SM UNIT-VMBAVTri PDF

Services Marketing
MBA, V Trimester, GSIB
Course Instructor
Dr. Subrahmanyam A
UNIT- V
Service Process -Service blueprint, Role of
physical evidence, Internal Marketing
Internal Marketing
“Happy internal clients mean happy external clients!”
• Internal marketing is the process of motivating and empowering the

employees of a company to work as a team for the overall
wellbeing of the customers and thereby the company itself.
• This is actually the core to the success of a company.
• A harmonised effort within the company is an utmost necessity to

provide customers with services at a desired level.
• Internal marketing (IM) has, in recent years, been viewed as an

element that has an important influence on employee satisfaction
and therefore on service quality.
Internal Marketing
• The interaction of employees with customers can influence service quality
and customer satisfaction to such an extent that it has become important
for service organisations to focus on ways to influence and manage such
interactions.
• In service industries employees represent the organisation to customers
through their interactions with them, and therefore these encounters
become the representations of the organisation to the client.
Internal Marketing
• With an internal marketing strategy, employees are treated as “internal
customers” who must be convinced of a company’s vision and worth just
as aggressively as “external customers.”
• The goal of internal marketing is to align every aspect of a company’s
internal operations to ensure they are as capable as possible of providing
value to customers.
• If a company can operate in a coordinated and standardised way, that
company can provide a more consistent experience to their customers
People
• In services marketing, people, or staff, are considered a crucial element of
the marketing mix.
• As more products add online services to enhance their offerings ‘people’
become more and more important
• Why are people Important?

• Think about why so many clicks and mortar companies outperform pure
dot coms.
• As well as experience of the marketplace, people (and process) are key –
real people, real buildings and established integrated systems that deliver
goods and services.
• People are important since everyone in your organization is an

ambassador and a sales person for your company.
People
• Given that everyone represents the company, one can see the importance
of having happy staff.
• Happy Staff = Happy Customers= Happy Shareholders
• The challenge, of course, is to recruit the right people, train them and
reward or motivate them appropriately.
• Training & resourcing of Employees
• Training & empowering staff is important to answer customers’ queries.
• It is worth investing in continual staff training as well as in online tools.
Benchmark research from Harvard (Kotter and Heskett, 1992) revealed
that companies who invest in all three key stakeholders (employees,
customers and shareholders) outperform those that invest in only two or
less (say customers and shareholders).
•
People
People’ Summary
• People/staff are important.
• In fact, service – before, during and after a sale – is required if repeat

business is to be enjoyed.
• Contact strategies should be developed that give customers choice of

contact, but minimize costly interactions with staff.
• Automated services help but people are also required. It is a delicate

balancing act but bear them both in mind when integrating online and
offline marketing activities.
• Recruitment, training and motivation are required. And

remember,
• happy staff = happy customers = happy Shareholders.

Process
• Process refers to the internal and sometimes external
processes, transactions and internal communications that are
required to run a business.
• Excellent execution of these is vital.
• Excellent processes are where e-commerce ends and e-
business begins.
• Un-integrated e-commerce sites create problems as
witnessed by US online toy stores whose web sites and
associated processes did not link into an information system
explaining to customers when stocks were unavailable.
Process
• Traditional offline services have processes continually on
view with the manufacturing process for goods behind closed
doors.
• Online services and their process of production are not as
visible since much of the processes operate in systems
unseen by the customer.
• Some of the process, or system, is on view, like menus, form
filling, shopping baskets, follow-up e-mails and of course the
interactions on web sites.
• It is on this part of the process and its outputs that customers
will judge service.
Physical Evidence
• When buying intangible services, customers look for physical evidence to
reassure them.
• In the offline world this includes buildings, uniforms, logos and more.
• In the online world the evidence is digital – primarily through web sites
but also through e-mail.
• In the online world, customers look for other cues and clues to reassure
themselves about the organization.
• So firstly, a reassuring sense of order is required.
• This means web sites should be designed with a consistent look and feel
that customers feel comfortable with.
Opening Vignette: Dinner in the Sky
• Why are people willing to pay thousands of dollars for this dining
experience?
• The servicescape makes all the difference
The Strategic Role of Physical Evidence

• Physical evidence is composed of three categories
1. Facility exterior
2. Facility interior
3. Other tangibles
• The extensive use of physical evidence varies by the type of service

firm
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Variations in Usage of Physical Evidence
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part.
The Strategic Role of Physical Evidence (cont’d)
• All service firms used to recognize the importance of

managing their physical evidence in its multifaceted role
of:
1. Packaging the service
2. Facilitating the flow of the service delivery process
3. Socializing customers and employees alike in terms

of their respective roles, behaviors, and relationships
4. Differentiating the firm from its competitors
1. Packaging
• Conveys customer expectations
Physical Quality Image

Evidence Ques Develop-
ment
• Improves customer perceptions of service

– Reduces perceived risk associated with the purchase
– Reduces cognitive dissonance after the purchase
2. Facilitating the Service Process
• Provides information
– How am I to act?
• Facilitates the ordering process

– How does this work?
• Manages consumers
– Barriers separate the technical core of the business from the part
of the business in which customers take part in the production
process
3. Socializing Employees and Customers
• Studies have shown that the use of uniforms:

– Aids in identifying the firm’s personnel
– Presents a physical symbol that embodies the group’s ideals
and attributes
– Implies a coherent group structure
– Facilitates the perceived consistency of performance
– Provides a tangible symbol of an employee’s change in status
– Helps in controlling the behavior of errant employees
4. A Means of Differentiation
• Studies have shown that well-dressed personnel are
perceived as:
– More intelligent
– Better workers
– More pleasant to engage with in interactions
• Upgrading the firm’s facilities often upgrades the image of

the firm in the minds of consumers, and it may also lead
to attracting more desirable segments
The SOR Model
• Stimulus-organism-response (SOR) model: a model developed by
environmental psychologists to help explain the effects of the service
environment on consumer behavior
• Consists of three components:
1. A set of stimuli
2. An organism component
3. A set of responses of outcomes
• Stimuli: the various elements of the firm’s physical evidence

• Organism: the recipients of the set of stimuli in the service encounter;
includes customers and employees
• Responses: consumers’ reaction or behavior in response to stimuli
– Responses are influenced by three emotional states:
1. Pleasure-displeasure
2. Arousal-nonarousal
3. Dominance-submissiveness
The Three Components of the SOR Model
part.
The Development of Servicescapes
• The use of physical evidence to design service
environments
– Remote, self-service, and interpersonal services
– High-contact versus low-contact service firms
• Facility location
• Facility layout
• Product design
• Process design
A Continuum of Facility Use by Type of Service
part.
The Servicescapes Model
part.
Stage 1:
Physical Environmental Dimensions
• Ambient conditions
– Lighting, air quality, noise, music, odor
• Space/function
– Layout of the facility, equipment, the firm’s furnishings
• Signs, symbols, and artifacts
– Signage, personal artifacts, style of decor
Stage 2:
Holistic Environment
• The collective perceptions of the servicescape
formed by employees and customers
– Perceived servicescape
– Economic customers
– Personalized customers
– Apathetic customers
– Ethical customers
Stage 3:
Internal Response Moderators
• Internal response moderators
– Pertain to the three basic emotional states of the SOR model
1. Pleasure-displeasure
2. Arousal-nonarousal
3. Dominance-submissiveness
– Mediate the reaction between the perceived servicescape and

customers’ and employees’ responses to the service environment
– Help explain why services are characterized by heterogeneity as the

service varies from provider to provider, and even from day to day
with the same provider
Stage 4:
Internal Responses
• Cognitive responses
– Beliefs, categorization, symbolic meaning
• Emotional responses
– Mood, attitudes
• Physiological responses
– Pain, comfort, ambient conditions
Stage 5:
Behavioral Responses to the Environment
• Individual behaviors in response to environmental
stimuli are characterized as:
– Approach behaviors
• Shopping enjoyment
• Repeat visits
• Favorable impressions of the store
• Money spent
• Time spent shopping
• Willingness to stay and explore the store
– Avoidance behaviors
• Environmental stimuli may be purposely managed to discourage
unwelcome market segments
Managing the Senses
When Creating Servicescapes
• Experts suggest answering the following questions before
implementing a servicescape development plan
1. Who is the firm’s target market?
2. What does the target market seek from the service experience?
3. What atmospheric elements can reinforce the beliefs and
emotional reactions that buyers seek?
4. How do these same atmospheric elements affect employee
satisfaction and the firm’s operations?
5. Does the suggested atmosphere development plan compete
effectively with competitors’ atmospheres?
Sight Appeals
• Sight appeals can be defined as the process of interpreting stimuli,
resulting in perceived visual relationships
• Sight appeals include:
– Size
– Shape
– Color
– Location
– Architecture
– Signage
– Entrance
– Lighting
Perceptions of Color
part.
Color Perceptions by Culture
part.
Sound Appeals
• Sound appeals have three major roles:
1. Mood setter
2. Attention grabber
3. Informer
• Proactive methods for purposely inserting sound into the

service encounter can be accomplished through the strategic
use of music and announcements
• Sound can also be a distraction to the consumer’s experience

– Consequently, sound avoidance tactics should also be considered
The Impact of Background Music on Restaurant
Patrons
part.
Scent Appeals
• Stale, musty, foul odors affect everyone and are sure to

creative negative impressions
• Pleasurable scents often induce customers to make
purchases and can affect the perception of products that
do not naturally have their own scent
Touch Appeals
• Liberal return policies

• “Open houses”
• Shaking hands with customers
• Engaging in face-to-face communications with customers
Taste Appeals
• Taste appeals are the equivalent of providing the

customer with samples of the service
Good service is good business
End of UNIT V

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Services Marketing

MBA, V Trimester, GSIB

• Internal marketing is the process of motivating and empowering the

• This is actually the core to the success of a company.

• A harmonised effort within the company is an utmost necessity to

• Internal marketing (IM) has, in recent years, been viewed as an

• Why are people Important?

• People are important since everyone in your organization is an

• In fact, service – before, during and after a sale – is required if repeat

• Contact strategies should be developed that give customers choice of

• Automated services help but people are also required. It is a delicate

• Recruitment, training and motivation are required. And

• happy staff = happy customers = happy Shareholders.

• So firstly, a reassuring sense of order is required.

The Strategic Role of Physical Evidence

• The extensive use of physical evidence varies by the type of service

• All service firms used to recognize the importance of

1. Packaging the service

2. Facilitating the flow of the service delivery process

3. Socializing customers and employees alike in terms

4. Differentiating the firm from its competitors

Physical Quality Image

• Improves customer perceptions of service

• Facilitates the ordering process

• Studies have shown that the use of uniforms:

– More pleasant to engage with in interactions

• Upgrading the firm’s facilities often upgrades the image of

• Stimuli: the various elements of the firm’s physical evidence

– Mediate the reaction between the perceived servicescape and

– Help explain why services are characterized by heterogeneity as the

• Proactive methods for purposely inserting sound into the

• Sound can also be a distraction to the consumer’s experience

• Stale, musty, foul odors affect everyone and are sure to

• Liberal return policies

• Taste appeals are the equivalent of providing the

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