Chapter 1

Service marketing is the endorsement of economic activities offered by a company to its consumers, it is considered to be a special sub set of marketing because it focuses on how rendering of services can affect both the customer attitude and the marketing strategy. Service marketing includes building public relations, advancing customer loyalty, developing quality of service, handling relationships and complaint management.

Define Service. What are the basic characteristics of service?***

Service is any act or performance that one party can offer to another that is essentially intangible in nature and doesn’t ownership of anything. Its production may or may not be tied with physical product. The American Marketing Association defines services as - “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.”

Characteristics of Services:

• Intangibility:

Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product.

• Inseparability:

It reflects the interconnection among the service provider, service receiver and other customer during delivering the service.

• Heterogeneity:

The variation in consistency from one service transaction to the next. Given the very nature of services, each service offering is unique and cannot be exactly repeated even by the same service provider.

• Perishability:

Services cannot be stored, saved, returned or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer.

Difference between Goods and Services*** Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation from their consumption

Production, distribution and consumption are simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible

Question: Describe the service implications and management procedures***

Management Procedures of Service

• Management of Intangibility: Use of tangible clues, Use of personal sources of information, Creation of strong organizational image

• Management of Heterogeneity: Customization, Standardization • Management of Inseparability: Emphasize on selection and training the contact personnel and

service providers, Consumer management, Use of multisite location • Management of Perishability:

Demand Strategy- Creative Pricing, Reservation System, Development of complementary service, Development of nonpeak demand Supply Strategy- Part time employment, Capacity sharing, Utilization of third parties, Increase customer participation

Write down the eight elements (8P’s) in integrated service marketing? 8 Ps Service Marketing

1. Product 2. Price 3. Place 4. Promotion 5. Process 6. People 7. Physical Evidence 8. Productivity & quality

Goods Services Resulting Implications Tangible Intangible Services cannot be inventoried.

Services cannot be patented. Services cannot be readily displayed or communicated.Pricing is difficult.

Standardized Heterogeneous Service delivery and customer satisfaction depend on employee actions. Service quality depends on many uncontrollable factors.There is no sure knowledge that the service delivered matches what was planned and promoted.

Production separate from consumption

Simultaneous production and consumption

Customers participate in and affect the transaction. Customers affect each other. Employees affect the service outcome. Decentralization may be essential. Mass production is difficult.

Nonperishable Perishable It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.

Chapter -2

Question: Explain service quality gaps with the help of a diagram.***

• Customer Gap:

• difference between expectations and perceptions

• Provider Gap 1:

• not knowing what customers expect

• Provider Gap 2:

• not having the right service designs and standards

• Provider Gap 3:

• not delivering to service standards

• Provider Gap 4:

• not matching performance to promises

What is expectancy disconfirmation mode? Discuss.***

A model proposing that comparing customer expectations lead customer to have their expectation confirmed or disconfirmed.

The Servuction Model

A model used to illustrate the factors that influence the service experience, including those are visible to the consumer and those and those are not.

• Inanimate Environment: All the nonliving features that present during the service encounter, like furniture, interior design, music, wall hangings etc.

• Contact Personnel: Employees other than the primary service providers who briefly interact with customers.

• Service Provider: Who provide the core services to the customers with direct interaction to them.

Define Service Encounter***

Service encounter

Involved in the production and delivery of the service are: the participants ¾ the customer and the contact personnel (employees); the process itself, and the physical environment in which the service is delivered.

• is the “moment of truth”

• occurs any time the customer interacts with the firm

• can potentially be critical in determining customer satisfaction and loyalty

• types of encounters: – remote encounters, phone encounters, face-to-face encounters

• Is an opportunity to: – build trust

– reinforce quality

– build brand identity

– increase loyalty

• Participants in Service Encounter - Customer - Service Personnel - Process

Managing the service encounter

Being an effective service manager demands more than just the direct management of service encounters. We shall cover some different approaches to managing services in an indirect way.

Role theory is a learned set of behaviors that guides or directs how an individual operates in a given setting. Roles are passed down from employee to employee through on-the-job training. Thus, by understanding the frameworks of roles, managers can exert indirect control over the service encounter.

