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Notes/Study Guide for Mktg 358 FINAL

by: cethornt

Notes/Study Guide for Mktg 358 FINAL Mktg 358

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These notes are very IN DEPTH for every single chapter on Kathy Watchers Services Marketing Final. Aced the final studying this.
Service marketing
Kathy Wachter
75 ?




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This 24 page Bundle was uploaded by cethornt on Tuesday October 4, 2016. The Bundle belongs to Mktg 358 at University of Mississippi taught by Kathy Wachter in Spring 2015. Since its upload, it has received 3 views. For similar materials see Service marketing in Business at University of Mississippi.

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Date Created: 10/04/16
Test 3 Day 1 10/4/16 9:36 PM Chapter 8 Service Process Redesign Why redesign? • Institutions are like steel beams- they tend to rust. What was once smooth and shiny and nice tends to become rusty • Rusting occurs internally o Natural deterioration of internal processes; creeping bureaucracy; evolution of spurious, unofficial standards o Symptoms § Extensive information exchange § Data that is not useful § High ratio of checking or control activities to value adding activities § Increased exception processing § Customer complaints about inconvenient and unnecessary procedures • Revitalizes process that becomes outdated • Changes in external environment make existing practices obsolete and require redesign of underlying processes o Creation of brand new processes to stay relevant § Self checkout, advance purchase § Preferred parking § Meters § Same day delivery § BOPUS (buy online pic up store) IN fact, service insights • Reflects how an innocent remark or comment can overtime become confused with a firms policy • You need to be aware that we need to question the validity of….?? Levels of customer participation • Low- employees and systems do all the work o Often involves standardized service (postal mail, PAK, UPS) • Medium- customer helps firm create and deliver service o Provide needed information and instructions o Make some personal effort; share physical possessions (rentals, repairs) • High- customer works actively with provider to co produce the service o Service cannot be created without customer active participation o Customer can jeopardize quality of service outcome (weight loss, marriage counseling) Process redesign; approaches and potential benefits • Examining service blueprint with key stakeholders • Eliminating non value adding steps o Simplify front end and back end processes with goal of focusing on benefit producing part of service encounter o Get rid of non value adding steps o Improve productivity and customer satisfaction • Shifting to self service o Increase in productivity and service quality o Lower costs o enhance technology reputation o Differentiates company 8.5 Self service technologies: • Ultimate form of customer involvement o You perform specific activities using facilities or systems provided by service supplier o Your time and effort replace those of employees § Internet based service, atms, self service gasoline pumps • information based services can easily be offered using SSTs o used in both supplementary services and delivery of core product § eBay • ?? get pic from mathis What aspects of SST please or annoy customers • People love SST when o SST machines are conveniently located and accessible 24/7- often as close as nearest computer o Obtaining detailer information and completing transactions can be done faster than through face to face or telephone contact o People in awe of what technology can do for them when it works well • People hate SST when o SST fails- system is down PIN numbers not accepted, etc… o Poorly designed technologies that make service processes difficult to understand and use o They mess up- forgetting passwords, failing to provide information as requested; simply hitting wrong buttons Key weaknesses of SSTs: • Too few incorporate service recovery systems o Customers still forced to make telephone calls to figure it out Putting SST to the test • Does the SST work reliably o Firms must ensure that SST are dependable and user friendly • Is the SST better than interpersonal alternatives o Customers will stick to conventional methods if SST doesn’t create benefits for them • If it fails, what systems are in place to recover o Always provide systems, structures, and technologies that will enable prompt service recovery when things go wrong • How do you make SST an effective tool for delivering customer satisfaction • How many of you have downloaded and used apps on your device • What has been you experience with these Day 2 10/4/16 9:36 PM 9.1 Fluctuations in Demand Threaten Service Productivity • Managing Capacity and Demand o Define productive capacity o Manage