Marketing in the “New” Economy Internet Marketing CRM Int’l Marketing Service Marketing

Marketing in the “New” Economy

Internet MarketingInternet

Marketing

CRMCRM CRM CRM

Int’l Marketing

Int’l Marketing

Service MarketingService

Marketing

SERVICES

Service Perspectives:Service Perspectives:Not a “Product”Intangible human act- that is produced at the time of consumption & can’t be standardized or inventoried…

No Difference- Products are just appliances that provide services- Shift perspective from Mfgr to consumer… and focus on benefits

No One-Automation,Virtualization

& Outsourcing

Defining -a Service• An act or performance offered by one

party for another

• An economic activity that does not result in ownership

• A process that creates benefits by facilitating a desired change in:

– customers themselves –get a haircut

– physical possessions- get a wig

– intangible assets- get therapy

http://images.google.com/imgres?imgurl=http://ects.in/ects/homefiles/services.jpg&imgrefurl=http://ects.in/ects/services.html&usg=__XKVbZfhSiEQbJpNmacEaMmlDkf4=&h=300&w=300&sz=10&hl=en&start=12&sig2=OUqOMUSbjKrWWu11HtCRNg&tbnid=bL-c_DcedSyzcM:&tbnh=116&tbnw=116&prev=/images%3Fq%3Dservices%26hl%3Den%26rlz%3D1T4GGLG_enUS315US315&ei=gBXySprBO5OKswON6uwV

Service as process….

People Processing

Possession Processing

Mental Stimulus

Processing

Information Processing

(directed at intangible assets)

e.g., airlines, hospitals,haircutting, restaurants hotels, fitness centers

e.g., transport, repair, cleaning, landscaping,

retailing, recycling

e.g. media, consulting,education, psychotherapy

e.g., accounting, banking, insurance, legal, research

TANGIBLE ACTS

INTANGIBLEACTS

DIRECTED AT PEOPLE

DIRECTED AT POSSESSIONS

What is the Nature of the Service Act?

Who / What is Direct Recipient of the Service?

Importance of Service Sector

In most countries, services add more economic value than agriculture, raw materials and manufacturing combined

In developed economies, employment is dominated by service jobs and most new job growth comes from services

http://earthtrends.wri.org/searchable_db/index.php?action=select_countries&theme=5&variable_ID=216



Changing Structure of Employment as Economic Development Evolves

Time, per Capita Income

Share of Employment

Industry

Services

Agriculture

Source: IMF, 1997

The Economist, 1996

0

10

20

30

40

50

60

70

80

1820 1840 1860 1880 1900 1920 1940 1960 1980 2000

Year

Perc

ent

Services

Industry

Agriculture

Waves of Change..

% US WORK-FORCE

http://seekingalpha.com/article/27883-gdp-by-category-services-spending-and-foreign-investments-in-u-s

At present …in U.S.

• ~80% workers are in service sector• Services account for ~80% of U.S. GDP • Service occupations is responsible for ~90% job growth

0

10

20

30

40

50

60

70

80

90

workers

GDP

Growth

Composition of US GDP In 2007, 1.2 percent of total US GDP was contributed by agricultural sector. Industrial sector made up 19.8 percent of US GDP in 2007. Services sector made up 79 percent of US GDP in that same period

http://www.economywatch.com/gdp/world-gdp/usa.html

http://www.economywatch.com/gdp/world-gdp/usa.html

Fast growing services -next decade- predicted by macro-environmental trends..

Fast growing services -next decade- predicted by macro-environmental trends..

