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Special Topic: Strategies Special Topic: Strategies for Service Marketsfor Service Markets
Chapter FifteenChapter Fifteen
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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-3
OverviewOverview
Services account for nearly Services account for nearly 85% 85% of U.S. jobs.of U.S. jobs.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-4
Figure 15.2Figure 15.2Services as a Percentage of U.S. Services as a Percentage of U.S.
GDPGDP
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Figure 15.3Figure 15.3Continuum of Evaluation for Continuum of Evaluation for Different Types of ProductsDifferent Types of Products
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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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-7
OverviewOverview
The distinction between The distinction between physical products and services physical products and services is not always crystal clear.is not always crystal clear.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-8
The Nature of ServicesThe Nature of Services
IntangibilityIntangibility
NonstandardizationNonstandardization
Inseparability of production and Inseparability of production and consumptionconsumption
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Figure 15.4Figure 15.4A Perceived Model of QualityA Perceived Model of Quality
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Figure 15.5Figure 15.5Dimensions of Service QualityDimensions of Service Quality
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Figure 15.6Figure 15.6Loss Aversion Model of Service Loss Aversion Model of Service
QualityQuality
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-12
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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-13
Table 15.1Table 15.1Example of SERVQUAL SurveyExample of SERVQUAL Survey
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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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-15
Figure 15.7Figure 15.7Linking Customer Satisfaction to Linking Customer Satisfaction to
RetentionRetention
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-16
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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-17
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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-18
““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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-19
Figure 15.11Figure 15.11Express Mail Delivery Service Express Mail Delivery Service
BlueprintBlueprint
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Figure 15.12Figure 15.12Singapore Airlines Service Singapore Airlines Service
BlueprintBlueprint
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Figure 15.13Figure 15.13Singapore Airlines: Detailed Singapore Airlines: Detailed Customer Service ActivitiesCustomer Service Activities
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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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-23
Marketing Mix ImplicationsMarketing Mix Implications
Distribution channelsDistribution channelsThe intangible nature of services The intangible nature of services complicates distribution decisions.complicates distribution decisions.Service principles must be Service principles must be distinguished from service deliverers.distinguished from service deliverers.
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Marketing Mix ImplicationsMarketing Mix Implications
Major approaches to service Major approaches to service distribution:distribution:
Company ownedCompany ownedAgents and brokersAgents and brokersElectronic channelsElectronic channelsFranchisingFranchising
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Marketing Mix ImplicationsMarketing Mix Implications
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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-26
Marketing Mix ImplicationsMarketing Mix Implications
AdvertisingAdvertisingPlays a key role in setting Plays a key role in setting expectationsexpectations
Implications for service Implications for service advertisingadvertising
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-27
Marketing Mix ImplicationsMarketing Mix Implications
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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-28
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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-29
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
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-30
Table 15.2Table 15.2Issues Posed by Issues Posed by
Internationalization of a Internationalization of a “Strategic Service Vision”“Strategic Service Vision”
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IllustrationIllustration
Disney learned that the quality of Disney learned that the quality of service concepts can be difficult to service concepts can be difficult to maintain in a global expansion due maintain in a global expansion due to cultural to cultural and institutional differences.and institutional differences.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-32
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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-33
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.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 15-34
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.