MARKETING FINAL EXAM NOTES List of Topics: 7 Ps of service Brand Equity Competition-based pricing (services) Consumer buyer behavior Consumer surplus Consumerism Conventional distribution channel vs vertical marketing system Core product & Supplementary services (flower of service) Criticisms of marketing CRM (Customer Relationship Management) Strategies Cycle of failure, mediocrity, success Demand management approaches Demand Management Strategies Differentiation Strategies Dimensions of service quality Distribution channel conflict Environmentalism Establishing service levels Four categories of service Four service focus strategies Front and back stage personnel Gaps in service design and delivery General Pricing Approaches Good vs. Service High vs. Low involvement products Important vs determinant attributes Jack Trout’s four principles of positioning Marketing communications mix Marketing concepts Marketing Environment Marketing Intelligence Marketing Mix Marketing Research Marketing/Distribution channels Maslow’s Hierarchy of Needs Needs/Wants/Demands New product Development www.uofgexamnetwork.com
Transcript
MARKETING FINAL EXAM NOTES
List of Topics:7 Ps of serviceBrand EquityCompetition-based pricing (services)Consumer buyer behaviorConsumer surplusConsumerismConventional distribution channel vs vertical marketing systemCore product & Supplementary services (flower of service)Criticisms of marketingCRM (Customer Relationship Management) StrategiesCycle of failure, mediocrity, successDemand management approachesDemand Management StrategiesDifferentiation StrategiesDimensions of service qualityDistribution channel conflictEnvironmentalismEstablishing service levelsFour categories of serviceFour service focus strategiesFront and back stage personnelGaps in service design and deliveryGeneral Pricing ApproachesGood vs. ServiceHigh vs. Low involvement productsImportant vs determinant attributesJack Trout’s four principles of positioningMarketing communications mixMarketing conceptsMarketing EnvironmentMarketing IntelligenceMarketing MixMarketing ResearchMarketing/Distribution channelsMaslow’s Hierarchy of NeedsNeeds/Wants/DemandsNew product Development
-pricing-promotion-distribution of ideas goods and services-to create exchanges that satisfy individual
SOME EXAMPLES OF MARKETING:-product/services-pricing-promotion-distributionConcept of life, luxury, clothes, cars
LECTURE 1
Who are the experts?Consumers
• Exposure: to messages, tactics, programs
What is marketing?• Attracting new customers by promising and delivering superior value• Building long-term relationships with customers by delivering continued customer
satisfaction• Creating, building, and managing these relationships profitably over time
The Marketing Process: (fig. 1.1)1. Understand the marketplace and customer needs and wants2. Design a customer driven marketing strategy3. Construct a marketing program that deliver superior value
4. Build profitably relationships and create customer delight5. Capture value from customers to create profits and customers equity
Needs, Wants, Demands• needs are states of felt deprivations• wants are needs shaped by culture and individual personality• demands are wants combined with buying power
Value and Satisfaction• if the performance and the customer’s experience is lower than expectations, the
customer satisfaction is low• if the performance and the customer’s experience meet expectations, the
customer is satisfied• if the performance and the customers experience exceeds expectations, the
customer is delighted
Terminology• Market• Consumers vs. Customers
Exchange and TransactionsExchange: the act of obtaining a desired object from someone by offering them of something in returnTransaction (unit of measurement): a trade between two parties that involves:
• two things of value• agreed upon conditions• time of agreement• place of agreement
Customer-Driven Marketing• Divide markets into segments
• Choose the right segment to target• Offer a unique value proposition• Differentiate your offer from competitor offers• Build customer value and satisfaction• Nurture long-term customer relationships
Marketing ConceptsProduction: affordability and availabilityProduct: quality and innovationSelling: promotion and hard sellingMarketing: customer satisfaction and relationshipsSocietal: long-term value to both customer and society
-increasing awareness that these organizations must build relationships with constituents and stakeholders-challenge of using new marketing techniques for non-profit initiatives
Lecture 2 CHAPTER 2: MARKETING STRATEGY
What is Strategic planning?
