Documente Academic
Documente Profesional
Documente Cultură
Industry
% of GDP in INDIA
2012
2001 1995 1980 1970 0 48 40 36
62 26 28 26
19
19 26 32 38
31
20
24
40
Services
45
60
Industry
80
Agriculture
100
120
4
Salt
Soft Drinks
Tangibility Spectrum
Detergents Automobile Cosmetics Fast Food
Intangible Dominant
Intangibility
Heterogeneity
Perishability
6
Production Simultaneous Customers participate in and separate from affect the transaction consumption Customers affect each other Employees affect service outcome Decentralization may be essential Mass production is difficult
8
Standardization Variability/ Service delivery & Heterogeneous customer satisfaction depend on employees action Service quality depends upon many uncontrollable factors There is no sure knowledge that the service delivered matches what 9 was planned and promoted
10
Physical good Channel type features Quality level Accessories Packaging Warranties Product lines Branding Exposure Intermediaries
11
PHYSICAL EVIDENCE
Facility design Equipment Signage Employee dress Other tangibles
PROCESS
Flow of activities Number of steps Level of customer involvement
12
People
Physical Evidence
Process
13
People
Employees Recruitment Training Motivation Rewards Teamwork Customers Education
Training
14
Physical Evidence
Facility Design Equipment Employee Dress Signage Other tangibles Reports Business cards Statements
15
Process
Flow of activities Standardized Customized No. of steps Simple Complex Customer Involvement
16
External Marketing
setting the promise
Employees
Interactive Marketing
delivering the promise
Customers
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
17
Company
Technology
Providers
Source: Adapted from A. Parasuraman
Customers
18
Services
Intangible
Resulting Implications
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. 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. It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.
Nonperishable Perishable
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing, 19 Journal of Marketing 49 (Spring 1985): 33-46.
People Processing
e.g., airlines, hospitals, haircutting, restaurants hotels, fitness centers
Possession Processing
e.g., freight, repair, cleaning, landscaping, retailing, recycling
INTANGIBLE ACTS
Information Processing
(directed at intangible assets)
Clothing
Restaurant meals
Computer repair
Haircut
Legal services
Complex surgery
Motor vehicle
Foods
Chair
Entertainment
Lawn fertilizer
Easy to evaluate
Difficult to evaluate
Need Recognition
Information Search
Evaluation
Decision
22
CULTURE
Values & Attitudes Manners & Customs Material Culture Aesthetics Educational & Social Institutions Language
Emotion And Mood Service Provision As Drama Service Roles And Scripts. Compatibility Of Customers
23
INFORMATION SEARCH
Use of personal source
Goods -personal and non-personal sources are used.
INFORMATION SEARCH
Perceived risk
Compare to goods more risk would be involved in purchase of services.
-Intangible nature -Since services are non-standardized always more uncertainty would accompany about the outcome each time it is purchased. -Services not accompanied by any warranties.
25
Evoked Set
Less number of service providers for the same services in a given geographic area.
Difficulty to obtain adequate prepurchase information about services. Customers evoked set frequently includes self-provision of the service.
27
One of the factors that most influences the effectiveness of role performance is a script.
29
30
(Hence consumers may complain less frequently about services than about goods.)
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Innovation Diffusion
The rate of diffusion of an Innovation depends on the Consumers Perceptions of the innovation with regard to Five Characteristics:
Relative Advantage Compatibility Communicability Divisibility Complexity (Customers adopt innovations in services more slowly than
32
Brand Loyalty
The degree to which consumers are committed to particular brands of goods or services depends on a number of factors:
-Cost of changing brands (switching cost) -Availability of substitutes -Perceived risk associated with the purchase -Degree to which they obtained satisfaction in past (Consumers are more brand loyal with services than products)
33
CULTURE
The Role Of Culture In Services
Culture is learned, shared, and transmitted from one generation to the next, and is multidimensional.
34
High
N ur sing H om e
H a ir Cut
4 - Sta r H ote l
G ood Re sta ur a nt Ai rl ine Tr a ve l (Econ.)
