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Services Marketing
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Usman Waheed
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Chapter 1
INTRODUCTION
TO
SERVICES
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Introduction
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Examples of Service
Industries
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Health Care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Hospitality
restaurant, hotel/motel, bed & breakfast,
ski resort, rafting
Travel
airlines, travel agencies, theme park
Others:
hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club
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Figure 1-1
Tangibility Spectrum
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics Fast-food
Outlets
Tangible
Dominant
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Intangible
Dominant
Fast-food
Outlets
Advertising
Agencies Airlines
Investment
Management
Consulting
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Teaching
Figure 1-2
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Percent of
U.S. Labor Force by Industry
Percent of GDP
80
70
60
50
40
30
20
10
0
Services
Manufacturing
Mining & Agriculture
Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and
July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S.
Economy, Scientific American, 244,3 (1981): 31-39.
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Figure 1-3
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Percent of GDP
80
70
60
50
40
30
20
10
0
Services
Manufacturing
Mining & Agriculture
Source: Survey of Current Business, August 1996, Table 11, April 1998, Table
B.3; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S.
Economy, Scientific American, 244,3 (1981): 31-39.
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Differences Between
Goods and Services
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Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability
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12
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Implications of Intangibility
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Implications of Heterogeneity
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Implications of Simultaneous
Production and Consumption
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15
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Implications of Perishability
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Table 1-2
Goods
Services
Resulting Implications
Tangible
Intangible
Standardized
Production
separate from
consumption
Simultaneous
production and
consumption
Nonperishable Perishable
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing,
Journal of Marketing 49 (Spring 1985): 33-46.
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Figure 1-5
External
Marketing
enabling the
promise
Employees
setting the
promise
Interactive Marketing
Customers
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Overall Strategic
Assessment
18
Specific Service
Implementation
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Figure 1-6
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Technology
Providers
Customers
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Product
Price
Place
Promotion
People
Process
Physical Evidence
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23
Table 1-3
PRODUCT
PLACE
PROMOTION PRICE
Promotion
blend
Flexibility
Quality level
Exposure
Salespeople
Price level
Accessories
Intermediaries
Advertising
Terms
Packaging
Warranties
Product lines
Storage
Differentiation
Allowances
Branding
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PHYSICAL
EVIDENCE
PROCESS
Employees
Facility design
Flow of activities
Customers
Equipment
Number of steps
Communicating
culture and values
Signage
Level of customer
involvement
Employee research
Employee dress
Other tangibles
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25
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Overall Strategic
Assessment
How effective is a firms
services marketing mix?
Is the mix well-aligned
with overall vision and
strategy?
What are the strengths and
weaknesses in terms of the
7 Ps?
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Specific Service
Implementation
Who is the customer?
What is the service?
How effectively does the
services marketing mix for a
service communicate its
benefits and quality?
What changes/improvements
are needed?
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27
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Part 1
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CUSTOMER
Service
Customer
Gap
Service Delivery
COMPANY
GAP 1
Perceived
Service
GAP 3
Customer-Driven Service
Designs and Standards
GAP 2
Part 1 Opener
Company Perceptions of
Consumer Expectations
GAP 4
External
Communications
to Customers
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Part 1 Opener
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30
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Expected
Service
GAP
Perceived
Service
Part 1 Opener
31
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Chapter 2
CONSUMER BEHAVIOR
IN SERVICES
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33
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Consumer Evaluation
Processes for Services
Search Qualities
attributes a consumer can determine prior to
purchase of a product
Experience Qualities
attributes a consumer can determine after purchase
(or during consumption) of a product
Credence Qualities
characteristics that may be impossible to evaluate
even after purchase and consumption
34
Figure 2-1
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Most
Goods
Easy to evaluate
High in search
qualities
Medical diagnosis
Auto repair
Root canals
Legal services
Television repair
Child care
Haircuts
Vacations
Restaurant meals
Automobiles
Houses
Furniture
Jewelry
Clothing
Difficult to evaluate
Figure 2-2
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Categories in Consumer
Decision-Making and Evaluation of
Services
Information
Search
Use of personal sources
Perceived risk
Purchase and
Consumption
Service provision as
drama
Service roles and scripts
Compatibility of customers
Evaluation of
Alternatives
Evoked set
Emotion and mood
Post-Purchase
Evaluation
Attribution of dissatisfaction
Innovation diffusion
Brand loyalty
35
36
Figure 2-3
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Evaluation of
Alternatives
Evoked set
Emotion and mood
Culture
Values and attitudes
Manners and customs
Material culture
Aesthetics
Educational and social
institutions
Purchase and
Consumption
Service provision as
drama
Service roles and scripts
Compatibility of
customers
Post-Purchase
Evaluation
Attribution of dissatisfaction
Innovation diffusion
Brand loyalty
37
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Information search
38
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Perceived Risk
39
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Evoked Set
40
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Service Provision as
Drama
41
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Global Feature:
Differences in the Service
Experience in the U.S. and Japan
Authenticity
Caring
Control Courtesy
Formality
Friendliness
Personalization
Promptness
42
43
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Chapter 3
CUSTOMER
EXPECTATIONS OF
SERVICES
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45
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DEFINITIONS
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Figure 3-1
Dual Customer
Expectation Levels
(Two levels of expectations)
Desired Service
Zone of
Tolerance
Adequate Service
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Figure 3-2
Zone of
Tolerance
Adequate Service
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Figure 3-3
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Level
of
Expectation
Zone of
Tolerance
Adequate Service
Desired
Desired
Service
Service
Zone
of
Tolerance
Adequate
Adequate
Service
Service
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Figure 3-4
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First-Time Service
Outcome
Process
Recovery Service
Outcome
Process
LOW
Expectations
HIGH
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Figure 3-5
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Enduring Service
Intensifiers
Desired
Service
Personal Needs
Zone
of
Tolerance
Adequate
Service
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Personal needs include physical, social,
psychological categories
Enduring service intensifiers are individual, stable
factors that lead to heightened sensitivity to
service
This can further divided into Derived Service
Expectations and Personal service Philosophies
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Figure 3-6
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Perceived Service
Alternatives
Self-Perceived
Service Role
Desired
Service
Zone
of
Tolerance
Adequate
Service
Situational
Factors
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Transitory service intensifiers temporary
a computer breakdown will be less tolerated
at financial year-ends
Perceived service alternatives
Perceived service role of customer
Situational factors
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Figure 3-7
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54
Desired
Service
Zone
of
Tolerance
Adequate
Service
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Past Experience
Predicted
Service
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Chapter 4
CUSTOMER
PERCEPTIONS OF
SERVICE
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56
57
Figure 4-1
Customer Perceptions of
Service Quality and
Customer Satisfaction
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Reliability
Responsiveness
Service
Quality
Situational
Factors
Assurance
Empathy
Tangibles
Product
Quality
Price
Customer
Satisfaction
Personal
Factors
58
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Factors Influencing
Customer Satisfaction
Product/service quality
Product/service attributes or features
Consumer Emotions
Attributions for product/service success or
failure
Equity or fairness evaluations
59
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Outcomes of
Customer Satisfaction
Increased customer retention
Positive word-of-mouth communications
Increased revenues
Figure 4-3
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Loyalty (retention)
100%
80%
60%
40%
20%
0%
Very
dissatisfied
Dissatisfied
Neither
satisfied nor
dissatisfied
Satisfied
Very
satisfied
Satisfaction measure
Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.
61
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Service Quality
The customers judgment of overall
excellence of the service provided in
relation to the quality that was expected.
Process and outcome quality are both
important.