Script theory is an extension of role theory. In role theory, employees are likened to actors on a stage, so with script theory, we think of them as using scripts.

Common Themes in Critical Service Encounters Research:

Recovery:

DO DON’T • Acknowledge problem • Explain causes • Apologize • Compensate/upgrade • Lay out options • Take responsibility

• Ignore customer • Blame customer • Leave customer to fend for him/herself • Downgrade • Act as if nothing is wrong

Question: Describe the categories in consumer decision making and evaluation of services.***

Information Search

• In buying services consumers rely more on personal sources. WHY?

• Personal influence becomes pivotal as product complexity increases

• Word of mouth important in delivery of services

• With service most evaluation follows purchase

Perceived Risk

• More risk would appear to be involved with purchase of services (no guarantees)

• Many services so specialized and difficult to evaluate (How do you know whether the plumber has done a good job?)

• Therefore a firm needs to develop strategies to reduce this risk, e.g, training of employees, standardization of offerings

Evoked Set

• The evoked set of alternatives likely to be smaller with services than goods

• If you would go to a shopping Centre you may only find one dry cleaner or “single brand”

• It is also difficult to obtain adequate pre purchase information about service

• The Internet may widen this potential

• Consumer may choose to do it themselves, e.g. garden services

Emotion and Mood

• Emotion and mood are feeling states that influence people’s perception and evaluation of their experiences

• Moods are transient

• Emotions more intense, stable and pervasive

• May have a negative or positive influence

Service Provision as Drama

• Need to maintain a desirable impression

• Service “actors” need to perform certain routines

• Physical setting important, smell, music, use of space, temperature, cleanliness, etc.

Factors that Influence Adequate Service

• Transitory service intensifiers – temporary – a computer breakdown will be less tolerated at financial year-ends

• Perceived service alternatives

• Perceived service role of customer

• Situational factors

Factors that Influence Desired and Predicted Service

• Explicit Service Promises

• Implicit Service Promises

• Word of Mouth

• Past Experience

Chapter 3

Question: Draw and discuss the figure of four focus strategies.***

Positioning is defined as the process of establishing and maintaining a distinctive place in the market for an organisation and/or its products/services offerings. This is the creating of a distinct place in the minds of a customer, or the perception of a customer.

The place a product occupies in consumers’ minds relative to competing products.

Example: eBay’s positioning: No matter what “it” is, you can find “it” on eBay!

FOUR FOCUS STARTEGIES

The extent of a company’s focus can be described along two dimensions—market focus and service focus. Market focus is the extent to which a firm serves few or many markets, while service focus describes the extent to which a firm offers few or many services.

These two dimensions define the four basic focus strategies shown in the following

Fully focused

A fully focused organization provides a limited range of services (perhaps just a single core product) to a narrow and specific market segment. There are both opportunities and risks to such a strategy. Firms has recognized expertise in a well-defined area, it may provide protection against would-be competitors, and then the firm can charge high prices. The biggest risk is that the market may be too small to get the volume of business needed for financial success. Other risks include the danger that demand for the service may decrease because of alternative products, or that purchasers in the chosen segment may be affected by an economic downturn.

Market focused

A market focused company concentrates on a narrow market segment, but has a wide range of services. Before choosing a market focused strategy, managers need to be sure that their firms have the operational capability to do an excellent job of delivering each of the different services selected. They also need to understand customer purchasing practices and preferences.

Service focused

Service focused firms offer a narrow range of services to a fairly broad market. However, as new segments are added, the firm needs to develop knowledge and skills in serving each segment. This may require a broader sales effort and greater investment in marketing communication.

Unfocused

Finally, many service providers fall into the unfocused category, because they try to serve broad markets and provide a wide range of services. The danger with this strategy is that unfocused firms often are “jack of all trades and master of none.”

Question: How will you develop a market positioning strategy?***

Positioning links market analysis and competitive analysis to internal corporate analysis

A. Market Analysis

Focus on overall level and trend of demand and geographic locations of demand

Look into size and potential of different market segments

Understand customer needs and preferences and how they perceive the competition

B. Internal Corporate Analysis

Identify organization’s resources, limitations, goals, and values

Select limited number of target segments to serve

C. Competitor Analysis

Understand competitors’ strengths and weaknesses

Anticipate responses to potential positioning strategies

Question: Define various types of positioning strategy.***

Positioning by Specific Product Attribute and Benefits: Here the marketer associates a product with an attribute, a product feature or a consumer feature. Eg. Grameen Phone (Stay Closer) – Strong Network and Wider Accessibility.