capacity § Stretch capacity - squeeze more people into a given capacity § Adjust capacity to more closely match demand o Understand demand § Understand patterns of demand and determine demand drivers o Manage demand § Use marketing strategies to smooth out peaks, fin in valleys • From Excess Demand to Excess Capacity o Four conditions potentially faced by fixed-capacity services: § Excess demand ú Too much demand relative to capacity at a given time § Demand exceeds optimum capacity ú Upper limit to a firms ability to meet demand at a given time § Optimum capacity ú Point beyond which service quality declines as more customers are services § Excess capacity ú Too much capacity relative to demand at a given time 9.2 Defining Productive Capacity • What is Productive Capacity? o Productive capacity can take several forms in services § Physical facilities designed to contain customers § Physical facilities designed for storing or processing goods § Physical equipment used to process people, possessions, or information § Labor § Infrastructure § Financial success in businesses that are limited in capacity depends laregly on how capacity is used 9.3 Managing Capacity • Alternative Capacity Management Strategies o Capacity is fixed, but more people are served at the same level of capacity o Stretch and shrink: § Offer inferior extra capacity at peaks (e.g. bus/train standees) § Use facilities for longer/shorter periods § Reduce amount of time spent in process by minimizing slack time • Adjusting Capacity to Match Demand o Schedule downtime during periods of low demand o Cross-train employees o Use part-time employees o Invite customers to perform self-service o Ask customers to share o Create flexible capacity o Rent or share extra facilities and equipment 9.4 Understanding Patterns of Demand • Demand may seem random, but analysis may reveal a predictable demand cycle for different segments • Keep good records of transactions to analyze demand patterns o Sophisticated software can help to track customer consumption patterns • Record weather conditions and other special factors that might influence demand *Managing - p. 275 9.5 Managing demand: alternative demand management strategies take no action • let customers sort it out reduce demand • higher prices • communications encouraging use of other time slots increase demand • lower prices • communication, including promotional incentives • vary product features to increase desirability • more convenient delivery times and places (food trucks) inventory demand by formalized queuing- checkings • hotels. Movies, sporting events inventory demand by reservation system • for departures, or arrivals- bookings Marketing strategies can reshape some demand patterns • Use price and nonmonetary costs to manage demand o Sst, effort, time, waits for delivery • Change product elements • Modify place and time of delivery o No change, thus queues o Vary tomes when service is available § Bars or specials o Offer service to customers at a new location § My guys in oxford • promotion and education When demand exceeds supply • Steps to take to inventory demand (keep for use later) o Use of service in off peak times 9.6 inventory demand through waiting lines and queuing systems Managing waiting lines • Almost no one likes to wait • An average person may spend up to 30 minutes/ day waiting in line, equivalent to 20 months in an 80 year lifetime • Reduce wait time by: o Rethinking the design of the queuing system o Installing reservations system o Tailoring queuing system to different market segments o Managing customer behavior and their perceptions of the wait o Redesigning processes to shorten the time of each transactions Perception of wait and timing: • Physical • Virtual (9.3 Disney and queue, p 283 and 9.2) • Value and worth (=$$ willing to pay premium) • P 285 (perceptions of waiting) • Yield management practices • Reservations- book, appointment, service call • Scheduling- hotels, freight, printing • Case 9- Accra beach hotel and book clocking during peak page 559 Virtual waits • One problem of waiting is the waste of customers time Queuing systems • Allocate queues based on o Urgency of job o Duration of service transaction o Payment of premium price o Importance of customer 9.7- cusotomer perceptions of waiting time 10 propositions to make waiting more bearable • unoccupied time feels longer than occupied time • solo waits feel longer than group waits • physically uncomfortable waits feel longer than comfortable ones • pre and post process waits feel longer than in process waits • unexplained waits are longer than explained wait times • unfamiliar waits seem longer than familiar ones • uncertain ……. • Missed last ones 9.8- inventory demand through reservation system Benefits of reservations • Avoid customer dissatisfaction due to excessive waits • Controls and smooth’s demand • Allows