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CUSTOMER EXPECTATIONS AND
PERCEPTIONS THROUGH MARKETING RESEARCH
WHY RESEARCH FOR SERVICES?
To discover requirement or expectation for services To monitor and track service performance To identify dissatisfied customers and need of service
recovery To forecast future expectations of customers To determine customers expectation for a new service
CRITERIA FOR EFFECTIVE RESEARCH PROGRAM
Includes both qualitative and quantitative research Includes both expectation and perception of
customers. Includes statistical validity when necessary. Includes measurement of loyalty, behavioral
intensions or actual behavior. Balance cost of research and value of information
CRITERIA FOR AN EFFECTIVE SERVICES RESEARCH PROGRAM
ResearchObjectives
Includes
Qualitativ
e
Research
IncludesQuantitative
Research IncludesPerceptions
and Expectations
of Customers
IncludesMeasures
ofLoyalty orBehavioralIntentions
Balances Cost
and Value of
InformationIncludesStatisticalValidity
When Necessary
Measures Priorities
or Importance
Occurswith
AppropriateFrequency
ELEMENTS IN SERVICE MARKETING RESEARCH PROGRAM
Complaint solicitation Critical incident studies Reuirement research Relationship and SERVQUAL survey
PORTFOLIO OF SERVICES RESEARCH
Customer Complaint Solicitation
“Relationship” Surveys
Post-Transaction Surveys
Customer Focus Groups
“Mystery Shopping” of Service Providers
Employee Surveys
Lost Customer Research
Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action
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
Assess company’s service performance compared to competitors; identify service-improvement priorities; track service improvement over time
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 employee-perceived obstacles to improve service; track employee morale and attitudes
Determine the reasons why customers defect
Research Objective Type of Research
Future Expectations ResearchTo forecast future expectations of customersTo develop and test new service ideas
STAGES IN THE RESEARCH PROCESS
Stage 1 : Define Problem Stage 2 : Develop Measurement Strategy Stage 3 : Implement Research Program Stage 4 : Collect and Tabulate Data Stage 5 : Interpret and Analyze Findings Stage 6 : Report Findings
FIGURE 5-6
IMPORTANCE/PERFORMANCE MATRIX
HIGH
HIGHLOW
Performance
Impo
rtan
ce
Attributes to Improve Attributes to Maintain
HighLeverage
Attributes to De-emphasizeAttributes to Maintain
LowLeverage
DELIVERING AND PERFORMING SERVICE
DELIVERING AND PERFORMING SERVICE
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.”
- Christian Gronroos (1990)
THE CRITICAL IMPORTANCE OF SERVICE EMPLOYEES
They are the service.They are the organization in the customer’s eyes.They are the brand.They are marketers.Their importance is evident in:
the services marketing mix (people)the service-profit chainthe services triangle
THE SERVICES MARKETING TRIANGLE
Internal Marketing
Interactive Marketing
External Marketing
Company(Management)
CustomersEmployees
“Enabling the promise”
“Delivering the promise”
“Making the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
THE SERVICE PROFIT CHAIN
Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A. Schlesinger, “Putting the Service-Profit Chain to Work,” Harvard Business Review, March-April 1994, p. 166.
SERVICE EMPLOYEES
Who are they?“boundary spanners”
What are these jobs like?emotional labormany sources of potential conflict
person/roleorganization/client interclient
quality/productivity tradeoffs
BOUNDARY SPANNERS INTERACT WITH BOTH INTERNAL AND EXTERNAL CONSTITUENTS
Internal Environment
External Environment
BOUNDARY-SPANNING WORKERS JUGGLE MANY ISSUESPerson versus role
Organization versus client
Client versus client
HUMAN RESOURCE STRATEGIES FOR DELIVERING SERVICE QUALITY THROUGH PEOPLE
Provideneeded support
systems
Hire theright people
Retain thebest
people
Developpeople to
deliverservicequality
Hire for servicecompetencies and
serviceinclinationCompete for
the bestpeople
Measure andreward strong
serviceperformers
Treatemployees
ascustomers
Includeemployees in
the company’s
visionDevelop
service-orientedinternal
processes
Providesupportivetechnology
andequipment
Measureinternal service
quality
Promoteteamwork
Empower employees
Train fortechnical and
interactiveskills
Be the preferredemployer
Customer-OrientedServiceDelivery
EMPOWERMENT
Benefits:quicker responses to
customer needs during service delivery
quicker responses to dissatisfied customers during service recovery
employees feel better about their jobs and themselves
employees tend to interact with warmth/enthusiasm
empowered employees are a great source of ideas
great word-of-mouth advertising from customers
Drawbacks:potentially greater dollar
investment in selection and training
higher labor costspotentially slower or
inconsistent service delivery
may violate customers’ perceptions of fair play
employees may “give away the store” or make bad decisions
TRADITIONAL ORGANIZATIONAL CHART
Manager
Supervisor
Front-lineEmployee
Customers
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Supervisor
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
CUSTOMER-FOCUSED ORGANIZATIONAL CHART
Manager
Supervisor
Front-lineEmployee
Customers
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Supervisor
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
Front-lineEmployee
TABLE 13.1
LEVELS OF CUSTOMER PARTICIPATION ACROSS DIFFERENT SERVICES
Source: Adapted from A. R. Hubbert, “Customer Co-Creation of Service Outcomes: Effects of Locus of Causality Attributions,” doctoral dissertation, Arizona State University, Tempe, Arizona, 1995.
