, machinery, equipment, and furnishings; and the ability of such arrangements to facilitate the attainment of customer and employee objectives.

Accessibility, aesthetics, seating comfort, etc. Signs, Symbols, Artifacts: The explicit or implicit
communication of meaning; often culturally embedded; important in forming first impressions on customers:

Way-finding, labels, rules of behavior, creating aesthetic

impression, providing clarity of information.

Guidelines for strategizing with the Physical Evidence

Recognize the strategic impact of the physical
evidence dimensions and tangibles.

Blueprint the physical evidence of the service. Clarify strategic roles of the Servicescape. Assess and identify physical evidence
opportunities.

Update and modernize the physical evidence

and the Servicescape.

Apply the service strategies cross-functionally.

Group Case-Study Homework :

(Due in the next class)
In your small groups, read up and discuss Case 6 on pages 572 590 of the textbook.
Answer the following questions and come prepared to make a 5-minute presentation of your answers (5 PP- slides) and to take questions in the next class (10 points max.): 1. What changes did the bank make to get to its new position as
the most customer-focused bank? 2. Analyze Jyske Banks success using the Service Quality Gaps Model. What strategies did the bank use to close each of the gaps in the model?

3.
4.

In your opinion, can Jyske Bank sustain its growth and success based on its current strategy? How?
Describes the change process that Jyske Bank went through over the 8-year period.

Mid-term Exams:
SECTION A: Answer all 20

multiple-choice questions on the Scantron cards provided

(2 points each).

SECTION B: Answer 3 short-

essay questions out of 5

(10 points each).

Next class pre-work:

Topic: Employees and Customers Roles in
Service Delivery and Management of Customer Demands

Read up all of: chapters 11 and 12 of the textbook. Be ready for your groups 5-minute power-point presentation.