Services Marketing Study Guide Exam 1

7/25/2019 Services Marketing Study Guide Exam 1

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Chapter 1 Introduction to Services MarketingCompanies that provide services: Google, FB, Twitter, Uber, Netfix.

mportance o! "ervices

#$% o! wor&ers are in the service sector

"ervices acco'nt !or #(% o! U". G)* and (+% o! global G)*

"ervice occ'pations are responsible !or the maorit- o! ob growth

hat is a "ervice/

0n act or per!ormance o1ered b- one part- to another. 0n act that creates val'e.

0n economic activit- that does not res'lt in ownership

*er!ormances that create desired res'lts !or c'stomers themselves, their ph-sicalpossessions or intangible assets.

2o' cannot own a service.

3conomic growth has demanded !or more services. e val'e convenience and

leis're time.

"ome ind'stries in the service sector

Ban&ing 4odging

5esta'rants, bars, catering

ns'rance

3d'cation

News and entertainment

6ealth care Transportation

5epair and maintenance

4a'ndries, dr- cleaning

holesaling and retailing

*ro!essional 7law, architect're,

cons'lting8

nternal services

"ervice elements within an organi9ation that !acilitate creation o!or add val'e to

its ;nal o'tp't.

ncl'des: increasingl-, these services are being o'tso'rced.o 0cco'nting and pa-roll administration

o 4egal services

o Catering and !ood services

o Cleaning and landscaping

o Transportation

o 5ecr'itment and training

o

o 6ow services di1er !rom goods

C'stomers do not obtain ownership o! services

"ervice prod'cts are intangible per!ormances, not obects.

C'stomers o!ten activel- involved in prod'ction process harder to improve prod'ctivit-,

control ?'alit-.

Time !actor is more important > speed ma- be &e-.


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)eliver- s-stems incl'de electronic and ph-sical channels. 3lectronic: Ban&s

7deposit chec&s8, Netfix. *h-sical: doctor.o

o

o Uni?'e !eat'res o! services

ntangibilit-: c'stomers do not obtain ownership o! services. "ervices prod'cts are

intangible per!ormances > not obects.

involved in prod'ction process.


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o

o

o Fig .E: The #*s o! ntegrated "ervice =anagement

*rod'ct: end res'lt. Core service and s'pplement services. C'stomer service is a

s'pplement services. 3x. 0pple does not have core service beca'se the- sell tangibleitems, b't the- do have s'pplement services.

*lace: how a service is delivered to -o'. 3lectronicall- or in person.

*rice: signal ?'alit-. =ore nervo's p'rchasing services.

*romotion: word o! mo'th, re!erral s-stem, ed'cating people on how to 'se a service.

*rocess: how do -o' ma&e services consistent, train -o'r emplo-ees so -o' deliver-services consistentl-.

*eople

*h-sical evidence: cleanness.o

o Chapter 2 Consumer Behavior in a Service Contexto Three stages o! service cons'mption

. *rep'rchase:a. Need: 'nconscio's 7inside o! -o' d'e to di1erent belie!s8, ph-sical

conditions, external so'rces 7-o' see some else have it,mar&etingHadvertising8.

b. n!ormation search: -o'r consideration setI the ones that come to mind.c. 3val'ation o! alternatives:

i. "earch attrib'tes: how eas- -o' can ;nd it. 3as- to identi!-. 3x.resta'rant atmosphere. 6igh in search attrib'tes: clothing, chair,motor vehicle, !oods.

ii. 3xperience attrib'tes: -o' will not &now how good something is 'ntil-o' tr- it. 3x: hairc't, resta'rant meals, lawn !ertili9er, entertainment.iii. Credence attrib'tes: even tho'gh -o' did it, -o' are not able to &now

i! the- reall- did it right. 3x. ed'cation, comp'ter repair, legalservices, complex s'rger-.