HOW CUSTOMERS WIDEN THESERVICE PERFORMANCE GAPLack of understanding of their roles
Not being willing or able to perform their roles
No rewards for “good performance”
Interfering with other customers
Incompatible market segments
IMPORTANCE OF OTHER (“FELLOW”) CUSTOMERSIN SERVICE DELIVERYOther customers can detract from satisfaction:
disruptive behaviorsoverly demanding behaviorsexcessive crowdingincompatible needs
Other customers can enhance satisfaction:mere presencesocialization/friendshipsroles: assistants, teachers, supporters, mentors
CUSTOMER ROLES IN SERVICE DELIVERY
Productive Resources
Contributors to Service Quality and Satisfaction
Competitors
SERVICES PRODUCTION CONTINUUM
1 2 3 4 5 6
Gas Station Illustration1. Customer pumps gas and pays at the pump with automation2. Customer pumps gas and goes inside to pay attendant3. Customer pumps gas and attendant takes payment at the pump4. Attendant pumps gas and customer pays at the pump with automation5. Attendant pumps gas and customer goes inside to pay attendant6. Attendant pumps gas and attendant takes payment at the pump
Customer Production Joint Production Firm Production
CUSTOMERS AS PRODUCTIVE RESOURCES
customers can be thought of as “partial employees”contributing effort, time, or other resources to the
production process
customer inputs can affect organization’s productivity
key issue:should customers’ roles be expanded? reduced?
CUSTOMERS AS COMPETITORScustomers may “compete” with the service
provider“internal exchange” vs. “external exchange”internal/external decision often based on:
expertise capacityresources capacitytime capacityeconomic rewardspsychic rewardstrustcontrol
STRATEGIES FOR ENHANCING CUSTOMER PARTICIPATION
STRATEGIES FOR ENHANCINGCUSTOMER PARTICIPATIONDefine customers’ jobs
helping oneselfhelping otherspromoting the company
Recruit, educate, and reward customersrecruit the right customerseducate and train customers to perform effectivelyreward customers for their contributionsavoid negative outcomes of inappropriate customer
participationManage the customer mix
CHARACTERISTICS OF SERVICE THAT INCREASE THE IMPORTANCE OF COMPATIBLE SEGMENTS
Source: Adapted from C. I. Martin and C. A. Pranter, “Compatibility Management: Customer-to-Customer Relationships in Service Environments,” Journal of Services Marketing, 3, no. 3 (Summer 1989), pp. 5–15.
MANAGING CAPACITY AND DEMANDWeek 10
DEMAND PATTERN
Predictable cycles Random Demand fluctuations Demand pattern by market segment
TABLE 14.2 CONSTRAINTS ON CAPACITY
Nature of the constraint Type of serviceTime Legal
ConsultingAccountingMedical
Labor Law firmAccounting firmConsulting firmHealth clinic
Equipment Delivery servicesTelecommunicationUtilitiesHealth club
Facilities HotelsRestaurantsHospitalsAirlinesSchoolsTheatersChurches
MANAGING DEMAND AND CAPACITY
Strategies for matching supply and demand through
(a) shifting demand to match capacity or (b) adjusting capacity to meet demand.