Re ta il Ba nk i ng M ote l
Dr y Cl ea ning
Fa st Food Movie Theater
Ca bl e TV
Internet-based Services
Low
35
36
37
38
http://www.trendwatching.com/trends/ http://feeds.feedburner.com/Shotgun
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GAP 1
SERVICE DELIVERY GAP 3 GAP 4 CUSTOMER- DRIVEN SERVICE DESIGNS AND STANDARDS
40
Implicit Service Promises Tangibles Price Expected Service Desired Service Word Of Mouth Personal Expert (Consumer Reports, Publicity Consultants) Past Experience
Self Perceives Service Role Situational Factors Bad Weather Catastrophe Random Over Demand
Predicted Service
41
42
Relationships
Enhancing
Retaining
Satisfying
Getting
Which segment sees high value in our offer, spends more with us over time, costs less to maintain, and spreads positive word-of-mouth?
Which segment costs us in time, effort and money, yet does not provide the return we want? Which segment is difficult to do business with?
Relationship Hierarchy
Most profitable customers
Which segment sees high value in our offer, spends more with us over time, costs less to maintain, and spreads positive word-of-mouth?
Which segment costs us in time, effort and money, yet does not provide the return we want? Which segment is difficult to do business with?
Social Benefits
mutual recognition, known by name friendship, enjoyment of social aspects
Increased Revenue from the Customer Reduced Marketing & Administrative Costs
Loyalty (Retention)
Zone of Affection
80
Near Apostle
60
40
20
Terrorist 0
1
Very dissatisfied
5
Very Satisfied
Satisfaction
Customer Loyalty
and profitability
52
1. Fin. bonds
Stable pricing
Continuous relationships
2. Social bonds
Mass customisati on
Customer intimacy
53
This is where the promises are kept or broken. Real time marketing It is from these service encounters that custmers build their perceptions.
55
A service encounter occurs every time a customer interact with the service organization: There are three types of service encounters:1) 2) 3) REMOTE ENCOUNTER PHONE FACE-TO-FACE
57
SOURCE OF PLEASURE AND DISPLEASURE IN SERVICE ENCOUNTERS Critical incidence technique is used to get customers and employees to provide verbatim stories about satisfying and dissatisfying service encounters they have experienced. With this technique, customers (either internal or external) are asked the following questions: Think of a time when, as a customer you had a particularly satisfying (or dissatisfying) interaction. When did the incidence happen? What specific circumstances led up this situation? Exactly what did the employee (firm) say or do? What resulted that made you feel the interaction was satisfying (or dissatisfying)? 58 What could or should have been done differently?
1) 2) 3) 4)
59
SERVICE RECOVERY
Service Recovery refers to the action taken by an organization response to a service failure.
Failure occurs for all kinds of reasons The service may be unavailable when promised It may be delivered late or too slowly The outcome may be incorrect or poorly executed Employees may be rude or uncaring
61
SERVICE RECOVERY
All of these types of failures bring about negative feelings and responses for the customers. Left Unfixed They can result in customers leaving Telling other customers about their negative experiences Even challenging the organization through customers rights organizations or legal channels
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SERVICE RECOVERY
Research has shown that resolving customer problems effectively has a strong impact on
SERVICE RECOVERY
It has been observed that customers who experience service failures, but are ultimately satisfied based on recovery efforts by the firm, will be more loyal than those whose problems are not resolved. Those who complain and their problems resolved quickly are much more likely to repurchase than are those whose complaints were not resolved. Those who never complain are likely least likely to repurchase
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SERVICE RECOVERY
An effective Service Recovery strategy can Increase customer Satisfaction and Loyalty Generate positive Word of Mouth A well designed, well documented services strategy also provides information that can be used to improve service as part of a continuous improvement effort
65
SERVICE RECOVERY
Ineffective Service Recovery Strategies can lead to customers who are so dissatisfied they become Terrorist, actively pursuing opportunities to openly criticize the company. Repeated Service Failures without an effective Recovery Strategy in place can aggravate even the best employees. The costs in Employee Morale and even lost employee can be huge. 66
67
Empirical Research suggests that only under the very highest levels of customers Service Recovery ratings will we observe increased satisfaction and loyalty.
68
It is safe to say that Doing it right the first time is still the best and safest strategy.
But when a failure does occur, then every effort at a superior Recovery should be made to mitigate its negative effects.
