______% of services are a part of the GDP

·         Agriculture is getting _______ in terms of labor

·         Why Services Matter? (5)

o   Services dominate U.S. and worldwide economies

o   Services are growing dramatically

o   Service leads to customer retention and loyalty

o   Service leads to profits

o   Services help manufacturing companies differentiate themselves

·         Zero-sum game

o   Add up profits and losses and the net sum is zero

§  Example is Poker

·         Eight Central Paradoxes of Technology

Control/Chaos

Freedom/enslavement

New/Obsolete

Competence/ Incompetence

Efficiency/ Inefficiency

Fulfills/Creates Needs

Assimilation/Isolation

Engaging/ Disengaging

·         Why do firms focus on services? (3)

o   Services can provide higher profit margins and growth potential than products

o   Customer satisfaction and loyalty are driven by service excellence

o   Services can be used as a differentiation strategy in competitive markets

§  Service is a technical, after-sale function that is provided by the service department

§  Service includes every interaction between any customer and anyone representing the company

·         Service Can Mean all of These (4)

o   Service as a product

Customer service

o   Services as value added for goods

o   Service embedded in a tangible product

·         10 Practices of Exceptional Service

o   Eliminate irritants

o   Perform as promised

o   Manage the customer’s experience

o   Make customers insiders

o   Create ownership

o   Have fun

o   Recover remarkably

o   Involve everyone in improvement

o   Make teamwork work

o   Do everything better

·         Characteristics of services compared to goods

o   Intangibility

o   Heterogeneity

o   Simultaneous production and consumption

o   Perishability

·         Challenges for Services

o   Defining and improving quality

o   Ensuring the delivery of consistent quality

o   Designing and testing new services

o   Communicating and maintaining a consistent image

o   Accommodating fluctuating demand

o   Motivating and sustaining employee commitment

o   Coordinating marketing, operations, and human resource efforts

o   Setting prices

o   Finding a balance between standardization versus customization

·         Implications of intangibility (4)

o   Services cannot be inventoried

o   Services cannot be easily patented

o   Services cannot be readily displayed or communicated

o   Pricing is difficult

·         Implications of Heterogeneity (3)

o   Service delivery and customer satisfaction depend on employee and customer actions

o   Service quality depends on many uncontrollable factors

o   No sure knowledge that the service delivered matches what was planned and promoted

·         Implications of Simultaneous Production and Consumption (5)

o   Customers participate in and affect the transaction

o   Customers affect each other

o   Employees affect the service outcome

o   Decentralization may be essential

o   Mass production is difficult

·         Implications of Perishability (2)

o   Difficult to synchronize supply and demand

o   Services cannot be returned or resold

• Price
• Product
• Place
• Promotion
• People
• Physical Evidence
• Process

§  “Servicescape”

·         What physical evidence is available that provides a physical determination of the service

o   Example: how the bathrooms are

·         Wal-Mart sees itself as a _______

pipeline

o   They don’t want merchandise sitting around

o   They check production every 15 minutes

o   Difference between customer expectations and perceptions of service received

§  Expected Service <-Service Gap-> Perceived Service

§  Not knowing what customers expect

§  Not having the right service designs and standards

§  Not delivering to service standards

§  Not matching performance to promises

·         Key Factors Leading to Provider Gap 1 (Knowledge/Listening Gap)

o   Inadequate marketing research orientation

o   Lack of upward communication

o   Insufficient relationship focus

Inadequate service recovery

·         Key Factors Leading to Provider Gap 2 (Design & Standards Gap)

o   Poor Service Design

o   Absence of Customer- driven Standards

o   Inappropriate Physics Evidence and Servicescape

·         Semiotics

o   Any and every object sends out messages

o   Everything has to have to same thing/ consistent

§  Integrated marketing communication

·         Key Factors Leading to Provider Gap 3 (Performance Gap)

Deficiencies in Human Resource Policies

o   Failure to match supply and demand

o   Customers not Fulfilling Roles

o   Problems with intermediaries

o   Lack of Integrated Service Marketing Communications

o   Inefficient Management of Customer Expectations

Overpromising

o   Inadequate Horizontal Communications

o   Inappropriate Pricing

·         Ways to use Gap Analysis

o   Overall Strategic Assessment

o   Specific Service Implementation

·         Search Qualities

o   Attributes a consumer can determine prior to purchase of a product

·         Experience Qualities

o   Attributes a consumer can determine after purchase (or during consumption) of a product

·         Credence Qualities

o   Characteristics that may be impossible to evaluate even after purchase and consumption. Relying on other people’s opinions becomes important

·         Stages in Consumer Decision Making and Evaluation of Service (6)

o   Need recognition

o   Information search

o   Evaluation of alternatives

o   Purchase

o   Consumer experience

o   Post experience evaluation

Issues to Consider in Examining the Consumer’s Service Experience (6)

