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SERVICES MARKETING Christopher Lovelock Paul Patterson Rhett Walker PowerPoint to accompany 3.

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Presentation on theme: "SERVICES MARKETING Christopher Lovelock Paul Patterson Rhett Walker PowerPoint to accompany 3."— Presentation transcript:

1 SERVICES MARKETING Christopher Lovelock Paul Patterson Rhett Walker PowerPoint to accompany 3

2 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 2 FINAL EXAM l Date: 17 th December, 2010 l Time: 180 minutes l Exam format: 03 sections  Section 1: 40 MCQs (one mark each)  Section 2: 10 True/ false (two marks each)  Section 3: 4 Written answers (10 marks each) l Chapters to be examined  2, 3, 4, 9, 11, 12

3 Chapter 2 Customer involvement in service processes-managing the service encounter

4 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 4 The Services System l Flowcharting l Moments of Truth l Critical Incidents

5 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 5 Flowcharting the Service Experience l A Flowchart is a ‘map’ of the service experience which shows the total process step by step. l Flowcharting is useful as a management tool to identify problems in stages of the delivery. l Flowcharting is also known as ‘Blueprinting’ and ‘Service Mapping’. l Flowcharting includes the Front-stage and Back-stage components of the service.

6 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 6 Moments of Truth l The Moment of Truth is when the customer and the service personnel meet. l The point when the skill, motivation and the tools employed by the service personnel and, the expectations and behaviour of the customer create the service experience.

7 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 7 Critical Incidents l Unsatisfactory encounters are likely to be more influential on the customer’s future behaviour than satisfactory ones. l Critical Incidents can occur pre- consumption and post-consumption as well as during.

8 Chapter 3 Customer Behaviour in Service Settings

9 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 9 Types of Risk l Functional: this is a concern about performance outcomes e.g. ‘How can I be sure my car will be properly serviced?’ l Financial: this reflects financial risks and unexpected costs e.g. ‘Will I incur extra expenses?’ l Temporal: this is about wasting time or unexpected delays e.g. ‘Will the service be too slow?’

10 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 10 Types of Risk l Psychological: personal fears and other ‘negative’ emotions e.g. ‘Will the service make me feel good?’ l Social: how others think and react e.g. ‘Will my friends approve or admire me?’ l Sensory: these are unwanted impacts on the five senses e.g. ‘Will the restaurant be too noisy?’

11 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 11 Strategies for Risk Reduction l Provide information l Firm’s reputation l Provide guarantees/warrantees l Standardise the service l Internet search l Seek tangible cues

12 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 12 Factors Influencing the Consumer’s Service Evaluation l Mood states l Role theory l Script theory l Control theory  Behavioural control  Cognitive control

13 Chapter 4 Customer Satisfaction and Service Quality

14 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 14 Figure 4.3 Benefits of Customer Satisfaction and Service Quality Customer satisfaction (& service quality) Insulates customers from competition Encourages repeat patronage & loyalty Enhances/promot es positive WOM Lowers costs of attracting new customers Reduces failure costs Can create sustainable advantage

15 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 15 Figure 4.4 The Disconfirmation of Expectations Model

16 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 16 Service Quality and Satisfaction Service quality: “ consumer’s judgement (across multiple service encounters) about an entity’s overall excellence or superiority..... it is a form of attitude, related but not equivalent to satisfaction.” (Source: Parasuraman et al (1998), see page 100)

17 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 17 Dimensions of Perceived Service Quality l Tangibles: appearance of physical elements l Reliability: dependable, accurate performance l Responsiveness: promptness and helpfulness l Source: Zeithaml, et al., Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: The Free Press, 1990).

18 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 18 Dimensions of Perceived Service Quality l Assurance: competence, courtesy, credibility and security l Empathy: easy access, good communications and customer understanding Source: Zeithaml, et al., Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: The Free Press, 1990).

19 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 19 Building a Service Satisfaction Information System l Analysis of customers’ complaints l Post transaction surveys l Ongoing surveys of account holders l Employee Surveys l Focus Groups l ‘Mystery shopping’ research l Competitive market surveys

20 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 20 Service Guarantees Guarantees need to be: l unconditional l easy to understand l meaningful l easy to invoke l easy to collect when any compensation is due (Source: Christopher W. L. Hart, see page 107 for full reference)

21 Chapter 9 Service Delivery and Servicescape Strategies

22 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 22 Chapter 9 Objectives l The role of physical environment l The process of service delivery l The role of customer service personnel l The role of intermediaries l The role of emerging technologies l Devising means of productivity enhancement

23 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 23 The Effect of Physical Evidence and Atmosphere on Buyer Behaviour l As an attention creating medium: the use of colour, noise, smell and so on (sensory impacts) l As a message creating medium: the use of symbolic cues to communicate with the intended audience l As an effect creating medium: using colours, sounds, spatial design and so on to heighten the buyer’s desire

