Amity Business School

MARKETING OF SERVICES
Module II
Focus on Customers
Customers expectations of service, Desired and Adequate
service, Zone of Tolerance, Managing customer expectations
and perceptions in services, Service Quality Dimensions,
Customer Satisfaction vs. Service Quality, The impact of service
failure and recovery, Types of Customer Complaint Actions and
Complainers, Service Guarantees, Service Recovery Strategies,
Role of Branding in Services

Ramesh Bagla
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Understanding Customers Expectations

Customers expectations are beliefs about service
delivery that serve as standards or reference points
against which performance is judged
Knowing what the customer expects is the first and
possibly most critical step in delivering good quality
service
Being wrong about what customers want can mean losing
business when another company hits the target exactly.
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Understanding Customers Expectations

The aspects of expectations that need to be
explored and understood for successful
services marketing are :
What types of expectation standards do
customers hold about services?
What factors influence most the formation of
these expectations?
What role do these factors play in changing
expectations?
How can a service company meet or exceed
customers expectations?
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Understanding Customers Expectations

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Level of Expectations
Desired Service

Level Customers
Believe Can and Should Be
Delivered

Zone
of
Tolerance
Adequate Service

Minimum Level
Customers Are Willing
to Accept

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Understanding Customers Expectations

Among the intriguing questions about
service expectations is whether customers
hold the same or different expectation levels
for service firms in the same industry.
For
example,
are
desired
service
expectations the same for all restaurants?
Or just for all fast-food restaurants?
Do the levels of adequate service
expectations vary across restaurants?
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Understanding Customers Expectations

A customers desired service expectation for
fast-food restaurants is quick, convenient, tasty
food in a clean setting.
The desired service expectation for an
expensive restaurant, on the other hand,
usually involves elegant surroundings, gracious
employees, candlelight and fine food.
In essence, desired service expectations seem
to be the same for service providers within
industry categories or subcategories that are
viewed as similar by customers.
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Understanding Customers Expectations

The adequate service expectation level, on the other
hand, may vary for different firms within a category or
subcategory.
Within fast-food restaurants, a customer may hold a
higher expectation for McDonalds than for Burger
King, having experienced consistent service at
McDonalds over time and somewhat inconsistent
service at Burger King.
It is possible, therefore, that a customer can be more
disappointed with service from McDonalds than from
Burger King even though the actual level of service
at McDonalds may be higher than the level at Burger
King.
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Factors Influencing Customer Expectations

How Services Marketers Can Influence Factors

Amity Business School
Factor

Possible Influence Strategies

Explicit service promises

Make realistic and accurate promises that reflect the service actually
delivered rather than an idealized version of the service.
Ask contact people for feedback on the accuracy of promises made in
advertising and personal selling.
Avoid engaging in price or advertising wars with competitors because they
take the focus off customers and escalate promises beyond the level at which
they can be met.
Formalize service promises through a service guarantee that focuses company
employees on the promise and that provides feedback on the number of times
promises are not fulfilled.

Implicit service promises

Ensure that service tangibles accurately reflect the type and level of service provided.
Ensure that price premiums can be justified by higher levels of performance by the
company on important customer attributes.

Lasting service
intensifiers

Use market research to determine sources of derived service expectations and

their requirements. Focus advertising and marketing strategy on ways the
service allows the focal customer to satisfy the requirements of the
influencing customer.
Use market research to profile personal service philosophies of customers and
use this information in designing and delivering services.

Personal needs

Educate customers on ways the service addresses their needs.

Temporary service
intensifiers

Increase service delivery during peak periods or in emergencies.

How Services Marketers Can Influence Factors

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Factor

Possible Influence Strategies

Perceived service
alternatives

Be fully aware of competitive offerings, and where possible

and appropriate, match them.

Self-perceived service role

Educate customers to understand their roles and perform

them better.

Word-of-mouth
communications

Simulate word of mouth in advertising by using testimonials

and opinion leaders.
Identify influencers and opinion leaders for the service and
concentrate marketing efforts on them.

Use incentives with existing customers to encourage them to

say positive things about the service.

Past experience

Use marketing research to profile customers previous

experience with similar services.

Situational factors

Use service guarantees to assure customers about service

recovery regardless of the situational factors that occur.

Predicted service

Tell customers when service provision is higher than

what can normally be expected so that predictions of
future service encounters will not be inflated.

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Issues involving customer service expectations

What does a service marketer do if customer
expectations are unrealistic?
Should a company try to delight the customer?
How does a company exceed customer service
expectations?
Do customer service expectations continually
escalate?
How does a service company stay ahead of
competition in meeting customer expectations
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Fundamentals of Customer Satisfaction

Recognize the importance of a satisfied customer, not only to
build, maintain and increase your organizations customer
base, but also for you own job satisfaction
Focus on customers behavior and your own behavior
Learn to deal with complaints in an efficient way
Deliver excellent service from the beginning till the end, so
that the customers have a positive perception about your
organization
Cope with stress so that you maintain a healthy level of workrelated stress

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Customer Perceptions of Quality and Customer Satisfaction

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Service Quality

Service quality is more difficult to measure

than the quality of goods
Service quality is based on consumers
perception of the outcome of the service
and their evaluation of the process by
which the service was delivered
Service quality perceptions result from a
comparison of what the consumer
expected prior to the service and the
perceived level of the service received

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Types of Service Quality

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Types of Service Quality

Search Qualities
- color, style, feel, smell more applicable
to goods quality can be evaluated prior
to purchase
Experience Qualities
- taste, feeling, satisfaction more
applicable to services quality can be
evaluated during and after the
consumption

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Types of Service Quality

Credence Qualities
- difficult to evaluate even after the service
is consumed consultancy, education,
medicare, advertising

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How to Improve Quality

Invest in good hiring and training procedures
Standardize the service-performance process

Monitor customer satisfaction

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Factors Influencing Customer

Satisfaction
Product/service quality
Specific product or service features
Consumer emotions
Attributions for service success or failure

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Factors Influencing Customer

Satisfaction
Perceptions of equity or fairness
Other consumers, family members, and
coworkers
Price
Personal factors
the customers mood or emotional state
situational factors

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Outcomes of Customer Satisfaction

Increased customer retention
Positive word-of-mouth communications
Increased revenues

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Relationship between Customer Satisfaction and

Loyalty in Competitive Industries

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Why Customers Leave?

1% die.
3% move away.
5% develop other relationships.
9% leave for competitive reasons.
14% are dissatisfied with

product or service.
68% leave because of rude or

discourteous service.

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Customer Service Competencies

Motivation To Serve
Customer Sensitivity
Communication
Decisiveness
Flexibility
Follow-up
Initiative
Integrity

Job Knowledge

Judgment

Persuasiveness

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Common Excuses For Service Lapses

I don't have enough time.

I don't get paid to be nice. I am measured

by my productivity and accuracy.

How can we do a good job if the computer

is always down?
Every customer is totally bonkers today

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Common Excuses For Service Lapses

I can't deal with people who do not show

me respect.
How can we do a good job if the

other departments do not provide the

back-up we need?
I am having a bad day.
People are basically stupid.

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What The Customer Wants?

. . . Greet me.
. . . Value me.
. . . Help me.
. . . Listen to me.
. . . Invite me back.