·         Services as processes

·         Service provision as drama

·         Service roles and script

·         The compatibility of service customers

·         Customer coproduction

Emotion and mood

·         The Five Dimensions of Service Quality

reliability

assurance

tangibles

empathy

responsiveness

o   Reliability

§  Providing service as promised

§  Dependability in handling customers’ service problems

§  Performing services right the first time

§  Providing services at the promised time

§  Maintaining error-free records

o   Assurance

§  Employees who instill confidence in customers

§  Making customers feel safe in their transactions

§  Employees are consistently courteous

§  Employees have the knowledge to answer customer questions

o   Tangibles

§  Modern equipment

§  Visually appealing facilities

§  Employees who have a neat, professional appearance

§  Visually appealing materials associated with the service

o   Empathy

§  Giving customers individual attention

§  Employees deal with customers in a caring fashion

§  Having the customer’s best interest at heart

§  Employees understand the needs of their customers

§  Convenient business hours

o   Responsiveness

§  Keeping customers informed as to when services will be performed

§  Prompt service to customers

§  Willingness to help customers

§  Readiness to respond to customers’ requests

§  Built trust

§  Reinforce quality

§  Build brand identity

§  Increase loyalty

·         Common Themes in Critical Service Encounters Research

o   Recovery: employee response to service delivery system failure

o   Adaptability: employee response to customer needs and requests

o   Coping: employee response to problem customers

o   Spontaneity: unprompted and unsolicited employee actions and attitudes

• Ideal expectations/Desires
• Normative (“should”) expectations
• Experience-based expectations
• Acceptable expectations
• Minimum tolerable expectations

Anyone who receives the company’s services, including:

o   The encounter is an opportunity to (4)

§  Built trust

§  Reinforce quality

§  Build brand identity

§  Increase loyalty

·         Common Themes in Critical Service Encounters Research (4)

• Recovery
• Adaptability
• Coping
• Spontaneity

·         Gadgeteer

o   Geared toward teens and twenty-something’s. Emphasize cell phones, music, and movies, home theater, gaming, and mobile audio

·         Relationship Marketing

o   A philosophy of doing business, a strategic orientation: focus on keeping current customers and improving relationships with them

In Relationship Marketing the focus is less on attraction

o   As you get more customers, you might still lose customers

o   Decreased purchases by some customers and also increased purchases from some customers

·         Customer Goals of Relationship Marketing

o   Acquiring, satisfying, retaining, enhancing

§  The goal of relationship marketing is to move customers up the ladder

Releationship Marketing Benefits for Customers (4)

§  Receipt of greater value

§  Confidence benefits

§  Social benefits

§  Special treatment benefits

Relationship Marketing Benefits for Firms (3)

§  Economic benefits

§  Customer behavior benefits

   §  Human resource management benefits

·         The customer pyramid

o   Goes from most profitable customer to the least profitable

·         Strategies for Building Relationships, Leading to Customer Loyalty (3)

o   Core Service Provision

o   Switching Barriers

o   Relationship Bonds

1. Define Problems and Research Objectives
2. Develop Measurement Strategy
3. Implement Research Program
4. Collect and Tabulate Data
5. Analyze and Interpret Findings
6. Report Findings

Customer complaint

 solicitation

Identify dissatisfied customers; identify most

common categories of service failures

“Relationship”

  Surveys

Assess company’s performance compared to

competitors; identify service improvement

priorities; track service improvement over time

Post-Transaction

 Surveys

Obtain customer feedback while service

experience is fresh; act on feedback quickly if

negative patterns develop

Customer Focus

 Groups

Use as input for quantitative surveys; provide a

forum for customers to suggest service

improvement ideas

“Mystery Shopping”

 of  Service

 Providers  

Measure individual employee service behaviors for

use in coaching, training, performance evaluation,

recognition and rewards; identify systemic strengths

and weaknesses in service

Employee Surveys

Measure internal service quality; identify employee

perceived obstacles to improve service; track

employee morale and attitudes

Lost Customer

Research

Determine the reasons why customers defect

Future Expectations

Research

Forecast future expectations of customers; develop

and test new service ideas

Platinum Tier

most profitable customers, heavy users, not overly price sensitive, willing to invest in and try new offerings, and committed customers of the firm

Gold Tier

Lower profitability, want price discounts, not as loyal. May be heavy users who minimize risk by working with multiple vendors.

Iron Tier

essential customers that provide the volume needed to utilize the firm’s capacity. Spending levels, loyalty, and profitability are not substantial enough for special treatment

Lead Tier

cost the firm money.  Demand more attention than their spending and profitability merits. sometimes problem customers—complaining about the firm to others and tying up firm resources.