implementation of revenue management and preselling of service to different customer segments • Fata captured helps organizations o Prepare financial projections o Plan operations and staffing levels Reservations strategies should focus on yield • Yield analysis helps managers to recognize opportunity cost of allocation capacity to one customer segment when another segment might yield a higher rate later • Decisions need to be based on good information o Detailed record of past usage o Supported by current market intelligence and good marketing sense o Realistic estimate of changes of obtaining higher rated • When firms overbook to increase yield o Victims of over booking compensated to preserve the relationship How to eliminate wait • Redesign process • Manage queues • Shift demand or target market • Do maintenance during off peak • Sst • Pricing options Day 3 10/4/16 9:36 PM Chapter 10: 10.1- what is the purpose of the service environments designing the servicescape If you go to a hotel or restaurant what appears first?, How might that influence your decisions/ thinking atmospherics for encounter Delivering unique experiences • Front staging the service scape o Shaping the guest/ user behaviors o Positioning/ image on strategic planning o Creating/ adding value o Productivity with supplementary (enhancing and facilitating elements- face to back stage and users • Surroundings and elements to support o The face of personnel and sense with flow Experience and behaviors • Hi contact (health, medical, dental, counseling, etc… the environment= setting) o Spa environment and unlikely services o Promotion should support the setting/ position • Wow factor o Differentiate and create environment to attract target segment • “I want to come back again” Position and differentiate • Tangibilizing the intangible= quality exception • Use of signals (doorman, concerning) • Impression management • Your impression or o Pod hotel o Hostel o Business traveler hotel o Resort hotel • Shaping expectations o Movie theatre today vs. 10 years ago and how the experience/ expectations have changed as well as the consumption via mobile tablet...choice option and fact many are merging being acquired by others 10.2 The Theory Behind Consumer Responses to Service Environments • The Mehrabian-Russell Stimulus-Response Model (Fig 10.7) • The Russell Model of Affect (Fig 10.8) • An Integrative Framework: Bitner's Servicescape Model (1) (Fig 10.9) 10.3 Dimensions of the service environment: aromatherapy- effects of selected fragrances on people Dimensions of the service environment: spatial layout and functionality • Special layout: o Floor plan o Size and shape of furnishings, counters, machinery, equipment, and how they are arranged • Functionality: ability of those items to make the performance of the service easier Consider also: packaging the servicescape • Theme parks • Entertainment events • Major cities (NY, LA, Las Vegas, Orlando) • Tourism • Parks and historical sites/ districts • In oxford: the historic preservation district and how to manage 10.4 selection og environment fesign element • missed this slide Day 4 10/4/16 9:36 PM Chapter 11 Embeddedness requires • Fit- matching job characteristics with employee skill set, personality, attitudes and behaviors of organizations • Links- relationships established (empowerment, teams, opportunities to learn and associate) within the organization- those ties to others o Often viewed as family and shared sense of responsibility to grow the organization • Sacrifice- what is lose if one leaves o Intentions in future vs. state of being…employee growth vs. frustration…sense of caring or concern o The emotional labor quotient Your frontline staff: NB, FYI: NIB • Are the core of your business and the face clients/ guests see leading to either o Vicious cycles= failures and TO § Sabotage, so- so mediocrity, rule bound, low pay, replaceable, no training, unhappy employer and customer, must advance and recruit continuously, revenue and cut losses o Virtuous cycles= success and growth § Recruit, hire train…. Service leadership and culture • Service culture can be defined as: o Share perceptions of what is important o Shared values and beliefs of why they are important • A strong service culture focuses on the entire organization on the frontline and top management is informed and actively involved The inverted organizational pyramid • Top management-middle management- frontline staff How to get it right- build high performance service delivery teams • Many service require cross functional coordination for excellent service delivery • Teams, training, and empowerment go hand in hand • Creating successful service delivery teams o Emphasis on cooperation, listening, coaching, and encouraging one another o Understand how to air differences, tell hard truths, ask tough questions o Management needs to set up a