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o

d. *erceived ris&s: the more di@c'lt- -o' have eval'ating a service be!orep'rchase, the more ris& -o' will perceive. This is one o! the biggestdi1erences between services and tangible goods.

i. F'nctional ris&: 'nsatis!actor- per!ormance o'tcomes. 3x. la'ndr-

service that is not able to ta&e o't a stain.ii. Financial: monetar- loss, 'nexpected extra costsiii. Temporal: wasted time, dela-s leading to problems. 3x. airline that

has dela-s and -o' have a wedding to attend, resta'rant be!ore -o'have class or a meeting.

iv. *h-sical: personal in'r-, damage to possessionsv. *s-chological: !ears and negative emotions

vi. "ocial: how others ma- thin& and react. 3x. what will others sa- i! -o'stain a cheap hotel.

vii. "ensor-: 'nwanted impact on an- o! ;ve senses. 3x. -o' come o't o!a resta'rant smelling li&e garlic. *lace to lo'd to have a conversation.

o "trategic responses to managing c'stomer perceptions o! ris&

Free trial

0dvertise: !amiliari9e celebrities or blogger.

)ispla- credentials: resta'rants 'se things li&e 9agat J resta'rant or the- show the

reviews and papers in the news. 4aw-ers, doctors, and pro!essors displa- theirdiplomas.


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o

!. *'rchase decision: repeat p'rchases can be simple and !ast. "ometimesp'rchases can involve tradeo1s.o

K. "ervice enco'nter: act'al deliver- o! the service.a. =oments o! tr'th. To'ch points that can ma&e or brea& relations.

o LMe co'ld sa- that the perceived ?'alit- is reali9ed at the moment

of truth !hen the service provider and the service customerconfront one another in the arena. 0t that moment the- are ver- m'chon their own t is the s&ill, the motivation, and the tools emplo-ed b- the;rmOs representative and the expectations and behavior o! the client whichtogether will create the service deliver- process. 5ichard Normann

b. 6igh contact to low contact enco'nters: service !actories, low contactIordering online, ban&ing 7online8, oil changes. 6igh contactI hotels,nannies.

o

c. Theater as metaphor: !acilities are a stage, emplo-ees are the actors.d. 5ole and script theories

o

5ole theor-: set o! learned behavior patterns 'sed in certain socialinteractions 7c'stomers and emplo-ees8.o "cript theor-: a service script speci;es behavior se?'ences o!

emplo-ees and c'stomer d'ring a service enco'nter.o

+. *ostenco'ntera. "atis!action: attit'deli&e 'dgment !ollowing a service p'rchase or series o!

service interactions. "atis!action 'dgements are based on comparison.*ositive discon;rmation 7better8, con;rmation 7same8, negativediscon;rmation 7worse8.


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b. )elight: goes past satis!action. s a !'nction o!I 'nexpectedl- high levels o!per!ormance, aro'sal 7s'rprise and excitement8, positive e1ect 7pleas're,

o- or happiness8. "trategic lin&s exist between c'stomer satis!actionHdelightand corporate per!ormance. B- creating more val'e !or c'stomer 7increasedsatis!action8, the ;rm creates more val'e !or the owners.

o

o Service "ualit# $he %ap Model

o C'stomer service champions incl'des: 5it9 Carlton

"o'thwest airlines

0pple

Neiman =arc's

0ma9on.com


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6ow these champs consistentl- achieve high mar&s !rom their c'stomers/

Understand what c'stomers expect

"et service ?'alit- standards that match c'stomersO expectations

=otivate emplo-ees to meet managementOs standards. 3x. recognition, ;nancial

incentive, creating a great wor& environment.