POSITIONING BY PRICE/ QUALITY: The positioning is done based on price and quality of the product. Premium products are positioned like this. Eg. Rolex (high price), Add- Din (low price)

POSITIONING BY USE OR APPLICATION: Specific image or position for a brand is to associate it with a specific use or application. Eg. Google Earth

POSITIONING BY PRODUCT CLASS: Often the competition for a particular Service comes from outside the Service class. Eg. G-Cinema, Telefilm, Limited hour Play etc.

POSITIONING BY PRODUCT USER: Here the persona of the product is associated with the User. Eg. Idea – Abhishek Bachan

POSITIONING BY COMPETITOR This is similar to positioning by product class, although in this case the competition is within the same product category. Eg. Onida TV – “Neighbour’s Envy, Owners Pride”

POSITIONING BY CULTURAL SYMBOLS: The cultural symbols are used to differentiate the brands. Eg. Humara Bajaj, MDH-Degi Mirch, Air India

Positioning Map

Great tool to visualize competitive positioning and map developments of time

Useful way to represent consumer perceptions of alternative products graphically

Also known as perceptual maps (built on preference maps)

Information about a product can be obtained from market data, derived from ratings by representative consumers or both

Positioning Map of Chocolates

Using Positioning Maps to Analyze Competitive Strategy

Positioning Maps Help Managers to Visualize Strategy

Positioning maps display relative performance of competing firms on key attributes

Research provides inputs to development of positioning maps - challenge is to ensure that

Attributes employed in maps are important to target segments

Performance of individual firms on each attribute accurately reflects perceptions of customers in target segments

Predictions can be made of how positions may change in light of future developments

Simple graphic representations are often easier for managers to grasp than tables of data or paragraphs of prose

Charts and maps can facilitate “visual awakening” to threats and opportunities, suggest alternative strategic directions

Chapter 4

Communication Mix

The communication mix refers to specific methods used to promote the company or its products to targeted customers

Messages through Marketing Channels: Advertising

Build awareness, inform, persuade, and remind

Challenge: How stand out from the crowd?

Effectiveness remains controversial

Research suggests that less than half of all ads generate a positive return on their investment

Messages through Marketing Channels: Public Relations

PR/Publicity involves efforts to stimulate positive interest in an organization and its products through third parties

e.g., press conferences, news releases, sponsorships

Corporate PR specialists teach senior managers how to present themselves well at public events, especially when faced with hostile questioning

Unusual activities can present an opportunity to promote company’s expertise

Messages through Marketing Channels: Direct Marketing

Mailings, recorded telephone messages, faxes, email

Potential to send personalized messages to highly targeted micro segments

Need detailed database of information about customers and prospects

Advance in on-demand technologies empower consumers to decide how and when they prefer to be reached, and by whom

e.g. email spam filters, pop-up blockers, podcasting

Permission Marketing goal is to persuade customers to volunteer their attention

Enables firms to build strong relationships with customers

e.g., People invited to register at a firm’s website and specify what type of information they like to receive via email

Messages through Marketing Channels: Sales Promotion

Defined as “Communication that comes with an incentive”

Should be specific to a time period, price, or customer group

Motivates customers to use a specific service sooner, in greater volume with each purchase, or more frequently

Messages through Marketing Channels: Personal Selling

Interpersonal encounters educate customers and promote preferences for particular brand or product

Common in B2B and infrequently purchased services

Many B2B firms have dedicated sales force to do personal selling

Customer assigned to a designated account manager

For services that are bought less often, firm’s representative acts as consultant to help buyers make selection

Face-to-face selling of new products is expensive— telemarketing is lower cost alternative

Messages through Marketing Channels: Trade Shows

Popular in B2B marketplace

Stimulate extensive media coverage

Many prospective buyers come to shows

Opportunity to learn about latest offerings from wide variety of suppliers

Sales representative who usually reaches four to five potential customer per day may be able to get five qualified leads per hour at a show