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Monitoring & Measuring Customer Satisfaction

Customer satisfaction measures how well a
company's products or services meet or
exceed customer expectations.
These expectations often reflect many aspects
of the company's business activities including
the actual product and service.
Customer satisfaction measures are an overall
psychological evaluation that is based on the
customer's lifetime of product and service
experience.
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Importance of monitoring and measuring

of Customer Satisfaction
Effective marketing focuses on two activities:
retaining existing customers and adding new
customers.
Customer satisfaction measures are critical
to any product or service company because
customer satisfaction is a strong predictor of
customer retention, customer loyalty and
product repurchase.
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Satisfaction Measurement: Overall

Measures of Satisfaction
Satisfaction measures involve three
psychological elements for evaluation of the
product or service experience
Cognitive (thinking/evaluation)
Affective (emotional-feeling/like-dislike)
Behavioral (current/future actions)
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Satisfaction Measurement: Overall

Measures of Satisfaction
Satisfaction measurement questions typically
include the following :
An overall satisfaction measure (emotional):
Overall, how satisfied are you with Nestle
fresh yogurt"? Satisfaction is a result of a
product related experience and this question
reflects the overall opinion of a consumer's
experience with the product's performance.
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Satisfaction Measurement: Overall

Measures of Satisfaction
A loyalty measure (affective, behavioral):
Would you recommend Nestle fresh yogurt " to
your family and friends?
A series of attribute satisfaction measures
(affective and cognitive):
How satisfied are you with the "taste" of Nestle
fresh yogurt?
How important is "taste" to you in selecting Nestle
fresh yogurt?
Intentions to repurchase (behavioral measures):
Do you intend to repurchase Yoni fresh yogurt?
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Satisfaction Measurement: Overall Measures of Satisfaction

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Service Failure
Some service failures are inevitable
Customers perception about the failure matters
not that of the service provider
Types of service failures are varied and some can
never be anticipated
Broad categories of service failure
- service delivery failure(unavailable/slow/core
failure)
- failure to respond to customer needs & requests
- unprompted & unsolicited employees actions

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Customer Response Following Service Failure

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Responses to Service Failures

Some customers dont complain, they do negative
word of mouth or switch
Process must be in place to elicits customer
feedback and to encourages him/her to complain
Actions following a discovery of customer
dissatisfaction or a complaint
- Apology
- Urgent reinstatement
- Empathy
- Symbolic atonement
- Follow-up

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Service Recovery
Corrective action taken by the service provider in
response to a complaint from the customer
about service failure or poor service quality, to
pacify the dissatisfied customer.
Simply put, service recovery is putting a smile
back on customers face after you have made
him frown because of a mistake.

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Service Recovery
The service provider taking a responsive action to
recover the lost or dissatisfied customers and
converting them into loyal and satisfied customers
An important and effective customer retention tool
Cost effective way to increase the market share and
sustain the market leadership.
Market leaders do whatever it takes to solve a
customers problem. They empower their employees
to bend or break the rules to take care of the
customer.

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Essentials of Service Recovery

To have a well defined process in place for service
recovery with time frames
Supportive organization culture
To identify customers with issues
To address those issues to customers satisfaction
quickly
To get a feedback from the customer about his
satisfaction level with cos service recovery process
To extend the process until customer is fully
satisfied

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Impact of Service Recovery

It counteracts negative outcomes
associated with service failure
S R can lead to higher level of customer
satisfaction than what existed prior to
service failure Service Recovery Paradox
Positive impact on post recovery word of
mouth
Higher level of customer satisfaction, loyalty
leads to improved bottom-line

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Service Recovery Strategies

Make the service fail safe do it right the first time
Quality Control Mechanisms TQM
Encourage and track complaints customer satisfaction
surveys, lost customer research
Act quickly set standards for resolution time
Provide adequate Explanations
Treat customers fairly
Relationship management
Learn from recovery experiences
Learn from lost customers

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Unhappy Customers Repurchase Intentions

Unhappy Customers Who
Do Not Complain

9%
Unhappy Customers Who
Do Complain
Complaints Not Resolved

Complaints Resolved

19%
54%

82%

Complaints Resolved Quickly

Percent of customers who will buy again after

a major complaint (over $100 in losses)
Source: Adapted from data reported by the Technical Assistance Research Program.

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Customer Complaint Behavior

Why do customers complain?

Why dont customers complain?