62
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Reliability
63
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Exercise to
Identify Service Attributes
Reliability:
Assurance:
Tangibles:
Empathy:
Responsiveness:
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SERVQUAL Attributes
ASSURANCE
RELIABILITY
EMPATHY
RESPONSIVENESS
64
TANGIBLES
Modern equipment
Visually appealing facilities
Employees who have a
neat, professional
appearance
Visually appealing materials
associated with the service
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66
Figure 4-4
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A Service Encounter
Cascade for a Hotel Visit
Check-In
Check-In
Bellboy
BellboyTakes
Takesto
toRoom
Room
Restaurant
RestaurantMeal
Meal
Request
Request Wake-Up
Wake-UpCall
Call
Checkout
Checkout
67
Figure 4-5
A Service Encounter
Cascade for an Industrial
Purchase
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Sales
SalesCall
Call
Delivery
Deliveryand
andInstallation
Installation
Servicing
Servicing
Ordering
OrderingSupplies
Supplies
Billing
Billing
68
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69
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70
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Adaptability:
Employee Response
to Service Delivery
System Failure
Employee Response
to Customer Needs
and Requests
Coping:
Employee Response
to Problem Customers
Spontaneity:
Unprompted and
Unsolicited Employee
Actions and Attitudes
71
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Recovery
DO
Acknowledge
problem
Explain causes
Apologize
Compensate/upgrade
Lay out options
Take responsibility
DONT
Ignore customer
Blame customer
Leave customer to
fend for him/herself
Downgrade
Act as if nothing is
wrong
72
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Adaptability
DO
Recognize the
seriousness of the need
Acknowledge
Anticipate
Attempt to accommodate
Explain rules/policies
Take responsibility
Exert effort to
accommodate
DONT
Promise, then fail to
follow through
Ignore
Show unwillingness to
try
Embarrass the customer
Laugh at the customer
Avoid responsibility
73
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Spontaneity
DO
Take time
Be attentive
Anticipate needs
Listen
Provide information
(even if not asked)
Treat customers fairly
Show empathy
Acknowledge by name
DONT
Exhibit impatience
Ignore
Yell/laugh/swear
Steal from or cheat a
customer
Discriminate
Treat impersonally
74
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Coping
DO
Listen
Try to accommodate
Explain
Let go of the customer
DONT
Take customers
dissatisfaction
personally
Let customers
dissatisfaction affect
others
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75
Figure 4-6
Operational flow of
activities
People
Steps in process
Contact employees
Customer
him/herself
Other customers
Flexibility vs.
standard
Technology vs.
human
Process
Physical
Evidence
Tangible
communication
Servicescape
Guarantees
Technology
76
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Part 2
LISTENING TO
CUSTOMER
REQUIREMENTS
77
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Provider GAP 1
CUSTOMER
Expected
Service
GAP 1
COMPANY
Part 2 Opener
Company
Perceptions of
Consumer
Expectations
78
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Chapter 5
UNDERSTANDING
CUSTOMER
EXPECTATIONS AND
PERCEPTIONS THROUGH
MARKETING RESEARCH
79
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80
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81
Figure 5-1
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Measures
Priorities
or
Importance
Includes
Quantitative
Research
Research
Objectives
Includes
Perceptions
and
Expectations
of
Customers
Includes
Measures
of
Loyalty or
Behavioral
Intentions
ost
C
es of
c
n
e
la
Ba Valu ion
Includes
Statistical
and ormat
Validity
Inf
When Necessary
82
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Research Objective
Identify dissatisfied customers to attempt recovery;
identify most common categories of service failure
for remedial action
Assess companys service performance compared to
competitors; identify service-improvement priorities; track
service improvement over time
Obtain customer feedback while service experience is still
fresh; act on feedback quickly if negative patterns develop
Use as input for quantitative surveys; provide a
forum for customers to suggest service-improvement
ideas
Measure individual employee service behaviors for use in
coaching, training, performance evaluation, recognition and
rewards; identify systemic strengths and weaknesses in
service
Measure internal service quality; identify employeeperceived obstacles to improve service; track
employee morale and attitudes
Type of Research
Customer Complaint
Solicitation
Relationship Surveys
Post-Transaction Surveys
Customer Focus Groups
Mystery Shopping of
Service Providers
Employee Surveys
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Define Problem
Develop Measurement Strategy
Implement Research Program
Collect and Tabulate Data
Interpret and Analyze Findings
Report Findings
Stage 1 :
Stage 2 :
Stage 3 :
Stage 4 :
Stage 5 :
Stage 6 :
83
84
Figure 5-5
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9
8
7
6
O
O
5
4
3
2
1
0
Reliability
Retail Chain
Responsiveness
Assurance
Empathy
Tangibles
85
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10
8
6
4
2
0
Reliability
Responsiveness
Computer
Manufacturer
Assurance
Zone of Tolerance
Empathy
Tangibles
O S.Q. Perception
86
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Figure 5-6
Importance/Performance Matrix
HIGH
High
Leverage
Importance
Attributes to Improve
Attributes to Maintain
Low
Leverage
Attributes to Maintain
LOW
Performance
Attributes to De-emphasize
HIGH
87
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Chapter 6
BUILDING
CUSTOMER
RELATIONSHIPS
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88
89
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Relationship Marketing
90
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91
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92
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93
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94
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95
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96
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Figure 6-1
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Customer Goals of
Relationship Marketing
Enhancing
Retaining
Satisfying
Getting
97
98
Figure 6-3
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Employee Loyalty
Quality
Service
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STEP 1:
99
Figure 6-5
STEP 2:
Develop
Identify
Profiles of
Bases for
Segmenting Resulting
the Market Segments
STEP
3:
Develop
Measures
of Segment
Attractiveness
STEP4:
Select the
Target
Segments
STEP
5:
Ensure that
Segments
Are
Compatible
100
Figure 6-6
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Stable
Pricing
Bundling and
Cross Selling
Continuous
Relationships
I. Financial
Bonds
Integrated
Information
Systems
IV.