Messages through Internet: Company’s Website

The web is used for a variety of communication tasks

Creating consumer awareness and interest

Providing information and consultation

Allowing two-way communication with customers through email and chat rooms

Encouraging product trial

Allowing customers to place orders

Measuring effectiveness of advertising or promotional campaigns

Innovative companies look for ways to improve the appeal and usefulness of their sites

Messages through Internet: Online Advertising

Banner advertising

Placing advertising banners and buttons on portals such as Yahoo, Netscape and other firms’ websites

Draw online traffic to the advertiser’s own site

Web sites often include advertisements of other related, but non competing services

Search engine advertising

Reverse broadcast network: search engines let advertisers know exactly what consumer wants through their keyword search

Can target relevant messages directly to desired consumers

Several advertising options:

Pay for targeted placement of ads to relevant keyword searches

Sponsor a short text message with a click-through link

Buy top rankings in the display of search results

Messages through Service Delivery Channels

Frontline employees

Communication from frontline staff can be for the core service or supplementary elements

New customers in particular need help from service personnel

Service outlets

Can be through banners, posters, signage, brochures, video screens, audio etc.

Self-service delivery points

ATMs, vending machines and websites are examples

Customer Training

Messages Originating from Outside the Organization

Word of Mouth (WOM)

Recommendations from other customers viewed as more credible

Strategies to stimulate positive WOM:

Having satisfied customers providing comments

Using other purchasers and knowledgeable individuals as reference

Creating exciting promotions that get people talking

Offering promotions that encourage customers to persuade their friend to purchase

Developing referral incentive schemes

Blogs – A new type of online WOM

Becoming increasingly popular

Communications about customer experiences influence opinions of brands and products

Some firm have started to monitor blogs as form of market research and feedback

Media Coverage

Compares, contrasts service offerings from competing organizations

Advice on “best buys”

Ethical Issues in Communication

Advertising, selling, and sales promotion all lend themselves easily to misuse

Communication messages often include promises about benefits and quality of service delivery. Customers are sometimes disappointed

Why were their expectations not met?

Poor internal communications between operations and marketing personnel concerning level of service performance

Over promise to get sales

Deceptive promotions

Unwanted intrusion by aggressive marketers into people’s personal lives

Many service firms employ a unified and distinctive visual appearance for all tangible elements

e.g. Logos, uniforms, physical facilities

Provide recognition and strengthen brand image

Especially useful in competitive markets to stand out from the crowd and be instantly recognizable in different locations

Question: What are the Common Educational and Promotional Objectives in Service Settings?

Common Educational and Promotional Objectives in Service Settings:

Create memorable images of specific companies and their brands

Build awareness/interest for unfamiliar service/brand

Compare service favorably with competitors’ offerings

Build preference by communicating brand strengths and benefits

Reposition service relative to competition

Reduce uncertainty/perceived risk by providing useful info and advice

Provide reassurance (e.g., promote service guarantees)

Encourage trial by offering promotional incentives

Familiarize customers with service processes before use

Teach customers how to use a service to best advantage

Stimulate demand in off-peak, discourage during peak

Recognize and reward valued customers and employees

Chapter 6

Question: Discuss the six step to setting a price.

Price is that which is given up in an exchange to acquire a good or service. It is the one element of marketing mix which produce revenue.

There is a six-step to setting a price:

1. Selecting the pricing objective

2. Determining demand

3. Estimating costs

4. Analyzing competitors’ costs, prices, and offers

5. Selecting a pricing method

6. Selecting the final price

Step 1: Selecting the Pricing Objective

• Survival

• Maximum current profit

• Maximum market share

• Maximum market skimming

• Product-quality leadership

Step 2: Determining Demand

• Price Sensitivity

Factors Leading to Less Price Sensitivity:

- The Product is more distinctive - Buyers are less aware of substitutes - Buyers Cannot easily compare the quality of substitutes - The Expenditure is a smaller part of buyer’s total income - The Expenditure is a Small compared to the total cost of the end product - Part of the cost is paid by another party - The product is Used with previously purchased assets - The product is assumed to have high quality and prestige - Buyers cannot store the product