24 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 24 Figure 9.1 A framework for understanding the impact of the physical environment Customers, employees Cognitive Emotional Physiological Ambience Space Signs, symbols Customers Approach Avoid Employees Productivity Job Satisfaction Service quality Staff turnover Environmental stimuli Thoughts and feelings Behavioural responses

25 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 25 Environmental Stimuli in Service Delivery l Ambience: temperature, air quality, noise, colour, music, odour l Space: design, layout, furnishings l Signs, symbols and artefacts: style of décor, signage, personal objects l Cognition: beliefs and thoughts l Emotions: mood, feelings, likes/dislikes l Physiology: discomfort, ease of movement

26 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 26 Other Behavioural Responses to Servicescape l Approach: propensity to stay, explore, engage in interactions, make purchases, and return l Avoid: disinclination to make purchases or stay, desire to leave, little incentive to return

27 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 27 The Process and Manner of Service Delivery l Planning and configuring l The Role of Blueprinting & Flowcharting l Important HRM issues l The role of IT l Marketspace vs Marketplace

28 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 28 Requirements for Blueprinting l Blueprinting must show time dimensions in diagrammatic form (see Figure 3) l The blueprint must identify and handle errors, bottlenecks, reiterations and so forth l The blueprint, based on research and experience must precisely define how much variation from standards can be allowed Source: G. Lynn Shostack, (See page 246)

29 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 29 Developing a Blueprint l Identify all the key activities involved in the service l Specify the linkage between the activities l Define the ‘big’ picture l ‘Drill down’ to obtain greater detail l Distinguish between ‘front-stage’ and ‘back-stage’ activities l Clarify the interactions between customers and employees and how these are supported by ‘back-stage’ processes

30 Chapter 11 Managing Capacity and Demand

31 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 31 Creating Flexible Capacity l Provide for additional capacity : some capacity has an elastic ability to absorb extra demand l Increase the number of casual and part- time employees: hire extra staff during busy seasons such as Christmas l Outsource facilities: rent facilities & equipment

32 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 32 Managing Capacity l Create flexibility in what is offered: review what is offered at different times and consider what might be gained by offering more or less at those times l Review the hours of business: consider extending or shortening hours

33 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 33 Managing Capacity l Schedule downtime in periods of low demand: carry out data-processing, repair and maintenance activities when demand is expected to be low l Cross-train employees: employees who can perform several functions can be moved to bottle neck points when needed

34 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 34 Demand Conditions l Demand exceeds maximum available capacity so that potential business may be lost l Demand exceeds the optimum capacity level, no one is turned away but there is a reduction in perceived service quality l Demand and supply are balanced at the level of optimum capacity l Demand is below optimum capacity and productive resources are underused posing a risk of customer disappoint or doubt about viability

35 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 35 Using the Marketing Mix Elements to Shape Demand Patterns l Product variations: offering varying ‘packages’ or ‘bundles’ of product benefits at different times l Modifying the timing and location of delivery involving three basic options: 1. No change 2. Varying the times when the service is available 3. Offering the service to customers at a new location

36 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 36 Using the Marketing Mix Elements to Shape Demand Patterns l Pricing strategies: effective pricing depends on the marketing manager having an understanding of how the demand responds to increases or decreases in the price per unit l Communication efforts: advertising, signage, publicity and sales messages to encourage increased use in off-peak times

37 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 37 Chapter 12 Integrated Marketing Communications for Services

38 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia Examine the advertising of services 6. Explore sales promotions for services 7. Present the role of personal selling in services 8. Discuss the role of public relations and viral (word-of-mouth) marketing for services Learning Objectives

39 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 39 The Promotional Mix for Services l The services promotional mix consists of:  Advertising  Sales promotions  Personal selling  Publicity and public relations  Direct mail  Internal personnel branding

40 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 40 Advertising the Service l Advertising objectives l Guidelines for advertising services l Enhancing the vividness of services advertising

41 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 41 Guidelines for advertising services l Provide tangible cues l Capitalise on word-of-mouth communication l Make the service understood l Establish advertising continuity l Advertise to employees l Promise what is possible

42 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 42 Enhancing the vividness of services advertising l A vividness strategy is an advertising approach for service offerings that uses concrete language, tangible objects, and dramatisation techniques to tangibilise the intangible

43 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 43 Enhancing the vividness of services advertising (cont’d) l Interactive imagery uses pictorial representations, verbal associations and letter accentuations that combine an organisation's name and its service to establish a strong link between service name and performance in customers’ minds

44 Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 44 Sales Promotions and Services l Sales promotions  Attract customers  Accommodate cyclical demand (change promotions to suit all climates and trends)  Enhance customers’ perception of the service  Add tangibility — try to tangiblise the intangibles, giving customers something to hold on to


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