Joint
Structural
Investments
Bonds
Shared
Processes
and
Equipment
Excellent
Quality
and
Value
II.
Social
Bonds
III. Customization
Bonds
Anticipation
/ Innovation
Mass
Customization
Personal
Relationships
Social Bonds
Among
Customers
Customer
Intimacy
101
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Chapter 7
SERVICE RECOVERY
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102
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103
Figure 7-1
Unhappy Customers
Repurchase Intentions
9%
37%
19%
46%
54%
Complaints Resolved
70%
82%
Source: Adapted from data reported by the Technical Assistance Research Program.
95%
104
Figure 7-3
SM
Customer Response
Following Service Failure
Service Failure
Take Action
Do Nothing
Switch Providers
Complain to
Provider
Complain to
Family & Friends
Switch Providers
Complain to
Third Party
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105
Figure 7-5
il
Fa
fe
Sa
e
th
c
vi
r
Se
We
En lcom
co
ura e an
ge d
Co
m
pla
i
n ts
Act Quickly
Learn from
ers
Lost Custom
Service
Recovery
Strategies
Le
Re arn f
co rom
ve
ry
Ex
pe
ri
en
ce
s
ea
Tr
om
t
s
Cu
er
i
Fa
rl y
Pricing
High Price
Price Increases
Unfair Pricing
Deceptive Pricing
SM
Inconvenience
Location/Hours
Wait for Appointment
Wait for Service
Figure 7-6
Uncaring
Impolite
Unresponsive
Unknowledgeable
Service
Switching
Behavior
Competition
Found Better Service
Ethical Problems
Cheat
Hard Sell
Unsafe
Conflict of Interest
Involuntary Switching
Customer Moved
Provider Closed
106
107
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Service Guarantees
SM
Table 7-7
Characteristics of an
Effective Service Guarantee
Unconditional
The guarantee should make its promise unconditionally no strings attached.
Meaningful
It should guarantee elements of the service that are
important to the customer.
The payout should cover fully the customer's
dissatisfaction.
108
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109
110
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Service Guarantees
111
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Service Guarantees
service guarantees work for companies who are
already customer-focused
effective guarantees can be BIG deals - they put the
company at risk in the eyes of the customer
customers should be involved in the design of service
guarantees
the guarantee should be so stunning that it comes as a
surprise -- a WOW!! factor
its the icing on the cake, not the cake
112
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Part 3
ALIGNING STRATEGY,
SERVICE DESIGN
AND STANDARDS
113
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Provider GAP 2
CUSTOMER
Customer-Driven
Service Designs and
Standards
COMPANY
GAP 2
Company
Perceptions of
Consumer
Expectations
Part 3 Opener
114
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Chapter 8
SERVICE DEVELOPMENT
AND DESIGN
SM
115
Figure 8-1
SM
Oversimplification
Incompleteness
Subjectivity
Biased Interpretation
116
Figure 8-2
SM
117
Front End
Planning
Idea Generation
Screen ideas against new service strategy
Concept Development and Evaluation
Test concept with customers and employees
Business Analysis
Test for profitability and feasibility
Service Development and Testing
Conduct service prototype test
Implementation
Market Testing
Test service and other marketing-mix elements
Commercialization
Postintroduction Evaluation
Source: Booz-Allen & Hamilton, 1982; Bowers, 1985; Cooper, 1993; Khurana & Rosenthal 1997.