5ealisticall- portra- the service delivered to c'stomers *rovide c'stomers with the service that the- expect.

hat c'stomers sa- matters most

Pnowledgeable sta1: D#%

Friendl- sta1: D.#%

"ervice a!ter the sale: K.E%

5eadil- available sta1: K.D%

Flexible policies !or ret'rnsHexchanges: Q%

Noneprod'ct is all that matters: K.Q%

Not s'reHother: K.(%

The service ?'alit- gap model

Five dimensions o! service ?'alit-: are -o' satis;ed with the val'e provided. 3ach

person val'es them di1erentl-.. Tangibles: appearance o! ph-sical !acilities, e?'ipment, personnel, and comm'nication

materials. 3x. appearance o! the place 7cleanness8, websites appearance 7!ormal8.K. 5eliabilit-: per!orms the promised service dependabl- and acc'ratel-, and are -o'

consistent/. 3x. show 'p in the correct time, do what the- are s'pposed to. 7mostimportant according to s'rve-s8.

+. 5esponsiveness: willingness to help c'stomers and provide prompt service, are the-timel-/. 3x. *'blix emplo-ee g'ides -o' to the aisle -o' need.

D. 0ss'rance: &nowledge and co'rtes- o! emplo-ees and their abilit- to inspire tr'st andcon;dence. 3x. con;dent someone can ;x -o'r car. Feeling sa!e.

E. 3mpath-: caring, individ'ali9ed attention the ;rm provides its c'stomers, goodcomm'nications, -o' want to act'all- solve their problems. 3x. career services wantsto help -o' get a ob.

*erceived service ?'alit-: how -o' as an individ'al interpret things

The service ?'alit- c'stomers believe the- are getting it ma- not alwa-s be

acc'rateR "ervice ?'alit- can be di@c'lt to eval'ateR

S4oo& at **T pg.K

E G0*"

G0* : Pnowledge gap. Gap between c'stomersO expectations o! service andmanagement perceptions o! c'stomer expectations. 3x. hotels.

6ow to close this gap: c'stomer !eedbac& 7how was -o'r experience, what can we

do to improve -o'r experience, what are -o'r expectations, detailed ?'estions8,mar&et research, 'pward comm'nication.

"ervice ?'alit- research approaches: transactional s'rve-s, mar&et s'rve-s,

m-ster- shopping, service reviews, c'stomer advisor- panels, !oc's gro'pinterviews 7( or # cons'mers together and !acilitate their disc'ssion8, emplo-eeresearch, emplo-ee ;eld reporting, new declining !ormer c'stomer s'rve-s.


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)ominos had a large &nowledge gap. The- had no idea what their c'stomers

expectation were, and what expectations the- had. The- onl- !oc'sed on thespeediness. The- then started 'sing !oc's gro'ps to as& c'stomers. The-completel- revamp their recipe.

G0* K: *olic- gap. Gap between management perception and translation o!

perceptions into service ?'alit- speci;cations. 2o' as an organi9ation are settingstandards and need to be able to accomplish them. 3x. s management comitted toservice ?'alit-/

6ow to close this gap: management commitment to service ?'alit-, goal setting:

set standards, tas& standardi9ation, perception o! !easibilit-: -o' want to set thispolicies, b't the- have to be realistic.

G0* +: )eliver- gap. e set the policies and the standards, are we act'all-

!ollowing them/ Gap between service ?'alit- speci;cations and service deliver-.3mplo-ees need to act'all- exec'te them.

6ow to close this gap: teamwor&, emplo-ee > ob ;t 7competent and honest8,

technolog- > ob ;t: ma&es -o'r ob easier and does not complicate them.

7)ominos order, Uber, ban&ing s-stem, sel!chec&o't in groceries8, perceivedcontrol 7managers overloo&ing emplo-ees8, s'pervisor- control s-stem, roleconfict, role ambig'it- 7ever-one needs to &now what their d'ties are8.

G0* D: Comm'nication gap. 0re -o' act'all- managing expectations/ Gap

between service deliver- and external comm'nications to c'stomers. hen the-mar&eted to -o' it so'nd ama9ing, b't when -o' get it -o' are not as satis;ed. 3x.movie trailers, !ood advertising.

6ow to close the gap: hori9ontal comm'nication 7comm'nication within the ;rm8

and propensit- to overpromise.

G0* E: *erception gap. Gap between expected service and perceived service.