Failure when fully overcome the failure is less critical, or the Recovery Effort is Clearly superlative, it may be possible to observe evidence of the Recovery Paradox
69
TYPES OF COMPLAINERS
Four categories on how the customers respond to failures have been identifies. These categories are:
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SERVICE RECOVERY
Ultimately, how a Service Recovery failure is handled and the customers reaction to recovery effort can influence Future decisions to remain loyal to the service provider or to switch to another provider. The more serious the failure, the more likely the customer to switch no matter what the recovery effort. The nature of the Customers Relationship with the firm may also influence whether the customer stays or switches providers.
71
TYPES OF RELATIONSHIPS
There are three types of relationships viz
True Relationships where the customer has had repeated
contact overtime with the same service provider.
Reliability or Doing it right the first time, is the most important dimension of service quality. Services adopt the TQM notion of POKA
YOKE to improve
service reliability. POKA YOKES are automatic warnings or controls in place to ensure mistakes are not made. It is important to create a culture of zero defections to ensure doing it right the first time.
73
Act Quickly
To take quick action the company requires systems and procedures as well as empowered employees.
76
To take quick action the company requires systems and procedures as well as empowered employees
Take care of the problems on the front line
Employees must be trained and empowered to solve problems as they occur Front line employees need the skills, authority and incentive to engage in effective recovery Allow customers to solve their own problems.
77
Customers expect to be treated fairly in terms of the outcome they receive, the process by which the service recovery takes place and the interpersonal treatment they receive.
78
79
service failure.
80
SERVICE GUARANTEES
A guarantee is particular type of recovery tool.
Guarantee is an assurance of the quality of or length of use to be expected from product offered for sale, often with a promise of reimbursement.
Guarantees are relatively common for manufactured products, they have only recently been used for services.
81
Given the nature of services as intangible and variable the question is what could be guaranteed, and how. Companies are finding that effective guarantees
recovery
82
strategy.
The guarantee communicates to the customer that they have the right to complain.
85
86
TYPES OF GUARANTEES
Satisfaction Versus Service Attribute Guarantees
Service guarantee can be unconditional satisfaction guarantee or service attribute guarantee Another type of service guarantee, combines the wide scope of the total satisfaction guarantee with specific performance standards.
Research suggests that this type of guarantee can be more effective than either of the above.
90
TYPES OF GUARANTEES
91
Meaningful
Easy to Understand and Communicate Easy to Invoke and Collect
92
Service Failure
Complaint Action
No Complaint Action
Complain to Provider
Exit/Switch
Stay
Exit/Switch
Stay
93
contd
There are 4 risks of attempting to describe services in words alone. 3 Subjectivity Any person describing a service inwords will be biased by personal experiences and degree of exposure to the service. 4 Biased Interpretation No two people will define Responsive, Quick or Flexible in exactly the same way.
97
The intangibles process cannot be either defined precisely or that everyone knows what we mean. Neither of these explanations or defenses for imprecision in unjustifiable.
98
If you do not actively participate in creating the future you want , you have no right to complain about the future you get.
99
E.g. Changes in features of the service as Extended Office hours in ICICI BANK.
SERVICE REDESIGN
There are 5 types of Service Redesign as potential ways of increasing customer benefits or reducing customers costs.
It was no longer tolerable for a response to take a few days everything now had to happen in hours.
107
Development cycles are much shorter and customers expect to be delivered information on demand, anytime, anywhere.
109
110
Customer Relationship Management tools work on two levels Operational & Analytical
At the front-office level it is called Operational CRM where the customer is directly in contact with the company. These interactions are referred to as touchpoints Inbound when the customer accesses the company support center or website. Outbound when a sales representative makes a sales call or e-mails a marketing message.
112
Customer Relationship Management tools work on two levels Operational & Analytical Analytical CRM also known as back-office or strategic CRM
detects patterns from the various customer touchpoints and provides an analysis of the data to help customer service, sales and marketing departments to personalize communications with their customers.
