Chapter 20 Service Marketing Ppt

CHAPTER 20 MARKETING OF SERVICES

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

LEARNING OBJECTIVES • Increasing importance of services in economies • All principles of marketing apply to services • The nature and special characteristics of services • Managing service quality, productivity and personnel Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Learning Objectives (Contd.)

• How to position a service organization and a brand • The service marketing mix • How businesses should manage service encounters and service recovery • Innovations in services Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Learning Objectives (Contd.)

• Difficult to provide a single definition of service • Concept of service has to be understood either as an exclusive offering from a company that is primarily intangible, or as a part of the service-product mix that a company offers Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

SERVICE LEVELS • Service is an intangible offering with little or no transfer of physical products to the customer • Service is one part of product-service mix being offered to customers • The main offering is the product but the supplier also provides some services • Every product or service or any combination of a mix of the two, ultimately is supposed to provide service for customers Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

INCREASING IMPORTANCE OF SERVICES • Advances in technology • Growth in per capita income • A trend towards outsourcing • Deregulation • Increasing growth in retailing due to increase in propensity to consumer Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

ALL PRINCIPLES OF MARKETING APPLY TO SERVICES

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

All Principles of Marketing Apply to Services (Contd.)

• Services impact customers more directly than products do • Marketing of services has to be more deliberate and considered • Service provider has to carefully audit his resources and competencies • Positioning must be razor sharp • Services more intractable than products Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

All Principles of Marketing Apply to Services (Contd.)

• Service provider must define service very precisely and also design the appropriate service-product mix • Promotion more challenging due to intangible nature of services • Same basic service can be provided in vastly different service facilities providing different levels of amenities and luxuries Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

All Principles of Marketing Apply to Services (Contd.)

• Same service can be delivered in various ways • Marketing mix conveys the positioning of a service

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

NATURE OF SERVICES • Intangibility • Inseparability • Presence of other consumers • Variability • Perishability Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

MANAGING SERVICES • Managing service quality Companies rated higher on service quality perform better in terms of market share growth Big gap exists between the expectations of the customers and the level of the service they get Real barriers while matching expected and perceived service levels of customers Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Managing Services (Contd.)

Does not understand customer requirements: Misconception barriers arise when companies misunderstand customer expectations No resources: A company may understand customer expectations but is unwilling to provide resources to meet them Bad delivery: The company is not able to deliver the expected service Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Managing Services (Contd.)

Management’s will: A management eager to improve quality is able to do it Exaggerated expectations: Exaggerated promises may become a problem

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Meeting customer expectations Important to understand and meet customer expectations Consumers of services value not only the outcome of the service encounter but also the experience of taking part in it Access: Is the service provided at convenient locations and at convenient times, with little waiting period in availing the service? Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Meeting Customer Expectations (Contd.)

Reliability: Service provider should be able to deliver the promised service each time the customer decides to avail of it Credibility: Can customers trust the service company and its staff? Security: Can the services be used without risk? Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Meeting Customer Expectations (Contd.)

Understanding customer: If the company understands the expectations and also has the capability to serve them, the customer is satisfied with the service outcome Responsiveness: How quickly do service staff respond to customer problems, requests and questions? Behavior of employees: Do service staff act in a friendly and polite manner? Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Meeting Customer Expectations (Contd.)

Competence: Performance of the primary service will depend on the knowledge and competencies of the service providers Communication: Is the service described clearly and accurately? Physical evidence: The company should provide physical evidence to customers which will assure customers that they will be provided a good service Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Managing service productivity Measure of relationship between the various types of inputs that are required to produce the service and the service output Conflict between improving service productivity and raising service quality Technology can be used to improve productivity and service quality simultaneously Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Managing Service Productivity (Contd.)

Customer involvement in production can be increased Important to balance supply and demand By smoothing demand or increasing flexibility of supply, both productivity and service quality can be achieved

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Managing service staff Quality of the service experience is heavily dependent on staff-customer interpersonal relationship Companies need to treat their employees well if customers have to be served well by their employees Nature of the job needs and appropriate personality characteristics to be defined sharply while selecting service staff Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Managing Service Staff (Contd.)

Socialization allows the newly recruited service professionals to experience the culture and tasks of the organization Maintaining a motivated workforce Customer feedback essential to maintain high standards of service quality Employees of service organizations must take pride in their jobs Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

POSITIONING SERVICES • Differentiate from competition on attributes that target customers highly value • Entails two decisions: Choice of target market (where to compete) Creation of differential advantage (how to compete) Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Positioning Services (Contd.)

• Determine important choice criteria of customers carefully • Most important decision of a service organization is selecting the factors on which it will compete • Select a few factors and provide superlative performances in the chosen factors • Target marketing • Differential advantage Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

THE SERVICES MARKETING MIX

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• The service Pure services are intangible Higher perceived risk in decision making process People, physical evidence and processes provide cues about the quality of the service Brand name affects perceptions of service Provide service trials wherever Marketing Management by Arun Kumar and N Meenakshipossible © Vikas Publishing House Pvt. Ltd. 2006

• Promotion Intangible elements of service may be difficult to communicate Sales people should develop lists of satisfied customers to be used in reference selling Word of mouth is critical to success Acknowledge the dominant role of personal influence in the choice process and stimulate word of mouth communication Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Promotion (Contd.)

Persuade satisfied customers to inform others of their satisfaction Develop materials that customers can pass on to others Target opinion leaders in its advertising campaign Encourage potential customers to talk to current customers Communication should also be targeted at employees Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Price An indicator of perceived quality Important in matching demand and supply Price sensitivity key segmentation variable

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Setting fees levels: Offset Inducement Divisionary Guarantee Predatory

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Place Distribution channels for services are more direct Production and consumption is simultaneous New technologies permit service companies to provide services without customers coming to their facility Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• People Service quality is inseparable from quality of service providers Set standards to improve quality of service provided by employees and monitor their performance Training of employees crucial Adopt a customer-first attitude than putting own convenience first Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

People (Contd.)

Employees of service organizations have to be adept in multiple roles Have empathy to judge the service requirement and mood of the customer Examine the role played by customers in service environment Seek to eliminate harmful interactions Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Physical evidence The environment in which the service is delivered Includes any tangible goods that facilitate the performance and communication of the service Strengthen cues that customers search for to judge the quality of services Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Process Procedures, mechanisms and flow of activities by which a service is delivered to customers Control variations in services by targeting smaller segment of customers Process and its visibility are both important for customers Process should be employed only when it is required to provide a service and not because customers have come to expect it Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

SERVICE ENCOUNTERS • A terrible ending usually dominates a person’s recollection of an experience • Customers who are mentally engaged in a task do not notice how long it takes • Customers desperately want to make sense of unexpected events Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Service Encounters (Contd.)

Study service encounters from customers’ point of view • Finish strong • Get the bad experience out of the way early • Segment the pleasure, combine the pain • Build commitment through choice • Give people rituals and stick to them Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

SERVICE RECOVERY • Well-intentioned, prompt, and apt recovery can assuage angry customers • Everyone in the organization must have the skill, motivation, and authority to make service recovery an integral part of service operations • Production-oriented service-delivery systems have helped in achieving consistently high service standards Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Service Recovery (Contd.)

• Inevitable problems will still arise, by providing for service recovery • Good service providers cover all the costs that a failure incurs • Customer’s problem is an opportunity • Companies must be responsive to customer complaints, and encourage them to complain • Monitor areas of the organization which are likely to throw up problems more frequently Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Service Recovery (Contd.)

• Solve customers’ problems fast because service problems quickly escalate • Train frontline employees and empower them • Give employees the authority, responsibility, and incentives to help customers in unique ways • Let customers know about corrective measures taken and the improvement achieved Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

INNOVATION IN SERVICES • Difficulties in applying traditional methods of research and development to services • Experiments with new services are most useful when they are conducted live , though cautiously • Improvements should be planned and experimented incrementally Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Innovation in Services (Contd.)

• Personnel conducting the experiments must be motivated • Successful experiment has to be persisted with • Experiment only when it can be finally implemented • Conducting live experiments risky and cumbersome, but may be inevitable Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006