4ba9cModule 2-Part1 (1).pdf

8/17/2019 4ba9cModule 2-Part1 (1).pdf

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MARKETING OF SERVICESModule II

Focus on CustomersCustomers’ expectations of service, Desired and Adequate

service, Zone of Tolerance, Managing customer expectations

and perceptions in services, Service Quality Dimensions,Customer Satisfaction vs. Service Quality, The impact of service

failure and recovery, Types of Customer Complaint Actions and

Complainers, Service Guarantees, Service Recovery Strategies

Role of Branding in Services

Ramesh Bagla


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Understanding Customers’ Expectatio

• Customers’ expectations are beliefs about servic

delivery that serve as standards or reference poi

against which performance is judged

• Knowing what the customer expects is the first a

possibly most critical step in delivering good qua

service

• Being wrong about what customers want can me

business when another company hits the target e


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• The aspects of expectations that need toexplored and understood for successservices marketing are :

What types of expectation standardscustomers hold about services?

What factors influence most the formation

these expectations?What role do these factors play in chang

expectations?

How can a service company meet or excecustomers’ expectations?


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Understanding Customers’ Expectations


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Level of Expectations

Desired Service

Zone

of Tolerance

Adequate Service

Level CustomersBelieve Can and Should

Delivered

Minimum LevelCustomers Are Willing

to Accept


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• Among the intriguing questions abservice expectations is whether customehold the same or different expectation levfor service firms in the same industry.

• For example, are desired serv

expectations the same for all restauranOr just for all fast-food restaurants?

• Do the levels of adequate servexpectations vary across restaurants?


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• A customer’s desired service expectation

fast-food restaurants is quick, convenient, tafood in a clean setting.

• The desired service expectation forexpensive restaurant, on the other hausually involves elegant surroundings, graci

employees, candlelight and fine food.• In essence, desired service expectations seto be the same for service providers wiindustry categories or subcategories thatviewed as similar by customers.


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• The adequate service expectation level, on the o

hand, may vary for different firms within a categorsubcategory.

• Within fast-food restaurants, a customer may hohigher expectation for McDonald’s than for BuKing, having experienced consistent serviceMcDonald’s over time and somewhat inconsis

service at Burger King.• It is possible, therefore, that a customer can be m

disappointed with service from McDonald’s than fBurger King even though the actual level of serat McDonald’s may be higher than the level at BuKing.


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Factors Influencing Customer Expectatio


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How Services Marketers Can Influence Factors

Factor Possible Influence Strategies

Explicit service promises Make realistic and accurate promises that reflect the service actuallydelivered rather than an idealized version of the service.

Ask contact people for feedback on the accuracy of promises made in

advertising and personal selling.

Avoid engaging in price or advertising wars with competitors because they

take the focus off customers and escalate promises beyond the level at which

they can be met.

Formalize service promises through a service guarantee that focuses company

employees on the promise and that provides feedback on the number of times

promises are not fulfilled.

Implicit service promises Ensure that service tangibles accurately reflect the type and level of service provided.

Ensure that price premiums can be justified by higher levels of performance by the

company on important customer attributes.

Lasting service

intensifiers

Use market research to determine sources of derived service expectations and

their requirements. Focus advertising and marketing strategy on ways the

service allows the focal customer to satisfy the requirements of the

influencing customer.

Use market research to profile personal service philosophies of customers and

use this information in designing and delivering services.

Personal needs Educate customers on ways the service addresses their needs.

Temporary service

intensifiers

Increase service delivery during peak periods or in emergencies.

S i k C fl


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How Services Marketers Can Influence Factors

Factor Possible Influence Strategies

Perceived service

alternatives

Be fully aware of competitive offerings, and where possible

and appropriate, match them.

Self-perceived service role Educate customers to understand their roles and performthem better.

Word-of-mouth

communications

Simulate word of mouth in advertising by using testimonials

and opinion leaders.

