Service Mkt And Crm

Chapter Goals To gain an understanding of: The nature and importance of services Characteristics of services and their

marketing implications Issues related to the planning and marketing of services The four Rs of services marketing The relationship marketing approach The impact of technology in providing services

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The Nature of Services regardless of the “product”, there is

a services component to the offerings of all firms in some cases, a service is the principal purpose of the transaction, as in the rental of a car, a haircut, or legal services -- we refer to this as the core service in others, service is performed in support of the sale of a tangible product -- these are referred to as supplementary services 12 - 3

Goods and Services Continuum There are two classes of services. Services

that are the main purpose of a transaction —renting a truck to move. Services that supplement the sale of a tangible good — for example, an information hotline for computer software. The focus here is primarily on identifiable, intangible services that are the main object of a transaction designed to provide want-satisfaction to customers; supplementary services growing in importance, however. 12 - 4

The Goods-Services Continuum

Canned Ready- AutoDraperies, Rest- Repairs: Air foods made mobiles Carpets aurant auto, house, travel clothes meals landscaping

MOSTLY GOODS

Insurance, Consulting, Teaching

MOSTLY SERVICES

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Importance of Services Three-fourths of the Canadian

labour force is employed in service industries. Over 70% of the nation’s gross national product is produced by services. From 1986 to 2000, virtually all new jobs will be in the service industries. Huge growth in personal services as well as business services. Copyright © 1998 by The McGraw-Hill Companies, Inc.

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Characteristics of Services

intangibility: intangibility difficult to sample and to

evaluate inseparability: difficult to separate services from the service provider; mainly direct sales; staff are essential to the delivery of quality services heterogeneity: heterogeneity virtually every service is different; very difficult to standardize quality perishability: those not sold can not be stored fluctuating demand: demand for some services fluctuates by season, or even by time of day 12 - 7

Strategic Services Management intangibility generally makes the

marketing of services a challenge understanding how people buy services and the segments that exist is just as important knowing more about the value of customer segments is important -some are more valuable than others knowing what they value so that service levels can be tailored is also important 12 - 8

Strategic Product Implications service organizations have to plan the

introduction of new services and the management of the life cycle the core service can be enhanced through the addition of supplementary services, thereby creating added value the life cycle of services has to be managed the branding of a service can be difficult as the customer often has nothing tangible to show 12 - 9

Managing Service Quality Quality is hard to define, measure, control,

and communicate Quality is defined by the consumer It’s important to measure customer satisfaction with an organization’s service quality. Customers see five important components: Core service must measure up. Quality of service, service meeting expectations. Technical aspects of delivery. Interaction with people who deliver service. Affective dimensions: How customers 12 - 10 feel.

Pricing Services

•

The characteristics of perishability, inability to store, and fluctuating demand for services create pricing challenges. Pricing Strategies include: • Discount strategies: Cheaper by the week. • A variable pricing strategy: Kids eat free, movies cheaper on Tuesdays. • Price competition. 12 - 11

Distribution of Services because most services are tied

directly to a specific service provider, most have been distributed directly to customers with advancing technology, many firms are now delivering services through machines channels of distribution are necessarily short; some firms use one agent intermediary, such as insurance, real estate, and travel agents some firms use franchises to

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Promotion of Services customer contact personnel

represent the main channel of customer communication service providers must ensure that each service encounter is a positive one if customers are to develop a positive image many professional service firms are now permitted to advertise other elements of the promotional mix are used, including publicity and

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Four Rs of Service Marketing

 Retention  Referrals  Relationships  Recovery

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The Changing Environment for Services The boom in the service economy, reduced

regulation has created an increase in competition. Major focus on increased productivity, efficiency Work on people aspects of business:  Education,

Change

training programs

technology:

 Computer-based

technologies used.

Restructure

jobs.  Bottom line: People are key to success! 12 - 15

Other Considerations in Marketing Services Impact of Technology: Remember,

not everyone likes impersonal

technology Performance Measurement: Larger firms can use market share, etc. Customer perceptions are essential. Prospects for Growth: It is very likely that services will continue to take an increasing share of the consumer dollar. The use of marketing programs in all services is expected to increase 12 - 16 considerably.

Future Service Profitability Impacted by: 1. 2. 3. 4. 5.

Focusing on the right priorities Increasing service quality Investing in problem solving Being fair to customers Investing in leadership development

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