Umbrella gap. 2o' are doing ever-thing right c'stomers 'st donOt see it that wa-.

6ow to close the gap: tangibles, reliabilit-, responsiveness, ass'rance, empath-.

Follow 'p a!ter the service. Tell the c'stomer wh- -o' did a good ob 7ed'catethem8. 3x. This are all o! the things did and wh-. Compliment c'stomers whenthe- are leaving 7bea't- salons8.

=eas'ring service ?'alit-: "35AU04

Comp'ting "35AU04 "cores

"35AU04 "core I *erception "core > 3xpectation "core

7For all E " dimensions: tangibles, reliabilit-, responsiveness, ass'rance, and

empath-8

VI -o' have an average services, meeting their expectations.

NegativeI Not meeting their expectations.

*ositiveI -o' are exceeding expectations.

Calc'late average gap scores across all c'stomer s'rve-ed s'm and divide b- E.

eighted "35AU04 "cores

8 Calc'late average importance weights across all c'stomers


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K8 ='ltipl- average importance scores b- average dimension scores !or each "35AU04dimension

+8 0dd weighted dimension scores

Service recover#& getting it right the second time

5esearch shows:

(V% o! 0mericans believe b'sinesses have not increased their !oc's on service

0mong this gro'p, K(% thin& companies are pa-ing less attention to service

(% o! most !re?'entl- angered c'stomers are +VD$ -ears old.

hat 'psets c'stomers/

Un!air o'tcomes 7o'tcome 'stice8. 3x. loss o! baggage, loss o! plane ride d'e to the taxi.

Un!air proced'res 7proced'ral 'stice8. *olicies that are set into place b't do not help -o'.3x. et bl'e &ept people in a plane !or Q ho'rs, no re!'nds !or ret'rns d'e to a lossreceipt 7ret'rns8.

Un!air interactions 7interactional 'stice8. Not showing empath- or remorse.

5ecent Clic&Fox "'rve-: what !r'strates c'stomers the most D%: having to spea& with m'ltiple agents and starting over ever- time

+%: r'de or inexperienced emplo-ees

$.+%: being &ept on hold !or long periods o! time

Q.E%: not getting what need on the ;rst time

#.(%: not being 'nderstood

hat happens when c'stomers are 'pset/

)ecrease their p'rchases, critici9e -o', leave and donOt come bac&.

5ecent Clic&Fox "'rve-: how c'stomers react to bad service experience

ED.D%: as& !or a manager E.Q%: tell others abo't it

+$.#%: stop doing b'siness with the compan-

KD.(%: s'bmit negative c'stomer satis!action s'rve-.

KV.(% post comments on social media.

Complaints or no complaints/

=ost c'stomers donOt complain at all


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)o'ble deviation: ;rms tr- to ma&e it right in the process, b't the- end 'p ma&ing

it worse than be!ore.

2o' never get a second chance to ma&e a ;rst impression b't, c'stomer will o!ten

!orgive mista&es i!: the service recover- e1ort is s'ccess!'l, past experiences withthe service provider have been s'ccess!'l.

The good news

hen c'stomers see a service recover- as satis!actor-, their rep'rchase rate ma- be asm'ch as + times as great as be!ore the recover-. this is called service recover- paradox.

Firms have a better chance o! winning bac& lost c'stomers 7KV%DV%8 than !rom selling

to new prospects 7E%KV%8.

Caveat: e1ective service recover- is not a c're !or chronic 'nreliabilit-.

Three reasons !or service recover- 'nderachievement:

. The costs o! service recover- are immediate and visible while the bene;ts are longterm and indirect.

K. =an- managers are c-nical abo't c'stomer motives and p'rpose!'ll- establish proo!o! in'r- re?'irements.

+. =an- dissatis;ed c'stomers 7abo't QV%8 do not complain

C'stomer expectations !or service recover-

To receive a sincere apolog- 7no !orm letters8.

To be o1ered a !air ;x 7sol'tions8 !or the problem > compensation e?'ivalent to the

b'rden the c'stomer has end'red.