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115
116
Improvement in customer service by helping the sales force respond quickly & accurately
Improvement in sales force productivity Better management control and visibility of the sales process
117
118
119
selling involving
126
127
130
SUCCESS IN NUTSHELL
Hire people with a sense of humor. Quit pretending. Give yourself the freedom to be yourself. Train for skill. Hire for spirit & enthusiasm. Be religious religious about hiring right people. Do whatever it takes. Remember, there is very little traffic in the extra mile. Treat everyone with kindness & equal respect; you never know whom youre talking to.
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133
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Customer Service
Let us explore the business processes that occur once a customer has bought a product. The after sales process of most companies include: Delivery and installation Registration Warranty support & help desk Post-warranty maintenance support
135
Customer Service
Organizations that provide an integrated sales
136
Customer Service
In recent years, call centers have gained popularity as costeffective avenues for selling and servicing customers. It has been estimated that 70 per cent of all business transactions are executed over the phone, making this the primary form of customer contact today.
137
Customer Service
Call centres play a very important role in managing the customers relationship with the organization. In several product companies the call center representative is the first contact that the customer makes with the organization and this form of customer service is extremely important in influencing the customers view of the organization.
138
Customer Service
There are several technology aids that are used to manage large call center operations. These include:
Automatic Call Distribution (ACD) Interactive Voice Response Systems (IVR) Computer Telephony Integration (CTI)
139
SUCCESS IN NUTSHELL
Use celebrations to create memories. Have celebrations acknowledge whats important, what you value. Let celebrations give people the opportunity to say hello and good-bye. Use celebrations to build relationships. Celebrate to make the mundane fun and unusual. If youre going to celebrate, do it right .
141
"You don't know what you can get away with until you try."
You know the expression, "it's easier to
"You don't know what you can get away with until you try. contd.
But they also realize a fact of life in most organizations: if you ask enough people for permission, you'll inevitably come up against someone who believes his job is to say
"no."
If you have an unhappy customer on Internet , he doesnt tell his six friends, he tells his 6000 friends.
- Jeff Bezos, President amazon.com
144
145
Most people will not stay on a site if the page and its contents take more than 8 seconds to load. Sometimes WORLD WIDE WEB is referred as WORLD
WIDE WAIT
147
Innovation 1961-1974
Institutionalization 1975-1995
Commercialization 1995
148
Business Significance
The market place is extended beyond traditional boundaries and is removed from a temporal and geographic location.
Marketspace is created;
shopping can take place anywhere. Customer convenience is enhanced and shopping costs are reduced.
Commerce is enabled across cultural and national boundaries seamlessly and without modification. Marketspace includes potentially billions of consumers and millions 149 of businesses worldwide.
Universal Standards There is one set of standards, namely Internet Standards. text messages are possible.
Richness Video, audio and Video, audio and text messages are Interactivity The
technology works through interaction with the user.
Consumers are engaged in a dialog that dynamically adjusts the experience to the individual & makes the consumer a coparticipant in the process of delivering goods to the market .
communication costs drop dramatically, while accuracy & timeliness improve greatly. Information becomes plentiful, 150 cheap & accurate.
Revenue source
Fees from advertisers in exchange for advertisements Fees from subscribers in exchange for access to content or service Fees (commissions) for enabling or executing a transaction Sales of goods, information or services Fee for business referrals
Example
yahoo.com
Subscription
wsj.com,
consumersexports.org,
sportsline.com
Transaction Fee
Sales Affiliate
ebay.com, e-trade.com
amazon.com mypoints.com
151
eCRM
The incremental use of Internet Technologies to machinate key processes and leverage business has gradually led to the integration of eCRM forcing businesses to adapt and change accordingly or risk failure.
152
eCRM
eCRM is the forging of marketing, sales &
eCRM
Companies with CRM-enabled processes, effect highly personalized communication directed to customers individually or by household. Using sophisticated technology they develop individual profiles of customers, detect and monitor behavior and react to customer events in near real-time or soon after the event occurs.
154
! Contrasts
WAS IS Technology helps links parts of an The network is the organization organization Every department uses IS/IT Every department lives on the web Department = Compartment Access = Success Project teams have regular phone Project teams meet 365/24/60/60 conferences
156
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The Connection Proclivity in women starts early. When asked, How was school today? a girl usually tells her mother every detail of what happened, while a boy might grunt, Fine.