Changes in workplace- automation, globalization:•Computer & data processing•Business services•Transportation

Changes in workplace- automation, globalization:•Computer & data processing•Business services•Transportation

Increased need/desire to recreate & communicate:•Hospitality & Travel•Interactive Entertainment•Mobile Communication

Increased need/desire to recreate & communicate:•Hospitality & Travel•Interactive Entertainment•Mobile Communication

More People: working more, living longer, living alone: •Social services•Health services•Residential care•Child day-care•Finance, Insurance, Real estate

More People: working more, living longer, living alone: •Social services•Health services•Residential care•Child day-care•Finance, Insurance, Real estate

Services dominate the United States Economy:GDP by Industry, 2001

Source: Bureau of Economic Analysis, November 2002

Finance, Insurance, Real Estate 20%

Wholesale and Retail Trade 16%

Transport, Utilities, Communications 8%

Health 6%

Business Services 5%

Other Services 11%

Government(mostly services) 13%

Manufacturing 14%

Agriculture, Forestry,Mining, Construction 8%

SERVICES


US likely to devote "30 %+ GDP on health by mid

century."


Critical Questions1. What is the “debate” all about

regarding how services should be defined / envisioned?

o How does the definition of a service affect your marketing strategy?

2. What are the key P’s to meeting service management challenges?

3. What are some of the factors & considerations affecting the near future of “services” marketing?






In the olden days- (a few years ago)… A Service was defined “categorically” according to its “tangibility”…..

Pure Pure tangible tangible good; no good; no serviceservice

Tangible Tangible goods with goods with

some some servicesservices

Hybrid: Hybrid: equal part equal part goods and goods and

serviceservice

Major Major service service

with with minor minor goodgood

Pure Pure service; service;

no tangible no tangible goodgood

Milk Computer& Warranty

Meal atRestaurant

LegalAdvice

Hair Styling

Product - Service Product - Service SpectrumSpectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

PureService

TangibleTangibleGoodGood

w/w/ServicesServices

MajorMajorServiceService

w/ Goodsw/ GoodsHybridHybrid

PureTangible

Good

Customer Evaluation as a Function of Tangibility

Inseparability

Services cannotbe separated

from theirproviders

Inseparability

Services cannotbe separated

from theirproviders

Intangibility

Services cannotbe experienced

beforepurchase

Intangibility

Services cannotbe experienced

beforepurchase

Variability

Quality ofservices dependson who provides

them & when,where, & how

Variability

Quality ofservices dependson who provides

them & when,where, & how

Perish-ability

Services cannotbe stored for

later sale or use

Perish-ability

Services cannotbe stored for

later sale or use

Intangibility

Services mrktg:

•Describe the invisible

•Articulate the imaginary

•& Define the indistinct

Services mrktg:

•Describe the invisible

•Articulate the imaginary

•& Define the indistinct

Inseparability• Performance &

consumption of service - happens at same time (eating @ restaurant, staying @ hotel; getting haircut, etc)

• Customers participate in & affect the transaction

• Customers affect each other

Variability-Heterogeneity

Difficult to standardize

• Delivery, Quality & Customer Satisfaction depend on employee actions• Employees vary -attitudes,

skills, mood, etc.

• No assurance service delivered matches what was planned/ promoted

PerishabilityCan not be

inventoried • Difficult to

synchronize supply & demand with services

• Services cannot be returned or resold

Marketing Strategies

that address“shortcoming”

Marketing Strategies

that address“shortcoming”

Perish-ability

Match supply& demand

Perish-ability

Match supply& demand

Intangibility

“Tangibilize” the intangible

Intangibility

“Tangibilize” the intangible

Variability

Systematizeservice

production& delivery

Variability

Systematizeservice

production& delivery

Inseparability

Increaseprofessionalism

ofemployees

Inseparability

Increaseprofessionalism

ofemployees

Intangibility

use tangibles to create/convey use tangibles to create/convey identity -signs, uniforms, imageryidentity -signs, uniforms, imageryGood hands of Allstate/ Traveler’s Good hands of Allstate/ Traveler’s Umbrella/ Prudential RockUmbrella/ Prudential Rock

standardization difficult

Constantly monitor- regularly evaluate staff

Systemize/franchise production & marketing

Variability Perish-abilityconsumption cannot be storedmatch supply and demand use of part-time staff differential pricing stimulation of off-peak

demand comfortable waiting area reservation system

Inseparabilitysimultaneous production

& consumption importance of service

provider selection, training and

rewarding of staff avoid customer conflict

Re: service marketing – for decades this has been the

thinking-

But is it the

The Four Service Marketing Myths: Remnants of a Goods-Based, Manufacturing Model

The 4 characteristics:

1. Do not distinguish services from goods

2. Only have meaning from a manufacturing perspective, and

3. Suggest inappropriate marketing strategies

The 4 characteristics:

1. Do not distinguish services from goods

2. Only have meaning from a manufacturing perspective, and

3. Suggest inappropriate marketing strategies

Key Point- Product-service differentiation is result of

industrial age-2nd wave thinking

Re- Re- VariabiltyVariabilty:: Customizaton not standardization is the goal

Re-Re-InseparabilityInseparability:: “Customer-ization” not isolation = goal

Re-Re-PerishabilityPerishability:: Services can be/are inventoried (ie-knowledge in databases &

experts head) AND Inventory management not maximization is the objective; Everything is perishable—if not in substance certainly in style…

Re: Re: IntangibilityIntangibility: : its not the product that people are buying. It’s the

functions served & benefits rendered- as it is w/ services

Re- Re- VariabiltyVariabilty:: Customizaton not standardization is the goal

Re-Re-InseparabilityInseparability:: “Customer-ization” not isolation = goal

Re-Re-PerishabilityPerishability:: Services can be/are inventoried (ie-knowledge in databases &

experts head) AND Inventory management not maximization is the objective; Everything is perishable—if not in substance certainly in style…

Re: Re: IntangibilityIntangibility: : its not the product that people are buying. It’s the

functions served & benefits rendered- as it is w/ services

A shift in perspective

Instead of focusing on product – service differences

…Focus on consumer commonalities

…in “consuming & evaluating” that which is purchased











Challenges for Service Mgt Same as Product

Mgt

1. Creating & offering the consumer value

2. Communicating a desired & distinct image

3. Create, sustain & enhance customer relationships

4. Defining- maintaining- improving qualityMind the gaps….

1. Creating & offering the consumer value

2. Communicating a desired & distinct image

3. Create, sustain & enhance customer relationships

4. Defining- maintaining- improving qualityMind the gaps….

Service Quality Gaps

Word of MouthCommunications

Personal Needs Past Experience

Expected Service

Perceived Service

Service Delivery

Service Quality Specs

Mgmt. Perceptions of Consumer Expectations

ExternalCommunications

to Consumers

MisunderstandingCommunication

Performance

Overpromising

Expectations

Marketer

Consumer

Closing the gaps by fine tuningClosing the gaps by fine tuning 4 Service P’s 4 Service P’s

TargetTargetMarketMarket

Product Place

PromotionPrice


Product Place

PromotionPrice


Product Place

PromotionPrice

~Process~People

~Physical Evidence

~Protocol

People are your Product

In many instances-people performing the service are the product

They are the service and/or organization in customer’s eyes.

They are the brand.

Recruit, Hire, Train, Monitor, Motivate,

Reward

Why customer satisfaction starts with HR

Delivering excellent service: Lessons from the best firms

Marketing-to personnel is as important as to consumersMarketing-to personnel is as important as to consumers

Internal Marketing

Employees

“enabling thepromise”

Performance/ Experience Management

“delivering promises”

External Marketing

Customers

“settingpromises”

Services Mgt

Triangle

Process Trade-off between Standardization & Personalization

“Although standardization may provide for manufacturing efficiency, this efficiency

comes at expense of marketing effectiveness. ..

the consumer orientation screams heterogeneity”

Same as w/ Products

Vargo & Lusch: The Four Service Marketing Myths

Limiting the variability in your service by standardizing the process of delivery & level of consumer involvement will lower expenses but comes w/ a cost:

The importance of Physical Evidence in the “Service Encounter”

At Moment of Truth when service delivered & evaluated by consumer– everything in evidence contributes to the consumer's evaluation of the service…

Be it a website, restaurant, office, hotel room or theme park…it needs to be designed & packaged as well as any product

What the customer sees -- hears, smells, feels-is what s/he’ll believes they will get…

Colors, textures, sounds, smells, décor, dress, demeanor…everything in evidence needs attention and management…

It’s the little things that count

How you design your service encounter is critical in a highly competitive market where consumers hard pressed to discern a significant difference in service performance …

Herein the design of your service encounter will prove the most critical variable in your marketing mix

Again – a lesson proven equally valid for products---

Identifiable apparel: An image-making marketing tool

By ~ 8-to-1 ratio, US

consumers prefer

employees wear

identifiable apparel

A good uniform

makes all the difference

A good uniform

makes all the difference

Identifiable apparel: An image-making marketing tool

1. Improves your image: Customers equate a professional-looking worker w/ a well-run company

2. Increases employee commitment: Adding employee's name can boost morale & loyalty

3. Provides a popular employment "perk":.

4. Shows off your firm's experience and expertise: "certification" -job titles, slogans & performance emblems on shirts/ sleeves…

Instill Proper Protocol so as to avoid the air of indifference

Most common aspect of service complaints is lack of respect for the customer.

______% move away

_______% lost due to competitive reasons and/or unhappy w/ the service

______% suspend patronage because of an attitude of indifference from owner, manager or an employee

Why services lose customers

~3

~30

~67

What Customers Desire:

2500 shoppers said courtesy,

knowledge & friendliness are most important components of

customer service.

The Multiplier EffectThe Multiplier Effect

When a customer has a minor service problem: •In transactions >$100 - s/he will tell 9 to 10 people. •In transactions over $100, s/he will tell 16 people.

When a customer has a minor service problem: •In transactions >$100 - s/he will tell 9 to 10 people. •In transactions over $100, s/he will tell 16 people.

TARP statistics.

Time is Money (Lost Customers)Time is Money (Lost Customers)

*Source: Forum Corporation

Time Taken to Resolve a Customer’s Problem

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Minutes Hours Days Weeks Months

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


20%25%

45%

55%

80%90

70

50

30

10

Percent of

Customers

That Will

Not Buy

Again


Where and Who Complains

Most complaints made to service provider (employee) at time & place of service

Less than 5% of complaints about services ever reach corporate headquarters.

High-income households, younger people, and service-knowledgeable customers are more likely to complain.

Actively Encourage Complaints

Average company does not hear from 95% of its unhappy customers.

Many complaints go unregistered because customers do not think it will help and/or do not know best way to register complaint

Encouraging complaints is a good way to “break the silence.”

Attitude is Crucial

Customers value acknowledged w/ every transaction…

Customers lose confidence when:– Complaints not readily or

personally addressed

E-pologies?

Email response should include

options/names & telephone

numbers for further

assistance..

Tarp Research -

Service Guarantees

Relatively new w/ respect to services.

Service guarantees provide both consumer & business benefits:

Service Guarantee: Customer Benefits

– Customers perceive better value.

– Lower perceived risk.– Higher perceived

reliability– Reinforces customer

loyalty

Forces firm to focus on customer.

States a clear performance goal. Provides measures for tracking

poor service. Forces examination of service

delivery system. Source of pride.

