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Copyright © 2003 Prentice-Hall, Inc Chapter 15 Designing and Managing Services by PowerPoint by Milton M. Pressley University of New Orleans
Copyright © 2003 Prentice-Hall, Inc Every business is a service business. Does your service put a smile on the customer’s face? Kotler on Marketing
Copyright © 2003 Prentice-Hall, Inc Chapter Objectives In this chapter, we focus on the following questions: How are services defined and classified? How do services differ from goods? How can service firms improve their differentiation, quality, and productivity? How can goods-producing companies improve their customer support services?
Copyright © 2003 Prentice-Hall, Inc Keen.com is a virtual advice marketplace The Nature of Services Government sector Private non-profit sector Business sector Manufacturing sector Service
Copyright © 2003 Prentice-Hall, Inc Categories of Service Mix Pure tangible good Tangible good with accompanying services Hybrid Major service with accompanying minor goods and services Pure service The Nature of Services
Copyright © 2003 Prentice-Hall, Inc Characteristics of Services and Their Marketing Implications Intangibility Service positioning strategy can be made tangible through: Place People Equipment Communication material Symbols Price The Nature of Services
Copyright © 2003 Prentice-Hall, Inc Online companies that provide services are often directly impacted by the quality of a customer’s computer or the customer’s Internet connection. Can you think of another service sector that has so little control over the environment in which their services are provided?
Copyright © 2003 Prentice-Hall, Inc The Nature of Services Carbone and Haeckel purpose the following for customer experience engineering Performance and context clues Humanics Mechanics Experience blueprint
Copyright © 2003 Prentice-Hall, Inc The Nature of Services Inseparability Variability Quality control by: Good hiring and training procedures Service blueprint Monitoring customer satisfaction
Copyright © 2003 Prentice-Hall, Inc Figure 15.1: A Service-Performance-Process Map: Nationwide Floral Delivery
Copyright © 2003 Prentice-Hall, Inc Perishability Strategies for better matching between demand and supply in a service business Differential pricing Nonpeak demand Complementary services Reservation systems Part-time employees Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion The Nature of Services
Copyright © 2003 Prentice-Hall, Inc Marketing Strategies for Service Firms Three Additional Ps People Physical evidence presentation Process
Copyright © 2003 Prentice-Hall, Inc Figure 15.2: Elements in a Service Encounter
Copyright © 2003 Prentice-Hall, Inc Figure 15.3: Three Types of Marketing in Service Industries
Copyright © 2003 Prentice-Hall, Inc Figure 15.4: Continuum of Evaluation for Different Types of Products
Copyright © 2003 Prentice-Hall, Inc Marketing Strategies for Service Firms Service Companies face three tasks: Competitive differentiation Service quality Productivity Managing differentiation Offering Primary service package Secondary service features
Copyright © 2003 Prentice-Hall, Inc Kaiser Permanente Online has over 30,000 registered users
Copyright © 2003 Prentice-Hall, Inc Marketing Strategies for Service Firms Faster and Better Delivery Reliability Resilience Innovativeness Image Managing Service Quality Perceived service Expected service
Copyright © 2003 Prentice-Hall, Inc FedEx and UPS have taken over much of the US Postal Service’s business, mostly through flexibility and innovation that the USPS can’t match. Can you think of another governmental service (anywhere in the world) where a private company has been able to take the profitable segment of a service, and leave the less profitable or more risky segment for a government agency?
Copyright © 2003 Prentice-Hall, Inc Marketing Strategies for Service Firms Five gaps that cause unsuccessful delivery Gap between consumer expectation and management perception Gap between management perception and service-quality specification Gap between service-quality specification and service delivery Gap between service delivery and external communications Gap between perceived service and expected service
Copyright © 2003 Prentice-Hall, Inc Figure 15.5: Service-Quality Model
Copyright © 2003 Prentice-Hall, Inc Five determinants of service quality Reliability Responsiveness Assurance Empathy Tangibles Strategic Concept Top-Management Commitment High Standards Self-Service Technologies (SSTS) Marketing Strategies for Service Firms
Copyright © 2003 Prentice-Hall, Inc Myalert.com provides access to services that users can perform themselves
Copyright © 2003 Prentice-Hall, Inc Marketing Strategies for Service Firms Monitoring Systems Voice of the Customer (VOC) measurements Customer importance and company performance Importance-performance analysis Figure 15.6: Tracking Customer Service Performance
Copyright © 2003 Prentice-Hall, Inc Table 15.1 Customer Importance and Performance Ratings for an Auto Dealership MeanMean AttributeImportancePerformance Number Attribute Description RatingRating 1 Job done right the first time Fast action on complaints Prompt warranty work Able to do any job needed See text for complete table
Copyright © 2003 Prentice-Hall, Inc Figure 15.7: Importance- Performance Analysis
Copyright © 2003 Prentice-Hall, Inc Marketing Strategies for Service Firms Satisfying Customer Complaints Satisfying Employees As Well As Customers Managing Productivity Seven approaches to improving service productivity: Have service providers work more skillfully Increase the quantity of service by surrendering some quality “Industrialize the service” by adding equipment and standardizing production Reduce or make obsolete the need for a service by inventing a product solution Design a more effective service Present customers with incentives to substitute their own labor for company labor Harness the power of technology to give customers access to better service and make service workers more productive
Copyright © 2003 Prentice-Hall, Inc Managing Product Support Services Customers have three worries Reliability and failure frequency Downtime duration Out-of-pocket costs of maintenance and repair Life-cycle cost
Copyright © 2003 Prentice-Hall, Inc Audible.com’s home page
Copyright © 2003 Prentice-Hall, Inc Managing Product Support Services To provide the best support for expensive equipment, firms offer: Facilitating services Value-augmenting services Herman Miller Office Furniture Company offers: Five-year product warranties Quality audits after installation Guaranteed move-in dates Trade-in allowances on systems products
Copyright © 2003 Prentice-Hall, Inc Managing Product Support Services Postsale Service Strategy Major trends in product support service Lele has noted the following: Equipment manufacturers are building more reliable and more easily fixable equipment Customers are becoming more sophisticated about buying product support services “Service unbundling”
Copyright © 2003 Prentice-Hall, Inc Managing Product Support Services Customers dislike dealing with multiple service providers handling different types of equipment Third-party service organizations Service contracts (extended warranties) may diminish in importance Customer service choices are increasing rapidly–this is holding down prices and profits Companies are increasing the quality of their call centers and their customer service representatives (CSRs)
Learning Objectives 5.1 Define customer service and identify the managers role in customer service. 5.2 Describe the importance of each of the key components.
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