structure to steer teams toward success Train service employees actively • Service employees need to learn o Organizational culture, purpose, and strategy § Get emotional commitment to core strategy and core values § Get managers to teach why and what job is about Empowerment is most appropriate when • Firms business strategy is based on personalized customized service and competitive differentiation • Emphasis on extended relationships rather than short term transactions • Use of complex and non routine technologies • Service failures are non routine Levels of employee involvement • Suggestion involvement o Employee make recommendation through formalized programs • Job involvement o Jobs redesigned o Employees retrained, supervisors reoriented to facilitate performance • High involvement o Information is shared o Employees skilled in teamwork, problem solving etc… o Participate in management decisions o Profit sharing and stock ownership How to get it right • Motivate and energize the frontline • Use full range of availability rewards effectively including: o Job content- people are motivated and satisfied knowing they are doing a good job o Feedback and recognition- people derive a sense of identity and belonging to an organization from feedback and recognition o Goal achievement- specific, difficult but attainable and accepted goals are strong motivators Managing people for service advantage • Front line work is difficult and stressful; employees are boundary spanners, undergo emotional labor, face a variety of conflicts o Person/ role conflict= job rules and customers demands o Organization/ client conflict= rules vs. customer needs o Inter-client conflict= not following rules • Emotional labor and o Understand cycles of failure, mediocrity, and success o How management treats emp in turn employee treats customer and guest Cycle of failure • The employee cycle of failure o Narrow job design o Emphasis on rules rather than service o Use of technology to control quality o Bored employees who lack ability to respond to customer problems o Dissatisfied with poor service attitude o Low service quality o High employee turnover • The customer cycle of failure o Costs of short sighted policies are ignored § Constant … § Missed the rest 11.4- be the preferred employer • create a large ppl • what determines a firms applicant pool o positive image in the community conduct personality tests • willingness to treat co workers and customers with courtesy consideration and tact • perceptiveness regarding customer needs • ability to communicate accurately and pleasantly give applicants a realistic preview of the job • chance for candidates to try on the job • assess how candidates respond to job realities • allow candidates to self select themselves out of the job Day 5 10/4/16 9:36 PM Chapter 12 How firms can develop a loyal and profitable customer base Wheel of loyalty and • Foundations for loyalty (including segmentation, selective customer acquisition, tiring of service, and service quality) • How to create loyalty bonds (including deepening the relationship through cross- selling and bundling, loyalty rewards, and higher level social, customization, and structural bonds) Reducing customer churn/ defections Customer relationship management (CRM) systems Benefits of loyalty • Research has shown that relationships can create value for individual customers through factors such as inspiring greater confidence social benefits and special treatment 12.1 The search for customer loyalty • customer become more profitable the longer they remain with a firm o increase purchases and or account balances § customers/ families purchase in greater quantities as they grow o reduce operating costs § fewer demands from suppliers and operating mistakes as customer becomes experiences o referrals to other customers § positive word of mouth saves firms from investing money in sales and advertising the search for customer loyalty • customers stay loyal when we create value for them • social benefits o mutual recognition and friendship between service provider and customer • special treatment o better price o discounts not available to most customer o extra services 12.3 building a foundation for loyalty • target the right customer and match them to what firm can deliver o how do customer needs relate to operations elements o how ell can service personnel meet expectations of different types of customers o can company match or exceed competing services that are directed at same types of customers • focus on number of customers serve as well as value of each customer o some customers more profitable that others in the short term o others may have room for growth remember the inverted pyramid • tip mgmt.-middle mgmt.