1. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-1 Chapter 9 Services marketing strategies

2. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-2 What is a service? Definition: Services are separately identifiable activities that satisfy customer needs or wants through essentially intangible benefits, either in their own right or as a significant element of a tangible product.

3. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-3 Characteristics of services The service and the creator–seller of the service are often inseparable. Services are variable (or heterogeneous). Services are highly perishable, cannot be stored, and the demand for services fluctuates. Services are intangible. It is impossible for customers to sample a service, but intangibility is reduced using: Service – Visual clues. – Association. – Organisation image. – Documentation.

4. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-4 Segmenting services Service segmentation is fundamentally the same process as that for a physical good, with 2 points of difference: Customisation of the service. Delivery of the service.

5. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-5 Branding services The first step in branding is to select a good brand name. The brand should be: Relevant. Distinctive. Easy to pronounce and remember. Adaptable to any additional services.

6. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-6 Managing service quality Measure the current quality of the service: ‘The customer’s requirements’. Measure the service gap: ‘Difference between customer expectation of the service and perception of the service received’.

7. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-7 The service gap The difference between what the customer expects and what they receive: The knowledge gap: Customer’s knowledge. The standards gap: Organisation’s standard. The delivery gap: The actual delivery experience. The communications gap: Advertising promise.

8. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-8 Pricing services Cost-plus pricing for services. – Cost of product plus a percentage mark-up. Demand-based pricing of services. – The price customers are likely to be prepared to pay. Competition-based pricing of service. – What other suppliers are charging for the same type of product.

9. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-9 Distribution strategies Location: The primary consideration is that services are supplied by a person (service provider) and assume the ‘characteristic of inseparability’. Location is a key marketing decision about where to locate the service for easy access to the customer and how to bring the two people together.

10. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-10 Promotion of services To overcome intangibility factors, effective service promotion should: Use tangible symbols: real people in service. Show the service encounter: staff interacting positively with customers.

11. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-11 Promotion of services Relationship marketing is a major promotional tool: Avoid over-promising, as it increases the service gap. Build word-of-mouth (WoM) promotion: a positive experience will spread through WoM.

12. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-12 Levels of retention strategies for services marketers Fig 9.2 p 279

13. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-13 The services marketing mix: People (1 of the other 3Ps) People: Front-line staff manage the service encounter by the critical incidents, which determine customer satisfaction with the overall service encounter. Boundary spanning: Can create problems for front-line staff — usually the link between the service and its customers.

14. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-14 Creating customer service-focused management Customer- service focused organisational structure Top management Middle management Customer-service staff Customers Customer-service staff Middle management Top management Fig 9.3 p 280 Traditional organisational structure

15. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-15 People The right contact staff: Recruit those with the right attitude and ‘service personality’. Empower contact staff: Front-line staff need the authority to make decisions. Reward staff for service delivery: Have reward schemes that ‘work’ as acknowledgement.

16. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-16 The services marketing mix: Physical evidence (1 of the other 3Ps) Physical evidence: Aims to offset the intangibility of the service. This incorporates tangibles such as: – Location and building exterior. – Interior design and décor. – Stationery, uniforms and promotional material.

17. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-17 Servicescapes The physical evidence used to influence the responses and behaviour of customers and staff. Servicescapes have 3 elements: – Stimuli — the tangible elements. – Customers and staff who receive the stimuli. – Responses — stimuli response or outcome.

18. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-18 The services marketing mix: Process (1 of the other 3Ps) Process is the operational system or method used to ‘actually’ deliver the service. Service providers need to: – Commit to one approach or the other. – Separate standardised and customised services. – Create flexibility capacity. – Increase the amount of customer participation. – Smooth the peaks and troughs in demand.

19. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix Slides prepared by: Joe Rosagrata 9-19 Blueprinting Buleprinting allows for the service process to be broken down into discrete steps and assessed against time and cost elements. Blueprinting is done in the form of a flowchart of activities.