118
Figure 8-3
SM
New
Services
Current Customers
New Customers
SHARE BUILDING
MARKET
DEVELOPMENT
SERVICE
DEVELOPMENT
DIVERSIFICATION
Figure 8-4
Service Mapping/Blueprinting
A tool for simultaneously depicting the service
process, the points of customer contact, and the
evidence of service from the customers point of
view.
Service
Mappin
g
Proces
s
Points of
Contact
Evidenc
e
120
SM
SM
Customer
Gives
Package
Receive
Package
Driver
Picks
Up Pkg.
Deliver
Package
Customer
Service
Order
Dispatch
Driver
SUPPORT
PROCESS
Truck
Packaging
Forms
Hand-held
Computer
Uniform
Truck
Packaging
Forms
Hand-held
Computer
Uniform
Customer
Calls
121
Airport
Receives
& Loads
Fly to
Sort
Center
Load on
Airplane
Sort
Packages
Fly to
Destinati
on
Unload
&
Sort
Load
On
Truck
122
CONTACT PERSON
SUPPORT PROCESS(Back Stage)(On Stage) CUSTOMER PHYSICAL
EVIDENCE
SM
Hotel
Exterior
Parking
Arrive
at
Hotel
Go to
Room
Greet and
Process
Take
Registration
Bags
Receive
Bags
Room
Menu
Amenities
Bath
Sleep
Shower
Call
Room
Service
Deliver
Bags
Take Bags
to Room
Registration
System
Delivery
Food
Tray
Food
Appearance
Receive
Food
Deliver
Food
Eat
Bill
Desk
Lobby
Hotel
Exterior
Parking
Check out
and
Leave
Process
Check Out
Take
Food
Order
Prepare
Food
Registration
System
123
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Figure 8-8
Step
Step11
Step
Step22
Step
Step33
Step
Step44
Step
Step55
Step
Step66
Identify
Identifythe
the
process
to
process to
be
beblueblueprinted.
printed.
Identify
Identifythe
the
customer
customeroror
customer
customer
segment.
segment.
Map
Mapthe
the
process
processfrom
from
the
the
customers
customers
point
pointofofview.
view.
Map
Mapcontact
contact
employee
employee
actions,
actions,
onstage
onstageand
and
back-stage.
back-stage.
Link
Linkcustomer
customer
and
contact
and contact
person
person
activities
activitiestoto
needed
needed
support
support
functions.
functions.
Add
Add
evidence
evidenceofof
service
serviceatat
each
each
customer
customer
action
actionstep.
step.
SM
Application of Service
Blueprints
New Service Development
concept development
market testing
124
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Service Marketers
Human Resources
Operations Management
rendering the service as promised
125
System Technology
providing necessary tools:
system specifications
personal preference databases
126
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Chapter 9
CUSTOMER-DEFINED
SERVICE STANDARDS
SM
127
Figure 9-1
SM
128
Business Process
30% Product
30% Sales
Total
Quality 10% Installation
15% Repair
15% Billing
Internal Metric
Customer Need
Reliability
(40%)
% Repair Call
Easy To Use
(20%)
Features / Functions
(40%)
Knowledge
(30%)
Supervisor Observations
Responsive
(25%)
Follow-Up
(10%)
% Follow Up Made
(25%)
% Repair Reports
(10%)
No Repeat Trouble
(30%)
% Repeat Reports
Fixed Fast
(25%)
Kept Informed
(10%)
% Customers Informed
Accuracy, No Surprise
(45%)
% Billing Inquiries
(35%)
Easy To Understand
(10%)
% Billing Inquiries
SM
129
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Service Encounter
Service
Quality
Customer Requirements
Measurements
130
131
Figure 9-2
SM