-The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.
Steps in Strategic PlanningCorporate Level Business unit, product, and market levelsDefining the company missionSetting company objectives and goalsDesigning the business portfolio
Planning, marketing and other functional strategies
Strategic Planning
-Defining a clear company mission:• Setting supporting objective• Designing a sound business portfolio• Coordinating functional strategies
-Fastest Growth Expected in Knowledge-based industries-Many new jobs are Well-paid requiring good educational qualifications
• Many manufacturing firms moved to marketing stand-alone services.
Contribution of Services Industries to Global GDP
Agriculture, 4%Industry, 32%Services, 64%
What are Services?
• Services involve a form of rental, offering, benefits without transfer of ownershipInclude rental of goodsMarketing tasks for services differ from those involved in selling foods and transferring ownership
Five Broad categories within non-ownership framework:
1. Rented goods services2. Defined space and place rentals3. Labor and expertise rentals4. Access to shared physical environments5. Systems and networks: access and usage
Four Broad categories of Services:
• Based on differences in nature of service act (tangible/intangible) and who or what is the direct recipient of service (people/possessions), there are four categories of services:
1. Product elements2. Place and time3. Price and other user outlays4. Promotion and education5. Process *6. Physical environment *7. People *
Chapter 3 Overview:
What is our role as consumers?What is our role of producers?What is the role of the marketing system?
Socially Responsible Marketing:
-Most Canadians feel that companies are 'just average' in their social responsibility-Half of consumers say they would not purchase from a company that was not socially responsible-Canadians have high expectations of their companies-What is the difference between being responsible and socially responsible marketers?- following laws/socially looking after community
Ethics:
• In your own words:--> Differences about what's right and wrong?--> What is meant by professional ethics?--> What differentiates 'illegal' from 'unethical'?
• Guidelines/polices and procedures of what company thinks is right and wrong, usually made public
shouldn’t do it, cant do it
Criticism of Marketing:
-High Prices: lead to higher prices due to marketing activities
-If the scanned item is higher than the shelved price, you can get it for free, up to a $10 maximum-endorsed by the Competition Bureau-Over 5000 retailers across Canada are Voluntary Code participants
Lecture 3CHAPTER 4
Marketing Environment Defined:
• The process and forces outside marketing’s direct control that affect marketing management’s ability to develop and maintain successful transactions with target customers.
Microenvironment:
• Factors close to the company that affect its ability to serve its customers• Unique to the company
• Factors: The company, suppliers, marketing intermediaries, customers, competitors, publics
Microenvironment:
• Larger societal forces that affect the microenvironment• Considered to be beyond the control of the organization• Forces: Demographic forces, economic forces, natural forces, technological
forces, political forces, cultural forces
Demographics
• Marketers track changing age and family structures, geographic population shifts, educational characteristics and population diversity
Baby Boomers:
• 9 million born between 1946-1964• Account for one-third of population• High amount of disposable income• Now moving into middle-age
Economic Environment:
• All those factors that affect consumer buying power and spending patterns-Income levels and distribution-The ‘necessity’ of products-Changes in trends and consumer spending-Economies of different nations
Cultural Environment:
• The institutions and other forces hat affect a society’s basic values, perceptions, preference and behaviors
• Cultural values are highly persistent• Learned from family and community
• Marketing research is conducted to collect data- but marketing managers much translate that data information
• Customer Relationship Management (CRM) systems—what are they and what do they do?
-Company based system managing potential suppliersCRM Example:
• “Netflix, QVC.com, Amazon Lead E-Retailers in Customer Satisfaction”-Kellogg wants to investigate if young children have an impact on their parents’ decisions to buy breakfast foods: secondary, casual-University Bookstore wants to get some insights into the impact on sales If they increased process by 20%: primary, casual, survey-Gillette wants to determine whether a market exists for a new line of deodorant for children: primary, descriptive, focus group
• Important to understand how cultural, social, personal, physiological factors affect purchase decisions.
