Lecture 6

21 08 2009

We have covered
Service Mktg Service Mktg Mix Consumer Behavior in Services GAP model of Service Quality Understanding Consumer expectations & perceptions through MR Building Customer Relationship Service Recovery Service Development & Design

Physical Evidence

Physical Evidence is the environment in which the service is delivered & where the firm & the customers interact & any tangible commodities that facilitate performance or communication of service.
Physical facility is referred to as SERVICESCAPE

Elements of Physical Evidence

Servicescape Facility exterior

Exterior Design Signage Parking Landscape Interior design Equipment Signage Layout Air quality/Temperature

Facility Interior

Other Tangibles Business card Stationary Billing statement Report Employee dress Uniform Brochure Webpage Virtual servicescape egs.?

Typology of Service Organisations

Servicescape Usage Self Service (customer only)
Interpersonal services (both customer & employee)

Complexity of Servicescape Elaborate Lean

Self service hotel

ATM, Internet services

Hotel, Restaurant

Hair salon, Dry cleaner

Remote service ( employee only)

Telecom, Insurance

Automated voice message

Roles of the Servicescape

Package
Eg. Disneyland

Facilitator
Eg. Bank

Socailizer
Eg. Barista, Caf Coffee Day

Differentiator
Eg. King Class

Physical Environment Dimensions

Framework on Environment-User Relationship in Service Organisations

Holistic Environment Internal Responses

Behaviour

Cognitive Emotional
. Beliefs, Categorizatio n, Symbolic meaning

Physiological . Pain, Comfort, Movement, Physical fit

. Mood, Attitude

Individual Behaviors
.Affiliation, Exploration, Stay longer, Commitment, Carry out plan

Ambient Conditions
. Temperature, Air quality, Noise, Music, Odor, etc.

Employee Responses

Social Interactions Space/Functions

. Layout, Equipment, Furnishing, etc. Signs, Symbols, Artefacts
. Signage, Personal Artefacts, Style of dcor, etc.

Perceived Servicescape

Between and among customers and employees

Customer Responses

Individual Behaviors
. Attraction, Stay/explore, Spend money, Return, Carry out plan

Cognitive Emotional
. Beliefs, Categorizatio n, Symbolic meaning

Physiological . Pain, Comfort, Movement, Physical fit

. Mood, Attitude

Employees Role in Service Delivery

Gaps Model of Service Quality

Customer Expected sevice Customer gap

Perceived service

Service delivery Company gap 1 Gap 3 Customer-driven service designs and standards Gap 2 Company perceptions of consumer expectations Gap 4

External communications to customers

IMPORTANCE OF SERVICE EMPLOYEES

Employees are the Service. They are the Brand. They are the Organisation . They are the Marketers . They are the Most Visible Element in the servicescape.

SERVICE QUALITY DIMENSIONS

All service quality dimensions:
Reliability Responsiveness Assurance Empathy Tangibles

. are directly influenced by service employees.

BOUNDARY SPANNERS
The frontline employees who operate at peripheral level or the boundary of the organisation.

They transfer information to and from the organisation.by understanding, filtering and interpreting it
They cover the full spectrum of jobs and professions.

BOUNDARY SPANNERS
At one end are the low qualified and low skilled workers and at the other end are the highly skilled and qualified professionals.

Irrespective of the skill or job, most boundary spanners often go through highly stressful situations.
They are also required to handle inter personal and inter organisational conflict.

EMOTIONAL LABOUR
Effort required to deliver quality service. Suppression of true feelings. Emote with friendliness, empathy, responsiveness, courtesy towards their customers.

SOURCES OF CONFLICT
Person / Role Conflict Organisation / Client Conflict Inter Client Conflict

STRATEGIES TO BUILD A CUSTOMER ORIENTED ORGANISATION

Hiring the right type of employees. Train and develop them to deliver service quality. Provide the needed support system. Retain the best people.

HIRE THE RIGHT TYPE OF EMPLOYEES

Compete for the best people. Hire for service competencies and service inclinations. Be the preferred employer.

TRAINING AND DEVELOPMENT

Train for technical, interactive and interpersonal skills. Empower employees.
Empowerment vs. Production Line

Encourage team work.

TRAINING AND DEVELOPMENT

Develop service oriented internal procedures / processes. Provide supportive technology and equipments.

Measure internal service quality.

RETAIN THE BEST PEOPLE

Measure and reward performers.
From productivity -> Customer Satisfaction

Treat employees as customers.

Include employees in the companys vision.

Customers Role in Service Delivery

. Service delivery is all about customer driven approach, unlike

the 4Ps approach which is product driven focusing on 4As

Awareness Availability Accessibility Affordability . .

Customers play a very vital role in successful delivery of service as customers are often present in the place where service is produced (Delivered) At times Service is not successful due to Customer Inaction (eg. ??)

Customer Participation in Service Delivery

Low level of participation High level of participation

Airline
Fast food Pest Control

Ad Agency Payroll Call centre Transportation

Personal trainer Major illness/surgery Consulting

Other Customer
Other customers who are present in the Service scape can influence the Service positively or negatively In many Service deliveries other customers also affect the service delivery in a positive or negative way. This can influence the customers perceptions of Service quality and affect customer satisfaction.

CUSTOMERS ROLES
Customers as productive resources.
IT, Consulting

Customers as contributors to Service Quality & Satisfaction.

Satisfaction ~ Customer belief of doing their part effectively

Customers as Competitors.

Strategy for Enhancing Customer Participation

Define Customer Jobs Effective Customer Participation Recruit Educate & Reward Customers
Educate thru orientation programs, literature, directional cues, watching other customers

Helping oneself, others, Promoting Co., Individual Differences

Manage the Customer Mix

Compatibility Management

Delivering Service through Intermediaries

Types of Channels for Service Distribution

Franchising
Consistency, Knowledge of local markets, Shared financial risk

Agents & Brokers

Reduce selling & distribution cost

Electronic Channels (TV, Telephone, Net)

Managing Demand & Capacity

Variation in Demand Relative to Capacity

Volume Demanded Maximum Capacity
Excess Demand ( Business lost) Demand exceeds optimum capacity ( service quality declines)

Optimum Capacity ( Demand & Supply are well balanced)

Ideal use
Excess capacity ( wasted resources)

Low utilization ( May send bad signals )

TIME

Capacity constraints
Time: e.g Medical, legal, fitness

Labour: e.g Hospital, maintenance, education

Equipment: e.g Courier services, telecommunication, travel services Facilities: e.g hospitality, educational institutions, airlines.

Optimal vs Maximal Use of Capacity

Understanding Demand Patterns

Charting demand patterns Predictable cycles

Random demand fluctuations

Demand patterns by market segment.

Strategies for matching capacity and demand

1) Shifting demand to match capacity : When the demand is too high; (a) Communicate busy hours to the customers. (b) Offer incentives for lean time usage (c) Focus on loyal customers (d) Communicate advantages of lean time usage. (e) Do not offer discounts.

 When the demand is too low; (a) Attract current market segments by focusing on sales and advertising. (b) Attract new segments with promotional schemes. (c) Offer discounts. (d) Bring the service to the customer (e) Modify hours of operation.

2. Adjusting capacity to match demand

When the demand is too high; (a) Stretch time, labour, facilities and equipment (b) Train employees for multiple skills (c) Hire part-time employees. (d) Pay the employees to work overtime. (e) Rent facilities and equipments. (f) Outsource activities.

 When the demand is too low; (a) carry out maintenance, repairs and renovations. (b) Conduct training for employees. (c) Offer leave to employees.

(d) Retrench employees.

When demand and capacity cannot be controlled

(a) Employ operational logic. (b) Have a reservation procedure. (c) Follow Queue discipline depending on; - Importance of the customer -Urgency of the job -Duration of the service transaction -Payment of a premium price. (d) Make waiting tolerable.

Yield Management
Used in capacity constrained services. Objective of yield management is to produce the best possible revenue from a limited available capacity. It involves allocating the right type of capacity, to the right type of customer, at the right price in order to earn maximum revenue.

Continued.

Yield = Actual revenue

potential revenue
Where, Actual revenue = Actual capacity used X Average actual price Potential revenue = Total capacity X maximum price

Case Study Discussions

Gp 5, 6 & 7

Thank you