Correct the problem

Emotional release from
frustration
Regain some measure of
control by spreading negative
w-o-m
Solicit sympathy
Create an impression of being
more intelligent and
discerning

Dont know who to complain to

Dont think it will do any good
May doubt their own subjective
evaluation
May accept part of the blame
May want to avoid confrontation
May lack expertise

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Service Guarantees
Guarantee = an assurance of the fulfillment of a
condition (Websters Dictionary)
In a business context, a guarantee is a pledge or
assurance that a product offered by a firm will perform as
promised and, if not, then some form of reparation will be
undertaken by the firm
For tangible products, a guarantee is often done in the
form of a warranty
Services are often not guaranteed
cannot return the service
service experience is intangible (so what do you guarantee?)

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Service Guarantees
Service guarantees work for companies who are
already customer-focused
Effective guarantees can be BIG deals they
put the company at risk in the eyes of the
customer
Customers should be involved in the design of
service guarantees
The guarantee should be so stunning that it
comes as a surprise a WOW!! factor
Its the icing on the cake, not the cake

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Service Guarantees

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Types of Service Guarantees

Single
attributespecific
guarantee
Explicit
minimum
performance
standard on
one important
attribute is
guaranteed
(e.g., delivery
by noon the
next day)

Multiattributespecific
guarantee
Explicit
minimum
performance
standard on a
few important
attributes is
guaranteed

Fullsatisfaction
guarantee
All service
aspects are
guaranteed to
be delivered to
the full
satisfaction of
the customer
with no
exceptions or
conditions
attached

Combined
guarantee
All service
aspects are
guaranteed (as
for fullsatisfaction
guarantee)
Explicit minimum
performance
standards on
important
attributes are
guaranteed (as
for multiattribute-specific
guarantee)

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Characteristics of an Effective
Service Guarantee
Unconditional
the guarantee should make its promise unconditionally no strings
attached

Meaningful
the firm should guarantee elements of the service that are
important to the customer
the payout should cover fully the customers dissatisfaction

Easy to Understand and Communicate

customers need to understand what to expect
employees need to understand what to do

Easy to Invoke and Collect

the firm should eliminate hoops or red tape in the way of accessing
or collecting on the guarantee

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Benefits of Service Guarantees

A good guarantee forces the company to focus on its
customers.
An effective guarantee sets clear standards for the
organization.
A good guarantee generates immediate and relevant
feedback from customers.
When the guarantee is invoked there is an instant
opportunity to recover, thus satisfying the customer and
helping retain loyalty.
Information generated through the guarantee can be
tracked and integrated into continuous improvement efforts.
Employee morale and loyalty can be enhanced as a result
of having a service guarantee in place.
A service guarantee reduces customers sense of risk and
builds long term customer loyalty.

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Is it Always Suitable to Introduce a Guarantee?

It may not be appropriate to introduce guarantees
when
Company has a strong reputation for service
excellence
Company does not have good quality level
Quality cannot be controlled because of external
forces
Customers perceive little risk in the service
Too many uncontrollable external variables
Fears of cheating or abuse by customers
Costs of the guarantee outweigh the benefits
Customers perceive little variability in service quality
among competitors

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Branding Services
Branding is a major strategic issue for service marketers.
Marketers believe, branding is not just naming a service,
but there is something more in it.
Branding begins with giving an identity to the service.
Service characteristics such as intangibility, variability &
perishability make branding a strategic requirement in
order to promote beliefs & values in the target market.

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Brand
A name, term, sign, symbol or design, or
a combination of them, which is intended
to identify the goods and services of one
seller or group of sellers and to
differentiate them from those of their
competitors.
- American Marketing Association

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Brand

A brand is a set of associations that are linked

to a product range, a division, or company.
These associations help customers understand
- what the product or company is
- why it is potentially relevant to them
- how it is different or similar to others
- products/services made by the company

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Characteristics of Good Brand Name

Distinctive
Suggestive
Appropriate
Adaptable
Easy to remember

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