-Same decision-making process applies to cars as it does to coffee
From a buyers perspective…
An example of a business buyer would be a hospital• Who do you think buys the scalpels and the x-ray machines, how do they decide
which ones to buy?-Same decision-making process applies to cars as it does to coffee
The Consumer Buyer Decision Process:
Figure 6.4
Business markets and business buyer behavior
• What factors would influence business buyer behavior?-Fixed price vs. negotiation
• Information Search• Evaluation of Alternatives• Purchase Decision
-Evoked set: set of possible services or brands that a customer may consider in the decision process -the different alternatives need to be evaluated before a final choice is made
Service Attributes: Style, color, texture, taste, soundExperience Attributes: vacations, sporting events, medical proceduresCredence Attributes: Quality of repair and maintenance work
Perceived Risks:
-Functional-Financial-Temporal_Physical-physiological-fears negative emotions-social- how others think and act-sensory-unwanted impact on 5 senses
How to handle them?
-seeking information from respected personal sources-using internet to compare service offerings and search for independent reviews and ratingsreplying on a firm that has a good reputation-looking for guarantees and warranties-visiting service facilities or trying aspects of service before purchasing-asking knowledgeable employees about competing services
Service Encounter Stage:
• Encounters range from high to low contact• An integrative perspective: Service facilities, Personnel, Role and script theories• 2.20• The Servuction System Fig. 2.22
-Evaluation of service performance-future intentions
Lecture 4Segmentation, Targeting, and Positioning
• Understand that a market, a market segment, and a target market are all variations of the same concept-a group of people!
• Think of a pie• No such thing as a product that is for “everyone”• Segmentation leads to stereotypes• Don’t be afraid to look beyond… push yourself beyond simply indentifying every
market segment according to age and gender• Don’t be afraif touse demographic and psycholographic characteristics
Overview of the 3-Step ProcessMarket Segmentation: Identify bases for segmenting market
Develop profiles of resulting segmentsMarket targeting: Develop measures of segment attractiveness
Select the target segmentsMarket Positioning: Develop positioning for each segment
Develop marketing mix for each segment
Market Segmentation-Bases of segmentation:Geographic:
• Area, population density, climate, etcDemographic:
-profitable/large enough to serve• Differentiability
-Substantially different than other segments• Actionability
-Effective programs can be designed
Mass Marketing• No segments and single marketing mix
Differentiated (segment) Marketing• Large segments with specific marketing mixes
Concentrated (niche) marketing• Small segments with specialized marketing mixes
Micromarketing• Customized marketing to individuals
PositioningDesigning the company’s offering and image for a distinctive place in the mind of the target market.Successful PositioningProduct position:
• How a product is viewed by consumers relative to competing productsThree positioning steps
• Identify competitive advantages on which to build a differentiated position• Choose the right competitive differentiation• Select an overall positioning strategy
Gaining Competitive Advantage• Key to wining target customers is to understand their needs better than your
competitors do and to deliver more value• Competitive Advantage: extent to which a company can position itself as
Identifying Competitive Advantage1. Product Differentiation (eg. Consistency durability, reliability, reparability)2. Services Differentiation (eg. Speed, convenience, careful delivery)3. Image Differentiation (eg. Convey benefits and positioning)4. People Differentiation (eg. Hiring, training better ppl than competitors)5. Channel Differentiation (eg. Retail outlet stores vs. the internet)
Example: Mountain Dew:-Image: you will do anything you can to get your hands on or protect your drink
sponsoring to extreme sports, high energy, live on the edge consumer
Successful Differentiation• Important- of value to consumers• Distinctive- obvious and clear• Superior- better value than competitors• Communicable- explainable• Pre-emptive- defendable and unique• Affordable- delivers value for cost• Profitable- company can make money
Positioning ErrorsUnder-positioning
• Failing to really position the company at allOver-positioning
• Giving buyer too narrow a picture of the companyConfused positioning
• Leaving buyers with a confused image of a company
-To young, active, soft-drink consumers with little time for sleep
Basic Focus Strategies for ServicesConsiderations for using the Focus Strategies
Market focused:
• Narrow market segment with wide range of services• Need to make sure firms have operational capability to do and deliver each of the
different services selected• Need to understand customer purchasing practices and preferences
Service Focused:
• Narrow range of services to fairly broad market• As new segments are added, firm needs to develop knowledge and skills in
service each segmentUnfocused:
• Broad markets with wide range of services • Many service providers fall into this category• Danger- become a “jack of all trade and master of none”
Importance of Determinant Attributes• Consumers choose between alternative service offerings• Determinant attributes determine buyers’ choices between competing
alternatives
Establishing Service Levels and Tiers• Need to make decisions on service levels-level of performance firm plans to offer
on each attribute• Segment customers according to willingness to trade off price versus service
level• Service tiering: positioning strategy based on offering server price-based classes
of service concept
**Four Principles of Positioning Strategy JACK TROUT**
Positioning as a Diagnostic toolUnderstand relationships between products and markets
• Compare to competition on specific attributes• Evaluate product’s ability to meet consumer needs/expectations• Predict demand a specific prices/performance levels
Make marketing mix decisions, respond to competition• Distribution/service delivery• Pricing• Communication
**Developing a Market Positioning Strategy (Everything that goes into creating)
Anticipating Competitive Response• Competitors might pursue same market position• Get inside competitors heads• Analyze possible effects of alternative competitive moves
-impact of price cut on demand, market share, and profits-Responses of different segments to changes in service attributes
Using positioning Maps to Plot Competitive Strategy- used as a diagnostic tool, help you gain advantage over competitors, and see where you are.
• Growth- Early majority customers, rapid sales growth and revenues• Maturity-late majority customers, flat sales declining profits• Decline- laggard customers, declining sales, replaced by new products
Maturity Stage Strategy• Modify the market• Modify the product• Modify the marketing mix
Lecture 6Pricing Considerations and StrategiesWhat is a price?
• Sum of all the values that consumers exchange for the benefits of having or using the good or service
Price vs. Cost• Marketers do not make decisions about costs, they make decision about prices
Dynamic Pricing:• The practice of charging different prices depending on individual customers and
situations• Internet and web-purchasing provides the technological capability• Sites like eBay even add the ability to negotiate price to dynamic pricing
What INTERNAL factors influence pricing?-Marketing objectives-Marketing mix strategies-Costs-Organizational considerationsEXTERNAL:
-Nature of the market and demand-Competition-Other environmental factors ( economy, resellers, government, social concerns)
Fixed vs. Variable- Your Call• Product packaging- Variable
• VP of Marketing’s salary- Fixed• Cost of 3 month billboard campaign- Fixed• Annual advertising budget- Fixed• Cost of the parts that go into manufacturing the marketer’s product- Variable
Price Elasticity• A way of measuring how sensitive the market is to price changes
-Inelastic: minimal change in demand as price increases-Elastic: significant drop in demand as price increases
Many buyers and sellers where each has little effect on the going market priceMonopolistic Competition:
Many buyers and sellers who trade over a range of pricesEx. AirlinesOligopolistic Competition:
Few sellers and sensitive to each other’s pricing/marketing strategiesPure Monopoly:
Market consists of a single sellerEx. LCBO
Pricing New Products• Marketing skimming pricing
-High price to reap maximum profit from early adopter segments-Strategy must be supported by product quality, production costs, and competitors’ difficulty in entering market
• Market penetration pricing-Low price to gain maximum market share-Market must be price sensitive, costs must fall with rising volume, and price
must discourage competition
Product Line PricingInvolve setting price steps between various products in a product line based on:
• Cost differences between products• Customer evaluations of different features• Competitor’s prices
Psychological Pricing• Considers the psychology of prices and not simply the economics• Consumers usually perceive higher-priced products as heaving higher-quality• Consumers use price less when they can judge quality of a product
