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Usman Waheed
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Services Marketing Services Marketing
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If You want these slides then send me at
E-mail at ch_paki@hotmail.com or call me at
+923!!"1921
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Chapter 1

INTRODUCTION
TO
SERVICES
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Objectives for Chapter 1:
Objectives for Chapter 1:
Introduction to Services
Introduction to Services
#
E$plain what ser%ices are and identif& ser%ice trends
#
E$plain the need for special ser%ices marketin'
concepts and practices
#
(utline the )asic differences )etween 'oods and
ser%ices and the resultin' challen'es for ser%ice
)usinesses
#
Introduce the ser%ice marketin' trian'le
#
Introduce the e$panded ser%ices marketin' mi$
#
Introduce the 'aps model of ser%ice *ualit&
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Introduction Introduction
#
,er%ices are deeds-processes and
performance
#
Intan'i)le- )ut ma& ha%e a tan'i)le
component
#
.enerall& produced and consumed at the
same time
#
/eed to distin'uish )etween ,E01I2E and
23,4(5E0 ,E01I2E
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Challenges for Services
Challenges for Services
#
6efinin' and impro%in' *ualit&
#
2ommunicatin' and testin' new ser%ices
#
2ommunicatin' and maintainin' a consistent
ima'e
#
5oti%atin' and sustainin' emplo&ee commitment
#
2oordinatin' marketin'- operations and human
resource efforts
#
,ettin' prices
#
,tandardi7ation %ersus personali7ation
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Examples of Service
Examples of Service
Industries
Industries
# Health Care
9 hospital, medical practice, dentistry, eye care
# Professional Services
9 accounting, legal, architectural
# Financial Services
9 banking, investment advising, insurance
# Hospitality
9 restaurant, hotel/motel, bed & breakfast,
9 ski resort, rafting
#
Travel
9 airlines, travel agencies, theme park
#
thers!
9 hair styling, pest control, plumbing, la"n maintenance, counseling
services, health club
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igure 1!1 igure 1!1
"angibilit# Spectrum
"angibilit# Spectrum
Tangible
#ominant
$ntangible
#ominant
Salt
Soft #rinks
#etergents
%utomobiles
Cosmetics
%dvertising
%gencies
%irlines
$nvestment
&anagement
Consulting
Teaching
Fast'food
utlets
Fast'food
utlets

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igure 1!$ igure 1!$
%ercent of
%ercent of
&'S' (abor orce b# Industr#
&'S' (abor orce b# Industr#
)
1)
$)
*)
+)
,)
-)
.)
/)
10$0 10+/ 10-0 10.. 10/+ 100-
;
e
r
c
e
n
t

o
f

.
6
;
,ource< Survey of Current Business, =pril 199:- 4a)le >.:- ?ul& 19::- 4a)le !.!>- and
?ul& 1992- 4a)le !."2@ Eli .in7)er' and .eor'e ?. 1oAta- B4he ,er%ice ,ector of the 3.,.
Econom&-C Scientific American- 2""-3 D19:1E< 31-39.
Year
,er%ices

5anufacturin'
5inin' F ='riculture
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)
1)
$)
*)
+)
,)
-)
.)
/)
10+/ 10,0 10-. 10.. 10/. 100-
igure 1!* igure 1!*
%ercent of &'S' 1ross 2omestic
%ercent of &'S' 1ross 2omestic
%roduct b# Industr#
%roduct b# Industr#
;
e
r
c
e
n
t

o
f

.
6
;
Year
,ource< Survey of Current Business, =u'ust 199!- 4a)le 11- =pril 199:- 4a)le
>.3@ Eli .in7)er' and .eor'e ?. 1oAta- B4he ,er%ice ,ector of the 3.,.
Econom&-C Scientific American- 2""-3 D19:1E< 31-39.
,er%ices

