Professional Documents
Culture Documents
Chapter 1
Chapter 1
FIGURE 1.1
Chart for
analyzing
commercial focus.
A COMMERCIAL ANALYSIS: FROM
PRODUCT-FOCUSED TO SERVICE-
FOCUSED MANAGEMENT
The end points of the profit and resource
variables are:
• Dominating focus on revenues and revenue generation, or
dominating focus on costs.
• Dominating focus on the firm’s resources and processes,
or dominating focus on the customers’ resources and
processes.
SERVICE MANAGEMENT REQUIRES AN
OUTSIDE-IN MANAGEMENT APPROACH
FIGURE 1.2
From product-focused
inside-out
management to
service-focused
outside-in
management.
SERVICE MANAGEMENT REQUIRES
AN OUTSIDE-IN MANAGEMENT
APPROACH
SERVICE MANAGEMENT REQUIRES
AN OUTSIDE-IN MANAGEMENT
APPROACH
SERVICE MANAGEMENT REQUIRES
AN OUTSIDE-IN MANAGEMENT
APPROACH
SERVICE MANAGEMENT REQUIRES
AN OUTSIDE-IN MANAGEMENT
APPROACH
SERVICE MANAGEMENT REQUIRES AN
OUTSIDE-IN MANAGEMENT APPROACH
TABLE 1.1
Fundamental
differences between
outside-in and inside-
out management.
DEFINING THE FIRM AS A
SERVICE BUSINESS
Key requirements in a service and relationship strategy:
• A manufacturer, wholesaler, retailer, service firm or supplier has a
thorough insight into the customers’ everyday processes, and into
the relationship between them and the customers’ life or business
processes, and the long-term needs and desires of their
customers.
• Value-supporting service is offered based on the technical
solutions imbedded in consumer goods and industrial equipment,
or in service activities.
DEFINING THE FIRM AS A
SERVICE BUSINESS
The core of a service firm’s offering is by definition a service activity.
The service approach to costumers are for any type of firms which
one must deliver, install, update, repair, maintain, and correct
solutions the costumers needs for the things they’ve bought. All
suppliers must deliver their service in a friendly, trustworthy and
timely manner.
A PROCESS MANAGEMENT
PERSPECTIVE
This is an ongoing relationship with costumers, where consumers
look for value support by the total service offering requires internal
collaboration among departments responsible for different elements
of the offering, such as the core product (goods or services),
advertising the product, delivering the product, taking care of
complaints and rectifying mistakes and quality faults, maintain the
product, billing routines, product documentation, etc.
PARTNERSHIPS AND
NETWORKS
A service and relationship approach to customers is based on
cooperation.
Service providers and customers will not view each other from a
win-lose perspective but will rather benefit from a win-win
situations, where the parties involved will be best off as partners.
Key ingredient of relationship marketing is trust between the
parties of network.
SEEKING DIRECT CONTACTS
WITH CUSTOMERS
A service and relationship approach to customers is based on a
notion of trusting cooperations between the business partners.
Hence, firms have to get to know their costumer much better than
normally been the case.
The best way to get the consumers trust is to treat all costumers
individually.
DEVELOPING A CUSTOMER
DATABASE
In order to pursue a relationship marketing strategy, a firm cannot
let such ignorance last. A costumer information database must be
established.
A well-prepared, updated, easily retrievable and easy-to-lead
costumer informationfile is needed in such cases to make it
possible for the employeeto pursuea relationship-oriented
customer contact.
A good database will be as effective support for cross-sales and
new product offerings.
CUSTOMER VALUE AND
VALUE CREATION
Value in business-to-business markets can be measured in
monetary terms.
Instead we define value in a simple but practical way as ‘being
better off’.
It should be observed that a customer does not always have
positive experiences.
CUSTOMER VALUE AND
VALUE CREATION
Considered a key aspect for decades.
The difference between value-in-use and value-in-exchange is that
value-in-exchange materializes at one particular point of time.
positive, ‘value creation; better off’, and negative, ‘value
destruction; worse off’.
CUSTOMER VALUE AND
VALUE CREATION
positive, ‘value creation; better off’, and negative, ‘value
destruction; worse off’.
Value for customers is created throughout the relationship by the
customer, partly in interactions between the customer and the
supplier or service provider.
HIDDEN AND RECOGNIZED
SERVICES
Recognized services, such as repair and maintenance and cosultancy, are
thought of a service activities by management.
Hidden services, such as invoicing, complaints handling, documentation and
customer training as that they seldom perceived as service by management.
And therefore are frequently not designed and managed as a value-supporting
service to customer.
CHOOSING STRATEGIC
PERPECTIVE
Characteristic of a corresponding
Strategic perspective strategic approach
Service perspective The firm takes the view that a service
offering is required to support the
customer’s value creation, and that
the core solution is not sufficient to
differentiate the offering from those
competitors.
CHOOSING STRATEGIC
PERPECTIVE
Characteristic of a corresponding
Strategic perspective strategic approach
Core product perspective The firm concentrates on the
development of the core solution,
weather this is physical product or
services, as the main provider of the
value for the customer’s value –
creating process.
CHOOSING STRATEGIC
PERPECTIVE
Characteristic of a corresponding
Strategic perspective strategic approach
Price perspective The firm takes the view that price is
the dominating purchasing criterion of
its customers, and that being able to
offer a low price is a necessity for
survival in the marketplace.
CHOOSING STRATEGIC
PERPECTIVE
Characteristic of a corresponding
Strategic perspective strategic approach
Image perspective The firm differentiate its offering by
creating imaginary extras (brand
image) around its core product.
CUSTOMER RELATIONSHOP
PERPECTIVE
Service as a perspective and service activities are inherently relational. A service
encounter, where a customer, for example, is a restaurant guest or has a machine
repaired, is a process. At some point in this process the service provider is normally
present, interacting with the customer. Even a single encounter includes relational
element.
If a customer feels that there is something special and valuable in his contacts with
a given firm, a relationship may develop.
THE LOGIC OF SERVICE
COMPETION
Customers are gradually becoming more sophisticated, more informed and,
consequently, more demanding. By and large, they are looking for more comfort,
fewer problems, lower additional cost and less trouble cost by the use of goods
and services; In short, they are looking for better value.
Three reason for the need to focus on services:
Customer
Competition
Technology
WHAT IS RELATIONSHIP?
One way of defining when a relationship has developed is to measure how many
times a customer has made purchases from the same firms.
Repetitive purchases by a customer can be a sign of the development of a
relationship between the firm and this customer, but this measure is not a good
way of assessing weather a relationship has developed of not.
WHEN IS THE CUSTOMER A
CUSTOMER?
In a transaction approach to marketing the customer is considered a customer is
considered a customer when he is the target of marketing and sale efforts.
According to the relationship perspective, the situation is different, a relationship is
an ongoing process. Once a relationship has been established, customers are
customers on a continuous basis and they should be treated as such regardless of
whether at any given point in time they are making a purchase or not. To sum up,
unless customers are treated as customers between purchases as well, the firm
does not show a genuine relational intent.
ARE ALL CUSTOMER
INTERESTED IN RELATIONSHIP?