Service Marketing 123

8/7/2019 Service Marketing 123

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Marketing Management by Arun Kumar and N Meenakshi Vikas Publishing House Pvt. Ltd. 2006

CHAPTER 20MARKETING OF SERVICES


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LEARNING OBJECTIVES Increasing importance of services in

economies

All principles of marketing apply toservices

The nature and special characteristics of

services

Managing service quality, productivity andpersonnel


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How to position a service organization and

a brand

The service marketing mix

How businesses should manage service

encounters and service recovery

Innovations in services

Learning Objectives (Contd.)


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Difficult to provide a single definition of

service

Concept of service has to be understood

either as an exclusive offering from a

company that is primarily intangible, or as a

part of the service-product mix that acompany offers

Learning Objectives (Contd.)


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SERVICE LEVELS

Service is an intangible offering with little or no

transfer of physical products to the customer

Service is one part of product-service mix being

offered to customers

The main offering is the product but the supplier also

provides some services

Every product or service or any combination of a mix

of the two, ultimately is supposed to provide service

for customers


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INCREASING

IMPORTANCE OFSERVICES

Advances in technology

Growth in per capita income

A trend towards outsourcing

Deregulation

Increasing growth in retailing due to

increase in propensity to consumer


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ALL PRINCIPLES OF

MARKETING APPLY TO

SERVICES


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Services impact customers more directly

than products do

Marketing of services has to be more

deliberate and considered

Service provider has to carefully audit his

resources and competencies

Positioning must be razor sharp

Services more intractable than products

All Principles of Marketing Apply to Services (Contd.)


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Same service can be delivered in various

ways

Marketing mix conveys the positioning of a

service

All Principles of Marketing Apply to Services (Contd.)


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NATURE OF SERVICES

Intangibility

Inseparability

Presence of other consumers

Variability

Perishability


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MANAGING SERVICES Managing service quality

Companies rated higher on service quality

perform better in terms of market sharegrowth

Big gap exists between the expectations of

the customers and the level of the servicethey get Real barriers while matchingexpected and perceived service levels ofcustomers


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Does not understand customer requirements:Misconception barriers arise whencompanies misunderstand customerexpectations

No resources: A company may understandcustomer expectations but is unwilling toprovide resources to meet them

Bad delivery: The company is not able todeliver the expected service

Managing Services (Contd.)


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Managements will: A managementeager to improve quality is able to do it

Exaggerated expectations: Exaggeratedpromises may become a problem

Managing Services (Contd.)


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Reliability: Service provider should beable to deliver the promised service eachtime the customer decides to avail of it

Credibility: Can customers trust theservice company and its staff?

Security: Can the services be usedwithout risk?

Meeting Customer Expectations (Contd.)


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Understanding customer: If the

company understands the expectationsand also has the capability to serve them,the customer is satisfied with the serviceoutcome

Responsiveness: How quickly do servicestaff respond to customer problems,requests and questions?

Behavior of employees: Do service staffact in a friendly and polite manner?



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Competence: Performance of the primary

service will depend on the knowledge andcompetencies of the service providers

Communication: Is the service described

clearly and accurately?

Physical evidence: The company should

provide physical evidence to customerswhich will assure customers that they will

be provided a good service



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Managingserviceproductivity

Measure of relationship between thevarious types of inputs that are required

to produce the service and the service

outputConflict between improving service

productivity and raising service quality

Technology can be used to improve

productivity and service quality

simultaneously


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Socialization allows the newly recruited

service professionals to experience the

culture and tasks of the organization

Maintaining a motivated workforceCustomer feedback essential to maintain

high standards of service quality

Employees of service organizations must

take pride in their jobs

Managing Service Staff (Contd.)


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POSITIONING SERVICES

Differentiate from competition on attributes

that target customers highly value Entails two decisions:

Choice of target market (where to

compete)

Creation of differential advantage (how to

compete)


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Determine important choice criteria of

customers carefully

Most important decision of a service

organization is selecting the factors on

which it will compete

Select a few factors and provide superlative

performances in the chosen factors

Target marketing

Differential advantage

Positioning Services (Contd.)


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Marketing Management by Arun Kumar and N Meenakshi

Vikas Publishing House Pvt. Ltd. 2006

THE SERVICESMARKETING MIX


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Theservice

Pure services are intangible

Higher perceived risk in decision

making processPeople, physical evidence and processes

provide cues about the quality of the service

Brand name affects perceptions of service

Provide service trials wherever possible


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Promotion

Intangible elements of service may bedifficult to communicate

Sales people should develop lists ofsatisfied customers to be used in referenceselling

Word of mouth is critical to success

Acknowledge the dominant role ofpersonal influence in the choice processand stimulate word of mouthcommunication


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Persuade satisfied customers to inform

others of their satisfactionDevelop materials that customers can passon to others

Target opinion leaders in its advertisingcampaign

Encourage potential customers to talk to

current customers

Communication should also be targeted atemployees

Promotion (Contd.)


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Price

An indicator of perceived quality

Important in matching demand andsupply

Price sensitivity key segmentation

variable


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Place

Distribution channels for services are

more direct

Production and consumption is

simultaneous

New technologies permit servicecompanies to provide services without

customers coming to their facility


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People

Service quality is inseparable fromquality of service providers

Set standards to improve quality of

service provided by employees andmonitor their performance

Training of employees crucial

Adopt a customer-first attitude thanputting own convenience first


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Employees of service organizations haveto be adept in multiple roles

Have empathy to judge the service

requirement and mood of the customer

Examine the role played by customers in

service environment

Seek to eliminate harmful interactions

People (Contd.)


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Physical evidence

The environment in which the service is

delivered

Includes any tangible goods that facilitatethe performance and communication of the

service

Strengthen cues that customers search forto judge the quality of services


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Process

Procedures, mechanisms and flow ofactivities by which a service is deliveredto customers

Control variations in services by targetingsmaller segment of customers

Process and its visibility are bothimportant for customers

Process should be employed only when itis required to provide a service and notbecause customers have come to expect it


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SERVICE ENCOUNTERS

A terrible ending usually dominates a

persons recollection of an experience Customers who are mentally engaged in a

task do not notice how long it takes

Customers desperately want to make sense

of unexpected events


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SERVICE RECOVERY

Well-intentioned, prompt, and apt recoverycan assuage angry customers

Everyone in the organization must have theskill, motivation, and authority to makeservice recovery an integral part of serviceoperations

Production-oriented service-delivery systemshave helped in achieving consistently highservice standards


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Inevitable problems will still arise, by

providing for service recovery

Good service providers cover all the costs that

a failure incurs

Customers problem is an opportunity

Companies must be responsive to customer

complaints, and encourage them to complain

Monitor areas of the organization which are

likely to throw up problems more frequently

Service Recovery (Contd.)


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Solve customers problems fast because

service problems quickly escalate

Train frontline employees and empower them

Give employees the authority, responsibility,and incentives to help customers in unique

ways

Let customers know about correctivemeasures taken and the improvement

achieved

Service Recovery (Contd.)


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INNOVATION IN SERVICES Difficulties in applying traditional methods of

research and development to services

Experiments with new services are most useful

when they are conducted live , though

cautiously

Improvements should be planned and

experimented incrementally


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Personnel conducting the experiments mustbe motivated

Successful experiment has to be persisted

with

Experiment only when it can be finally

implemented

Conducting live experiments risky and

cumbersome, but may be inevitable

Innovationin Services (Contd.)

Documents

Service Marketing 123