5anufacturin'
5inin' F ='riculture
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2ifferences 3et4een
2ifferences 3et4een
1oods and Services
1oods and Services
Intangibilit#
%erishabilit#
Simultaneous
%roduction
and
Consumption
5eterogeneit#
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Implications of Intangibilit#
Implications of Intangibilit#

,er%ices cannot )e in%entoried

,er%ices cannot )e patented

,er%ices cannot )e readil& displa&ed

or communicated

;ricin' is difficult
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Implications of 5eterogeneit#
Implications of 5eterogeneit#

,er%ice deli%er& and customer satisfaction

depend on emplo&ee actions

,er%ice *ualit& depends on man&

uncontrolla)le factors

4here is no sure knowled'e that the ser%ice

deli%ered matches what was planned and
promoted
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Implications of Simultaneous
Implications of Simultaneous
%roduction and Consumption
%roduction and Consumption

2ustomers participate in and affect the

transaction

2ustomers affect each other

Emplo&ees affect the ser%ice outcome

6ecentrali7ation ma& )e essential

5ass production is difficult

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Implications of %erishabilit#
Implications of %erishabilit#

It is difficult to s&nchroni7e suppl& and

demand with ser%ices

,er%ices cannot )e returned or resold

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"able 1!$ "able 1!$
Services are 2ifferent
Services are 2ifferent
1oods Services 6esulting Implications
Tangible Intangible Serices cannot be inentoried!
Serices cannot be "atented!
Serices cannot be readil# dis"la#ed or comm$nicated!
%ricing is di&&ic$lt!
Standardi'ed (eterogeneo$s Serice delier# and c$stomer satis&action de"end on
em"lo#ee actions!
Serice )$alit# de"ends on man# $ncontrollable &actors!
There is no s$re *no+ledge that the serice deliered
matches +hat +as "lanned and "romoted!
%rod$ction
se"arate &rom
cons$m"tion
Sim$ltaneo$s
"rod$ction and
cons$m"tion
C$stomers "artici"ate in and a&&ect the transaction!
C$stomers a&&ect each other!
,m"lo#ees a&&ect the serice o$tcome!
-ecentrali'ation ma# be essential!
.ass "rod$ction is di&&ic$lt!
/on"erishable %erishable It is di&&ic$lt to s#nchroni'e s$""l# and demand +ith
serices!
Serices cannot be ret$rned or resold!
Source: 0da"ted &rom 1alarie 0! 2eithaml3 0! %aras$raman3 and 4eonard 4! 5err#3 6%roblems and Strategies in Serices .ar*eting37
Journal of Marketing 49 8S"ring 199:;: 33<46!
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igure 1!, igure 1!,
"he Services Marketing "riangle
"he Services Marketing "riangle
$nternal
&arketing
$nteractive &arketing
()ternal
&arketing
Company
*&anagement+
Customers (mployees
enabling the
promise
delivering the promise
setting the
promise
,ource< =dapted from 5ar& ?o >itner- 2hristian .ronroos- and ;hilip Gotler
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7a#s to &se the
7a#s to &se the
Services Marketing "riangle
Services Marketing "riangle
Overall Strategic
Assessment
#
How is the ser%ice
or'ani7ation doin' on
all three sides of the
trian'leI
#
Jhere are the
weaknessesI
#
Jhat are the stren'thsI
Specific Service
Implementation
#
Jhat is )ein' promoted and
)& whomI
#
How will it )e deli%ered
and )& whomI
#
=re the supportin' s&stems
in place to deli%er the
promised ser%iceI
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,ource< =dapted from =. ;arasuraman
Company
Customers
Providers
Technology
igure 1!- igure 1!-
"he Services "riangle
"he Services "riangle
and "echnolog#
and "echnolog#
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Services Marketing Mix:
Services Marketing Mix:
. %s for Services
. %s for Services
#
4raditional 5arketin' 5i$
#
E$panded 5i$ for ,er%ices< 8 ;s
#
>uildin' 2ustomer 0elationships 4hrou'h
;eople- ;rocesses- and ;h&sical E%idence
#
Ja&s to 3se the 8 ;s
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"raditional Marketing Mix
"raditional Marketing Mix
#
=ll elements within the control of the firm that
communicate the firmKs capa)ilities and ima'e to
customers or that influence customer satisfaction
with the firmKs product and ser%ices<