EVEolution
158
When land was the scarce resource, nations battled over it. The same is happening now for
talented people.
Stan Davis & Christopher Meyer, futureWEALTH
161
Historically, smart people have always turned to where the money was. where the smart are. Today, money is turning to
people
162
be
19 95
19 97
19 99
20 01
20 03
Years
164
20 05
19 97
19 99
20 01
20 03
Years
20 05
165
166
Customer satisfaction
Customer loyalty
Profitability
Employee Productivity
167
SUCCESS IN NUTSHELL
Lighten up: Dont take yourself so seriously. Associate with fun people
Technical Core
Equipment
The Customer
Service People
Backstage (invisible)
Other Customers
Advertising Mail Technical Core Self Service Equipment Phone, Fax, Web site etc.
Backstage (invisible) Front Stage (visible)
170
The Customer
Word of Mouth
Service as Theater
All the worlds a stage and all the men and women merely players. They have their exits and their entrances and each man in his time plays many parts
Slowing market growth in mature service industries means that only way for a firm to grow is to take share from competitors
Rather than attempting to compete in an entire market, firm must focus efforts on those customers it can serve best Must decide how many service offerings with what distinctive (and 172 desired) characteristics
A business must set itself apart from its competition. To be successful it must identify and promote itself as the best provider of attributes that are important to target customers
GEORGE S. DAY
173
174
175
176
Current Services
Current Markets MARKETS SERVED New Markets
Market Penetration
New Services
Service Development
Market Development
Diversification
177
Narrow Many
NUMBER OF MARKETS SERVED Service Focused
Wide
Unfocused (Everything for everyone)
Few
Market Focused
Operating Assets
(Facilities/Equipment, IT Systems, People, Op. Skills, Cost Structure)
180
Service
frequency
Vehicle
Transport
In-flight service
core product (a good or a service) supplementary services that add value to the core In mature industries, core products often become commodities Supplementary services help to differentiate core products and create competitive advantage by:
facilitating use of the core service enhancing the value and appeal of the core
182
What Should Be the Core and Supplementary Elements of Our Service Product?
How is our core product defined and what supplementary elements currently augment this core?
Can we charge more for higher service levels on key attributes (e.g., faster response, better physical amenities, easier access, more staff, superior caliber personnel)? Alternatively, should we cut service levels and charge less?
183
Core and Supplementary Services in a Luxury Hotel (Offering Guests Much More than a Cheap Motel!)
Reservation Cashier Business Center A Bed for the Night in an Elegant Private Room with a Bathroom Valet Parking Reception Baggage Service
Cocktail Bar
Entertainment/ Sports / Exercise
Restaurant
184
What Happens, When, and in What Sequence? The Time Dimension in the Augmented Service Product
Reservation Parking Check in USE ROOM Get car Check out Phone USE GUESTROOM OVERNIGHT Porter Meal Pay TV Room service
Pre Visit
Consultation Order-Taking
Exceptions
KEY:
Hospitality Safekeeping
186
Core
Customers often require information about how to obtain and use a product or service. They may also need reminders and documentation
187
Customers need to know what is available and may want to secure commitment to delivery
188
189
Core
Customers may pay faster and more cheerfully if you make transactions simple and convenient for them
190
Core
Value can be added to goods and services by offering advice and consultation tailored to each customers needs and situation
191
Core
Core
Core
Customers appreciate some flexibility in a business when they make special requests.
They expect it when not everything goes according to plan
194
195
Provider GAP
CUSTOMER
Expected Service
COMPANY
Part 2 Opener
196
Provider GAP 2
CUSTOMER
COMPANY
Part 3 Opener
Idea Generation Screen ideas against new service strategy Concept Development and Evaluation Test concept with customers and employees Business Analysis Test for profitability and feasibility Service Development and Testing Conduct service prototype test
Implementation
Market Testing
Test service and other marketing-mix elements Commercialization Postintroduction Evaluation 199
Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.
Service Blueprinting
A service blueprint is a picture or map that accurately portrays the service system so that the different people involved in providing it
point of view.
200
Service Mapping/Blueprinting
A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customers point of view.
Process
Service Mapping
201
203
Hotel exterior, lobby, employees, key Make Customer reservation Actions Employee Actions Face-to-face Phone Contact Rep. records, confirms Valet Parks Car Enter data Register guest data
Check-in at reception
Receptionist verifies, gives key to room
Make up Room
205
Customer Calls
Receive Package
Deliver Package
SUPPORT PROCESS
Dispatch Driver
Fly to Destination
Load On Truck
206
Menu
PHYSICAL EVIDENCE
Arrive at Hotel
Sleep Shower
Receive Food
Eat
Deliver Bags
Deliver Food
Registration System
Prepare Food
Registration System
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Step 1
Identify the process to be blueprinted.
Step 2
Identify the customer or customer segment.
Step 3
Map the process from the customers point of view.
Step 4
Map contact employee actions, onstage and backstage.
Step 5
Link customer and contact person activities to needed support functions.
Step 6
Add evidence of service at each customer action step.
215
4. Analyze profitability
216
Human Resources
empowering the human element
job descriptions selection criteria appraisal systems
Operations Management
rendering the service as promised
managing fail points training systems quality control
System Technology
providing necessary tools:
system specifications personal preference databases
Standardized
Service Factory
Customized
Service Shops
Hospitals Auto repair Other repair services
Capital Intensive
DEGREE OF LABOR INTENSITY
Mass service
Labor Intensive
Professional Retailing/Warehousing Services Doctors Schools Lawyers Retail aspects of Accountants Commercial Banking
Architects
220
CUSTOMER DEFINED SERVICE STANDARDS Once marketers understand what customers expect
Critical Challenge is using this knowledge to set service quality standards and goals for the organization
Difficulty in Setting Standards to match or exceed customer Expectations is because it requires that the
Marketing & Operations within a company work together. ( Also known as Functional Integration)
221
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Factors Necessary for Appropriate Service Standards In reality many service tasks are routine specific rules and standards can be fairly established and effectively executed. Employees may welcome how to perform actions most efficiently : It frees them to use their ingenuity in the more personal & individual aspects of their jobs.
223
Factors Necessary for Appropriate Service Standards Even in Highly Customized Services Many aspects of Service can be Routinized Dentist & Physician - Checking patients in, weighing patients, billing patients, collecting patients & taking routine measurements. More time of the dentist & physician can be spent on the expert services of diagnosis or patient care
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2 3
225
Factors Necessary for Appropriate Service Standards Standardizing whether accomplished by technology or by improvements in work processes, reduces
GAP 2
Both technology & improved work processes structure important elements of service provision and also facilitate goal setting
226
Instead company should set Customer-Defined StandardsOperational standards based on pivotal customer requirements that are visible to & measured by customers
227
1. 2. 3. 4. 5. 6.
Hard Customer-Defined Standards Soft Customer-Defined Standards One-Time Fixes Building Blocks: The Service Encounter Sequence Expressing Customer Requirements as Specific Behaviors and Action Measurements of Behavior and Actions
228
Soft
8. Provide Feedback about Performance to Employees 9. Periodically Update Target Levels and Measures
229
230
Systematic investigation of information about a phenomenon specific to marketing situation. Desk or field research own research or through agency.
A coordinated set of models and procedures with supporting computer software & hardware. 231
Market Research
Type of Research Primary Research Objectives
Qualitative/Q uantitative Monetary Time Frequency
Complaint solicitation
Qualita tive
Low
Low
Continu ous
Qualita tive
Low
232
Requirements research
Qualita tive
Moder ate
Annual
To monitor and track service Quantit Low performance ative To assess overall company performance compared with that of competition To determine the links between satisfaction and behavioral intentions To assess gaps between customer expectations and perceptions
Contin uous
233
Trailer calls
To obtain immediate feedback Quantit on performance of service ative transactions To measure effectiveness of changes in service delivery To assess service performance of individuals and teams To use as input for process improvements To identify common service failure points
Low
Low
Continuo us
To create dialogue with Qualitat Modera Mode important customers ive te rate To identify what individual large customers expect and then to assure that it is delivered To close the loop with important customers
Annual
234
Qualitative/ Quantitative
Monetary
Time
Frequency
To determine customer perceptions of long term professional services during service provision To identify service problems and solve them early in the service relationship
To research customers in Qualita Moder natural settings tive ate To study customers from cultures other than your home country
High
Periodic
235
Mystery shopping
To measure individual employee performance for evaluation , recognition and rewards To identify systemic strengths and weaknesses in customer-contact services To monitor changing customer expectations To provide a forum for customers to suggest and evaluate new service ideas
Low
Quarterl y
Customer panels
Low
Continuo us
236
High Periodic
237
Provider Gap 3
CUSTOMER
Service Delivery
COMPANY
238
One of the main clues to corporate excellence has come to be incidents of unusual effort on the part of apparently ORDINARY EMPLOYEES.
239
Internal Marketing
Enabling the promise
External Marketing
Making the promise
Employees
Interactive Marketing
Delivering the promise
Customers
243
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A. Schlesinger, Putting the Service -Profit Chain to Work, Harvard Business Review, March-April 1994, p. 166. 246
Not everything that counts can be counted , and not everything that can be counted , counts. -Albert Einstein
247
said, did,
Feel
- Maya Angelou
248
Team
When people work really hard for
something they believe in, a special bond inevitably develops
between them.
249
Success In a Nutshell
Hire people with a sense of humor. Quit pretending. Give yourself the freedom to be yourself. Train for skill. Hire for spirit and enthusiasm. Treat family members as best friends; dont take them for granted. Treat everyone with kindness and equal respect; you 251 never know whom youre talking.
252
Service Employees
Who are they?
boundary spanners
quality/productivity tradeoffs
Internal Environment
254
255
Person/Role Conflict
This conflict arises when what they are asked to do things that are quite different from their personalities.
256
Organization/Client Conflict
Interclient Conflict
Employee
258
Quality/Productivity Trade-Offs
Empower employees
Promote teamwork
260
Service Culture
Benefits:
Empowerment
Drawbacks:
potentially greater dollar investment in selection and training higher labor costs potentially slower or inconsistent service delivery may violate customers perceptions of fair play employees may give away the store or make bad decisions
Supervisor
Supervisor
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Front-line Employee
Customers
263
Customers
Front-line Employee Front-line Employee Front-line Employee Front-line Employee
Front-line Employee Front-line Employee Front-line Employee Front-line Employee
Supervisor
Supervisor
Manager
264
Payment may be the Customer inputs only required customer (information, materials) input. are necessary for an adequate outcome, but the service firm provides the service.
Other customers can either enhance or detract from customer satisfaction and perceptions of Quality.
267
Customers Role
Customers as Productive Process
Customers as Contributors to Service Quality and Satisfaction Customers as Competitors
268
If customers contribute effort, time, or other resources to the service production process, they should be considered as part of the organization.
269
Effective customer participation can increase the likelihood that needs are met and that the benefits the customer seeks are actually attained.
e.g. students, health care, personal fitness, weight loss.
270
Customers as Competitors
A final role played by service customers is that of potential competitor. Whether to produce a service for themselves (internal exchange) for example, child care, home maintenance , car repair or have someone else provide the service for them (external exchange) is common dilemma for consumers. 271
273
Helping Oneself Helping Others Promoting the Company Individual Differences: Not Everybody Wants to Participate
274
275
276
277
TIME CYCLE 2
279
Type of Service
Legal , Consulting ,Accounting ,Medical
Labor
Equipment
Delivery services, Telecommunications ,Utilities ,Health club Hotels, Restaurants, Hospitals, Airlines, Schools, Theatres Churches 281
Facilities
282
283
284
285
Yield Management
Yield = Actual Revenue/Potential Revenue
where Actual Revenue = Actual Capacity x Average Actual Price Potential Revenue = Total Capacity x Maximum Price
286
Pricing Of Services
287
288
1 2 3 4 5
Service heterogeneity limits knowledge Providers are unwilling to estimate prices Individual customer needs vary Price information is overwhelming in services Prices are not visible
289
1 2 3 4
290
Customers depend on price as a cue to quality and because price sets expectations of quality, service prices must be determined carefully.