• Estimating demand curves

- Statistical Analysis - Price Experiments - Surveys

• Price Elasticity of Demand

Changes in Price affect Consumer demand

Step 3: Estimating Costs

Types of Costs - Fixed and variable cost - Total Cost - Cost per unit of production

Accumulated Production Activity-Based Cost Accounting Target Costing

Step 4: Analyzing competitors’ costs, prices, and offers

- Evaluate the competitor’s price and product value

Step 5: Selecting a price method

• Markup pricing

• Target-return pricing

• Perceived-value pricing

• Value pricing

• Going-rate pricing

• Auction-type pricing

Step 6: Selecting the final price

• Impact of other marketing activities

• Company pricing policies

• Gain-and-risk sharing pricing

• Impact of price on other parties

Price Adaption Strategies

• Geographical pricing

• Discounts/ Allowances

- Cash, Quantity, Functional, Seasonal, Volume, Prompt payment discount

- Allowance

• Promotional pricing

- Loss-leader pricing - Special-event pricing - Cash rebates - Low-interest financing - Longer payment terms - Warranties and service contracts - Psychological discounting

• Differentiated pricing

- Customer-segment pricing - Product-form pricing - Image pricing - Channel pricing - Location pricing - Time pricing - Yield pricing

Respond to low-cost rival by/Brand Leader Responses to Competitive Price Cuts

• Maintain price

• Maintaining price and adding value

• Reducing price

• Increasing price and improving quality

• Launching a low-price fighter line

Chapter 7

Help Customers to Evaluate Service Offerings

• Customers may have difficulty distinguishing one firm from another -Provide tangible clues related to service performance

• Some performance attributes lend themselves better to advertising than others. e.g., Airlines • Firm’s expertise is hidden in low-contact services

- Need to illustrate equipment, procedures, employee activities that take place backstage

Promote Contributions of Service Personnel

• Frontline personnel are central to service delivery in high contact services

- Make the service more tangible and personalized

• Show customers work performed behind the scenes to ensure good delivery - To enhance trust, highlight expertise and commitment of employees - Advertisements must be realistic - Messages help set customers’ expectations - Service personnel should be informed about the content of new advertising campaigns

or brochures before launch

Facilitate Customer Involvement in Production

- Customers are actively involved in service production; they need training to perform well

- Show service delivery in action

- Television and videos engage viewer

e.g., Dentists showing patients videos of surgical procedures before surgery

- Streaming videos on web and podcasts are new channels to reach active customers

Stimulate or Dampen Demand to Match Capacity

• Live service performances are time-specific and can’t be stored for resale at a later date - Advertising and sales promotions can change timing of customer use

• Examples of demand management strategies: - Reducing usage during peak demand periods

- Stimulating demand during off-peak period

Chapter 8

Question: Define Service blueprint? What are the components of service blueprint?

Service Blueprint is a picture or map that accurately portrays the service system so that different people involved in providing it can understand and deal with it objectively regardless of their individual point of view

Service Blueprinting/ Service Mapping

A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer’s point of view.

Blueprint Components

• Customer actions: it includes steps, choices, activities and interactions that customer performs in the process of purchasing, consuming and evaluating the service

• Onstage employee actions: steps and activities that the contact employees performs that are visible to the customer.

• Backstage employee actions: steps and activities that occur behind the scene to support onstage activities.

• Support processes: covers the internal services, steps and interactions that take place to support the contact employees in delivering the service.

CUSTOMER ACTIONS

Line of interaction: direct interactions b/w the customer and organization

ONSTAGE” CONTACT EMPLOYEE ACTIONS

Line of visibility: this line separates all service activities that are visible to the customers from those that are not visible

“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

Line of internal interaction: separates contact employee’s activities from those of other service support activities and people

SUPPORT PROCESSES

Building a Service Blueprint

Application of Service Blueprints

• New Service Development

• concept development

• market testing

• Supporting a “Zero Defects” Culture

• managing reliability

• identifying empowerment issues

• Service Recovery Strategies

• identifying service problems

• conducting root cause analysis

• modifying processes

Blueprints Can Be Used By:

• Service Marketers

• creating realistic customer expectations

• service system design

• promotion

• Operations Management

• rendering the service as promised

• managing fail points

• training systems

• quality control

• Human Resources

• empowering the human element

• job descriptions

• selection criteria

• appraisal systems

• System Technology

• providing necessary tools:

• system specifications

• personal preference databases

The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

Exercise for Creating Customer-Defined Service Standards

• Form a group of four people

• Use your school’s undergraduate or graduate program, or an approved alternative

• Complete the customer-driven service standards importance chart

• Establish standards for the most important and lowest-performed behaviors and actions

• Be prepared to present your findings to the class

Chapter 9

What are the Key Components of Service Blueprint? ***

1. Define standards for front-stage activities

2. Specify physical evidence

3. Identify main customer actions

4. Line of interaction (customers and front-stage personnel)

5. Front stage actions by customer-contact personnel

6. Line of visibility (between front stage and backstage)

7. Backstage actions by customer contact personnel

8. Support processes involving other service personnel

9. Support processes involving IT

Customer as Co-Producer: Levels of Customer Participation***

• High – Customer works actively with provider to co-produce the service - Service cannot be created without customer’s active participation - Customer can jeopardize quality of service outcome

• Medium – Customer inputs required to assist provider - Provide needed information and instructions - Make personal effort; - May Share physical possessions

• Low – Employees and systems do all the work - Involves standardized work

Process Redesign: Principle Approaches

• Eliminating non-value-adding steps • Shifting to self-service • Delivering direct service • Bundling services • Redesigning physical aspects of service processes

Self Service Technologies (SSTs)

• SSTs are the ultimate form of customer involvement in service production - Customers undertake specific activities using facilities or systems provided by service

supplier - Customer’s time and effort replace those of employees

• Information-based services lend selves particularly well to SSTs - Used in both supplementary services and delivery of core product

• Many companies and government organizations seek to divert customers from employee contact to Internet-based self-service

Service Firms as Teachers: Well-trained customers perform better

• Firms must teach customers roles as co-producers of service • Customers need to know how to achieve best results • Education can be provided through:

- Brochures - Advertising - Posted instructions - Machine-based instructions - Websites, including FAQs - Service providers - Fellow customers

• Employee must be well-trained to help advise, assist customers

Managing Customers as Partial Employees to Increase Productivity and Quality

1. Analyze customers’ present roles in the business and compare to management’s ideal 2. Determine if customers know how to perform and have necessary skills 3. Motivate customers by ensuring that will be rewarded for performing well 4. Regularly appraise customers’ performance; if unsatisfactory, considering changing roles of

termination

Identifying Jay Customer

Jay customer

A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers.

Why do jay customer matter?

Can disrupt processes Affect service quality May spoil experience of other customers

What should a firm do about them?

Try to avoid attracting potential jay customers Institute preventive measures Control abusive behavior quickly Take legal action against abusers But firms must act in ways that didn’t alternate other customers

Managing difficult customer

1. Egocentric Edgar

The type of customers who place his or her needs above all other customers and service personnel.

Dealing Strategy:

Take actions within the organization policy in the way that demonstrate you are trying to solve his or her problems in a special way. Let not know the edgar the policy of organization.

2. Bad mouth betty

The type of customers who becomes loud, crude and abusive to service personnel and other customer alike.

Dealing Strategy:

Ignore the foul language and listen to the core problem Let know him/her you are willing to solve her problem but not to listen his or her abusive

language Hang up, walk way or do whatever is necessary

3. Hysterical Harold

The type of customers who reverts to screaming and tantrums to make his/her point.

Dealing Strategy:

Move to Harold offstage Take responsibility for the problem

4. Dictatorial Dick

The type of customers who assumes superiority over all personnel and management.

Dealing Strategy:

Provide service in equitable manner Tell straight forward exactly what you can do for him

5. Freeloading Freda

The type of customers who uses tricks or verbal abuse to acquire service without paying.