To be treated in a wa- that shows the compan- cares abo't the problem and helping thec'stomer solve it.

To receive a timel- response.

To receive the recover- service promised rather than one that !alls short.

"ervice recover- st'dies s'ggest:

0n o'tcome !ail're calls !or material compensation while poor treatment !rom a server

calls !or an apolog-.

Compensation had a more positive e1ect on satis!action among North 0merican s'bects

than on 3ast0sian s'bects.

! !ail're occ'rs in!re?'entl- or the compan- is not responsible, compensation does not

a1ect rep'rchase intentions.

Fig (.+: components o! an e1ective service recover- s-stem


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"'ccess!'l recoveries

=a&e it eas- !or c'stomers to give !eedbac&

5ecover- sho'ld be proactive. 2o' sho'ld not wait !or the c'stomer to come to -o'

complaining. ! -o' &now -o' do something wrong, recover it be!ore the- complain. 5ecover- sho'ld be planned. There sho'ld be a process set 'p.

5ecover- re?'ires empowered and trained emplo-ees

3mplo-ees sho'ld care and compensate

$he Service %uarantee

G'arantees allow c'stomers to red'ce ris&.

+ components

The promise: what a compan- o1ers its c'stomers in exchange !or their mone-.

The pa-o't: what c'stomers get i! a compan- does not deliver- on its promise.

The recover-H pa-o't process: the wa- g'arantee pa-o'ts are made.

The power o! service g'arantees

Forces ;rms to !oc's on what their c'stomers expect

"ets clear standards !or c'stomers and emplo-ees

5e?'ire development o! s-stems !or generating c'stomer !eedbac&

Forces ;rms to 'nderstand wh- the- !ail

B'ilds mar&eting m'scle b- red'cing ris&

Criteria !or good service g'arantees

Unconditional: we are going to stand be what we sa-. No loopholes.

3as- to 'nderstand and comm'nicate: simple. =eaning!'l to the c'stomer: needs to act'all- matter. 3x. mone- bac&

3as- to invo&e

3as- to collect on

Credible

Internal marketing 'mplo#ee engagement

s attracting, developing, motivating and retaining ?'ali;ed emplo-ees thro'gh

satis!-ing their needs. t is a philosoph- o! treating emplo-ees as c'stomers.


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5ecent st'd- o! national retailers

#% o! respondents do not have an identi;ed career path !or emplo-ees who

might want to sta- with the compan-. (E% have no !ormal emplo-ee recognitionprogram. (% have no !ormal c'stomer service training.

mportance o! internal mar&eting 3mplo-ee prod'ctivit- increases with ever- -ear the- sta- with a ;rm

6igh costs involved with recr'itingHtraining new emplo-ees

C'stomer lo-alt- tied to emplo-ees

"atis;ed emplo-ees provide better ?'alit- service

Cost o! emplo-ee ch'rn 7t'rnover8 is high

=arriott nternational loses (V% o! !rontline sta1 in their hotels. t costs them

WVV to recr'it and train each replacement

5eplacing an experienced car salesman with an inexperienced one costs the dealer

an average o! W+(,VVV a month in sales

0 sec'rities bro&er with E -ears o! experience has relationships with c'stomersworth 'p to W= a -ear to ;rm

"even essential o! internal mar&eting

Compete !or talent: do we compete as hard !or emplo-ees as we do c'stomers/ 0im high,

'se a variet- o! recr'iting methods, broaden pool, internal mar&et segmentation.

Tailoring bene;ts !or di1erent emplo-ee segments

The K(-ear old 'nder&ind: "toc& options, 4owcost, catastrophic health

ins'rance, 3d'cation assistance

The DV-ear old, Famil-!oc'sed wor&er: "'pplementar- health and termli!e

ins'rance, Famil- visionHdental ins'rance, Flex time, wor& at home da-s, Basic

?'ali;ed retirement plan The ED-ear old who &nows -o'r compan-: 0 ?'ali;ed retirement plan or two, 0

de;ned bene;t plan, Cashval'e li!e ins'rance and longterm care ins'rance


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There is a disconnect among mar&eters when it comes to attaining and

s'ccess!'ll- converting c'stomer insights.

