Services Marketing and Customer Relationships

Copyright 2001 by McGraw-Hill Ryerson Limited

Chapter Goals
To gain an understanding of:
The nature and importance of services Characteristics of services and their marketing implications Issues related to the planning and marketing of services The four Rs of services marketing The relationship marketing approach The impact of technology in providing services
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The Nature of Services

regardless of the product, there is a services component to the offerings of all firms in some cases, a service is the principal purpose of the transaction, as in the rental of a car, a haircut, or legal services -- we refer to this as the core service in others, service is performed in support of the sale of a tangible product -- these are referred to as supplementary services

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Goods and Services Continuum

There are two classes of services. Services that are the main purpose of a transaction renting a truck to move. Services that supplement the sale of a tangible good for example, an information hotline for computer software. The focus here is primarily on identifiable, intangible services that are the main object of a transaction designed to provide want-satisfaction to customers; supplementary services growing in importance, however.
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The Goods-Services Continuum

Canned Ready- AutoDraperies, RestRepairs: Air foods made mobiles Carpets aurant auto, house, travel clothes meals landscaping

Insurance, Consulting, Teaching

MOSTLY GOODS

MOSTLY SERVICES

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Characteristics of Services
intangibility: difficult to sample and to evaluate inseparability: difficult to separate services from the service provider; mainly direct sales; staff are essential to the delivery of quality services heterogeneity: virtually every service is different; very difficult to standardize quality perishability: those not sold can not be stored fluctuating demand: demand for some services fluctuates by season, or even by time of day

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Strategic Services Management

intangibility generally makes the marketing of services a challenge understanding how people buy services and the segments that exist is just as important knowing more about the value of customer segments is important -- some are more valuable than others knowing what they value so that service levels can be tailored is also important

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Strategic Product Implications

service organizations have to plan the introduction of new services and the management of the life cycle the core service can be enhanced through the addition of supplementary services, thereby creating added value the life cycle of services has to be managed the branding of a service can be difficult as the customer often has nothing tangible to show

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Managing Service Quality

Quality is hard to define, measure, control, and communicate Quality is defined by the consumer Its important to measure customer satisfaction with an organizations service quality. Customers see five important components: Core service must measure up. Quality of service, meeting expectations. Technical aspects of delivery. Interaction with people who deliver service. Affective dimensions: How customers feel.
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Pricing Services
The characteristics of perishability, inability to store, and fluctuating demand for services create pricing challenges.

Pricing Strategies include: Discount strategies: Cheaper by the week. A variable pricing strategy: Kids eat free, movies cheaper on Tuesdays. Price competition.
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Distribution of Services
because most services are tied directly to a specific service provider, most have been distributed directly to customers with advancing technology, many firms are now delivering services through machines channels of distribution are necessarily short; some firms use one agent intermediary, such as insurance, real estate, and travel agents some firms use franchises to distribute services

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Promotion of Services
customer contact personnel represent the main channel of customer communication service providers must ensure that each service encounter is a positive one if customers are to develop a positive image many professional service firms are now permitted to advertise other elements of the promotional mix are used, including publicity and community affairs
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Four Rs of Service Marketing

Retention Referrals Relationships Recovery

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The Changing Environment for Services

The boom in the service economy, reduced regulation has created an increase in competition. Major focus on increased productivity, efficiency Work on people aspects of business:

Education, training programs Computer-based technologies used.

Change technology:

Restructure jobs. Bottom line: People are key to success!

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Other Considerations in Marketing Services

Impact of Technology: Remember, not everyone likes impersonal technology Performance Measurement: Larger firms can use market share, etc. Customer perceptions are essential. Prospects for Growth: It is very likely that services will continue to take an increasing share of the consumer dollar. The use of marketing programs in all services is expected to increase considerably.
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Future Service Profitability

Impacted by:
1. 2. 3. 4. 5. Focusing on the right priorities Increasing service quality Investing in problem solving Being fair to customers Investing in leadership development

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