Identify influencers and opinion leaders for the service and

concentrate marketing efforts on them.

Use incentives with existing customers to encourage them to

say positive things about the service.

Past experience Use marketing research to profile customers’ previousexperience with similar services.

Situational factors Use service guarantees to assure customers about servicerecovery regardless of the situational factors that occur.

Predicted service Tell customers when service provision is higher thanwhat can normally be expected so that predictions of

future service encounters will not be inflated.


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Issues involving customer service expectatio

• What does a service marketer do if customerexpectations are ‘unrealistic’?

• Should a company try to delight the customer?

• How does a company exceed customer serviceexpectations?

• Do customer service expectations continuallyescalate?

• How does a service company stay ahead ofcompetition in meeting customer expectations


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Fundamentals of Customer Satisfactio

• Recognize the importance of a satisfied customer, nbuild, maintain and increase your organization’s cusbase, but also for you own job satisfaction

• Focus on customer’s behavior and your own behavi

• Learn to deal with complaints in an efficient way

• Deliver excellent service from the beginning till the ethat the customers have a positive perception aboutorganization

• Cope with stress so that you maintain a healthy leverelated stress


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Customer Perceptions of Quality and Customer Satisfactio


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Service Quality• Service quality is more difficult to measur

than the quality of goods• Service quality is based on consumers’

perception of the outcome of the serviceand their evaluation of the process bywhich the service was delivered

• Service quality perceptions result from acomparison of what the consumerexpected prior to the service and theperceived level of the service received


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Types of Service Quality


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• Search Qualities- color, style, feel, smell – more applicable

to goods – quality can be evaluated prior

to purchase

• Experience Qualities- taste, feeling, satisfaction – more

applicable to services – quality can be

evaluated during and after the

consumption


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• Credence Qualities- difficult to evaluate even after the service

is consumed – consultancy, education,

medicare, advertising


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How to Improve Quality

Invest in good hiring and training procedures

Monitor customer satisfaction

Standardize the service-performance process


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Factors Influencing Customer

Satisfaction• Product/service quality

• Specific product or service features

• Consumer emotions• Attributions for service success or failure


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Factors Influencing Customer

Satisfaction

• Perceptions of equity or fairness

• Other consumers, family members, and

coworkers

• Price• Personal factors

– the customer’s mood or emotional state

– situational factors


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Outcomes of Customer Satisfactio

• Increased customer retention

• Positive word-of-mouth communications

• Increased revenues


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Relationship between Customer Satisfaction an

Loyalty in Competitive Industries


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Why Customers Leave? 1% die.

3% move away.

5% develop other relationships.

9% leave for competitive reasons.

14% are dissatisfied withproduct or service.

68% leave because of rude or discourteous service.


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Motivation To Serve

Customer Sensitivity Communication

Decisiveness

Flexibility

Follow-up

Initiative Integrity

Job Knowledge

Judgment

Persuasiveness

Customer Service Competencies


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Common Excuses For Service Laps

• I don't have enough time.• I don't get paid to be nice. I am measured

by my productivity and accuracy.

• How can we do a good job if the computer

is always down?• Every customer is totally bonkers today


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• I can't deal with people who do not showme respect.

• How can we do a good job if theother departments do not provide theback-up we need?

• I am having a bad day.

• People are basically stupid.

Common Excuses For Service Laps


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What The Customer Wants?

. . . Invite me back.

. . . Listen to me.

. . . Value me.

. . . Greet me.

. . . Help me.


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Monitoring & Measuring Customer Satisfact

• Customer satisfaction measures how well a

company's products or services meet orexceed customer expectations.

• These expectations often reflect many aspecof the company's business activities includingthe actual product and service.

• Customer satisfaction measures are an overpsychological evaluation that is based on thecustomer's lifetime of product and serviceexperience.


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Importance of monitoring and measur

of Customer Satisfaction

• Effective marketing focuses on two activitiretaining existing customers and adding ne

customers.