Promotional Pricing• Temporarily pricing products below list price and sometimes even below cost to
create buying excitement and urgency----------Approaches---------
Loss Leaders Low-Interest FinancingSpecial-Event Pricing Longer Warranties
Cash Rebates Free MaintenanceDiscounts
Geographical Pricing• FOB (free on board)-origin pricing• Uniform-delivered pricing• Zone pricing• Basing-point pricing• Freight-absorption pricing
International Pricing (NOT BEING TESTED)Price depends on many factors, including
• Economic conditions• Competitive situations• Laws and regulations• Development of the wholesaling and retailing system• Costs
Managerial Implications• To develop product policy and pricing strategy, managers need to determine:
Which supplementary services should be offered as a standard package or as fee based options
• Firms that compete on a low-cost, no-frills basis needs fewer supplementary elements than those marketing expensive, high-value-added services
Setting Prices and Implementing Revenue Management• Harder to calculate financial costs than a manufactured good• Difficulty in defining a “unit of service”• Services hard to evaluate• Customers may be prepared to pay more for faster delivery• Delivery through physical or electronic channels-may create differences in
perceived value
The Pricing Tripod
Pricing Strategy| | |
Costs Competition Value to Customer
Cost-based Pricing:Traditional vs. Activity-Based Costing
• Traditional Costing Approach-Labor and infrastructure costs are considered fixed costs
-Sets of delivery activities and related goods-Firms can pinpoint profitability of different services, channels etc.
How do you Reduce Price Competition?• Outsourcing• Non-price related costs of using competing alternatives are high• Personal relationships mater• Switching costs are high• Time and location specificity
Net Value: Perceived benefits to customer (Gross value- All Perceived outlays (Money, Time, Mental/Physical Effort)
Pricing Issues:Putting Strategy into Practice
• How much to charge?• What basis for pricing?• Who should collect payment?• Where should payment be made?• When should payment be made?• How should payment be made?• How to communicate prices?
• Through marketing Channels – Traditional tools of personal selling, account
management programs, trade shows, advertising, direct marketing, sales
promotion, public relations
Message Transmission (2) – read in textThrough messages originating outside the Organization – very influential and powerful- Word of Mouth (WOM) – more credible than firm’s messaging. Customers rely on it when making high risk decisions-Blogs – on line journals where people can post their point of view, bloggers can become de factor watch dogs, links enable information sharing-Editorial Coverage –editorial coverage about a company initiated by broadcasters and publishers
Strategies for Corporate Design• Many service firms employ a unified and distinctive visual appearance for all
tangible elements to reinforce the brand
-for example, logos, uniforms, physical facilities
• Provide a recognizable theme linking all the firm’s operations
• Use of trademarked symbol as primary logo, with name secondary
-Shell’s yellow scallop shell on a red background
-MacDonald’s “Golden Arches”
Marketing or Distribution Channel• A set of interdependent organizations involved in the process of making a product or
service available for use or consumption by the consumer or business user. (see
Disintermediation • Bypassing intermediaries and going directly to final buyers
• Radically new types of channel intermediaries that compete with or displace
traditional ones
• Internet and e-commerce are the most common cause of disintermediation
Number of Intermediaries • Intensive distribution
-as many distributors as possible
• Exclusive distribution
-only one distributor in a given territory
• Select distribution
-A select few distributors in a given territory
Logistics and Supply Chain• Planning, implementing and controlling the physical flow of goods, services and
related information from points of origin to points of consumption to meet customer
requirements at a profit
• Includes
-Outbound distribution
-Inbound distribution
-Reverse distribution
Evaluating Advertising• Ultimate test is whether sales have increased. • Measure before and after an ad campaign to measure results. • Online advertising the easiest to measure based on conversion rates and the
Sales Promotion• Coupons, contests, premiums, and incentives. • Used to attract attention. • Provide incentive for trial or purchase.• Generates results now versus later.• Effectiveness easier to track than advertising. • May detract from brand equity and loyalty.
Sales Promotion Objectives• Consumer: increase short-term sales or help build long-term market share.• Trade: get retailers to:
-Carry new items and more inventory. -advertise products. -give products more shelf space. -buy ahead.
Personal Selling• Personal, flexible, two-way communication, provides direct feedback.• Builds preference, conviction, action. • Suited to complex, higher priced products.• Basis for building a buyer relationship.• Requires long-term commitment and ongoing management.
Direct Response• Hard to appreciate why marketers choose this type of marketing.• More than just “junk mail”! • Marketers must make a thousand decisions to execute a DM campaign
Direct Mail Marketing – Type of Direct Response• Involves sending an offer, announcement, reminder or other item to a person at a
particular address.• Permits high target-market selectivity. • Personal and flexible. • Easy to measure results.
Public Relations• Public relations involves building good relations with the company’s various publics
by obtaining favorable publicity, building up a good corporate image and handling or heading off unfavorable rumors, stories and events.
• Cannot be purchased - challenging!• Directly opposite to advertising – journalists cannot be paid. • News stories, features, press conferences, annual reports, corporate website. • Seen as more believable than advertising messages. • More cost efficient. • Can be difficult to control. • Can be proactive and reactive.
Public Relations Tools• News. • Speeches. • Special events. • Buzz marketing. • Mobile marketing. • Written materials.• Audiovisual materials.• Corporate identity materials. • Public service activities. • Company website.
Lecture 8: Chapters: 19, 20, 23Four Categories of ServicesDelivery of a Possession-Processing Service (Fig. 8.2a-d)People-Processing (Fig. 8.2a)Mental Stimulus (Fig. 8.2 c)Information Processing (Fig. 8.2 d)
Blue PrintingDeveloping a Blueprint:
• Identify key activities in creating and delivering service• Define “big picture” before “drilling down” to obtain a higher level of detail
Advantages of Blue printing:
• Distinguish between “frontstage” and “backstage”• Clarify interactions between customers and staff, and support by backstage
activities and systems• Identify potential fail points; take preventative measures; prepare contingency• Pinpoint stages in the process where customer commonly have to wait
Blueprinting The Restaurant Experience: A Three-Act Performance• Act 1: Introductory Scenes• Act 2: Delivery of Core Product
Cocktails, seating, order food and wine, wine servicesPotential fail points: menu information complete? Menu intelligible? Mistakes in transmitting information a common cause of quality failure Customers may not evaluate quality of food and drink, but how promptly its served.• Act 3: The Drama Concludes
Improving reliability of Processes by Failure Proofing• Indentify fail products• Analysis of reasons for failure often reveals opportunities of failure proofing to
reduce/eliminate future risk of errors• Need fail-safe methods for both employees and customers• Have poka-yokes to ensure service staff do things correctly, as requested, or at
the right speed• Customer poka-yokes focus on preparing the customer for: The encounter Understanding and anticipating their roles Selecting the correct a service or transaction
Process Redesign: Approaches and Potential Benefits• Eliminating non-value-adding steps
Simplify front-end and back-end processes with gal of focusing on benefit-producing part of service encounter get rid of non-value
• Delivering direct service Bring service to customers instead of bringing customers to service firmImprove convenience for customersProductivity can be improved if companies can eliminate expensive retail locationsIncrease customer base
• Redesigning physical aspects of service processes Focus on tangible elements of service processes; include changes to facilities and equipment to improve service experienceIncrease convenience
• Record weather conditions and other special factors that might influence demand
Alternative Demand-Management Strategies• Take no action
Let customers sort it out• Reduce demand
Higher pricesCommunication promoting alternative times
• Increase demand Lower prices Communication, including promotional incentives Vary product features to increase desirability More convenient delivery times and places
• Inventory demand by reservation system• Inventory demand by formalized queuing
Information Need for Demand and Capacity Management Strategies• Historical data on demand level and composition, noting responses to
marketing variables• Demand forecasts by segment under specified conditions• Segment-by-segment data• Fixed and variable cost data, profitability of incremented sales• Meaningful location-by-location demand variations• Customer attitudes toward queuing:
Lining up-when it is acceptable? Pg. 477• Customer opinions of quality at different levels of capacity utilization: ex.
