Designing and Managing Services 13 Designing and Managing Services Marketing Management A South Asian Perspective, 13th ed

Chapter Questions How do we define and classify services and how do they differ from goods? How do we market services? How can we improve service quality? How do service marketers create strong brands? How can goods marketers improve customer support services? Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-2

Aravind Eye Hospital provides comprehensive eye care services Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-3

What is a Service? A service is any act of performance that one party can offer another that is essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a physical product. Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-4

Service Sectors Government Private nonprofit Business Retail Manufacturing Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-5

General Motors’ OnStar Service Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-6

Categories of Service Mix Pure tangible good Good w/ accompanying services Hybrid Service w/ accompanying goods Pure service Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-7

Service Distinctions Equipment-based or people-based Service processes Client’s presence required or not Personal needs or business needs Objectives and ownership Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-8

Figure 13.2 Continuum of Evaluation for Different Types of Products Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-9

Distinctive Characteristics of Services Intangibility Inseparability Variability Perishability Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-10

Physical Evidence and Presentation Place People Equipment Communication material Symbols Price Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-11

Palace on Wheels provides the ultimate royal experience due to careful design and execution of various service elements Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-12

How to Increase Quality Control Invest in good hiring and training procedures Standardize the service-performance process Monitor customer satisfaction Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-13

Matching Demand and Supply Demand side Differential pricing Nonpeak demand Complementary services Reservation systems Supply side Part-time employees Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-14

Figure 13.3 A Blueprint for Overnight Hotel Stay Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-15

Improving Service Quality Listening Reliability Basic service Service design Recovery Surprising customers Fair play Teamwork Employee research Servant leadership Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-16

Figure 13.4 Root Causes of Customer Failure Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-17

Solutions to Customer Failures Redesign processes and redefine customer roles to simplify service encounters Incorporate the right technology to aid employees and customers Create high-performance customers by enhancing their role clarity, motivation, and ability Encourage customer citizenship where customers help customers Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-18

Figure 13.5 Three Types of Marketing in Service Industries Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-19

Table 13.1 Factors Leading to Customer Switching Behavior Pricing Inconvenience Core Service Failure Service Encounter Failures Response to Service Failure Competition Ethical Problems Involuntary Switching Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-20

Figure 13.6 Service-Quality Model Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-21

Gaps That Cause Unsuccessful Service Delivery Gap between consumer expectation and management perception Gap between management perception and service-quality specifications Gap between service-quality specifications and service delivery Gap between service delivery and external communications Gap between perceived service and expected service Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-22

Determinants of Service Quality Reliability Responsiveness Assurance Empathy Tangibles Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-23

Best Practices Strategic Concept Top-Management Commitment High Standards Self-Service Technologies Monitoring Systems Satisfying Customer Complaints Satisfying Employees Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-24

Figure 13.7 Importance-Performance Analysis Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-25

Table 13.3 Customer Importance and Performance Ratings for an Auto Dealership Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-26

Developing Brand Strategies for Services Choosing Brand Elements Establishing Image Dimensions Devising Branding Strategy Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-27

Customer Worries Failure frequency Downtime Out-of-pocket costs Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-28

Table 13.4 Top Customer Service Providers USAA Four Seasons Hotels Cadillac Nordstrom Wegman Food Markets Edward Jones Lexus UPS Enterprise Rent-A-Car Starbucks Ritz-Carlton Amica Insurance Southwest Airlines Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-29

Marketing Debate Is service marketing different from product marketing? Take a position: Product and service marketing are fundamentally different. or 2. Product and service marketing are highly related. Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-30

Marketing Discussion Colleges and universities can be classified as service organizations. How can you apply the marketing principles developed in this chapter to your school? Do you have any advice as to how it could become a better service marketer? Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 13-31