Lecture 6 21 08 2009

We have covered Service Mktg Service Mktg Mix Consumer Behavior in Services GAP model of Service Quality Understanding Consumer expectations & perceptions through MR Building Customer Relationship Service Recovery Service Development & Design

Physical Evidence

Physical facility is referred to as SERVICESCAPE Physical Evidence is the environment in which the service is delivered & where the firm & the customers interact & any tangible commodities that facilitate performance or communication of service. Physical facility is referred to as SERVICESCAPE

Elements of Physical Evidence Servicescape Facility exterior Exterior Design Signage Parking Landscape Facility Interior Interior design Equipment Layout Air quality/Temperature Other Tangibles Business card Stationary Billing statement Report Employee dress Uniform Brochure Webpage Virtual servicescape egs.?

Typology of Service Organisations

Roles of the Servicescape Package Eg. Disneyland Facilitator Eg. Bank Socailizer Eg. Barista, Café Coffee Day Differentiator Eg. King Class

Framework on Environment-User Relationship in Service Organisations

Employees’ Role in Service Delivery

Gaps Model of Service Quality Customer Expected sevice Customer gap Perceived service Service delivery External communications to customers Company gap 1 Gap 4 Gap 3 Customer-driven service designs and standards Gap 2

IMPORTANCE OF SERVICE EMPLOYEES Employees are the ‘Service’. They are the ‘Brand’. They are the ‘Organisation’ . They are the ‘Marketers’ . They are the ‘Most Visible Element’ in the servicescape.

SERVICE QUALITY DIMENSIONS All service quality dimensions: Reliability Responsiveness Assurance Empathy Tangibles ……. are directly influenced by service employees.

BOUNDARY SPANNERS The frontline employees who operate at peripheral level or the boundary of the organisation. They transfer information to and from the organisation….by understanding, filtering and interpreting it They cover the full spectrum of jobs and professions.

BOUNDARY SPANNERS At one end are the low qualified and low skilled workers and at the other end are the highly skilled and qualified professionals. Irrespective of the skill or job, most boundary spanners often go through highly stressful situations. They are also required to handle inter personal and inter organisational conflict.

EMOTIONAL LABOUR Effort required to deliver quality service. Suppression of true feelings. Emote with friendliness, empathy, responsiveness, courtesy towards their customers.

SOURCES OF CONFLICT Person / Role Conflict Organisation / Client Conflict Inter Client Conflict

STRATEGIES TO BUILD A CUSTOMER ORIENTED ORGANISATION Hiring the right type of employees. Train and develop them to deliver service quality. Provide the needed support system. Retain the best people.

HIRE THE RIGHT TYPE OF EMPLOYEES Compete for the best people. Hire for service competencies and service inclinations. Be the preferred employer.

TRAINING AND DEVELOPMENT Train for technical, interactive and inter-personal skills. Empower employees. Empowerment vs. Production Line Encourage team work.

TRAINING AND DEVELOPMENT Develop service oriented internal procedures / processes. Provide supportive technology and equipments. Measure internal service quality.

RETAIN THE BEST PEOPLE Measure and reward performers. From productivity -> Customer Satisfaction Treat employees as customers. Include employees in the company’s vision.

Customers’ Role in Service Delivery

. At times Service is not successful due to Customer Inaction (eg. ??) . Service delivery is all about customer driven approach, unlike the 4P’s approach which is product driven focusing on 4A’s Awareness Availability Accessibility Affordability . Customers play a very vital role in successful delivery of service as customers are often present in the place where service is produced (Delivered) . At times Service is not successful due to Customer Inaction (eg. ??)

Customer Participation in Service Delivery Low level of participation High level of participation Airline Fast food Pest Control Ad Agency Payroll Call centre Transportation Personal trainer Major illness/surgery Consulting

Other Customer Other customers who are present in the Service scape can influence the Service positively or negatively In many Service deliveries other customers also affect the service delivery in a positive or negative way. This can influence the customer’s perceptions of Service quality and affect customer satisfaction.

CUSTOMERS’ ROLES Customers as productive resources. IT, Consulting Customers as contributors to Service Quality & Satisfaction. Satisfaction ~ Customer belief of doing their part effectively Customers as Competitors.

Strategy for Enhancing Customer Participation Recruit Educate & Reward Customers Effective Customer Participation Define Customer Jobs Helping oneself, others, Promoting Co., Individual Differences Educate thru orientation programs, literature, directional cues, watching other customers Manage the Customer Mix Compatibility Management

Delivering Service through Intermediaries

Types of Channels for Service Distribution Franchising Consistency, Knowledge of local markets, Shared financial risk Agents & Brokers Reduce selling & distribution cost Electronic Channels (TV, Telephone, Net)

Managing Demand & Capacity

Variation in Demand Relative to Capacity Excess Demand ( Business lost) Volume Demanded Maximum Capacity Demand exceeds optimum capacity ( service quality declines) Optimum Capacity ( Demand & Supply are well balanced) Ideal use Excess capacity ( wasted resources) Low utilization ( May send bad signals ) TIME

Optimal vs Maximal Use of Capacity Capacity constraints Time: e.g Medical, legal, fitness Labour: e.g Hospital, maintenance, education Equipment: e.g Courier services, telecommunication, travel services Facilities: e.g hospitality, educational institutions, airlines. Optimal vs Maximal Use of Capacity

Understanding Demand Patterns Charting demand patterns Predictable cycles Random demand fluctuations Demand patterns by market segment.

Strategies for matching capacity and demand

Shifting demand to match capacity : When the demand is too high; (a) Communicate busy hours to the customers. (b) Offer incentives for lean time usage (c) Focus on loyal customers (d) Communicate advantages of lean time usage. (e) Do not offer discounts.

When the demand is too low; (a) Attract current market segments by focusing on sales and advertising. (b) Attract new segments with promotional schemes. (c) Offer discounts. (d) Bring the service to the customer (e) Modify hours of operation.

2. Adjusting capacity to match demand When the demand is too high; (a) Stretch time, labour, facilities and equipment (b) Train employees for multiple skills (c) Hire part-time employees. (d) Pay the employees to work overtime. (e) Rent facilities and equipments. (f) Outsource activities.

When the demand is too low; (a) carry out maintenance, repairs and renovations. (b) Conduct training for employees. (c) Offer leave to employees. (d) Retrench employees.

When demand and capacity cannot be controlled (a) Employ operational logic. (b) Have a reservation procedure. (c) Follow Queue discipline depending on; - Importance of the customer -Urgency of the job -Duration of the service transaction -Payment of a premium price. (d) Make waiting tolerable.

Yield Management Used in capacity constrained services. Objective of yield management is to produce the best possible revenue from a limited available capacity. It involves allocating the right type of capacity, to the right type of customer, at the right price in order to earn maximum revenue.

Yield = Actual revenue potential revenue Continued…. Where, Actual revenue = Actual capacity used X Average actual price Potential revenue = Total capacity X maximum price

Case Study Discussions Gp 5, 6 & 7

Thank you