Hotels/air travel/retail service
What is Service?Different Perspectives of Service QualityTranscendent:
• Quality=Excellence• Recognized on through experiences
Manufacturing-based: • Quality is n conformance to the firm’s developed specifications
User-based:• Quality lies in the eyes of the beholder
Value-based:• Quality is a trade-off between price and value
Dimensions of Service QualityTangibles: Appearance of physical elementsReliability: Dependable and accurate performance
Responsiveness: Promptness; helpfulnessAssurance: Competence, courtesy, credibility, securityEmpathy: Easy access, good communication, understanding of customer
Seven Service Quality GapsFig. 23.11. Knowledge Gap: Difference between expectations and needs2. Standards Gap: Specify SQ standards that reflect expectations
Translation into design/delivery specs3. Delivery Gap: Ensure service performance meets standardsExecution of design/delivery specs4. Internal Communications Gap: Ensure that communications promises
are realistic5. Perceptions Gap: Educate customers to see reality of service quality delivered
Customer perceptions of service execution6. Interpretation Gap: Pretest communications to make sure message is clear and unambiguous7. Service Gap: Close gaps 1 to 6 to meet customer expectations consistently
Soft and Hard Measures of Service Quality• Soft measures- not easily observed, must be collected by talking to
customers, employees or othersProvide direction, guidance and feedback to employees on ways to achieve customer satisfaction Can be quantified by measuring customer perceptions and beliefseg. SERVQUAL, surveys, and customer advisory panels
• Hard measures- can be counted, timed, or measured through audits Typically operational processes or outcomes Standards often set with reference to percentage of occasions on which a particular measure is achieved.
Customer feedback Collection Tools• Total market surveys• Annual surveys• Transactional surveys• Service feedback cards• Mystery shopping• Unsolicited customer feedback• Focus group discussions• Service reviews
Analysis, Reporting and Dissemination of Customer Feedback• Choosing the relevant feedback tools and collecting customer feedback is
meaningless If the information is not passed back to the relevant parties to take action
• Reporting system needs to deliver feedback to frontline staff, process owners, branch/department managers and top management
• Three types of performance reports: Monthly Service Performance UpdateQuarterly Service Performance Review Annual Service Performance Repot
Tools to Analyze and Address Service Quality Problems• Fishbone diagram
Cause-and-effect diagram to identify potential causes of problems• Pareto Chart
Separating the trivial from the important. Often, a majority of problems is causes by a minority of causes (ie. The 80/20 rule)• Blueprinting
Visualization of service delivery, identifying points where failures are most likely to occur
Cause-and-Effect Chart for Flight Departure Delays (Fig. 14.10)Analysis of Causes of Flight Departure Delays (Fig. 14.11)
Service Efficiency, Productivity and Effectiveness• Efficiency: involves comparison to a standard, usually time-based (eg.
how long employee takes to perform specific task)• Productivity: involves financial value of outputs to inputs• Effectiveness: degree to which firm meets goals
Generic Productivity Improvement StrategiesTypical strategies to improve service productivity:
• Careful control of costs at every step in process• Efforts to reduce wasteful use of materials or labor• Matching productive capacity to average rather than peak demand levels• Replacing workers by automated machines or self-service technologies• Teaching employees how to work more productively• Broadening variety of tasks that service worker can perform• Installing expert systems that slow paraprofessionals to take on work
previously performed by professionals who earn higher salariesAlthough improving productivity can be approached incrementally, major gains often require redesigning entire processes
Customer-Driven Ways to Improve Productivity• Change timing of customer demand
By shifting demand away from peaks, managers can make better use of firm’s productive assets and provide better service
• Involve customers more in productionGet customers to self-serve Encourage customers to obtain information and buy from firm’s corporate websites
• Ask customers to use third parties Delegate delivery of supplementary service elements to intermediary organizations
Evaluating Advertising
• Ultimate test is whether sales have increased. • Measure before and after an ad campaign to measure results. • Online advertising the easiest to measure based on conversion rates and the
ability to prompt immediate calls to action.
Sales Promotion
• Coupons, contests, premiums, and incentives. • Used to attract attention. • Provide incentive for trial or purchase.• Generates results now versus later.• Effectiveness easier to track than advertising. • May detract from brand equity and loyalty.
Sales Promotion Objectives
• Consumer: increase short-term sales or help build long-term market share.• Trade: get retailers to:
-Carry new items and more inventory. -advertise products. -give products more shelf space. -buy ahead.
• Personal, flexible, two-way communication, provides direct feedback.• Builds preference, conviction, action. • Suited to complex, higher priced products.• Basis for building a buyer relationship.• Requires long-term commitment and ongoing management.
Direct Response
• Hard to appreciate why marketers choose this type of marketing.• More than just “junk mail”! • Marketers must make a thousand decisions to execute a DM campaign
-Who to send it to-database
Direct Mail Marketing – Type of Direct Response
• Involves sending an offer, announcement, reminder or other item to a person at a particular address.
• Permits high target-market selectivity. • Personal and flexible. • Easy to measure results.
Public Relations
• Public relations involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image and handling or heading off unfavorable rumors, stories and events.
• Cannot be purchased - challenging!• Directly opposite to advertising – journalists cannot be paid. • News stories, features, press conferences, annual reports,corporate website. • Seen as more believable than advertising messages. • More cost efficient. • Can be difficult to control. • Can be proactive and reactive.
• News. • Speeches. • Special events. • Buzz marketing. • Mobile marketing. • Written materials.• Audiovisual materials.• Corporate identitymaterials. • Public service activities. • Company website.•
Lecture 9Chapters: 21, 22Service Staff
• Crucially important to the success of a service firm-Most visible-Represents company and delivers brand promise-Service staff= brand
• Instead of a brand manager- people manager-Gain a competitive advantage-Help ensure sustainability in the marketplace
Understand that the work of service staff can be demanding, challenging and difficult…
• Higher performing, satisfied employees are key• Front-line work can be demanding (boundary spanners)• Often have conflicting roles• Emotional labor
Conflict comes from 3 sources:• Person/role conflicts
-Between job requirements, and own personality• Organization/client conflicts
-Follow company rules or satisfy customer• Inter-client conflicts
-Client to client conflict• EXAMPLES?
CYCLE OF FAILURE- the search for productivityCYCLE OF MEDICRITY- no incentive to improve-employees unresponsive-increased pay the longer you are there-taking initiative, making decisions, providing insight is discouraged-high job security-emphasis on rules-not satisfied with jobCYCLE OF SUCCESS-happy employees, whole cycle is positive-bigger job designs-employees satisfied
What are the key barriers for firms seeking to break the cycle of failure and move in to the cycle of success?
• Short sighted management• Low margins• Forced efficiency (Wal-Mart)
The best candidates…• Observe behavior
-Interviews, exercises• Conduct Personality tests
-Does personality match the job?• Multiple, structured interviews
-Different interviewers• Realistic job preview
-Expectations much match job offering
Other aspects of HR• Train service employees actively• Empower the front line• Build high performance service delivery teams• Motivate and energize people
The Service Talent Cycle for Service Firms ** in text**1. Hire the right people2. Enable your People3. Motivate and Energize your People
Common Failures in CRM Implementation (part 1 of 2)
• Unfortunately, there is a high failure rate of CRM implementations• Common reasons for failures
-viewing CRM as a technology initiative-lack of customer focus-not enough understanding of customer lifetime value (CLV)
PART 2:• Inadequate support from top management• Lack of coordination• Failure to reengineer business processes• Underestimating the challenges in data integration