- frontline staff (traditional) • middle/top management support frontline-frontline staff- customer Questions on test about platinum, lead, iron, gold????? • What are the zones of building a foundation for loyalty 12.4 Strategies for developing loyalty bonds with customers • deepening the relationship o bundling. Cross selling services makes switching a major effort that customer is unwilling to go through unless extremely dissatisfied with service provider o customers benefit from buying all their various services • reward based bonds o can be financial or non financial bonds or a combination of both o financial bonds § discounts on purchases, loyalty program rewards, cash back programs o non financial rewards § priority to loyalty program members for waitlists and queues in call centers higher baggage allowances, priority upgrading, access to airport lounges for frequent flyers o intangible regards • social bonds • structural bonds Question: Emotional labor is when employees • Have a gap between what they feel inside, and what management expects them to display to their customers Question: from the customers perspective which of the following is the most important aspect of service? • Timely delivery of service It just didn’t go as planned • The worst experience ever, never go there again, do others need to be made aware • What might alleviate the discomfort • Compensation/ restitution • Reduce valve pressure So will you • Publicize • Grumble • Do nothing • Tell provider • Tell others • Seek legal recourse What is fair • Do you equate justice as text implies o Procedural- rules hoops o Interactional- staff behaviors § Class and perceived fairness in service encounters…many of these o Outcome- compensation= time, effort, energy, expended In service encounters: • The perception of the situation • The empathy of the parties involved • The responsibility for selection criteria o Training and development o Management philosophy • Customers behaviors • Next time: how to recover…and do you want/ need/ care • The loyalty customers satisfaction triad within recovery contexts Day 6 10/4/16 9:36 PM Chapter 13: 13.1- customer complaining behavior Why do customers complain • Obtain compensation • Release their anger • Help to improve the service • Out of concern for others What proportion of unhappy customers complain Why don’t unhappy customers complain Who is most likely to complain Where do customers complain What do customers expect once they have made a complaint 13.2- customer responses to effective service recovery • Importance of service recovery o Plays a crucial role in achieving customer satisfaction o Tests a firms commitment to satisfaction and service quality § Employee training and motivation is highly important o Missed rest of slide- mathis • The service recovery paradox o Missed whole slide- mathis 13.3- principles of effective service recovery systems • Be proactive o On the spot, before customers complain • Missed whole slide- MATHIS How generous should compensation be • Rules of thumb o What is positioning of our firm o How severe was the service failure o Who is affected customer Service Guarantees • The power of service guarantees: o Force firms to focus on what customers want o Set clear standards o Require systems to get and act on customer feedback o Force organizations to understand why they fail and to overcome potential fail points o Reduce risks of purchase and build loyalty • How to design service guarantees o Unconditional o Easy to understand and communicate o Meaningful to the customer o Easy to invoke o Easy to collect o Credible • Types of service guarantees o Single attribute specific guarantee § One key service attribute is covered o Multi-attribute specific guarantee § A few important service attributes are covered o Full satisfaction guarantee § All service aspects covered with no exception o Combined guarantee § All service aspects are covered § Explicit minimum performance standards on important attributes o Guarantees aren’t always necessary § When there is no risk involved 13.5: discouraging abuse and opportunistic customer behavior • addressing the challenge of jay customers o jay customer: a customer who behaves in a thoughtless or abusive fashion, causing problems for the firm, its employees and other customers o more potential for mischief in service businesses, especially when many customers are present o no organization wants an ongoing relationship with an abusive customer o types § oral abusers § the rule breaker ú many services need to establish rules to guide customers safely through § the belligerent ú shouts loudly, maybe mouthing insults, threats and curses ú service personnel ú mathis has rest § the family fueder § the cheat: thinks of various ways to cheat the firm § the thief: no intention of paying- sets out to steal or pay less ú service lend themselves to clever schemes to avoid payment ú firms must take preventative actions against thieves, but make allowance for honet but absent minded