FIGURE 14.1VARIATIONS IN DEMANDRELATIVE TO CAPACITY
STRATEGIES FOR SHIFTING DEMAND TO MATCH CAPACITY
Use signage to communicate busy days and times.
Offer incentives to customers for usage during non-peak times.
Take care of loyal or “regular” customers first.
Advertise peak usage times and benefits of non-peak use.
Charge full price for the service--no discounts.
• Use sales and advertising to increase business from current market segments.
• Modify the service offering to appeal to new market segments.
• Offer discounts or price reductions.
• Modify hours of operation.• Bring the service to the
customer.
Demand Too High Demand Too LowShift Demand
SHIFTING DEMAND TO MATCH CAPACITY
Vary service offering Communicat with customers Modify timing and location of service offering Differentiate on price
STRATEGIES FOR ADJUSTING CAPACITY TO MATCH DEMAND
Stretch time, labor, facilities and equipment.
Cross-train employees. Hire part-time employees. Request overtime work from employees. Rent or share facilities. Rent or share equipment. Subcontract or outsource activities. Outsource.
• Perform maintenance, renovations.
• Schedule vacations.
• Schedule employee training.
• Lay off employees.
Demand Too High Demand Too LowFlex Capacity
ADJUSTING CAPACITY TO MATCH DEMAND
Stretch existing capacity Stretch time Stretch labour Stretch facilities Stretch equipments
AIGNING CAPACITY WITH DEMAND FLUCTUATIONS Use part time employees Outsourcing Rent or share facilities or equipments Cross train employees Modify or move facilities and equipment
WAITING ISSUES (MAISTER, 1986) unoccupied time feels longer preprocess waits feel longer anxiety makes waits seem longer uncertain waits seem longer than finite waits unexplained waits seem longer unfair waits feel longer longer waits are more acceptable for “valuable”
services solo waits feel longer
WAITING LINE STRATEGIESEmploy operational logic
modify operationsadjust queuing system
Establish a reservation process
Differentiate waiting customersImportant customerurgency of the jobduration of the service transactionpayment of a premium price
FIGURE 14.6WAITING LINE CONFIGURATIONS
SERVICE PROVIDER PARTICIPANTS
service principal (originator)creates the service concept
(like a manufacturer)
service deliverer (intermediary)entity that interacts with the customer in the execution
of the service
(like a distributor/wholesaler)
SERVICES INTERMEDIARIESFranchisees
service outlets licensed by a principal to deliver a unique service concept it has created e.g., Jiffy Lube, Blockbuster, McDonald’s
Agents and Brokersrepresentatives who distribute and sell the services of
one or more service suppliers e.g., travel agents, independent insurance agents
Electronic Channelsall forms of service provision through electronic means
e.g., ATMs, university video courses, TaxCut software
BENEFITS AND CHALLENGES FORFRANCHISEES OF SERVICEBenefits:
An established business format
National or regional brand marketing
Minimized risk of starting a business
Challenges:EncroachmentDisappointing profits
and revenuesLack of perceived
control over operationsHigh fees
BENEFITS AND CHALLENGES IN DISTRIBUTING SERVICES THROUGH AGENTS AND BROKERSBenefits:
Reduced selling and distribution costs
Intermediary’s possession of special skills and knowledge
Wide representationKnowledge of local
marketsCustomer choice
Challenges:Loss of control over
pricingRepresentation of
multiple service principals
BENEFITS AND CHALLENGES IN ELECTRONIC DISTRIBUTION OF SERVICESBenefits:
Consistent delivery for standardized services
Low costCustomer convenienceWide distributionCustomer choice and
ability to customizeQuick customer
feedback
Challenges:Price competitionInability to customize
with highly standardized services
Lack of consistency due to customer involvement
Changes in consumer behavior
Security concernsCompetition from
widening geographies
COMMON ISSUES INVOLVING INTERMEDIARIESconflict over objectives and performance
difficulty controlling quality and consistency across outlets
tension between empowerment and control
channel ambiguity
STRATEGIES FOR EFFECTIVE SERVICE DELIVERY THROUGH
INTERMEDIARIESControl Strategies:
MeasurementReview
Partnering Strategies:Alignment of goalsConsultation and
cooperation
Empowerment Strategies:Help the intermediary
develop customer-oriented service processes
Provide needed support systems
Develop intermediaries to deliver service quality
Change to a cooperative management structure