The search !or c'stomer lo-alt-

5elationship mar&eting !oc'ses on attracting, developing and retaining c'stomer

relationships. 7longterm8

Transaction mar&etingis !oc's on that one sale.

C'stomers become more pro;table the longer the- remain with a ;rm:

ncreased p'rchases andHor acco'nt balances: c'stomers p'rchase in greater ?'antities

as the- grow.

5ed'ced operating costs: !ewer demands !rom s'ppliers and operating mista&es as

c'stomer becomes experienced.

5e!errals to other c'stomers: positive word o! mo'th saves ;rm !rom investing mone- in

sales and advertising.

*rice premi'ms: long term c'stomers willing to pa- reg'lar price. illing to pa- higher

price d'ring pea& periods.

h- are c'stomers lo-al/

C'stomers sta- lo-al when ;rms create val'e !or them

Aal'es can be created !or c'stomers thro'gh:

Con;dence bene;ts: con;dence in contract per!ormance, abilit- to tr'st the provider,

lower anxiet- when p'rchasing, &nowing what to expect and receive.

"ocial bene;ts: m't'al recognition and !riendship.

"pecial treatment: better price, disco'nts not available to most c'stomers, extra

services, and higher priorit- when there is a wait.

Understanding the c'stomer;rm relationships: The wheel o! lo-alt- 7+ steps8

8 ant to b'ild a !o'ndation with the c'stomer. Basic. "egment the mar&et to matchc'stomer needs and ;rm capabilities. Be selective: ac?'ire c'stomers who ;t the coreval'e proposition. =anage the c'stomer base via e1ective tiering o! service. )eliver-?'alit- service.

Targeting the right c'stomer:

Foc's on n'mber o! c'stomers served and val'e o! each c'stomer. "omec'stomers more pro;table than others in the short term.


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=aster"lave wants to intensi!- !eelings o! sel!worth, and demands that the

compan- listen, anticipate his or her ever- need, satis!- ever- demand and not as&?'estions.

3xample: 0n online retail c'stomer c'ts o!! her relationship a!ter a series o! small

service in!ractions that signal disrespect

31ective Tiering o! "ervice: the c'stomer p-ramid

*latin'm: KV % o! -o'r c'stomers give -o' QV% o! -o'r b'siness.

Gold: the- spent a lot with -o', b't not o'trageo's. Tho'sands not millions

ron: b'l& o! the c'stomers. 3conomies o! scale comes !rom this. 3x. people that go

to Aegas once a -ear. Aegas needs them, beca'se the- are a big maorit-

4ead: costing -o' mone-.

K8 Creating those bonds o! lo-alt-. 6igher service levels, interaction, act'al rewards. B'ildhigherlevel bonds: social, c'stomi9ation and str'ct'ral.

)eepening the relationship: B'ndlingHCrossselling services ma&es switching a maore1ort that c'stomer is 'nwilling to 'nderta&e. C'stomers bene;t !rom consolidatingtheir p'rchasing o! vario's services !rom the same provider 7send vo'cher,c'stomer service representative calls c'stomer.


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0ddressing &e- ch'rn drivers: )eliver ?'alit-, =inimi9e inconvenience and non

monetar- costs, Fair and transparent pricing, nd'str- speci;c drivers 7Cell'lar phoneind'str-: handset replacement a common reason !or s'bscribers discontin'ingservices >o1er proactive handset replacement programs8, 5eactive meas'res 7"aveteams8.

ncrease switching costs: nat'ral switching costs 7e.g. changing primar- ban& acco'nt

man- related services tied to acco'nt8. Can be created b- instit'ting contract'al

penalties !or switching.

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Services Marketing Study Guide Exam 1