Requirements: Diagnosticity:
Satisfaction Value
Relationship
Solution Provider
Dig
Deeper
General Concepts
Reliability
Empathy
Assurance
Tangibles
Responsiveness Price
Dig
Deeper
Dig
Deeper
Abstract
Low
Dimensions
Delivers on Time
Returns Calls Quickly
Knows My Industry
Delivers by Weds 11/4
Returns Calls in 2 Hrs
Knows Strengths of
My Competitors
Attributes
Behaviors
and Actions
Concrete
High
Figure 9-3
132
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Hard
5.5.Develop
DevelopFeedback
Feedback
Mechanisms
Mechanisms
Soft
6.6.Establish
EstablishMeasures
Measuresand
andTarget
TargetLevels
Levels
7. Track Measures Against Standards
8.8. Update
UpdateTarget
TargetLevels
Levelsand
andMeasures
Measures
Measure by
TransactionBased Surveys
133
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HIGH
Importance/Performance Matrix
10.0
Maintain
Improve
Does whatever it takes to
correct problems (9.26, 7.96)
Completes projects
Gets price we originally agreed upon (9.21, 8.64)
Importance
8.0
LOW
7.0
8.0
Performance
9.0
10.0
HIGH
134
Figure 9-5
SM
O 1
N 0
Large Customers
Small Customers
WORKING
12
16
HOURS
20
24
135
Figure 9-6
SM
Customer Expectations
Customer
Process
Blueprint
Company
Process
Blueprint
A
A
B
B
Lost Card
Reported
48 Hours
Report Lost
Card
Receive New
Card
C
C
D
D
EE
40 Days
FF
G
G
H
H
New Card
Mailed
136
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Chapter 10
PHYSICAL EVIDENCE
AND THE SERVICESCAPE
SM
137
Table 10-1
SM
Elements of Physical
Evidence
Servicescape
Other tangibles
Facility exterior
Business cards
Stationery
Billing statements
Reports
Employee dress
Uniforms
Brochures
Internet/Web pages
Exterior design
Signage
Parking
Landscape
Surrounding environment
Facility interior
Interior design
Equipment
Signage
Layout
Air quality/temperature
138
Table 10-2
SM
139
Other tangibles
Insurance
Not applicable
Hospital
Building exterior
Parking
Signs
Waiting areas
Admissions office
Patient care room
Medical equipment
Recovery room
Airline gate area
Airplane exterior
Airplane interior (dcor, seats, air
quality)
Not applicable
Policy itself
Billing statements
Periodic updates
Company brochure
Letters/cards
Uniforms
Reports/stationery
Billing statements
Airline
Express mail
Sporting
event
Tickets
Food
Uniforms
Packaging
Trucks
Uniforms
Computers
Signs
Tickets
Program
Uniforms
140
Table 10-3
SM
Elaborate
Lean
Self-service
(customer only)
Golf Land
Surf 'n' Splash
ATM
Ticketron
Post office kiosk
Internet services
Express mail drop-off
Interpersonal
services
(both customer and
employeee)
Hotel
Restaurants
Health clinic
Hospital
Bank
Airline
School
Dry cleaner
Hot dog stand
Hair salon
Remote service
(employee only)
Telephone company
Insurance company
Utility
Many professional services
Figure 10-3
SM
141
PHYSICAL
ENVIRONMENTAL
DIMENSIONS
HOLISTIC
ENVIRONMENT
INTERNAL
RESPONSES
BEHAVIOR
Cognitive
Emotional
Physiological
Employee
Responses
Ambient
Conditions
Space/Function
Individual
Behaviors
Social
Interactions
between and
among
customer and
employees
Perceived
Servicescape
Signs, Symbols,
and Artifacts
Customer
Responses
Cognitive
Source: Adapted from Mary Jo Bitner, Servicescapes.