Product

Price

Place

Promotion
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Expanded Mix for Services !!
Expanded Mix for Services !!
the . %s
the . %s
#
;roduct
#
;rice
#
;lace
#
;romotion
#
People
#
Process
#
Physical (vidence
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"able 1!* "able 1!*
Expanded Marketing Mix for
Expanded Marketing Mix for
Services
Services
%6O2&C" %(8CE %6OMO"IO9 %6ICE
%h#sical good
features
Channel t#pe %romotion
blend
lexibilit#
:ualit# level Exposure Salespeople %rice level
8ccessories Intermediaries 8dvertising "erms
%ackaging Outlet location Sales
promotion
2ifferentiation
7arranties "ransportation %ublicit# 8llo4ances
%roduct lines Storage
3randing
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%EO%(E %5;SIC8(
E<I2E9CE
%6OCESS
Emplo#ees acilit# design lo4 of activities
Customers E=uipment 9umber of steps
Communicating
culture and values
Signage (evel of customer
involvement
Emplo#ee research Emplo#ee dress
Other tangibles
"able 1!* >Continued? "able 1!* >Continued?
Expanded Marketing Mix for
Expanded Marketing Mix for
Services
Services
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7a#s to &se the . %s
7a#s to &se the . %s
(%erall ,trate'ic
=ssessment
#
How effecti%e is a firmKs
ser%ices marketin' mi$I
#
Is the mi$ well-ali'ned
with o%erall %ision and
strate'&I
#
Jhat are the stren'ths and
weaknesses in terms of the
8 ;sI
,pecific ,er%ice
Implementation
#
Jho is the customerI
#
Jhat is the ser%iceI
#
How effecti%el& does the
ser%ices marketin' mi$ for a
ser%ice communicate its
)enefits and *ualit&I
#
Jhat
chan'esLimpro%ements are
neededI
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Services Marketing "riangle
Services Marketing "riangle
8pplications Exercise
8pplications Exercise
#
Mocus on a ser%ice or'ani7ation. In the conte$t
&ou are focusin' on- who occupies each of the
three points of the trian'leI
#
How is each t&pe of marketin' )ein' carried out
currentl&I
#
=re the three sides of the trian'le well ali'nedI
#
=re there specific challen'es or )arriers in an& of
the three areasI
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%art 1
FOCUS ON THE CUSTOMER
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%erceived
Service
Expected
Service
C&S"OME6
COM%89;
Customer
1ap
18% 1
18% $
1aps Model of Service :ualit#
1aps Model of Service :ualit#
18% *
External
Communications
to Customers 18% +
Service 2eliver#
Customer!2riven Service
2esigns and Standards
Compan# %erceptions of
Consumer Expectations
%art 1 ="ener
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1aps Model of Service
1aps Model of Service
:ualit#
:ualit#
#
2ustomer .ap<
#
difference )etween e$pectations and perceptions
#
;ro%ider .ap 1<
#
not knowin' what customers e$pect
#
;ro%ider .ap 2<
#
not ha%in' the ri'ht ser%ice desi'ns and
standards
#
;ro%ider .ap 3<
#
not deli%erin' to ser%ice standards
#
;ro%ider .ap "<
#
not matchin' performance to promises
%art 1 ="ener
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"he Customer 1ap
"he Customer 1ap
Expected
Service
%erceived
Service
18%
%art 1 ="ener
31
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Cha"ter 2
CONSUMER BEHAVIOR
IN SERVICES
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Objectives for Chapter $:
Objectives for Chapter $:
Consumer 3ehavior in
Consumer 3ehavior in
Services
Services
#
(%er%iew the 'eneric differences in consumer )eha%ior
)etween ser%ices and 'oods
#
Introduce the aspects of consumer )eha%ior that a marketer
must understand in fi%e cate'ories of consumer )eha%ior<
#
Information search
#
E%aluation of ser%ice alternati%es
#
,er%ice purchase and consumption
#
;ostpurchase e%aluation
#
0ole of culture
33
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Consumer Evaluation
Consumer Evaluation
%rocesses for Services
%rocesses for Services
#
,earch Nualities
9
attri)utes a consumer can determine prior to
purchase of a product
#
E$perience Nualities
9
attri)utes a consumer can determine after purchase
Dor durin' consumptionE of a product
#
2redence Nualities
9
characteristics that ma& )e impossi)le to e%aluate
e%en after purchase and consumption
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igure $!1 igure $!1
Continuum of Evaluation for
Continuum of Evaluation for
2ifferent "#pes of %roducts
2ifferent "#pes of %roducts
C
l
o
t
h
i
n
g
>
e
+
e
l
r
#
?
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r
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t
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r
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o
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s
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i
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-i&&ic$lt to eal$ate
,as# to eal$ate
A
(igh in search
)$alities
(igh in eB"erience
)$alities
(igh in credence
)$alities
A
A
Most
1oods
Most
Services
3+
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igure $!$ igure $!$
Categories in Consumer
Categories in Consumer
2ecision!Making and Evaluation of
2ecision!Making and Evaluation of
Services
Services
Information
Search
Evaluation of
8lternatives
%urchase and
Consumption
%ost!%urchase
Evaluation
&se of personal sources
%erceived risk
Evoked set
Emotion and mood
Service provision as
drama
Service roles and scripts
Compatibilit# of customers
8ttribution of dissatisfaction
Innovation diffusion
3rand lo#alt#
3!
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igure $!* igure $!*
Categories in Consumer 2ecision!
Categories in Consumer 2ecision!
Making and Evaluation of Services
Making and Evaluation of Services
Information
Search
Evaluation of
8lternatives
%urchase and
Consumption
%ost!%urchase
Evaluation
&se of personal sources
%erceived risk
Evoked set
Emotion and mood
Service provision as
drama
Service roles and scripts
Compatibilit# of
customers
8ttribution of dissatisfaction
Innovation diffusion
3rand lo#alt#
Culture
<alues and attitudes
Manners and customs
Material culture
8esthetics
Educational and social
institutions
38
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Information search Information search
#
In )u&in' ser%ices consumers rel& more on
personal sources. JHYI 0efer p32
#
;ersonal influence )ecomes pi%otal as
product comple$it& increases
#
Jord of mouth important in deli%er& of
ser%ices
#
Jith ser%ice most e%aluation follows
purchase
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%erceived 6isk %erceived 6isk
#
5ore risk would appear to )e in%ol%ed with
purchase of ser%ices Dno 'uaranteesE
#
5an& ser%ices so specialised and difficult to
e%aluate DHow do &ou know whether the
plum)er has done a 'ood Ao)IE
#
4herefore a firm needs to de%elop strate'ies
to reduce this risk- e.'- trainin' of
emplo&ees- standardisation of offerin's
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Evoked Set Evoked Set
#
4he e%oked set of alternati%es likel& to )e smaller
with ser%ices than 'oods
#
If &ou would 'o to a shoppin' centre &ou ma&
onl& find one dr& cleaner or Bsin'le )randC
#
It is also difficult to o)tain ade*uate prepurchase
information a)out ser%ice
#
4he Internet ma& widen this potential
#
2onsumer ma& choose to do it themsel%es- e.'.
'arden ser%ices
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Emotion and Mood Emotion and Mood
#
Emotion and mood are feelin' states that
influence peopleKs perception and
e%aluation of their e$periences
#
5oods are transient
#
Emotions more intense- sta)le and
per%asi%e
#
5a& ha%e a ne'ati%e or positi%e influence
"1
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Service %rovision as Service %rovision as
2rama 2rama
#
/eed to maintain a desira)le impression
#
,er%ice BactorsC need to perform certain
routines
#
;h&sical settin' important- smell- music-
use of space- temperature- cleanliness- etc.
"2
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1lobal eature:
1lobal eature:
2ifferences in the Service
2ifferences in the Service
Experience in the &'S' and @apan
Experience in the &'S' and @apan