Dealing Strategy:

Suggest to take legal action Persuade him/her to take him/her business elsewhere Develop new policy

Chapter 10

E-Commerce: Move to Cyberspace

Internet facilitates 5 categories of “flow”

Information

Negotiation

Service

Transactions

Promotion

Electronic channels offer complement/alternative to traditional physical channels

Convenience (24-hour availability, save time, effort)

Ease of obtaining information online and searching for desired items

Better prices than in many bricks-and-mortar stores

Broad selection

Recent Developments link Websites, customer management (CRM) systems, and mobile telephony

Integrating mobile devices into the service delivery infrastructure can be used as means to:

Access services

Alert customers to opportunities/problems

Update information in real time

The Challenge of Distribution in Large Domestic Markets

Marketing services (i.e., physical logistics) face challenges due to:

Distances involved (geographic areas)

Existence of multiple time zones

Multiculturalism (especially, immigrants and indigenous people)

Differences in laws and tax rates

companies counter this by:

Targeting specific market segments

Seeking out narrow market niches

Serving multiple segments across a huge geographic area is biggest marketing challenge

How Service Processes Affect International Market Entry

People processing services require direct contact with customers

Possession processing involves services to customer’s physical possessions

Information-based services include mental processing services and information processing services

Employee cycle of failure

Begins with a narrow design of jobs to accommodate low skill levels, an emphasis on rules rather than service and the use of technology to control quality

Strategy of low wages is accompanied by minimal effort on selection of training

Consequences include bored employees who lack the ability to respond to customer problems, become dissatisfied and develop a poor service attitude.

Outcomes for the firm are low service quality and high employee turnover

Because of weak profit margins, the cycle repeats itself with the hiring of more low paid employees to work in this unrewarding atmosphere

Customer cycle of failure

Begins with repeated emphasis on attracting new customers

Become dissatisfied with employee performance and the lack of continuity implicit in continually changing faces

These customers fail to develop any loyalty to the supplier

This requires an ongoing search for new customers to maintain sales volume

Chapter 11

Select And Hire the Right People:

1. Be the Preferred Employer

Create a large pool: “Compete for Talent Market Share”

What determines a firm’s applicant pool?

Positive image in the community as place to work

Quality of its services

The firm’s perceived status

There is no perfect employee

Different jobs are best filled by people with different skills, styles or personalities

Hire candidates that fit firm’s core values and culture

Focus on recruiting naturally warm personalities

2. How to Identify the Best Candidates

Observe Behaviour

Hire based on observed behavior, not words you hear

Best predictor of future behavior is past behavior

Consider group hiring sessions where candidates given group tasks

Personality Testing

Willingness to treat co-workers and customers with courtesy, consideration and tact

Perceptiveness regarding customer needs

Ability to communicate accurately and pleasantly

3. How to Identify the Best Candidates

Employ Multiple, Structured Interviews

Use structured interviews built around job requirements

Use more than one interviewer to reduce similar to me effects

Give Applicants a Realistic Preview of the Job

Chance to have “hands-on” with the job

Assess how the candidates respond to job realities

Allow candidates to self-select themselves out of the job

The Organizational Culture, Purpose and Strategy

Promote core values, get emotional commitment to strategy

Get managers to teach “why”, “what” and “how” of job.

Interpersonal and Technical Skills

Both are necessary but neither is sufficient for optimal job performance

Product/Service Knowledge

Staff’s product knowledge is a key aspect of service quality

Staff need to be able to explain product features and to position products correctly

Factors Favoring Employee Empowerment

Firm’s strategy is based on competitive differentiation and on personalized, customized service

Emphasis on long-term relationships vs. one-time transactions

Use of complex and non-routine technologies

Environment is unpredictable, contains surprises

Managers are comfortable letting employees work independently for benefit of firm and customers

Employees seek to deepen skills, like working with others, and are good at group processes

Motivate and Energize the Frontline

Use the full range of available rewards effectively, including:

Job content

Feedback and recognition

Goal accomplishment

Service-Profit Chain Model

• Most applicable to service environments.

• Model is based on a set of cause and effect linkages between internal and external performance, and defines the key performance measurements on which service-based firms should focus.

Causal Links in the Service Profit Chain

Customer loyalty drives profitability and growth

Customer satisfaction drives customer loyalty

Value drives customer satisfaction

Employee productivity and retention drive value

Employee loyalty drives productivity

Employee satisfaction drives loyalty and productivity

Internal quality drives employee satisfaction

Top management leadership underlies chain’s success