FINAL EXAM REVIEW

BHO3439
Marketing Services and
Experiences
2021

Slide 1
Chapter 4

Developing
service products:
core and
supplementary
service elements

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Slide 2
 What is a service product?
The augmented product
•The core service (what is being delivered)
•Supplementary service (value-adding services other than the core)
•Delivery process (the manner or how the service is delivered)

One night stay in hotel

- core is accommodation and safety
FedEx parcel delivery - core is parcel arrives at correct
address, on time, undamaged.
One night stay in hotel
– value adding supplementary services – restaurant,
gym, spa, wake-up service, room service, laundry and
dry cleaning facilities.
One night stay in hotel
Respect, courtesy and empathy of the service personnel.
Professional services: add to the above also the
knowledge, expertise and professional experience of the
provider. Slide 3
 Classifying
supplementary services

Facilitating
•Information
•Order-taking
•Billing
•Payment

Supporting/enhancing
•Consultation
•Hospitality
•Safekeeping
•Exceptions

Slide 4
 Creating new services (6)

1. Major service innovations –

• new core offerings for markets that have not been previously defined,
• usually include both new service characteristics and radical new processes.
• E.g. eBay’s online auction services, Tough Mudder Challenge

2. Major process innovations –

• e.g. retailing online but in innovative ways

3. Product line extensions –

• in Melbourne the larger Grand Hyatt and the smaller boutique Park Hyatt, each for
different markets.

Slide 5
 Creating new services (6)

4. Process line extensions –

• new ways of delivering the service – usually offering more convenience .
• Barnes and Noble (US book chain) added a new internet subsidiary,
barnesandnoble.com
5. Supplementary service innovations –
• adding new facilitating services or enhancing existing service.
• The Snap Printing group provide web-based printing service for advice and
customised printing requirements direct and on line.
6. Service redesign
• – the most common – modest changes covered in next o/heads

Slide 6
 Branding strategies for services

A brand is a perceptual thing that is based

in reality but reflects the experiences,
differences and thus perceptions of consumers

Slide 7
Slide 8
Figure 4.6 The spectrum of branding alternatives

Slide 9
Chapter 5

Distributing
services through
physical and
electronic
channels
Digital Image PowerPoint to accompany:

Slide 10
 Distribution strategy in a services context
What is being distributed?
In services there’s often nothing to move. Experiences,
performances and solutions are not physically shipped and stored.
Informational transactions are increasingly conducted via electronic
channels.

• Information and promotion flow – get the customer interested in

buying the service
• Negotiation flow – agreement on service features and configurations,
terms of offer. Sell the right to use the service; train or concert ticket
or reservation
• Product flow – if it needs people then it is likely there is a need for
physical facilities.

Slide 11
Distinguishing between distribution of supplementary and core services

(‘augmented’ is a legacy of the product model)

Slide 12
 Distribution options for serving customers: determining the
type of contract

Customers visit the service site

Service providers go to their customers

The service transaction is conducted remotely

Slide 13
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002702/Lovelock/Services Marketing 6e
 Place and time decisions

Where should service be delivered in a bricks-

and-mortar context?

© Paul Patterson

Customers using a
self-service vending
machine in the Taipei
metro system

Slide 14
 The role of intermediaries

Slide 15
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002702/Lovelock/Services Marketing 6e
 The role of flowcharting and blueprinting

Flowcharting provides a service organisation with the means of

managing and controlling individual parts of the service delivery
system; identifying weak points and opportunities for improving
or enhancing the efficiency and productivity of the system; and
preventing service failures.

• Must show time dimensions

• Must identify and handle errors, bottlenecks, and reiterations
• Must precisely define how much variation from standards can be
allowed in execution

Slide 16
Copyright © 2015 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781486002702/Lovelock/Services Marketing 6e
 Chapter 7

Balancing
productive
capacity and
demand

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Slide 17
 Defining productive capacity

production capacity:
Volume of products services that can be generated by a production
plant or enterprise in a given period by using current resources.
Capacity is the volume or ability to perform (many examples refer
only to physical capacity).
productive capacity:
The resources or assets that a firm can employ to create goods and
services.

Adapted from Business Dictionary

http://www.businessdictionary.com/definition/production-capacity.html
#ixzz1qHoz8a76
Slide 18
 The forms of Productive Capacity for a Service Organisation
1. Physical facilities designed to contain customers. E.g. hotels,
medical clinics, classrooms, passenger aircraft and public transport. The number of
customers is constrained by the number and size of facilities and by such
regulations such as Health and Safety.
2. Physical facilities designed for storing or processing goods.
That either belong to or are being offered for sale, e.g. gas pipelines, warehouses,
car parks, cargo aircraft.
Hotel im Wasserturm

Slide 19
 The forms of Productive Capacity for a Service Organisation
3. Service-provision equipment
used to process people,
possessions or information
If not managed can cause bottlenecks.
Examples are; telephones, hairdryers,
airport security scanners, cash registers
and toll gates.

