Special Topic: Strategies for Service Markets

Special Special Topic: Topic:

Strategies Strategies for Service for Service

MarketsMarkets

Chapter Chapter FifteenFifteen

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-2

Key Learning PointsKey Learning Points

The nature and characteristics of The nature and characteristics of servicesservicesThe service quality modelThe service quality modelMeasuring the quality of servicesMeasuring the quality of servicesDeveloping marketing strategies for Developing marketing strategies for servicesservicesMarketing-mix decision making for Marketing-mix decision making for service businessesservice businessesHow information technology affects How information technology affects the marketing of servicesthe marketing of services


Figure 15.1Figure 15.1Edward Jones Web SiteEdward Jones Web Site


OverviewOverview

Services Services account for account for nearly 85% nearly 85% of U.S. jobs.of U.S. jobs.


Figure 15.2Figure 15.2Services as a Percentage of U.S. Services as a Percentage of U.S.

GDPGDP


Figure 15.3Figure 15.3Continuum of Evaluation for Continuum of Evaluation for Different Types of ProductsDifferent Types of Products


DiscussionDiscussion

In groups of three, list three In groups of three, list three services not shown in Figure services not shown in Figure 15.3. Classify each service in 15.3. Classify each service in terms of the difficulty of terms of the difficulty of evaluation and the degree to evaluation and the degree to which it is high in search, which it is high in search, experience, or credence experience, or credence qualities.qualities.


OverviewOverview

The distinction between The distinction between physical products andphysical products andservices is notservices is notalways crystalalways crystalclear.clear.


The Nature of ServicesThe Nature of Services

IntangibilityIntangibility

NonstandardizatiNonstandardizationon

Inseparability of Inseparability of production and production and consumptionconsumption


Figure 15.4Figure 15.4A Perceived Model of QualityA Perceived Model of Quality


Figure 15.5Figure 15.5Dimensions of Service QualityDimensions of Service Quality


Figure 15.6Figure 15.6Loss Aversion Model of Service Loss Aversion Model of Service

QualityQuality


The Nature of ServicesThe Nature of Services

Types of Service GapsTypes of Service Gaps

Between customers’ expectations Between customers’ expectations and management perceptionsand management perceptions

Between management’s Between management’s perceptions and service quality perceptions and service quality specificationsspecifications

Between service quality Between service quality specifications and service deliveryspecifications and service delivery

Between service delivery and Between service delivery and external communicationsexternal communications


Table 15.1Table 15.1Example of SERVQUAL SurveyExample of SERVQUAL Survey


Service QualityService Quality

The return on quality (ROQ)The return on quality (ROQ)Quality is an investment.Quality is an investment.

Quality improvement efforts must Quality improvement efforts must be financially accountable.be financially accountable.

It is possible to overspend on It is possible to overspend on quality.quality.

Not all quality expenditures are Not all quality expenditures are equally valid.equally valid.


Figure 15.7Figure 15.7Linking Customer Satisfaction to Linking Customer Satisfaction to

RetentionRetention


Strategic IssuesStrategic Issues

Services can also be Services can also be differentiated from the differentiated from the competition by emphasizing the competition by emphasizing the value chain:value chain:

Inbound logisticsInbound logistics

OperationsOperations

Marketing and salesMarketing and sales

ServiceService


Figure 15.8Figure 15.8AT&T AdAT&T Ad


Figure 15.9Figure 15.9Liberty Mutual AdLiberty Mutual Ad


Figure 15.10Figure 15.10Embassy Suite AdEmbassy Suite Ad


Strategic IssuesStrategic Issues

Professional servicesProfessional servicesProfessional services are highly Professional services are highly dependent upon employees.dependent upon employees.

Quality is influenced by several factors.Quality is influenced by several factors.

Differentiation can occur along several Differentiation can occur along several dimensions.dimensions.

Making a firm’s accomplishments Making a firm’s accomplishments tangible is the key to success.tangible is the key to success.

CRM is critical.CRM is critical.


““Service blueprinting involves Service blueprinting involves creating a flowchart that creating a flowchart that describes the flow of activity describes the flow of activity from the time the customer first from the time the customer first contacts the service provider to contacts the service provider to the time the customer receives the time the customer receives the service.the service.””

- Russell S. Winer


Figure 15.11Figure 15.11Express Mail Delivery Service Express Mail Delivery Service

BlueprintBlueprint


Figure 15.12Figure 15.12Singapore Airlines Service Singapore Airlines Service

BlueprintBlueprint


Figure 15.13Figure 15.13Singapore Airlines: Detailed Singapore Airlines: Detailed Customer Service ActivitiesCustomer Service Activities


ActivityActivity

In groups of two, create a service In groups of two, create a service blueprint for one of the following blueprint for one of the following services:services:

A restaurantA restaurant

A hair salonA hair salon

A bank or credit unionA bank or credit union

An e-commerce web siteAn e-commerce web site

A furniture storeA furniture store


Marketing Mix ImplicationsMarketing Mix Implications

Distribution Distribution channelschannels

The intangible The intangible nature of services nature of services complicates complicates distribution distribution decisions.decisions.Service principles Service principles must be must be distinguished from distinguished from service deliverers.service deliverers.



Major approaches to service Major approaches to service distribution:distribution:

Company ownedCompany ownedAgents and brokersAgents and brokersElectronic channelsElectronic channelsFranchisingFranchising



Elements of Typical Elements of Typical Franchise AgreementFranchise Agreement

Nature of Nature of serviceserviceGeographic Geographic territoryterritoryRevenue Revenue percentpercentAgreement Agreement lengthlengthUp-front feeUp-front fee

Terms of Terms of agreementagreementPromotion supportPromotion supportSupport providedSupport providedTermination Termination conditionsconditions



AdvertisingAdvertisingPlays a key role in setting Plays a key role in setting expectationsexpectations

Implications for service Implications for service advertisingadvertising



PricingPricingService prices are difficult for Service prices are difficult for consumers to evaluate and consumers to evaluate and compare.compare.Price is often used as an indicator Price is often used as an indicator of service quality.of service quality.The role of reference prices is The role of reference prices is very important.very important.


Customer Relationship Customer Relationship ManagementManagement

CRM is critically important for CRM is critically important for contractual services.contractual services.

Marketers must continuously Marketers must continuously remind customers about the remind customers about the benefits of the service.benefits of the service.

Marketers need to track the Marketers need to track the customer’s usage.customer’s usage.


Global Aspects of Global Aspects of Services MarketingServices Marketing

Basic global growth strategies Basic global growth strategies for service businesses.for service businesses.

MultisiteMultisite

MultiserviceMultiservice

MultisegmentMultisegment


Table 15.2Table 15.2Issues Posed by Issues Posed by

Internationalization of a Internationalization of a “Strategic Service Vision”“Strategic Service Vision”


IllustrationIllustration

Disney learned Disney learned that the quality of that the quality of service concepts service concepts can be difficult to can be difficult to maintain in a maintain in a global expansion global expansion due to cultural due to cultural and institutional and institutional differences.differences.


Impact of Technology on Impact of Technology on Service MarketingService Marketing

Technology has changed Technology has changed services marketing for three services marketing for three main reasons:main reasons:

Internet channels of distribution.Internet channels of distribution.Computerization.Computerization.Opportunities for differentiation.Opportunities for differentiation.


IllustrationIllustration

Travel services are the largest Travel services are the largest category of e-commerce. Most category of e-commerce. Most bookings are done through Internet bookings are done through Internet travel sites and web sites run by travel sites and web sites run by airlines. While fares can be easily airlines. While fares can be easily compared at travel sites, the majority compared at travel sites, the majority of bookings are done through airline of bookings are done through airline websites as discount airlines do not websites as discount airlines do not sell through travel agents.sell through travel agents.


Executive SummaryExecutive Summary

Services have experience attributes.Services have experience attributes.Services have three characteristics.Services have three characteristics.Service quality is defined by five Service quality is defined by five dimensions.dimensions.Service quality can be assessed Service quality can be assessed negatively.negatively.SERVQUAL measures service quality.SERVQUAL measures service quality.There are several strategic issues in There are several strategic issues in services marketing.services marketing.Globalization of services requires special Globalization of services requires special attention.attention.New technologies affect channels of New technologies affect channels of distribution for services.distribution for services.


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Special Topic: Strategies for Service Markets