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

2. FINAL EXAM Date: 17th December, 2010 Time: 180 minutes
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)
Chapters to be examined
2, 3, 4, 9, 11, 12
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 2

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

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

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

6. Moments of Truth
The Moment of Truth is when the customer and the service personnel meet.
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.
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 6

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

8. Customer Behaviour in Service Settings
Chapter 3
Customer Behaviour in Service Settings

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

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

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

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

13. Customer Satisfaction and Service Quality
Chapter 4
Customer Satisfaction and Service Quality

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

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

16. Service Quality and Satisfaction
“ 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)
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

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

18. Dimensions of Perceived Service Quality
Assurance: competence, courtesy, credibility and security
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).
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

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

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

21. Service Delivery and Servicescape Strategies
Chapter 9
Service Delivery and Servicescape Strategies

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

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

24. Environmental stimuli Behavioural responses
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
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

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

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

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

28. Requirements for Blueprinting
Blueprinting must show time dimensions in diagrammatic form (see Figure 3)
The blueprint must identify and handle errors, bottlenecks, reiterations and so forth
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)
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

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

30. Managing Capacity and Demand
Chapter 11
Managing Capacity and Demand

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

32. Managing Capacity
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
Review the hours of business: consider extending or shortening hours
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

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

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

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

36. Using the Marketing Mix Elements to Shape Demand Patterns
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
Communication efforts: advertising, signage, publicity and sales messages to encourage increased use in off-peak times
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

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

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

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

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

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

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

43. Enhancing the vividness of services advertising (cont’d)
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
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia

44. Sales Promotions and Services
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
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia