Study Guide 1 Services Marketing
Service businesses and industries
health care hospital, dentist, eye care
professional service accounting, legal, architecture
hospitality restaurant, hotel, ski resort
travel airline, theme park
other hair salon, pest control, plumbing, interior design, ect.
services can’t be inventoried, easily patented, easily communicated or priced
delivery and satisfaction depend on employee and customer
quality depends on uncontrollable factors
service may not always match promotion
simultaneous production and consumption
customers impact transaction and each other
employees affect service
services can’t be returned (ex: florist)
comes with its own challenges
quality needs to be defined, improved, and ensured
designing new services
consistency can be difficult with many employees
accommodating fluctuating demand for different seasons
Don't forget about the age old question of What is the purpose of qtl analysis?
motivating employees can be difficult
Characteristics of services We also discuss several other topics like What are the different string instruments?
“Services include every interaction between any customer and anyone representing the company.”
simultaneous production and consumption
attributes a customer can determine after purchase or during consumption of product. Part of customer evaluation process for services. Midpoint between search qualities (attributed determined before purchase) and credence (characteristics that can’t be evaluated after consumption)
reliability ability to perform promised service
assurance knowledge and courtesy of employees and ability to inspire trust tangibles physical facilities, equipment, and appearance of personnel empathy caring, individualized attention provided to customers We also discuss several other topics like What hormones do the hypothalamus make?
responsiveness willingness to help customers and provide prompt service The Customer Gap
the difference between expected service and perceived service. Is the service better/worse than expected?
The Four Gaps
Avoid these 4 gaps to get good quality service:
Gap 1 Listening Gap not knowing what customers expect
inadequate mktg research
lack of communication
inadequate service recovery
*customer feedback is important*
Gap 2 Design and Standards Gap not having right service design and standards not having customerdriven service design and standards
poor service design
absence of customer driven standards
inappropriate physical evidence and service scape
management of perceptions of customer expectations
Gap 3 Performance Gap not delivering services standards
deficiencies in human resources
failure to match supply and demand
customers not fulfilling roles
problems with service intermediaries Don't forget about the age old question of What improves the quality of life for the community?
employes have a large impact on customer service sometimes the are not motivated because:
lack of empowerment
make sure employees are empowered to make customers happy
Gap 4 Communication not matching promises
lack of integrated services marketing (keep yo promises)
ineffective management of customer expectations
access how you’re meeting customer expectations
look for strengths and weaknesses
find boundaries between price and customer service
“Put it all together close the gaps!!”
High Ideal expectations are most ideal for fancy restaurants Normative “should” expectations
Low Minimum tolerable expectations terrible services but very low prices Zone of Tolerance If you want to learn more check out Basic transactional relationship refers to what?
We also discuss several other topics like What will happen if the stalk of the pituitary gland is cut or destroyed in any way?
Area between desired and adequate service.
can be widened or narrowed
change over time
varies among individuals
varies among product
Factors that influence customer expectations
Desired service can be affected by personal needs or want for lasting service
Adequate service affected by want for temporary service, perceived service alternatives, selfperceived service, situations
Predicted service is affected by explicit and implicit service promises, word of mouth (WOM), past experiences
The gap between expected service and perceived service.
Reliability ability to perform service dependably
Assurance knowledge and courtesy of employees & ability to inspire trust Tangibles physical facilities, equipment, ect.
Empathy caring, individualized attention to customers
Responsiveness willingness to provide prompt service and help
Customer satisfaction is determined by:
1. Service quality
2. Product quality
4. Situational & personal factors
Leads to customer loyalty
the “moment of truth” that determines customer loyalty
occurs any time the customer interacts with the firm
can be potentially critical in determining customer satisfaction and loyalty can be through phone, facetoface, or remote
is an opportunity to build trust, reinforce quality, build brand identity, & increase loyalty Customer research
customer complaint solicitation
customer focus groups
lost customer research
critical service encounters research
Find out by:
asking customers directly mail, phone, facetoface, online, in groups observing customers anthropological tools, qualitative depth
get information from employees and front line service providers
database marketing research use customer information files, capture behavior through data analysis
Customer perceptions of service
Process operational flow of activities, steps in process, flexibility vs standard, technology vs human
People contact employees, customer and other customers
Physical evidence tangible communication, servicescape, guarantees, technology, website
Critical incident studies
Goal: understand actual events and behaviors causing customer dis/satisfaction in service encounters
Method: critical incident technique
ex: think of a time when, as a customer, you had a particularly dis/satisfying interaction with an employee. When did it happen? What circumstances led to the situation? What was said and done? What resulted that made you feel dis/satisfied?
