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SERVICE MARKETING

Books to be Referred
• Services Marketing- By Christopher Lovelock.

• Services Marketing- By K.Rama Mohana Rao.

• Services Marketing- Dr. S. Shajahan.


Marketing Services V/S Goods
Philip Kotler has classified products into the following
five categories for establishing goods-service
relationship:

 Pure tangible goods.


 Tangible goods with accompanying service.
 Hybrid.
 Service with accompanying goods.
 Pure Service.
Service Package
• The “package” concept of service product suggest
that what you offer to the market is a bundle of
different services, tangible and intangible, but there
is a “core” service and around it are built the other
services which are:

 Facilitating services
 Supporting services
Developing New Service Offering
If a new service offer is to be developed, then the
following five steps should be systematically followed
in a sequence:

 Consumer Benefit Concept.


 Developing Service Concept.
 Developing the Augmented Service Offer.
 Service Delivery System.
 Managing Image & Communication.
Augmented Service Offering
• Basic service package is not always equivalent to the service
product the customer perceives.

• Therefore, basic service package has to be expanded to a


more holistic model of augmented service offering.

• Elements of Augmented Service Offer:

 Accessibility of Service.
 Interaction with service organization.
 Customer Participation.
Pricing Techniques
There are many pricing concepts and techniques which
organization may use in developing their pricing
policy, some of them are:

 Penetration Pricing.
 Price Skimming.
 Competitor Pricing.
 Differential Pricing.
 Marginal Pricing.
Winning Strategies through lowering price

Two firms that have won substantial market


shares by offering the lowest prices to their
customers are:

 Southwest Airlines.

 Wal-Mart (the world’s largest retailer)


Place (Distribution)
• Most services are distributed through direct sales.

• For certain services, agents can be identified and deployed


with selling as a chief function to be performed by them.

• Sometimes, services are generally not delivered to the buyer


and the creation of time and place utilities is a vital function in
the service marketing.
Promotion
Various techniques used for promoting services are:

 Advertising (Print, Internet and Direct Mail)

 Sales Promotion (Coupons and Prize promotions)

 Personal Communication (Selling, Customer service and Word


of mouth)

 Corporate Design (Interior décor, Uniforms and Stationery)


The Three additional ‘P’s of Service
Marketing
• People.
 All human actors who play a part in service delivery and thus
influence the buyer’s perceptions.

 This fifth P is by far the most important determinant of


customer brand loyalty.

 Two types of service employees which are commonly seen in


service industry are Support personnel and Customer Contact
Personnel.
The Three additional ‘P’s of Service
Marketing
• Physical Evidence
 It includes all the tangible representations of service such as
brochures, letterhead, business card etc.

 In some cases it also includes the environment of the place


where the service is delivered (servicescape)

 For restaurants, health clubs, hospitals and schools the


physical facility is critical in communicating the service and
making the entire customer experience positive.
The Three additional ‘P’s of Service
Marketing
• Process

 The mechanism by which the consumer consume the services


(customer management process) also gives customers
evidence on which he judge the service.

 Another characteristic of the process that can provide


evidence to the customer is whether the service follow a
STANDARDIZED APPROACH or whether the process is
CUSTOMIZED ONE.
Southwest Airlines
• Southwest Airlines occupies a solid position in the minds of U.S air
travelers as a reliable, convenient, fun, low fare, no frills airline.

• It has maintained this position consistently for over 30 years while making
money every year.

• Success has come to the airline for number of reasons like it keeps its
costs down by not serving meals, having no pre assigned seats and
keeping employee turnover very low.

• Airlines has the best customer service record in the airline industry and
has won the industry “Triple Crown” award for best baggage handling and
best customer complaint statistics many years in the row.
Tourism as a Service
• Liberalization of the Indian economy has brought
about changes across various dimensions.

• Tourism is also developing as an important service


industry in India.

• The characteristic features of a service like


Intangibility, Variability and Inseparability apply to
the travel and tourism industry as well.
The Tourism Marketing Mix

• Product & Price.


• Place.
• Promotion.
• People.
• Process.
• Physical Evidence.
Service Quality
The Customer Gap

• Customer gap is the difference


between customer expectations and Expected
perceptions.
Service
• Customer expectations are standards
that customers bring into the service.

• Customer perceptions are subjective


assessments of actual service
experiences. Perceived
Customer service

Gap
The Provider Gaps
• Not Knowing What Customers Expect (Gap 1)
• Not Having the Right Service Quality Designs
and Standards (Gap 2)
• Not Delivering to Service Designs and
Standards (Gap 3)
• Not Matching Performance to Promises.
(Gap 4)
Knowledge Gap (Gap 1)

• A Primary reason why firms r not meeting the quality


standards is because they lack accurate understanding of
customer expectations.

• Knowledge gap also occurs due to lack of communication


between management and frontline employees.

• It can also be due to lack of company strategies to retain


customers and strengthen relationship with them
Standard Gap (Gap2)
• Standard gap is the difference between management perception
of customer expectations and quality standards established for
service delivery.

• Understanding of customers expectations should be translated


into customer-driven standards.

• When service standards are absent or when the standards in


place do not reflect customers expectations, quality of service is
likely to suffer because quality of service delivered by customer
contact personnel is critically influenced by the standards against
which they are evaluated.
Delivery Gap (Gap3)
• Delivery gap is the difference between specified delivery
standards and the service providers actual performance
on these standards.

• Gap 3 can be narrowed by ensuring that all the


resources needed to achieve the standards are in place.

• Main two reasons for Delivery gap to occur are:


 Ineffective recruitment of employees (wrong job-fit)
 Customers not fulfilling their roles.
Internal Communication Gap (Gap 4)

• It is the difference between what the


company’s advertising and sales promotion
speak about product features, performance
and service quality level and what the
company is actually able to deliver.
• The discrepancy between actual and promised
service has an adverse effect on the customer
gap.
In services, the last
experience remains
uppermost in your mind.
Therefore, it is not enough to
be good, you have to be
consistently good
Service Recovery
• Service recovery refers to the actions taken by an organization in
response to a service failure.

• Any type of failure bring negative feelings and responses from


customers.

• Resolving customer problems effectively has a strong impact on


customer satisfaction, loyalty and word of mouth communication.

• Customers who’s complain are resolved quickly are more likely to


repurchase a service than those whose complains are not resolved.
Recovery Paradox
• Some organizations have customers who are initially
dissatisfied with the service experience and then experience a
high level of excellent service recovery, leading them to be
even more satisfied after they experience a service failure
than they otherwise would have been.

• Is this strategy of “screwing up” just a little so that it can “fix


the problem” superbly can work for an organization if that
leads to more satisfied customers.
The Recovery Paradox
Problems faced by an firm in using this approach

 Majority of customers do not complain when they experience


a problem.
 It is expensive to fix mistakes.
 It appear ludicrous to encourage service failures.
 There is certainly “no guarantee” that the customer actually
will end up more satisfied.
How Customers Respond to Service
Failures

• Why People Do (& Do Not) Complain.

• Types of Customer Complaint Actions:


 Complaining to the service provider.
 Spreading negative word of mouth about the company to friends.

• Switching Versus Staying.


(How a service failure is handled and customers reaction to the recovery will
influence the decision of the customer of switching or staying back with the
same service provider)
Types of Complainers
• Passives
(This group of customers is least likely to take any action and
unlikely to say anything to the provider)
• Voicers
(This group of customers actively complain to the service provider)
• Irates
(This group of customers are more likely to engage in negative
word of mouth communication)
• Activists
(This group of customers actively complain on all dimensions)
Service Recovery Strategies
Do It Right
the First
Cultivate Time
Relationship
with customers

Encourage
and Track
Complaints

Provide
Adequate
Explanations

Act
Quickly
Act Quickly
Company must be prepared to act on the
complaints quickly:

• Take care of Problems on the Front Line


(First person to hear a complaint from a customer “owns” that
complaint until the employee is sure it is resolved)

• Empower Employees
(Employees must be trained and empowered to solve problems as
they occur)
Customer Expectations of Service
Customer holds two types of expectations about
services:

• Desired Service – the ‘wished for’ service


(It is a blend of what the customer believes “can be” & “should
be”)
• Adequate Service – the service that would be acceptable
(Adequate service is “minimum tolerable expectation” )
The Zone of Tolerance
• Performance of service vary across providers and across
employees from the same provider, the extent to which
customers recognize and are willing to accept this variation is
called the zone of tolerance.

• Zone of tolerance is the range or window in which customers


do not particularly notice service performance. Customer only
notices when it falls outside the range, than the service gets
the customers attention in either a negative or positive way.
Different Customers Possess Different Zones of
Tolerance

Some Customers have narrow zone of tolerance.


The zone of tolerance representing the
difference between desired service and
adequate service can expand or contract
within a customer.
Customer Satisfaction
• Satisfaction is the customers evaluation of a product or
service in terms of whether that product or service has met
the customer’s needs and expectations.

• For customer satisfaction it is necessary to establish and


maintain certain important characteristics like :
• Quality.
• Fair Prices.
• Effective Delivery.
• Serious consideration
What Determines Customer Satisfaction?

• Attributions for Service Success or Failure.


• Perceptions of Equity or Fairness.
• Other Consumers, Family Members and
Coworkers.
Service Encounter (Moments of Truth)
• A service encounter (moment of truth) occurs every time a
customer interacts with the service organization.

• Customer is mentally evaluating the service they are


experiencing and forming a lasting opinion about the
organization at every service encounter.

• From organization point of view, each encounter thus


presents an opportunity to prove its potential as a quality
service provider.
The Importance of First Encounter
• Since many customers are aware that they are engaged in a new
experience, they pay particular attention to the details of this
interaction.

• With first impressions being very powerful and long lasting, its
essential that the employee put their best foot forward.

• Customers that feel valued and appreciated from the very start will
have a strong tendency to return for future business.

• Each customer contact is a unique, unrepeatable opportunity for a


company to differentiate itself from the competition.
Types of Service Encounters
There are three general types of service encounters:

• Remote encounters
(In remote encounters the tangible evidence of the service and the quality of
the technical processes becomes the primary base for judging quality)
• Phone encounters
(Tone of voice, employee knowledge and efficiency in handling customer
issues become important in judging quality here)
• Face-to-Face encounters
(Both verbal and non verbal behaviors are important determinants of quality
in case of face to face encounters)
Employees Roles in Service
Delivery
Types of Marketing in Service Firms
Strategies for Delivering Service Quality
through People

• Hire the Right People.


• Develop People to Deliver Service Quality.
• Provide Needed Support Systems.
• Retain the Best People.

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