Services Marketing And Customer Relationships
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Chapter 12 Services Marketing and Customer Relationships Sommers
Barnes
Ninth Canadian Edition Presentation by
Karen A. Blotnicky Mount Saint Vincent University, Halifax, NS Copyright © 2001 by McGraw-Hill Ryerson Limited
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 Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 2
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
Copyright © 2001 McGraw-Hill Ryerson Limited
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.
Copyright © 2001 McGraw-Hill Ryerson Limited
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
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 5
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 © 2001 McGraw-Hill Ryerson Limited Copyright © 1998 by The McGraw-Hill Companies, Inc.
12 - 6
Characteristics of Services
intangibility difficult to sample and to evaluate • intangibility: • inseparability: difficult to separate services from the service provider; mainly direct sales; staff are essential to the delivery of quality services heterogeneity virtually every service is different; very • heterogeneity: 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
Copyright © 2001 McGraw-Hill Ryerson Limited
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
Copyright © 2001 McGraw-Hill Ryerson Limited
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 Copyright © 2001 McGraw-Hill Ryerson Limited
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. service meeting expectations. • Quality of service, • Technical aspects of delivery. • Interaction with people who deliver service. • Affective dimensions: How customers feel.
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 10
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. Copyright © 2001 McGraw-Hill Ryerson Limited
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 distribute services
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 12
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 community affairs
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 13
Four Rs of Service Marketing
• • • •
Retention Referrals Relationships Recovery
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 14
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, training programs • Change technology: • Computer-based technologies used. • Restructure jobs. • Bottom line: People are key to success!
Copyright © 2001 McGraw-Hill Ryerson Limited
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 considerably.
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 16
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 Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 17
Barnes
Ninth Canadian Edition Presentation by
Karen A. Blotnicky Mount Saint Vincent University, Halifax, NS Copyright © 2001 by McGraw-Hill Ryerson Limited
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 Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 2
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
Copyright © 2001 McGraw-Hill Ryerson Limited
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.
Copyright © 2001 McGraw-Hill Ryerson Limited
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
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 5
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 © 2001 McGraw-Hill Ryerson Limited Copyright © 1998 by The McGraw-Hill Companies, Inc.
12 - 6
Characteristics of Services
intangibility difficult to sample and to evaluate • intangibility: • inseparability: difficult to separate services from the service provider; mainly direct sales; staff are essential to the delivery of quality services heterogeneity virtually every service is different; very • heterogeneity: 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
Copyright © 2001 McGraw-Hill Ryerson Limited
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
Copyright © 2001 McGraw-Hill Ryerson Limited
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 Copyright © 2001 McGraw-Hill Ryerson Limited
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. service meeting expectations. • Quality of service, • Technical aspects of delivery. • Interaction with people who deliver service. • Affective dimensions: How customers feel.
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 10
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. Copyright © 2001 McGraw-Hill Ryerson Limited
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 distribute services
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 12
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 community affairs
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 13
Four Rs of Service Marketing
• • • •
Retention Referrals Relationships Recovery
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 14
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, training programs • Change technology: • Computer-based technologies used. • Restructure jobs. • Bottom line: People are key to success!
Copyright © 2001 McGraw-Hill Ryerson Limited
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 considerably.
Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 16
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 Copyright © 2001 McGraw-Hill Ryerson Limited
12 - 17
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