Chapter 15

Services Marketing
Chapter 15:
Striving for
Service Leadership
Slide 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 Page 1
Overview of Chapter 15
Services Marketing
The Service-Profit Chain
Integrating Marketing, Operations, and Human Resources
Creating a Leading Service Organization
In Search of Human Leadership
Services Marketing
Services Marketing
Links in the Service-Profit Chain
Services Marketing
8. Top
2. Customer 5. Employee 6. Employee
1. Customer 3. Value 7. Internal management
satisfaction 4. Quality and loyalty drives satisfaction
loyalty drives drives quality drives leadership
drives productivity service drives
profitability customer employee underlies the
customer drives value quality and employee
and growth satisfaction satisfaction chains
loyalty productivity loyalty
success
Firm Value Created by Customer
Satisfaction
Services Marketing
Qualities Associated with
Service Leaders
Services Marketing
Understands mutual dependency

among marketing, operations, and
human resource functions of the
firm
Has a coherent vision of what it

takes to succeed
Strategies are defined and driven by

a strong, effective leadership team
Responsive to various stakeholders
Value created through customer

satisfaction
Services Marketing
Integrating Marketing,
Operations, and
Human Resources
Defining the Three Functions
Services Marketing
Target right customers and build relationships

Marketing Offer solutions that meet their needs
Function Define quality package with competitive advantage
Create, deliver specified service to target customers

Operations Adhere to consistent quality standards
Function Achieve high productivity to ensure acceptable costs
Human Recruit and retain the best employees for each job
Resource Train and motivate them to work well together
Achieve both productivity & customer satisfaction
Function
Reducing Interfunctional Conflict
Services Marketing
One challenge is to avoid creating functional silos

High-value creating enterprises should be thinking in terms of activities,
not functions
Top management needs to establish clear imperatives for each

function that defines how a specific function contributes to the
overall mission
Interfunctional transfers will Appointing formally designated
provide a holistic perspective individuals to integrate
for individuals objectives
Establishing integrated project Internal marketing and training
teams
Commitment of top
Having interfunctional service management
delivery teams
Services Marketing
Creating a Leading
Service Organization
From Losers to Leaders: Four
Levels of Service Performance
Services Marketing
Bottom of the barrel

Service Patronized because there is no viable alternative
New technology introduced only under duress; uncaring
Losers workforce
Dominated by a traditional operations mindset

Service Unsophisticated marketing strategies
Consumers neither seek out nor avoid them
Nonentities
Clear market positioning strategy such that customers
Service within target segment(s) seek them out
Proactive, investment-oriented approach to HRM
Professionals
The crme da la crme of their respective industries
Service Names synonymous with outstanding service, customer
delight
Leaders Employees are empowered and committed
Four Hurdles for Moving up the
Performance Ladder
Services Marketing
Cognitive Hurdles
People cannot agree on causes of current problems and the need
for change
Resource Hurdles
Firm is constrained by limited funds
Motivation Hurdles
Prevent rapid execution when employees are reluctant to change
Political Hurdles
Organized resistance forces in forms from powerful vested
interests seeking to protect their positions
Leading Change in a Service
Organization Involves 8 Stages
Services Marketing
6. Producing 7. Building
1. Creating a sense
sufficient short-term momentum and
of urgency to
results to create using that to tackle
develop the impetus
credibility and tougher change
for change
counter cynicism problems
8. Anchoring new
2. Putting together a 5. Empowering
behaviors in
strong enough team employees to act on
organizational
to direct the process that vision
culture
3. Creating an
appropriate vision of 4. Communicating
where the that new vision
organization needs broadly
to go
Source: John Kotter
Services Marketing
In Search of
Human Leadership
Leadership vs. Management
Services Marketing
Leadership Management
Development of vision and strategies, Keeps current situation operating

and empowerment of people to
Setting direction through planning,
Planningbudgeting,
overcome obstacles, make vision organizing, staffing, controlling, and
happen
Creating visions and strategies that problem
A solvingprocess designed to
management
describe a on
Emphasis business,
emotionaltechnology, or
and spiritual produce orderly
Emphasizes results,
physical not change
resources
corporate culture
resources Works through hierarchy and systems
Works
In terms of whatpeople
through it should
andbecome
culture Keeps current system functioning
over long term and articulating
Produces useful change, especially
feasible way of achieving goal
non-incremental change
Individual Leadership Qualities
Services Marketing
Love for the business Make communication a

priority
See service quality as
foundation for Work with a team on
competing decision-making
Recognize key role of Know when to change
employees when necessary
Driven by a set of core Walk the talk
values they pass on
Leadership, Culture, and Climate
Services Marketing
Leadership
Leadership traits are needed of everyone in supervisory or
managerial positions, including those heading teams
Organization Culture
Represents the shared
Perceptions/themes regarding what is important
Values, beliefs, and assumptions
Shares understanding about what works and what doesnt work
Styles of working and relating to others
Organizational Climate
The tangible surface layer on top of the organizations underlying
culture that requires radical rethinking of:
HRM activities
Operational procedures
Firms reward and recognition policies
Summary
Services Marketing
Service profit chain provides summary of relationships between

key variables that explain service leadership
Four levels of service performance

Service losers Service professionals
Service nonentities Service leaders
Service leadership must cut across marketing, operations, and

human resources
Leaders need to understand the difference between leadership
vs. management, as well as setting direction vs. planning
Leaders play a big part in nurturing an effective organizational
culture that moves an organization towards service leadership

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Services Marketing

The Service-Profit Chain

Integrating Marketing, Operations, and Human Resources

Creating a Leading Service Organization

In Search of Human Leadership

The Service-Profit Chain

Understands mutual dependency

Has a coherent vision of what it

Strategies are defined and driven by

Responsive to various stakeholders

Value created through customer

Target right customers and build relationships

Create, deliver specified service to target customers

One challenge is to avoid creating functional silos

Top management needs to establish clear imperatives for each

Bottom of the barrel

Dominated by a traditional operations mindset

Development of vision and strategies, Keeps current situation operating

Love for the business Make communication a

Service profit chain provides summary of relationships between

Four levels of service performance

Service leadership must cut across marketing, operations, and

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