Data: stories from customers and employees
Output: identification of themes underlying dis/satisfaction with service encounters Relationship surveys
Visit a store and evaluate based on the time and date of the visit.
is the store and the areas around it clean?
are you greeted promptly and in a friendly manner?
is merchandise clearly priced?
employees neatly dressed?
is your order rung up correctly and quickly?
were you thanked and asked to come again?
if food, do employees wash hands?
is product fresh?
food prepared efficiently and as requested?
is a business strategy that focuses improving relationships with current customers. Does not emphasize on finding new customers.
Usually cheaper for the company to keep current customers than to find new ones. Evolution of customer relationships
Acquiring > Satisfying > Retaining > Enhancing
Relationship value of customers
Benefits for customers:
receipt of greater value
confidence and trust in provider, reduced anxiety
social benefits familiarity, social support, personal relationships
special deals or price breaks
Benefits for firms:
economic increased and steady revenue, reduced marketing and admin. costs customer behavior benefits word of mouth (WOM) endorsements, customer voluntary performance, social benefits and mentors to other customers
human resource management easier jobs for employees, employee social benefit and retention
Customer profitability tiers
most profitable customers
typically heavy users of the product
not overly price sensitive
willing to invest in and try new offerings
profitability levels are not as high
sometimes want price discounts
not as loyal as platinum
may be heavy users who minimize risk by working with multiple vendors
essential majority of customers
spending levels, loyalty, and profitability not enough for special treatment
customers who cost the firm money
demand more attention than they are due given their spending and profitability sometimes problem customers
complain about the firm to others and tie up firm resources
Service failure and recovery
recovery how quickly can you bounce back from a problem
spontaneity sense something is wrong and fix it before it’s a problem coping “you can’t pick your customers,” deal with problem customers best way you can adaptability how can you adapt to circumstances
Do: acknowledge problem, explain causes, apologize, compensate, take responsibility, give options
Don’t: ignore, blame, downgrade, act as is nothing is wrong, have someone else deal with it
Customer responses to failures
15% complain to management or company headquarters many times, the problem gets fixed
45% complain to a frontline employee
50% do not complain about a problem tell other people about the problem and spreads a bad image of the company
Fairness in customer relationships
Outcome fairness: results customers receive from complaints
fair give a coupon or a free meal to compensate
unfair refuse to refund money for cold food or refuse to apologize
Procedural fairness: policies, rules, and timeliness of complaint process fair manager accepts responsibility and/or calls back later to check in unfair give a phone number to call instead of accepting responsibility
Interactional fairness: interpersonal treatment received during complaint process fair courtesy, inform customer of reasons the problem may have occurred unfair seem not to care, be rude
encourage and track complaints
provide adequate explanations
treat customers fairly
cultivate relationships with customers
learn from recovery experiences
learn from lost customers survey
make the service failsafe
A guarantee is a pledge or assurance that an offered product will perform as promised and, if not, 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 because they cannot be returned, and experience is intangible.
Should give a WOW factor.
Should not rely on employees to describe service guarantee might confuse customer due to oversimplification, incompleteness, subjectivity, and biased interpretation.
Guarantees need to be:
Unconditional no strings attached. Keep your promise
Meaningful guarantee elements that the customer wants
Easy to Understand customers need to know what to expect
Easy to invoke and collect no hoops should be in the way of getting the guarantee
you know you’re getting a good product
forces company to focus on its customers
sets clear standards for organization
generates immediate feedback from customers
customer satisfaction and loyalty
employee morale and loyalty can be enhanced
reduces customer’s sense of risk and builds confidence
Guarantees aren’t always necessary:
doesn’t fit your company image
could be abused by customers
cost of guarantee outweighs benefits
Satisfied customers increase retention, positive WOM, increased revenue Dissatisfied customers can be bad for your business.
Exponential power of storytelling as people tell the story, the negativity is embellished as it grows.
Half of customers who complain feel as though they got NO compensation for their complaints.
Relationship value of customers
lifetime value in customers how much money they spend on your company in their lifetime is how much they are worth to you
ex: Toyota customers are worth tens of thousands of dollars
Starbucks customers might be worth about $2,000 in their lifetime