4. Labour: The number,

experience and expertise of
personnel.
Insufficient staff and inexperienced staff
can cause difficulties. Examples are;
waiters, nurses, doctors, check-in staff.

Slide 20
 The capacity challenge

Technique 1: Stretch or shrink existing capacity levels

a) Some capacity is elastic in that it can absorb demand. E.g. a city train carriage
can take additional passengers during peak times.
b) Extend opening hours or use facilities for longer periods.
c) Reduce process time, e.g. restaurant can clear tables & present the bill with little
delay.
d) Reduce the level of service/product, e.g. offering a simpler menu at peak times.

Slide 21
 The capacity challenge
Technique 2: Adjusting capacity to match demand
Schedule down time during periods of low demand
• Make repairs, undertake maintenance and renovations. E.g. between semesters, Cadbury factory
closes over Christmas and employees take leave.
Cross-train employees
• Staff may be under utilised. In a supermarket shelf stockers could be called upon to operate checkouts.
Use part-time (or casual) employees
• Postal services and retailers hire additional casual staff during Christmas.

Slide 22
 The capacity challenge cont.
Invite customers to perform self-service
(co-production)
•Self service check in at airports and check
out at supermarkets.
Ask customers to share
•Shared taxis at airports and shared tables
in cafes
Create flexible capacity
•Boeing 777 has a flexible interior
(next o/h)
Rent or share extra facilities and
equipment
•Ski rental and motor bike rental may
consider sharing the same premises.
Photographers share studio space.

http://planetjeffro.com/post/988136022/socialize
-your-next-taxi-ride-fare-share-has
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Using marketing mix elements to shape demand patterns

Pricing strategies – e.g. increase price at peak times,

evening performances.
Product variations – Accounting office that offers
bookkeeping and consulting services during non-taxation times.
Modifying the timing and location of delivery. Time –
matinee performances, cafes opening longer in summer.
Location – Travelling libraries, in-office tailoring services,
theatre in the park.

Slide 25
Chapter 8

Integrated
services
marketing
communications

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 Integrated marketing communications planning

•Who is our target audience?

•What do we need to communicate
and achieve?
•How should we communicate this?
•Where should we communicate
this?
•When do the communications need
l e ?
to take place? o f i
p r
hi p
e rs
ad
Re
Slide 29
PowerPoint
to accompany

CHAPTER 9
Managing people for service
advantage
Frontline employees
  Work in customer contact
centres is intense! Yet how
customer service
representatives perform often
determines how a firm’s
service quality is perceived by
customers

© Martin Novak/Shutterstock.com
 Frontline work is difficult and stressful
 Boundary spanning –
employees operating at the
boundary of the company and
link the inside of an organisation
to the outside world
 Sources of conflict
 person– role conflict; what the
job requires and the employee’s
personality
 organisation–client conflict -
follow the company’s rules or
satisfy the customer
 inter-client conflict - for
example, smoking in non-
smoking sections, jumping
queues
 Frontline work is difficult and stressful
 Emotional labour – arises when
there is a discrepancy between the
way frontline staff feel inside and
the emotions that management
require them to portray in front of
customers.
They are expected to have a
cheerful disposition, be helpful,
compassionate, sincere or even
self-effacing.
 ‘The power axis for emotional
labour tends to favour both the
management and the customer,
with the front line employee…
being subordinate’ – Constanti
and Gibbs
 Frontline work is difficult and stressful
 Burnout
 Jobs that are particularly prone
to burnout are those where you
have to be relentlessly positive,
so the caring professions like;
medicine,
nursing,
social work, and
teaching,
(where there is a large amount of
personal interaction that requires
deep personal attention and
concern) require a huge amount
of emotional labour.
Role stressors

Emotional Job satisfaction

labour + -

+
+ Turnover
Role conflict intentions
Burnout
+
-
Role Organisational
ambiguity + - commitment

Role overload Job performance

Source: Schneider (1995)

Cycles of failure, mediocrity and success

 The cycle of failure

 The cycle of mediocrity
 The cycle of success
Chapter 10

Crafting the
service
environment

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Slide 38
 What is the role of service environments?
• Engineer the customers’ experience and shape their behaviours
• Convey the planned image of the firm and support its positioning and differentiation
strategy
• Act as part of the value proposition
• Facilitate the service encounter and enhance both service quality and productivity

http://www.fourseasons.com/newyork/landing_3.html/?source=gaw09nycS5&kw=four+seasons+hotel+new+york&creative= Slide 39
8596814942&KW_ID=s2cXBw7GB|pcrid|8596814942&gclid=CITJ9L37l68CFeFMpgodP1v6ww
 Shape customers’ experiences and behaviour
As a message-creating medium – using symbolic cues to communicate about the
distinctive nature and quality.
As an attention-creating medium – to make the servicescape stand out from competitors’
establishments and attract customers.
As an effect-creating medium - using colour, texture, sound, scent and spatial design to
enhance the experience and/or to heighten an appetite for certain goods.

Richmond
Hill Café
and Larder

Slide 40
The Mehrabian–Russell Stimulus-Response Model

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 Dimensions of the service environment
•Ambient conditions
•Spatial layout and functionality
•Signs, symbols and artefacts
•People are part of the service environment too

Slide 44
Chapter 11

Managing the
customer service
function

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Slide 45
 Improving customer service in response to competitive pressures

• Service standards (key performance indicators - KPIs)

• Customer-defined service standards

© Paul Patterson
Old-fashioned personal service in
‘service’ stations in Asia goes a long
way to encouraging the customer to
engage with the brand
Slide 46
Service standards (key performance indicators—KPIs)

•Standardisation of service behaviours and actions –

Many routine processes can be standardised such as, opening cheque accounts or
delivering an in-flight meal.
Routine tasks can be delegated to assistants to enable the service professional to
spend more time on the expert service provision.
•Standardisation can take three forms:
1. Substitution of technology for personal contact and human effort
2. Improvement in work methods and,
3. Combinations of both 1 and 2.

Slide 47
 Customer-defined service standards

Converting customer expectations into specific behaviours and actions

Setting customer-defined standards
Customer service attributes for a
web-based financial service

Singapore Airlines Service Centre

Slide 48
 Service culture (1)
Service culture is “the pattern of shared values and beliefs that give
the members of an organisation meaning, and provide them with the
rules for behaviour in the organisation”.

A service culture exists if there is an ‘appreciation for good service’.

Good service is given to internal as well as external customers.

Thai Airways
in-flight
stewards are
renowned for
their smiles
and in-flight We recognise that our people are crucial to
service. our success, which is why all of our staff have
access to the training, education and services
they need.

Slide 49
 Employees and customer service

•Delivering the core service as promised—reliability

—is often totally within the control of frontline
employees
•Employees are critical to service recovery efforts

© Paul Patterson

The Cape House (Serviced Apartments) in Bangkok has an amazingly high annual
Slide 50
occupancy due to its consistently high customer service
Chapter 12

Customer
satisfaction and
service quality

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Slide 51
Consider this point of view:

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Figure 12.5 The Disconfirmation of Expectations Model

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 Dimensions of service quality SERVQUAL

1. Tangibles (appearance of physical elements)

2. Reliability (dependable, accurate performance)

3. Responsiveness (promptness and helpfulness)

4. Assurance (competence, courtesy, credibility and security)

5. Empathy (easy access, good communications and customer understanding)

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Slide 58
Chapter 13

Managing
relationships and
building loyalty

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 Pathways to growth

1. Attract new customers

2. Encourage existing customers to purchase more units of service
3. Encourage existing customers to purchase higher-value services
4. Reduce the extent of turnover—or ‘churn’—resulting from desirable
customers that defect to a competing service supplier
5. Regain lost customers
6. Terminate unprofitable, stagnant or otherwise unsatisfactory relationships

Slide 60
Why is customer loyalty important for a firm’s profitability?

•Opportunities to cross-sell other company services

•Reduced operating costs
•Increased purchases
•Positive word-of-mouth advertising

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 Customer retention strategies

Retention strategy 1— Create loyalty bonds

Retention strategy 2—Build in switching barriers
Retention strategy 3—Reduce customer churn

Slide 65
Chapter 14

Handling customer
complaints and
managing service
recovery

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Slide 66
 Customer response to service failures
1. Do nothing
2. Complain in some form to the service firm
3. Take some kind of overt action with a third party (e.g. complain to a
consumer claims tribunal)
4. Defect and simply not patronise this firm again

The office of the Victorian Ombudsman was

established on 30 October 1973.
John Vincent Dillon appointed
http://www.ombudsman.vic.gov.au/www/html/74-history-of-t
he-victorian-ombudsman.asp
Herald & Weekly Times Limited portrait collection.

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I hope you feel that you have learnt
something from this subject, found it
challenging and enjoyed the
experience!

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