=uthenticit&

2arin'

2ontrol 2ourtes&

Mormalit&

Mriendliness

;ersonali7ation

;romptness
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"3
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Chapter *
CUSTOMER
EXPECTATIONS OF
SERVICES
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""
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Objectives for Chapter *:
Objectives for Chapter *:
Customer Expectations of
Customer Expectations of
Service
Service
#
0eco'ni7e that customers hold different t&pes of
e$pectations for ser%ice performance
#
6iscuss controlla)le and uncontrolla)le sources of
customer e$pectations
#
6istin'uish )etween customersK 'lo)al e$pectations of
their relationships and their e$pectations of the ser%ice
encounter
#
=cknowled'e that e$pectations are similar for man&
different t&pes of customers
#
6elineate the most important current issues surroundin'
customer e$pectations
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2EI9I"IO9S
2EI9I"IO9S
#
2ustomers ha%e different e$pectations re
ser%ices 9 or e$pected ser%ice
#
6esired ser%ice 9 customer hopes to recei%e
#
=de*uate ser%ice 9 the le%el of ser%ice the
customer ma& accept
#
6( Y(30 EO;E24=4I(/, 6IMME0 0E
,;30 and 2=;4=I/ 6(0E.(I
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igure *!1 igure *!1
2ual Customer
2ual Customer
Expectation (evels
Expectation (evels
>"4o levels of expectations?
>"4o levels of expectations?
8de=uate Service
2esired Service
Aone of
"olerance
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"8
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igure *!$ igure *!$


"he Aone of "olerance
"he Aone of "olerance
8de=uate Service
2esired Service
Aone of
"olerance
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igure *!* igure *!*


Aones of "olerance
Aones of "olerance
<86;
<86;
for
for
2ifferent Service 2imensions
2ifferent Service 2imensions
Most Important actors (east Important actors
(evel
of
Expectation
,ource< >err&- ;arasuraman- and Peithaml D1993E
8de=uate Service
2esired Service
Aone of
"olerance
2esired
Service
8de=uate
Service
Aone
of
"olerance
2esired Service
8de=uate Service
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"9
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Aones of "olerance
Aones of "olerance
<86;
<86;
for
for
irst!"ime and 6ecover# Service
irst!"ime and 6ecover# Service
irst!"ime Service
=$tcome
%rocess
=$tcome
%rocess
6ecover# Service
Expectations
(O7 5I15
,ource< ;arasuraman- >err& and Peithaml D1991E
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igure *!, igure *!,


actors that Influence
actors that Influence
2esired Service
2esired Service
2esired
Service
8de=uate
Service
Aone
of
"olerance
Enduring Service
Intensifiers
%ersonal 9eeds
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+1
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#
;ersonal needs include ph&sical- social-
ps&cholo'ical cate'ories
#
Endurin' ser%ice intensifiers are indi%idual- sta)le
factors that lead to hei'htened sensiti%it& to
ser%ice
4his can further di%ided into 6eri%ed ,er%ice
E$pectations and ;ersonal ser%ice ;hilosophies
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+2
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igure *!- igure *!-


actors that Influence
actors that Influence
8de=uate Service
8de=uate Service
2esired
Service
8de=uate
Service
Aone
of
"olerance
Self!%erceived
Service 6ole
Situational
actors
%erceived Service
8lternatives
"ransitor# Service
Intensifiers
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+3
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#
4ransitor& ser%ice intensifiers 9 temporar& 9
a computer )reakdown will )e less tolerated
at financial &ear-ends
#
;ercei%ed ser%ice alternati%es
#
;ercei%ed ser%ice role of customer
#
,ituational factors
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+"
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igure *!. igure *!.