Service Guarantee: Organizational Benefits











Exact nature of Future Changes- depends on nature of the Service

Network Information Services: banking, credit card, insurance, telecom

Retail Hospitality: travel, restaurants, lodging,

leisure, hotels Labor & Expertise:

– Business Support: administration-processes, consulting, customer service

– Personal & Professional: medical, legal, financial, technical assistance






UCTEnhanced

Self-Service

IncreasinglyOutsourced

IncreasinglyVirtualized

Ubiquitious ComPunication Technologies

3G videophones w/ broadband – 2 megper second – always online for self-service

Mobile Kiosks AI Enhanced PDA devices

w/ speech recognition & avatars

RFID – everywhere & in everything

RFID- everywhere & in everything

SmartCode making0.25mm chips

targetcost 5-10 cents ..w/ 15-20 feetrange

Manufacturing capacity10+ billion a year

UCT in Everything you wear-

washable garments w/ miniaturized in-ear speakers /solar cells to provide energy.

technology woven into fabric,

components allowing many functions to be almost `built in' to our bodies, creating a `second skin'.

UCT Enhanced Jewelry

embed functional technology into jewelry & body accessories -- rings, necklaces, earrings, glasses and watches. - -

for body adornment and for more intimate and discreet communication, information gathering and entertainment.

Invisible, intelligent wireless tickets

Can be read in yourpocket at 25 metres

Ultra-wide bandfrequency

“One-ticket fits all”

RFID Shopping App’s

Future grocery shopping

-

integrated –info system

http://www.youtube.com/watch?v=sSlEa1udYGw

http://www.youtube.com/watch?v=sSlEa1udYGw

Exact nature of Future Changes- depends on nature of the Service











UCTEnhanced

Self-Service

IncreasinglyOutsourced

IncreasinglyVirtualized

Predicting a diverse future: Directions and issues in the marketing of services European Journal of Marketing ; Bradford; 2002; Angus Laing

Predicting a diverse future: Directions and issues in the marketing of services European Journal of Marketing ; Bradford; 2002; Angus Laing

“Driven by technological

developments, deregulation, and

globalization- the service sector

in post-industrial economies is

facing unprecedented

change”

“Driven by technological

developments, deregulation, and

globalization- the service sector

in post-industrial economies is

facing unprecedented

change”

http://asimov.uaa.alaska.edu:2051/pqdweb?RQT=305&SQ=AUTHOR(Angus%20Laing)&SMR=1&SAid=0&SAName=sa_menu&JSEnabled=1&TS=1057690643

http://asimov.uaa.alaska.edu:2051/pqdweb?RQT=305&SQ=AUTHOR(Angus%20Laing)&SMR=1&SAid=0&SAName=sa_menu&JSEnabled=1&TS=1057690643

Increasing importance of technological mediation…Increasing importance of technological mediation…

Virtual ExperiencesVirtual Experiences

Redefining concept of-

“Service Encounter”

The Moment of Truth when a service is delivered &

evaluated by consumer

Virtual ExperiencesVirtual Experiences

Redefining concept of-

“Service Encounter”

The Moment of Truth when a service is delivered &

evaluated by consumer

Commodification… standardized "off-the-shelf" service packages Commodification… standardized "off-the-shelf" service packages

Pre-Packaged, fill in the blank, instant-service forms & queries

Some Computer generated…Expert-system managed… Responses

Pre-Packaged, fill in the blank, instant-service forms & queries

Some Computer generated…Expert-system managed… Responses

Professional Services To date-- characterized by high levels of

limited/regulated interpersonal interaction

NOW- 24/7 “access to specialist technical information, formerly the preserve of professionals,

…fundamentally changed the informational asymmetries which have conventionally characterized the delivery of professional services”

NOW- 24/7 “access to specialist technical information, formerly the preserve of professionals,

…fundamentally changed the informational asymmetries which have conventionally characterized the delivery of professional services”

http://www.psychadvisor.com/counsel/index.cfm

Free Advice on Any TopicOnline From America's EldersPersonal Reply to Each Request www.ElderWisdomCircle.org

Free Advice on Any TopicOnline From America's EldersPersonal Reply to Each Request www.ElderWisdomCircle.org



http://www.google.com/url?q=http://www.ElderWisdomCircle.org/&sa=l&ai=AspQGVHIUB9YqmQLmsItxBO9CZWZ-BUftemgviPMCHMAkOBA0GOQADMAmWAAAAAAABAA&num=3



http://www.elderwisdomcircle.org/







“Technologically driven productivity growth is-most important factor in

shaping employment in U.S. & every country in the world.