Emotional
Physiological
Individual
Behaviors
142
SM
Part 4
DELIVERING AND
PERFORMING SERVICE
143
SM
Provider GAP 3
CUSTOMER
Service Delivery
COMPANY
GAP 3
Customer-Driven
Service Designs and
Standards
Part 4 Opener
144
SM
Chapter 11
EMPLOYEES ROLES IN
SERVICE DELIVERY
SM
145
146
SM
Service Employees
147
SM
Service Employees
Who are they?
boundary spanners
person/role
organization/client
interclient
quality/productivity
Figure 11-3
SM
Internal Environment
148
SM
Figure 11-4
149
150
Figure 11-5
Me
as
Re ure a
w
Str ard nd
o
S
n
Pr ervic g
ov
ide e
rs
Develop
People to
Deliver
Service
Quality
e
lud s in
Inc ee
y
plo e
s
Em th any
mp n
Co Visio
Provide
Needed Support
Systems
De
Se v e l o
or rvic p
i
e
Int ente Pr ern d
oc
es al
se
s
Provide
Supportive
Technology
and
Equipment
Empower
Employees
Retain the
Best
People
Customeroriented
Service
Delivery
r
fo and
ain l
Tr nica tive
ch rac
Te nte kills
I S
Hire the
Right People
B
Pr e t
E m e f e he
pl rred
oy
er
P
Te rom
am ot
wo e
rk
Hire for
Service
Competencies
and Service
Inclination
r
fo
e
t t
pe es
m B le
Co the op
Pe
Treat
Employees
as
Customers
SM
re
su al
a
Me tern e
In rvic y
Se alit
Qu
152
SM
Service Culture
A culture where an appreciation for good service
exists, and where giving good service to internal
as well as ultimate, external customers, is
considered a natural way of life and one of the
most important norms by everyone in the
organization.
153
SM
Chapter 12
CUSTOMERS ROLES IN
SERVICE DELIVERY
SM
154
SM
Importance of Other
Customers in Service
Delivery
155
156
SM
Figure 12-2
SM
Contributors to
Quality and
Satisfaction
Competitors
157
158
SM
Customers as Productive
Resources
partial employees
contributing effort, time, or other resources to
the production process
SM
Customers as Contributors
to Service Quality and
Satisfaction
Customers can contribute to
their own satisfaction with the service
by performing their role effectively
by working with the service provider
159
160
SM
Customers as Competitors
161
SM
Technology Spotlight:
Services Production Continuum
Customer Production
Joint Production
Firm Production
162
Figure 12-3
SM
Define Customer
Jobs
Effective
Customer
Participation
Manage the
Customer
Mix
Recruit, Educate,
and Reward
Customers
163
SM
SM
164
165
SM
Chapter 14
MANAGING DEMAND
AND CAPACITY
SM
166
Explain:
the underlying issue for capacity-constrained services
the implications of capacity constraints
the implications of different types of demand patterns on
matching supply and demand
Lay out strategies for matching supply and demand through:
shifting demand to match capacity or
flexing capacity to meet demand
Demonstrate the benefits and risks of yield management strategies
Provide strategies for managing waiting lines
SM
Understanding Capacity
Constraints and Demand
Patterns
Capacity Constraints
Time, labor, equipment
and facilities
Optimal versus maximal
use of capacity
Demand Patterns
Charting demand patterns
Predictable cycles
Random demand
fluctuations
Demand patterns by market
segment
167
Figure 14-3
SM
Shift Demand
168
Figure 14-4
SM
Flex Capacity
Perform maintenance
renovations
Schedule vacations
Schedule employee training
Lay off employees
169
170
Table 14-1
SM
Extent to which
supply is
constrained
Wide
4
Accounting and tax
preparation
Passenger transportation
Hotels and motels
Restaurants
Theaters
Narrow
2
Insurance
Legal services
Banking
Laundry and dry cleaning
3
Services similar to those in
2 but which have
insufficient capacity for
their base level of business
Source: Christopher H. Lovelock, Classifying Services to Gain Strategic Marketing Insights, Journal of Marketing, 47, 3 (Summer 1983): 17.
