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

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

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

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

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

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

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

Customer Behaviour in Service Settings Chapter 3 Customer Behaviour in Service Settings

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

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 10

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 11

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 12

Customer Satisfaction and Service Quality Chapter 4 Customer Satisfaction and Service Quality

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 14

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

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 16

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 17

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 18

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 19

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 20

Service Delivery and Servicescape Strategies Chapter 9 Service Delivery and Servicescape Strategies

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 22

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 23

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 24

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 25

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 26

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 27

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, 1984. (See page 246) Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia 28

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 29

Managing Capacity and Demand Chapter 11 Managing Capacity and Demand

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 31

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 32

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 33

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 34

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 35

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 36

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

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 38

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 39

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 40

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 41

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 42

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 43

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 44