actors that Influence
actors that Influence
2esired and %redicted Service
2esired and %redicted Service
2esired
Service
8de=uate
Service
Aone
of
"olerance
%redicted
Service
Explicit Service
%romises
Implicit Service
%romises
7ord!of!Mouth
%ast Experience
++
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Chapter +
CUSTOMER
PERCEPTIONS OF
SERVICE
+!
S
M
Objectives for Chapter +:
Objectives for Chapter +:
Customer %erceptions of
Customer %erceptions of
Service
Service
#
;ro%ide &ou with definitions and
understandin' of customer satisfaction and
ser%ice *ualit&
#
,how that ser%ice encounters or the
Bmoments of truthC are the )uildin' )locks of
customer perceptions
#
Hi'hli'ht strate'ies for mana'in' customer
perceptions of ser%ice
+8
S
M
igure +!1 igure +!1
Customer %erceptions of
Customer %erceptions of
Service :ualit# and
Service :ualit# and
Customer Satisfaction
Customer Satisfaction

Service
:ualit#
6eliabilit#
6esponsiveness
8ssurance
Empath#
"angibles
%roduct
:ualit#
%rice
%ersonal
actors
Customer
Satisfaction
Situational
actors
+:
S
M
actors Influencing
actors Influencing
Customer Satisfaction
Customer Satisfaction
#
;roductLser%ice *ualit&
#
;roductLser%ice attri)utes or features
#
2onsumer Emotions
#
=ttri)utions for productLser%ice success or
failure
#
E*uit& or fairness e%aluations
+9
S
M
Outcomes of
Outcomes of
Customer Satisfaction
Customer Satisfaction
#
Increased customer retention
#
;ositi%e word-of-mouth communications
#
Increased re%enues
!
S
M
igure +!* igure +!*
6elationship bet4een Customer
6elationship bet4een Customer
Satisfaction and (o#alt# in
Satisfaction and (o#alt# in
Competitive Industries
Competitive Industries
)B
$)B
+)B
-)B
/)B
1))B
<er#
dissatisfied
2issatisfied 9either
satisfied nor
dissatisfied
Satisfied <er#
satisfied
Satisfaction measure
(
o
#
a
l
t
#

>
r
e
t
e
n
t
i
o
n
?
Source: >ames 4! (es*ett3 W! ,arl Sasser3 >r!3 and 4eonard 0! Schlesinger3 The Service Profit Chain3 8/e+ Cor*3 /C: The ?ree %ress3 199D;3 "! 93!
!1
S
M
Service :ualit#
Service :ualit#
#
4he customerKs Aud'ment of o%erall
e$cellence of the ser%ice pro%ided in
relation to the *ualit& that was e$pected.
#
;rocess and outcome *ualit& are )oth
important.
!2
S
M
"he ive 2imensions of
"he ive 2imensions of
Service :ualit#
Service :ualit#
=)ilit& to perform the promised
ser%ice dependa)l& and accuratel&.
Gnowled'e and courtes& of
emplo&ees and their a)ilit& to
con%e& trust and confidence.
;h&sical facilities- e*uipment- and
appearance of personnel.
2arin'- indi%iduali7ed attention the
firm pro%ides its customers.
Jillin'ness to help customers and
pro%ide prompt ser%ice.
"angibles
6eliabilit#
6esponsiveness
8ssurance
Empath#
!3
S
M
Exercise to
Exercise to
Identif# Service 8ttributes
Identif# