Service Expectations

• Service expectations are set of standards

expected from the customer in terms of
service offerings.
 Types of Expectations
• Ideal Service
• Desired Service-level of service is
moderated by reality of life.
• Adequate Service-minimum acceptable
level of service
• Predicted Service-Customer prediction
about the level of services.
 Factors influencing Consumer
Expectations
Zone of tolerance is based on two levels of customer
expectations- Desired and adequate level
Customer desired service expectations are influenced by
two factors-
1. Personal needs
2. Enduring intensifiers
Adequate service level represents bottom level
expectations below which service becomes
unacceptable.
Five factors influence adequate service expectations-
1. Transitory factors, 2. Perceived alternatives,3. Self
perceived role, 4. Situational factors, 5. Predicted
service.
Consumer decision process for Services

• Service businesses have been operations

dominated.
• Seven stages involved- Need recognition,
information search, pre purchase
evaluation, purchase, consumption, post
purchase evaluation , Divestment.
 Importance of Service
Encounter
• The service encounter plays a critical
role in determining customer satisfaction.
It is the service firm's 'moment of truth'.
The management of waiting time, personal
interactions, and gaps between customers'
expectations and perceptions are also
addressed.
 Identifying and Selecting Target Segments

• A target segment is one selected from among the broader

market by specific firms.

• Target segments should be selected on the basis of their sales,

profit potential, and the firm’s ability to match or exceed
competing offerings directed at the same segment.
 Service Encounters/MOT
• A service encounter occurs every time a
customer interacts with
the service organization.
• There are three general types of service
encounters – remote encounters,
technology mediated encounters, and
face-to-face encounters.
 Understanding Consumer Choice Behavior

Services emphasize experience qualities and is harder to

evaluate.

• Developing a Service Concept for a Specific Segment

 Developing a Service Concept for a Specific
Segment
• Research is needed to identify what attributes of a service
customers deem important and the competitions’ performance
on such services.

• Each individual attribute different priorities to different

services.
 Creating a Competitive Position

Positioning is the process of establishing and

maintaining a distinctive place in the market for an
organization and its individual product offerings.
Repositioning involves changing the existing
position, which revises service characteristics or
redefines target market segments.

• Copy Positioning versus Product Positioning

• Positioning Role in Market Strategy
 Positioning’s Role in Market Strategy

• Positioning plays a pivotal role in marketing strategy because

it links market analysis and competitive analysis to internal
corporate analysis.

• For multiproduct service businesses, it is particularly

important that there be some consistency between the positions
held by different services offered at the same location, since
the image of one may spill over onto the others.

• An explicit positioning strategy is valuable in helping

prospective customers to get a mental “fix” on a product that
would otherwise be rather amorphous.
 Steps in Developing a Positioning
Strategy

 Market Analysis is needed to determine such factors as the

overall level and trend of demand, and the geographic
location of this demand.

 Internal corporate analysis requires the organization to

identify its resources, any limitations or constraints, and the
values and goals of its management.

 Competitive analysis is the identification and analysis of

competitors to provide a sense of their strengths and
weaknesses, which may suggest opportunities for
differentiation.
 Developing a Market-Positioning Strategy
Definition and Analysis of
Market Analysis Market Segments
(Size, Location,
Trends)
Selection of Most Appropriate
Target Market Segments to Serve
Internal Corporate
Analysis (Resources,
Marketing
Constraints, Values) Articulation of Desired
Action
Position in the marketplace
Plan

Selection of Which Benefits

Competitive Analysis To Emphasize To Customers
(Strengths,Weaknesses,
Current Positioning
Analysis of Possibilities for
as perceived By
Effective Differentiation
consumers)
Against Competition
Position map of location vs. luxury
level
Position map of service level vs.
price level
 Managing Demand and Capacity – Capacity Constraints;
Demand Patterns
•Service demand management is used to describe the proactive
management of work initiatives (demand) with business constraints (supply).
•The business economist Michael Porter of Harvard Business School
pioneered this value chain approach: "the value chain disaggregates the
firm into its strategically relevant activities in order to understand the
costs and existing potential sources of differentiation".

•It is the micro mechanism at the level of the firm that equalizes supply and
demand at the macro market level.

•Early applications in distribution, manufacturing and purchasing collectively

gave rise to a subject known as the supply chain.

•Marketing, sales and service are the other half of the value-chain,
which collectively drive and sustain demand, and are known as the
Demand Chain.

• Progress in transforming the demand side of business is behind the supply

side but there is growing interest today in transforming demand chains.
•The perishable and intangible nature of services makes it impossible
for service companies to store them in order to use them during peak
demand periods.

•Demand for services depends on many factors like the phase in which
the economy operates i.e., whether the economy is in a recession or
expansion; demographic factors, natural disasters, and the
technological developments in the market.
 Strategies to deal with imbalances
•This can be done by hiring part-time employees, outsourcing
activities, sharing or modifying facilities, renting or moving
equipment, cross-training employees and finally by scheduling
downtime delivery periods of low demand.

•Apart from matching demand and capacity, an organization may also

try to create a demand inventory.

•The first step is to deal with the waiting line or queue at the time of
service delivery.

•One way is to adopt the first-come first-serve principle. When it is

not possible to do so, organizations can solve the problem through
market segmentation.

• Other strategies involve serving those customers who require the

services on an emergency basis first, reducing the time of transaction,
serving important customers first, or by serving customers who
contribute the most to the organization's profits.
 Yield Management
•Yield management is a variable pricing strategy based on
anticipating and influencing consumer behavior. The goal is to
maximize revenue from a fixed, time-limited resource such as
airline seats, hotel room reservations, or advertising inventory.
•Yield management in hotel industry helps you to make the most
of your occupancy. It ensures a higher revenue, even if your
occupancy is not 100%.
• A solid yield management strategy can increase
your revenue significantly. Good yield management maximizes
revenue production for the same number of units, by
taking advantage of the forecast of high demand/low demand
periods, effectively shifting demand from high demand periods to
low demand periods and by charging a premium for late bookings.
•Revenue management involves predicting consumer
behavior by segmenting markets, forecasting demand, and
optimizing prices for several different types of
products, yield management refers specifically to
maximizing revenue through inventory control. Basically it
is price optimization part.

•Yield management software is a solution that empowers

your company to accurately forecast the demand for your
products, assess supply, and maximize profits. It gives you
immediate access to the data you need to offer the right
price to your customer at the right time. Yield management
has a more narrow focus and is concerned only with the
selling price and the volume of sales, so that the best
possible revenue yield can be achieved.
Examples-
•The airline needs to keep a specific number of seats in reserve to cater
to the probable demand for high-fare (last minute) seats. The fewer seats
that are reserved for a particular category, the lower the price of each
seat. This will continue until the price of a seat in the premium class
equals that of those in the concession class. Depending on this, a floor
price (lower price) for the next seat to be sold is set.

•Hotels use yield management to calculate the rates, rooms and

restrictions on sales in order to best maximize their return. These
systems measure constrained and unconstrained demand along with
pace to gauge which restrictions to implement, e.g. length of stay, a non-
refundable rate, or close to arrival rate.

Yield management is all about selling products and services at the right
price, at the right time, to the right people – and making the most of a
limited resource.
Sometimes businesses, faced with a lack of pricing power turn to yield
management as a last resort but soon discover that it was a wise move.
 Waiting line strategies
A waiting-line system, or queuing system, is when a person or object spends
time waiting in a line to complete a transaction or activity. There are three parts to
a service line system:

the number of servers, arrival time of customers, and the waiting line rules.

It deals with issue of treatment of customers in sense reduce wait time and
improvement of service. Queue management deals with cases where the
customer arrival is random; therefore, service rendered to them is also random.
The waiting line theory was developed by A K Erlang.

Waiting in anxiety seems longer, unoccupied waiting time feels longer than
occupied waiting time, unfair waiting feels longer than equitable waiting.

Reservations can be used to inventory the demand.

Single Channel, Single Phase (e.g. ship yards and car wash)
Single Channel, Multi Phase (e.g. bank tellers)
Multi Channel, Single Phase (e.g. separate queue of man and women for single
ticket window)
Multi Channel, Multi Phase (e.g. Laundromat, where option of several washers
and several dryers)❮
 Service recovery and its role in CRM

•The goal of service recovery is to identify customers

with issues and then to address those issues to the
customers' satisfaction to promote customer retention.
Perhaps more importantly, the organizational culture
must be supportive of idea that customers are
important and their voice has value. This is helpful for
customer retention and CRM is also useful for
customer retention.
 Employees’ and Customers’ role in service
delivery.

In most of the service marketing encounters, the delivery personnel would be

the only interface between the Customer and the organization and hence these
employees make a significant contribution in the development of the
organizational competitive advantage. It rests upon the Service delivery
employees to ensure that the interaction between them and the customer is
consistent with the desired positioning of the Service encounter as conceived
by the top management to make the building of the competitive edge exercise
successful.

Front end executives are considered as the most important asset for any
service organization and hence the most capable in achieving and sustaining
the competitive advantage.

Customer feedback is important and has a role in service delivery.