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Marketing Services What the Winners Do
Differently
John Gregg Principal, Navigate Consulting
Australian Marketing Institute Perth - 28 November 2011
The rise of service businesses
• Maturity of product markets and erosion of margin
• Decline in manufacturing
• Rising standards
• New service ideas
• International opportunities
The discipline of service marketing
• About 30 years old
• Three key academic “schools”: American, Nordic and French
• Good application of the scientific process
• Related to customer care/customer service
Nature & eras of product marketing
Pre-production
Marketing
Production
Post-production
Marketing
Consumption
Create
Awareness
Induce
Trial
Demonstrate
Benefits
Build Brand
Preferences
Source: L. Berry
Pre-sale
Marketing
Create
Awareness
Induce
Trial
Demonstrate
Benefits
Build Brand
Preferences
Word of Mouth
Communication Post-sale
Marketing
Production Consumption
Strong influence Weak influence
Source: L. Berry
Nature & roles of service marketing
Service Differences: The “American School”
• Intangibility
• Simultaneous consumption
• Perishability
• Lack of ownership
• Variability
• Inseparability
Names: Zeithaml, Bitner, Lovelock, Berry, Parasuraman, Rust
Service Differences: The “Nordic School”
• No product
• Process outcomes are key
Names: Gronroos, Moseburg, Gummerson
The physical support
or technical and
tangible
configuration
enabling the
output to happen
(e.g. ATMs, plane,
hotel bed)
The processes,
procedures or
operations which
give access to the
output
(e.g. to call the bank,
to connect to
Internet)
The fulfilment of
the primary
customer need
(e.g. to eat, to sleep,
to go from A to B)
Output Process Support
Pierre Eiglier & Eric Langeard, 2007
Service Differences: The “French School”
For example: The marketing mix for services
Product Price
Distribution
(Place) Promotion
Target
Market
People Presence Process
Examples from key areas
1. The brand
2. “Product” development
3. Communications
1. Brand strategy for product businesses FMCG
Corporate Company
Image
Product Brand
Customer Relationship
How companies manage branded propositions
Perceived
value
Time
Core proposition
Core proposition
Long term trend
Added value
Added value
How brand literate companies manage branded propositions
• Clear customer segments
• Detailed, numeric research
• Management of change in the proposition, as tastes change
• Gives direction to the rest of the company
• Talent management in the brand function
Brand strategy for service businesses
Service
Description
Services
Corporate Company
Brand
Customer Relationship
Brand integrity for service businesses
The Customer Journey
Awareness
Corporate marketing
Purchase
and Use
Technical
documents and
service
experience
Seeking
Information
Sales points
Sale
Termination calls
Drive for
Flexibility and
Customisation
Drive for
Volume & Cost
Reduction Professional
Services
Professional
Service
Shop Mass
Service
Shops
Mass
Services
Low High
Number of customers processed by a typical unit per day
High Contact time
Customisation
Discretion
Capability Focus
Front office
oriented
Low Contact time
Customisation
Discretion
Product Focus
Back room
oriented
Source: Prof. Graham Clark
2. Effective “product” development
Emotional
Features
Augmented
Core
Colour, Style
Brand
Features analysis of a car
The goods/services spectrum
Relatively
Pure Good
Service-Intensive
Good
Hybrid Goods-Intensive
Service
Relatively
Pure Service
Supply of
Lubricating oils
Automatic
ordering
systems
for oil
Supplying and
financing
workshop
equipment
Oil waste
management
and collection
service
Consultancy
service
for technical
support
marketing etc.
Tangible part of product Intangible part of product
Models of service 1 High product content
Service sold as an emotional
reassurance of enduring product
performance (e.g. washing machine
maintenance)
PRODUCT FEATURES
Emotional
Features
Augmented
Core Service
support
Infrastructure
Models of service 2 Service used to differentiate a product
Emotional
Augmented
Core
Service Features
Service packaged as an
integral part of the offer
in order to differentiate
or add value
(e.g. preventative maintenance
of computer systems)
PRODUCT FEATURES
Models of service 3 Low margin product sold through a service environment
Emotional features
Image and
environmental
design
Process
integrity
Product
offering
Technology
support
Access to
the service
People
behaviour
Service
positioning
objectives
Product is sold
through a service
infrastructure which
appeals to a
particular segment
(e.g. fast food or
supermarkets)
SERVICE FEATURES
Models of service 4 Service only or “Added Value” offering
FEATURES OF A SERVICE OFFER
The company’s
proposition is almost
entirely without
product content
(e.g. management
consultancy)
Emotional
Features
Augmented
Core
Molecular modelling principles
• Identify the “nucleus” of the proposition
• Identify physical and intangible elements
• Link the elements
• Ring the total entity and define it by a set value
• Circumscribe it by its distribution method
• Describe its brand positioning or “face”
Molecular modelling Airlines
Market Positioning (weighted towards evidence)
Distribution
Price
service frequency
in-flight service
food &
drink
vehicle
pre & post flight
service
Transport
KEY
Tangible elements
Intangible elements
3. Marketing communications issues for service companies
1. Obviously: Benefit based
2. Enhance word of mouth
3. Professional services reputation to create “demand pull”
4. Collateral strategy to make the intangible tangible
5. The importance of internal marketing
6. Educative marketing
7. Locus of control and how it affects communications planning
The locus of control as part of communication planning
High
Low Low High
Complexity of
the
Proposition
Competence of the Customer
The contribution of services marketing
The
Work
Reputation
Measurement Brand
Repurchase
or referral
Amplification
Word of
mouth