• Customer satisfaction measures are critica

to any product or service company becauscustomer satisfaction is a strong predictor

customer retention, customer loyalty and

product repurchase.


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Satisfaction Measurement: Overall

Measures of Satisfaction

• Satisfaction measures involve three

psychological elements for evaluation of th

product or service experience

Cognitive (thinking/evaluation)

Affective (emotional-feeling/like-dislike)

Behavioral (current/future actions)


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• Satisfaction measurement questions typicallyinclude the following :

• An overall satisfaction measure (emotional):

Overall, how satisfied are you with “Nestle

fresh yogurt"? Satisfaction is a result of a

product related experience and this question

reflects the overall opinion of a consumer's

experience with the product's performance.


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• A loyalty measure (affective, behavioral):Would you recommend “Nestle fresh yogurt " toyour family and friends?

• A series of attribute satisfaction measures(affective and cognitive):How satisfied are you with the "taste" of Nestlefresh yogurt?How important is "taste" to you in selecting Nestlfresh yogurt?

• Intentions to repurchase (behavioral measures):Do you intend to repurchase Yoni fresh yogurt?


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Satisfaction Measurement: Overall Measures of Satisfac


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Service Failure• Some service failures are inevitable

• Customer’s perception about the failure mattersnot that of the service provider

• Types of service failures are varied and some canever be anticipated

• Broad categories of service failure

- service delivery failure(unavailable/slow/corefailure)

- failure to respond to customer needs & requests

- unprompted & unsolicited employees actions


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Customer Response Following Service Failure


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Responses to Service Failures• Some customers don’t complain, they do negativ

word of mouth or switch• Process must be in place to elicits customer’feedback and to encourages him/her to complain

• Actions following a discovery of customerdissatisfaction or a complaint

- Apology

- Urgent reinstatement- Empathy

- Symbolic atonement

- Follow-up


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Service Recovery

Corrective action taken by the service provider

response to a complaint from the customerabout service failure or poor service quality, to

pacify the dissatisfied customer.

Simply put, service recovery is putting a smileback on customer’s face after you have made

him frown because of a mistake.


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Service Recovery

• The service provider taking a responsive action to

“recover” the lost or dissatisfied customers and

converting them into loyal and satisfied customers

• An important and effective customer retention tool

• Cost effective way to increase the market share an

sustain the market leadership.

• Market leaders do whatever it takes to solve a

customer’s problem. They empower their employe

to bend or break the rules to take care of the

customer .


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Essentials of Service Recovery• To have a well defined process in place for servic

recovery with time frames• Supportive organization culture

• To identify customers with issues

• To address those issues to customer’s satisfactioquickly

• To get a feedback from the customer about hissatisfaction level with co’s service recovery proce

• To extend the process until customer is fullysatisfied


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Impact of Service Recovery• It counteracts negative outcomes

associated with service failure• S R can lead to higher level of customer

satisfaction than what existed prior toservice failure – Service Recovery Parado

• Positive impact on post recovery word ofmouth

• Higher level of customer satisfaction, loyaleads to improved bottom-line


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Service Recovery Strategies• Make the service fail safe –do it right the first time

Quality Control Mechanisms – TQM• Encourage and track complaints – customer satisfac

surveys, lost customer research

• Act quickly – set standards for resolution time

• Provide adequate Explanations

• Treat customers fairly• Relationship management

• Learn from recovery experiences

• Learn from lost customers

A


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Unhappy Customers’ Repurchase Intention

54%

19%

9%

Complaints Resolved Quickly

Complaints Resolved

Complaints Not Resolved

Unhappy Customers WhoDo Not Complain

Unhappy Customers WhoDo Complain

Percent of customers who will buy again afa major complaint (over $100 in losses)

Source: Adapted from data reported by the Technical Assistance Research Program.

