Chapter 10:

Managing Services for Business Markets-

Part 2

Reference –Majority contents are from a) “B2B Marketing – A South Asian Perspective” - Michael D. Hutt,
Dheeraj Sharma & Thomas W. Speh and b) R.A.Cormier, besides other sources)

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 Topic
A. Recap
B. roles of service quality, customer satisfaction
and loyalty assume in service marketing
success
C. Service Packages
D. Hybrid Offering
 Recap- Delivering effective customer solutions

1) The suppliers’ role -multi domain skills, boundary spanning

skills; complementary actions across departments; documentation
of effective/ non effective customer solutions(key milestones in
solution development, recoding history and for learning from
experience); blueprint for service (role/responsibilities/ guidelines)

2) The customers’ role –

customer Adaptiveness – willingness to adapt processes to
accommodate suppliers product, political counseling, operational
counseling

Choose customers wisely – not all are suitable for solutions.

Benefits of solution marketing

Creating growth opportunity, sustaining differentiation & customer loyalty,

 Recap- Unique Service Characteristics
Business services that are intangible-dominant market offerings.
Few services are totally intangible – they often contain
elements with tangible properties.
Source :https://www.bain.com/insights/winning-in-industrial-service/, accessed august 2020

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Service Quality

•A good service is one that meets or exceeds the customer’s

expectations.

Dimensions of service quality -

Reliability, Responsiveness, assurance, empathy and tangibles.

Customer satisfaction and loyalty

The basic elements of products/service, basic support services – technical

assistance/ training, recovery process , extraordinary services in solving
customer’s unique problem.

Service Recovery – Policy. Procedures and processes a firm uses to resolve

customer’s problem.

Zero defections – service quality impacts defection. No defection increases

bottom line, and creates many other benefits.

Return on quality- justify quality improvements on financial basis as it has

also diminishing returns after some points
5 Dimensions of Service Quality
 Actuators India Ltd - Problems identified in the case
a) the services person does not returns call.
b) no replies for spares quote.
c) double invoicing for supply of 4 nos. of actuator and for almost a year, no actions have been taken except
some emails.
d) Long logistics time took for to and fro movements for repaired devices.
e) Customers complained about delays of receipt of actuators sent for repair at the end of Actuator India.
f) There is increasing reports that some of the repairs are taking long time to return back to customers.
g) It was revealed that emails are send to different people based on whom the customer knew in Actuator
India.
h) The customers look forward to an instant acknowledgement of emails communication.
i) A CRM module was functional but that was only used to trace customer contact.
j) The SAP purchase module was integrated with EU HQs and has no independence of local changes on
requirement.
h) unavailability of services in time and bad repairs.
Actuator India Ltd - Examination of Selected Customer experiences

Quality Customer Tactics Implications

experiences
Reliability the services training of service person, People, Process.
person does not service supply chain issues,
returns call. inventory issues

Responsiven unavailability of Develop third party service Place, Pricing

ess services in time delivery channels, and
and bad repairs. repair centre
Assurance Confusions Designate single point of process
created by contact, use CRM and
Multiple points of integrate with ERP
contact
empathy Long time of Problem identification and Place
repairs due to addressing the same with
delay in logistics Logistic service provider
tangibles. Lack of Best practices manual, Physical evidence,
information on training of SME personnel Promotion,
gear conditions for Process
maintenance
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 Customer Satisfaction and Loyalty

Customer-linking processes that affect satisfaction:

1. Basic elements of the product or service that customers
expect all competitors to provide.
2. Basic support services, such as technical assistance or
training, that makes product more effective.
3. A recovery process for quickly fixing product or service
problems.
4. Extraordinary services that so excel in solving customers’
unique problems or in meeting customer needs that these
services make the product or service seem customized.
 Service Recovery
✓ A Firm does not provide flawless service
all the time. Hence, service recovery
strategy is important.
✓ Service recovery strategy encompasses
procedures, policies, and processes that
firms use to resolve customer service
problems promptly and effectively.
✓ One way of resolving a discrepancy is to
negotiate the resolution.
✓ “What’s it going to take for you to be
very satisfied with the resolution of this
complaint?”
✓ IBM assigns a resolution owner,
generally an expert, after receiving
the complaint.
✓ Ocean freight-shipping industry
found clients who expressed higher
satisfaction with claims handling,
complaint handling and problem
resolution have a higher level of
overall satisfaction with the
shipping line.
✓ Customers who have experienced a
service failure and have got it
corrected to their satisfaction are
more loyal than customer who have
not experienced a service failure.
 Zero Defections

• Deals with zero defection of customer – implications for customer

loyalty and customer retention.

• It is beneficial in terms of sales and profits because:

1. The firm can charge more – revenue across the years increase.
2. The cost of doing business is reduced.
3. Long-term customers provide word-of-mouth advertising.

• Therefore, the strategy is to:

1. Track defections to find out “why.”
2. Recognize that continuous improvement is not a cost but an
investment in a customer that generates profits.
3. Measure return on quality – return should neutralize cost
investment.
 Service Package
Developing the Service Package

 The service package can be thought of as the

product dimension of service, to include:
1. Essential concept of the service
2. Range of service provided
3. Quantity, quality and level of service

In addition:
 Service package must consider some factors unique
to services – personnel, physical product and a
process for providing the service.
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 Services Packages

➢ Customer- benefit concept – the core benefit the customer derives from
the service

➢ Service concept – It defines the general benefits that the service

company shall provide to the customer through the bundle of products and
services.

➢ Service offer - service offer spells out in – more detail those services
to be offered - when, where, and to whom they shall be provided and how
they shall be presented. Shall include all the tangibles and intangibles.

➢ Service delivery system – How the service is provided by the system? It

should provided a carefully designed blueprint how the service is to be
delivered

➢ Service personnel – Ensure that all personnel know and understand the
service benefit concept.---- attitude, knowledge and skills of the service
people.
Conceptualizing the Service Product
Conceptualizing the Service Product – Hotel services for corporate customers training annual sales meeting
Customer – Benefits –
a successful annual sales meeting
meal schedules, message services,
Service offers – when, where and to
whom – total service package –
tangible and intangible – multitude of
tangible elements ( soundproof
meeting, projection equipment, video
players, slide projections, flip charts)
and intangible elements ( attitude of
personnel, warmth of front desk
greetiings, response to reuests)
Service Personnel –a ) knowledge,
attitude, behaviour and skills of
personnel.
Service concept –
flexibility, responsiveness and
courteousness in providing
meeting rooms, a full range of
audiovisual equipment, flexible
professional personnel, climate
controlled meeting rooms
Service delivery system –
personnel with capabilities and
attitudes, facilities and layouts for
effective work flows, and carefully
developed processes and
procedures
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Conceptualizing the Service Product – ABC India Ltd

Customer – Benefits - Service concept –supply of all

Troubleshoot gear operational Spares of gears, Inspection and
problems Repairs services

Service Offers– when, where and to Service delivery system –

whom – components repairs to supply
of entire gear, best practices manual,
training programmes, delivery within 3
days from request, in-situ inspection
within 2 days in case of major failure,
repairs and dispatch to client factory
within 7 days of receipt, gear
inspection for next 6 months, etc.
a) Specially trained customer
relationship manager , b) one point of
contact - dedicated 24x7 call centre, c)
dedicated service team., d) service
camps
Long term – a) third party channels

Service Personnel –a ) well trained

customer relationship manager, b)
service experts and c) Trained third
party people.

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 Hybrid Offerings

Unique Unique
resources capabilities
Service related data
Installed base
processing and
product usage and
interpretation
process data.
capability
Differentiation
Product Execution risk advantage
development and assessment and
manufacturing mitigation
assets. capability

Product sales force Cost leadership

Design to service
and distribution
capability advantage
network

Field service Hybrid offering

organization sales capability

Hybrid offering
deploying capability

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 Hybrid Offerings

Hybrid offerings represents a combination of one or more goods and

one or more services that together more customer benefits than if
the goods and services were available separately.

Unique resources - manufacturer

Installed base product usage and process data - can be used for
monitoring operations, maintenance and other process interventions.
Product development and manufacturing assets - can be leveraged to
achieve a competitive advantage by leverage by incorporating
customer feedback.
Product sales force and distribution network -
Field service organization – after sales service, new products and
services
Unique capabilities
Service related data
processing and interpretation
capability
Execution risk assessment
and mitigation capability
Design to service capability
Hybrid offering sales
capability
Hybrid offering deploying
capability
Definitions
Unique capabilities -manufacturer
Manufacturer capacity to gather, analyze, and interpret installed base product usage
and process data to help business customer s to reduce costs and increase
productivity . Eg - An industrial equipment manufacturer uses customer energy usage
data for energy consulting services
The manufacturer’s capacity to evaluate the likelihood that agreed upon outcomes
of hybrid offerings will be achieved and the to design and implement safeguarding
mechanisms to meet performance commitments and to maintain internal profit
targets. Eg- A manufacturer of in-flight entertainment systems of commercial airlines
examined product usage and process data from installed base of customers to develop
reliable outcome expectations and performance guarantee
The manufacturer’s capability to integrate the product and service elements of the
offering in the development process to tap the full potential for revenue generation or
cost reduction. Eg -Enabling technician to do remote maintenance and increase
revenue and reduce cost
The manufacturer’s capacity to reach key decision makers in the customer organization,
co-ordinate key contacts in the customer and vendor firms, sell hybrid offering value
through specific documentation and communication tools and aligns the sales force
with both the field organization and channel partners to increase hybrid offering
revenues . Eg- using sales force to mobilize third party partners as well as internal
service team as and when needed.
Capacity to use flexible offering platforms that can standardize production and delivery
processes while providing menu of options to adapt to individual customer’s need. Eg
six different maintenance packages for printers to cover the needs of retail banking
customers
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 Supplier Process support services - process
promise improvement of customer – a
to Product life cycle services -input based
manufacturer of material handling
perform maintenance services within lifetime
a deed equipment offers warehouse optimization
and logistics counseling to the customer

Nature of
the value
proposition Services for Hybrid
Offering

Supplier Asset efficiency services - output based –

promise to
achieve Improve productivity performance of Process delegation services - services to
performan assets - Manufacturer of flight perform on behalf of a customer – dupont
ce
infotainment offering 98.5% availability paint shop – paints supply plus painting
of video screens during flights.

Service oriented towards Service orietned towards

Supplier goods Customer process

Service Recipient

adapted from Wolfgang, U. and Reinartz, W.J.( 2011), Hydbrid offerings,: How manufacturing firms combines goods and services sucessully, Journal of
Marketing, 75 in Hutt Speh and Sharma

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Source :https://www.bain.com/insights/winning-in-industrial-service/, accessed august 2020

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 Service Mix - 7P
Service Mix DHL Services

Product (Service) DHL Logistics aims offering variety of service options to its customers with 5 divisions, namely DHL Express, DHL
Global Forwarding, DHL Freight, DHL Supply Chain and DHL Global Mail

Pricing ✓For standardized freight services, DHL Logistics prefers implementing cost plus pricing strategy.
✓ For customized services, prices are relatively high when compared with standardized transportation services
provided by the company.

Promotion DHL usually prefers introducing its service offerings through television advertisements.
DHL holds several sponsorship deals with some of the most exclusive worldwide events such as Rugby World
Cup, Formula 1, IMG Fashion Week , etc reflecting the values of the company.

Place Branches all around the world. DHL has 850 terminals, warehouses and offices located in approximately 150
territories. Express conducts its operations in more than 220 countries and territories with a fleet of more than
250 aircrafts.

Physical evidence Components of physical layout such as odors, colors, temperature, noise level, and comfort of furnishings may
influence the perceived performance of service provider (Bitner, 1990).
✓Eg- DHL uses its widely-known logo, red DHL writing on a yellow-colored-base, and yellow color on its trucks,
packaging materials and buildings.
✓website, brochures, business cards and even invoices.
✓No dress code for employees working at internal operation departments , but dress code essential for front
line employees .

People New Employee Orientation Program that aims introducing all products of DHL to employees
and developing their communication skills., Soft skill plus basic IT / IS training, SAP training, Functional trainings

Process ✓DHL pays attention to the for measuring customer satisfaction and being able to inform customers about
processes – Soft trans program – measures of duration of cargo handling to address cargo handling
programme.
✓I-sell program is being used for keeping records of customer visits and sales reports.
✓7/24/365 customer service for specific industries

Source – Oflaca, B.S, Dobrucalı,B., Yavas, T., and Escobar, M.G. (2015)Services Marketing Mix Efforts of a Global Services Brand: The Case of DHL Logistics, Procedia
Economics and Finance 23 , 1079 – 1083, , www.sciencedirect.com
 Service Guarantees
✓A service guarantee has been defined as a written promise of
performance combined with an offer of compensation in the event that
service promises are not achieved

✓decreasing the perceived risk in purchasing, increasing customer

satisfaction, building customer loyalty, and supporting quality improvement
initiatives in the supplier organization

✓service guarantees are perceived as valuable to the extent that

customers are ready to pay a substantial price premium.

✓service guarantees in a b2b setting must be co-created jointly with

the customer to ensure they are relevant and valuable

Source - R .McColl, Y. Truongb , and A.L. Rocca (2019)Service guarantees as a

base for positioning in B2B, Industrial Marketing Management 81 (2019) pp.78–86
Thank You

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