Productivity growth substitutes technology &/or more efficient

techniques for physical & mental labor

Inventors & investors always figure out ways to replace people with machines”

Automation- 1 ,2 ,3

http://www.youtube.com/watch?v=-_SxW_7v9is

http://www.youtube.com/watch?v=1O6vYiWABTA

http://www.youtube.com/watch?v=B3NGN4t4hm4

Restaurants without waiters

http://www.youtube.com/watch?v=b79pwb6Wlsc



Ultimately most all your service needs will be handled by & thru your AI enhanced PDA…

“With the ruthlessness of Skynet in "The Terminator," computerization in the tertiary sector is now committing mass Dilberticide, replacing receptionists with automated phone systems and travel agents with services like Priceline. Why Dilbert is doomed

The jobs of tomorrow are not what you'd expect

Recession creating a lost generation

http://mobile.salon.com/opinion/feature/2009/11/02/healthcare_employment/index.html

http://faculty.cbpp.uaa.alaska.edu/afef/recession_creating_a_lost_genera.htm

"secondary production

"secondary production

"primary production”"primary

production”

•mechanization of agriculture & mining -- freed up labor for

factories…

•automation in manufacturing freed up workers for-office

work

•Computers & AI in the office--free up workers

for…..?

"tertiary production""tertiary

production"

As it has always done in the past, labor will shift from more mechanized

to less mechanized sectors…. But what will

those jobs be?

• cannot be automated• require a high degree of creativity• & rely on the human touch in face-to-face interactions

•these are called "proximity services" & include fastest-growing occupations, healthcare & education.

Since the recession began, healthcare has added 559,000 jobs. Even more remarkable, the average monthly gain of 22,000 jobs during 2009 has been only slightly lower than the average increase of 30,000 jobs a month in 2008.

The most numerous & stable jobs of tomorrow will be those that cannot be offshored

Why Dilbert is doomedThe jobs of tomorrow

are not what you'd

expect



Outsourcing of IT Services $10.8 billion The value of IT

outsourcing contracts signed in the first quarter of 2005. Source: TPI Index

400,000 Number of service jobs sent overseas since 2000. Source: The Goldman Sachs Group Inc.

$10.8 billion The value of IT outsourcing contracts signed in the first quarter of 2005. Source: TPI Index

400,000 Number of service jobs sent overseas since 2000. Source: The Goldman Sachs Group Inc.

3% Percentage of last year's total layoffs due to offshoring. Source: U.S. Department of Labor

104,000 Number of IT jobs lost due to offshore outsourcing between 2000 and 2003, equaling 2.8% of U.S. IT jobs. Source: Information Technology Association of America

3.5 million Number of U.S. white-collar jobs moving offshore by 2015, averaging 200,000 a year. Source: Forrester Research Inc.

3% Percentage of last year's total layoffs due to offshoring. Source: U.S. Department of Labor

104,000 Number of IT jobs lost due to offshore outsourcing between 2000 and 2003, equaling 2.8% of U.S. IT jobs. Source: Information Technology Association of America

3.5 million Number of U.S. white-collar jobs moving offshore by 2015, averaging 200,000 a year. Source: Forrester Research Inc.

Where the Jobs Go!Where the Jobs Go!

0% 5% 10% 15% 20% 25% 30% 35% 40%

Singapore

Russia

Phillipines

Malaysia

Canada

Ireland

Mexico

China

India

Source: Computer world and Interunity Group, Inc., April & May 2003Base: Survey of 252 corporate IT managers in the U.S.; multiple responses allowed

India graduates 300,000 IT engineers and 90,000 MBAs

per year

The Other Side of Outsourcing

Documents

Marketing in the “New” Economy Internet Marketing CRM Int’l Marketing Service Marketing