A


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Customer Complaint Behavior

• Why do customers complain?

– Correct the problem

– Emotional release from

frustration

– Regain some measure of

control by spreading negative

w-o-m

– Solicit sympathy – Create an impression of being

more intelligent and

discerning

• Why don’t customers compla

– Don’t know who to complain

– Don’t think it will do any goo

– May doubt their own subjec

evaluation

– May accept part of the blam

– May want to avoid confronta

– May lack expertise

Am


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Service Guarantees• Guarantee = an assurance of the fulfillment of a

condition (Webster’s Dictionary)

• In a business context, a guarantee is a pledge orassurance that a product offered by a firm will perform promised and, if not, then some form of reparation will undertaken by the firm

• For tangible products, a guarantee is often done in theform of a warranty

• Services are often not guaranteed – cannot return the service

– service experience is intangible (so what do you guarantee?)

Am


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Service Guarantees• Service guarantees work for companies who a

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

• “It’s the icing on the cake, not the cake”

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Service Guarantees

Am


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Types of Service Guarantees Single

attribute-specific

guarantee

• Explicitminimumperformancestandard onone important

attribute isguaranteed(e.g., deliveryby noon thenext day)

Multi-attribute-specific

guarantee

• Explicitminimumperformancestandard on afew important

attributes isguaranteed

Full-

satisfactionguarantee

• All serviceaspects areguaranteed tobe delivered tothe full

satisfaction ofthe customerwith noexceptions orconditionsattached

Combinguaran

• All serviceaspects aguaranteefor full-satisfactioguarantee

• Explicit mperformanstandardsimportantattributes guaranteefor multi-attribute-sguarantee

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Characteristics of an Effective

Service Guarantee

• Unconditional – the guarantee should make its promise unconditionally – no sattached

• Meaningful – the firm should guarantee elements of the service that are

important to the customer

– the payout should cover fully the customer’s dissatisfaction

• Easy to Understand and Communicate – customers need to understand what to expect – employees need to understand what to do

• Easy to Invoke and Collect – the firm should eliminate hoops or red tape in the way of acce

or collecting on the guarantee

Am


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Benefits of Service Guarantees• A good guarantee forces the company to focus on its

customers.

• An effective guarantee sets clear standards for theorganization.

• A good guarantee generates immediate and relevantfeedback from customers.

• When the guarantee is invoked there is an instantopportunity to recover, thus satisfying the customer andhelping retain loyalty.

• Information generated through the guarantee can betracked and integrated into continuous improvement effor

• Employee morale and loyalty can be enhanced as a resuof having a service guarantee in place.

• A service guarantee reduces customers’ sense of risk anbuilds long term customer loyalty.

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Is it Always Suitable to Introduce a Guarante

• It may not be appropriate to introduce guaranteewhen• Company has a strong reputation for service

excellence

• Company does not have good quality level

• Quality cannot be controlled because of externalforces

• Customers perceive little risk in the service• Too many uncontrollable external variables• Fears of cheating or abuse by customers• Costs of the guarantee outweigh the benefits• Customers perceive little variability in service qua

among competitors

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Branding Services• Branding is a major strategic issue for service ma

• Marketers believe, branding is not just naming a but there is something more in it.

• Branding begins with giving an identity to the ser

• Service characteristics such as intangibility, vari

perishability make branding a strategic requiremeorder to promote beliefs & values in the target m

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Brand

A name, term, sign, symbol or design, oa combination of them, which is intende

to identify the goods and services of on

seller or group of sellers and t

differentiate them from those of the

competitors”.

- American Marketing Associatio

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Brand

• A brand is a set of associations that are linketo a product range, a division, or company.

• These associations help customers understa

- what the product or company is

- why it is potentially relevant to them- how it is different or similar to others

- products/services made by the compan

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Characteristics of Good Brand Nam

• Distinctive• Suggestive

• Appropriate

• Adaptable

• Easy to remember

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