customers § the vandal ú service vandalism includes pouring soft drinks into bank cash machines, clashing bus seats, breaking hotel furniture § the deadbeat- customers who fail to pay ú preventive action is better than a cure ú customers may have good reason for not paying Dealing with customer fraud • If in doubt, believe the customer • Keep a database of how often customers invoke service guarantees or of payments made for service failure • Insights from research on guarantee cheating o Amount of guarantee payout had no effect on customer cheating o Repeat purchase intention reduced cheating intent o Customers are reluctant to cheat if service quality is high (rather than just satisfactory) • Managerial implications o Firms can benefit from offering 100% money back guarantees o Guarantees should be offered to regular customers as part of membership program since regular customers are unlikely to cheat o Excellent service firms have less to worry about than average providers 13.3 Principles of effective service recovery • be proactive o on the spot, before customers complain • plan recovery procedures o identify most common service problems and have prepared scripts to guide employees in service recovery • teach recovery skills to relevant personnel • empower personnel to use judgments and skills to develop recovery solutions Day 7 10/4/16 9:36 PM Exam Review Chapter 8- Redesigning the service environment -How, why, what in terms f the design of the service scape -Impact and influence of SST on service encounter delivery -Value and co creation -Designing the experience Chapter 9- Demand and Capacity How does demand affect capacity? What are ways you can use capacity when: -Experiencing peek demand? Slack demand? -The role of productivity capacity (and all forms) • Info, people, possess, process, labor, infrastructure, goods -The role of deliver? -Hoe does a reservation system work? • Role of fences and tiers? Cont… -‘Stretch and shrink’ and effect on satisfaction? -How to best manage demand with fixed capacity? -Role of ‘weather’ and capacity/demand? -Ways to expand via market segment… • E.g. Enterprise and motorcycle -Ways service businesses can manage ‘slack’ demand Cont.. -Segments; options; fences (non-physical- off peak stays) -Product elements -Time and delivery options -Promotion and education (signs, adv, publicity) • design of delivery process • Queue systems: wait and lines • Reservations • Market to different segments based on queue • Consumer behavior and marketing ‘wait’ • Re: Ch. 8 and ‘blueprinting’? o Process redesign Ch. 9 -Bus services and their business models to manage (videos) -Demand and actions: none, reduce, increase.. -Lines and queues (managing these and why) -Use price and nonmonetary costs to manage demand • SST, effort, time…=waits for delivery… • -Change product elements • -Modify place and time of delivery -Managing wait times: how and why? Chapter 10 -Designing the servicescape -That which creates memorable experience encounters -The psychology and sociology of behavior- ‘atmospherics’ ‘ambience’ -Your overall feelings and emotions associated with ‘service encounters’… -What two hotels were highlighted and why? • Text highlighted as well.. Peabody? -Design and layout of space/s to create ‘encounter experiences’ -Mood states created via.. • Colors, scents, psychological of ‘mood’ with please/pain; happy/sad/angry; avoid/approach • Role of ‘labor’ with encounters Chapter 11 -Recruiting, hiring, training, staffing the service enterprise! -“The RIGHT people are your most important asset.” –Jim Collins -The ‘cost’ of HR links, fit, sacrifice -> Embeddednes -> Turnover Intention -‘Vicious vs. Virtuous cycles’ and HR, staff, customers/guests…failure vs success.. -Leadership and ‘team’ environment -Customer management and satisfaction • Types of customers/guests/clients • Servicing these (or not) -Training environment and • culture, skills, knowledge..and remember hiring for hotel.. -Empowerment, involvement level, content, achievement and rewards -Conflicts associated with work/workers environment (how to handle) -Service talent cycle (influence on service) Chapter 12 -Loyalty (why and how) ‘wheel’ -How do programs work? And why do we have them? -Building the foundation; creating bonds continuing the relationship (or not) and reasons. -Defections, churn, reasons and solutions -Satisfaction and loyalty…results.. -Customer pyramid and tiers -Switching- reasons and why… Chapter 13 -Service failures..recovering strategies -What is ‘reasonable’ in service encounter? -Complaints and complaining (why and how) -Actions? Forms of Justice -Sometimes you don’t want them back • Jaycustomers (types) -Responding to both chapter 12 and 13 -‘Zones’: affection, indifference, defection -“brand apostles vs. brand terrorist -Cases 17 and 19 and videos


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