291
292
Cost-Based Pricing
1 Costs are difficult to trace.
2 Labor is more difficult to price than materials. 3 Cost may not equal value.
293
Cost-Based Pricing
1 Costs are difficult to trace.
2 Labor is more difficult to price than materials. 3 Cost may not equal value.
294
Competition-Based Pricing
1 Small firms may charge too little to be viable.
2 Heterogeneity of services limits comparability. 3 Prices may not reflect customer value.
295
Demand-Based Pricing
Monetary price must be adjusted to reflect the value of nonmonetary costs. Information on service costs is less available to customers, hence price may not be a central factor.
296
For hotel vacation : Value is price first and quality second. For hotel for business travel : Value is the lowest price for a quality brand. For a computer service contract : Value is the same as quality.
300
For a housekeeping service : Value is how many rooms I can get cleaned for what the price is. For a hairstylist : Value is what I pay in cost and time for the look I get. For executive education : Value is getting a good educational experience in the shortest time possible.
301
For a housekeeping service : Value is how many rooms I can get cleaned for what the price is. For a hairstylist : Value is what I pay in cost and time for the look I get. For executive education : Value is getting a good educational experience in the shortest time possible.
302
What Makes Service Pricing Strategy Different (and Difficult)? No ownership of services --hard for firms to calculate financial costs of creating an intangible performance Variability of inputs and outputs --how can firms define a unit of service and establish basis for pricing?
Many services hard for customers to evaluate --what are they getting in return for their money?
Importance of time factor --same service may have more value to customers when delivered faster Delivery through physical or electronic channels --may 303 create differences in perceived value
304
Competition
Costs
Value to customer
305
Effort Time
Perceived Benefits
Perceived Outlays
308
Relationship Pricing
non-price incentives discounts for volume purchases discounts for purchasing multiple services
Low-cost Leadership
Convince customers not to equate price with quality Must keep economic costs low to ensure profitability at low price
309
Time expenditures
Physical effort (e.g., fatigue, discomfort) Psychological burdens (mental effort, negative feelings) Negative sensory burdens (unpleasant sensations affecting any of the five senses)
310
Search Costs
Operating Costs
Incidental Expenses
Physical Costs
Psychological Costs Sensory Costs Necessary follow-up Problem solving
After Costs
311
Clinic B
Price $85 Located 15 min away by car or transit Next available appointment is in 1 week Hours: Monday Friday, 8am 10pm Estimated wait at clinic is about 30 45 minutes
Clinic C
Price $125 Located next to your office or college Next appointment is in 1 day Hours: Mo Sat, 8am 10pm By appointment estimated wait at clinic is about 0 to 15 minutes
312
Increasing Net Value by Reducing Non-financial Costs of Service Reduce time costs of service at each stage Minimize unwanted psychological costs of service Eliminate unwanted physical costs of service Decrease unpleasant sensory costs of service
313
Requires rate fences to prevent customers in one value segment from purchasing more cheaply than willing to pay
RM uses mathematical models to examine historical data and real time information to determine what prices to charge within each price bucket how many service units) to allocate to each bucket
314
Variable
Quadrant 2:
Hotel Rooms Airline Seats Rental Cars Cruise Lines
Predictable
Quadrant 3:
Unpredictable Restaurants Golf Courses
Quadrant 4:
Continuing Care Hospitals
315
Dealing with Common Customer Conflicts Arising from Revenue Customer conflict can arise from: Marketing tools to reduce customer conflicts: Management Perceived Unfairness & Perceived Fenced Pricing
Financial Risk Associated with Multi-Tier Pricing and Selective Inventory Availability
Bundling Categorising High Published Price Well designed Customer Recovery
Customers Unfulfilled Price Expectation of Group Customers Change in the Nature of the Service
Alternatives Physical Segregation & Perceptible Extra Service Set Optimal Capacity Utilisation Level
316
Price Elasticity
Price per unit of service
Di De
De Di
Location of Passengers booking air tickets for an booking or identical route in different countries reservation are charged different prices Flexibility of ticket Fees/penalties for canceling or usage changing a reservation (up to loss of entire ticket price) Non refundable reservation fees
319
Location of consumption
Capacity of Aircraft
Time Line
Source: John Gourville and Dilip Soman, Pricing and the Psychology of Consumption, Harvard Business Review, September 2002, 90-96.
Time Line
325