Table 14-2
SM
Type of service
Time
Legal
Consulting
Accounting
Medical
Labor
Law firm
Accounting firm
Consulting firm
Health clinic
Equipment
Delivery services
Telecommunication
Utilities
Health club
Facilities
Hotels
Restaurants
Hospitals
Airlines
Schools
Theaters
Churches
171
172
SM
173
SM
Part 5
MANAGING SERVICE
PROMISES
174
SM
Provider GAP 4
CUSTOMER
COMPANY
Service Delivery
GAP 4
Part 5 Opener
External
Communications
to Customers
175
SM
Chapter 15
INTEGRATED
MARKETING
COMMUNICATION
SM
176
177
SM
Figure 15-1
Vertical Communications
Horizontal Communications
Employees
External Marketing
Communication
Advertising
Sales Promotion
Public Relations
Direct Marketing
Interactive Marketing
Personal Selling
Customer Service Center
Service Encounters
Servicescapes
Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler
Customers
Figure 15-3
SM
Approaches for
Integrating Services Marketing
Communication
Manage
Customer
Expectations
Manage
Service
Promises
Goal:
Delivery
greater than
or equal to
promises
Manage
Internal
Marketing
Communication
Improve
Customer
Education
178
SM
179
Figure 15-4
Approaches for
Managing Service Promises
Coordinate
External
Communication
Make
Realistic
Promises
Offer
Service
Guarantees
Goal:
Delivery
greater than
or equal to
promises
Figure 15-8
SM
Approaches for
Managing Customer Expectations
Offer Choices
Create Tiered-Value
Offerings
Communicate Criteria for
Service Effectiveness
Negotiate
Unrealistic
Expectations
Goal:
Delivery
greater than
or equal to
promises
180
SM
Goal:
Delivery
greater than
or equal to
promises
181
Figure 15-9
Approaches for
Improving Customer Education
Prepare
Customers
for the
Service
Process
Confirm
Performance
to Standards
Clarify
Expectations
after the Sale
Teach
Customers
to Avoid
Peak
Demand
Periods
and
Seek Slow
Periods
182
SM
Figure 15-10
Create Effective
Horizontal
Communications
Align Back
Office Personnel
w/ External Customers
Create
Cross-Functional
Teams
183
SM
Chapter 17
Contact: +923006641921
Usman Waheed
SM
Contact: +923006641921
Usman Waheed
184
SM
185
Figure 17-1
Service
Quality
Contact: +923006641921
Profits
Usman Waheed
186
SM
Figure 17-2
Service
Quality
Profits
Market
Share
Reputation
Sales
Price
Premium
Contact: +923006641921
Usman Waheed
187
Figure 17-3
SM
Costs
Service
Quality
Customer
Retention
Volume of
Purchases
Price
Premium
Word of
Mouth
Contact: +923006641921
Margins
Profits
Usman Waheed
188
Figure 17-5
Perceptions of Service,
Behavioral
Intentions and Profits
SM
Costs
Customer
Retention
Service
Behavioral
Intentions
Volume of
Purchases
Margins
Price
Premium
Word of
Mouth
Profits
Sales
Contact: +923006641921
Usman Waheed
189
Figure 17-6
SM
Most Profitable
Customers
Best
Customers
Other
Customers
Least Profitable
Customers
Contact: +923006641921
Usman Waheed
190
Figure 17-7
SM
Platinum
Gold
Iron
Lead
Least Profitable
Customers
Contact: +923006641921
Usman Waheed
SM
191
Figure 17-8
Key Drivers
Service Encounters
Service
Encounter
Service
Encounter
Service
Quality
Service
Encounter
Behavioral
Intentions
Customer
Retention
Service
Encounter
Contact: +923006641921
Usman Waheed
Profits
Figure 17-9
192
SM
Financial Measures
Customer
Perspective
Service Perceptions
Service Expectations
Perceived Value
Behavioral Intentions:
% Loyalty
% Intent to Switch
# Customer
Referrals
# Cross Sales
# of Defections
Contact: +923006641921
Price Premium
Volume Increases
Value of Customer
Referrals
Value of Cross Sales
Long-term Value of
Customer
Innovation and
Learning Perspective
Number of new products
Return on innovation
Employee skills
Time to market
Time spent talking to
customers
Operational
Perspective:
Right first time (% hits)
Right on time (% hits)
Responsiveness (% on
time)
Transaction time (hours,
days)
Throughput time
Reduction in waste
Process quality
Usman Waheed
193
Figure 17-10
SM
Costs
Defensive
Marketing
Service
Quality
Volume of
Purchases
Margins
Price
Premium
Customer
Retention
Word of
Mouth
Profits
Market
Share
Offensive
Marketing
Sales
Reputation
Price
Premium
Contact: +923006641921
Usman Waheed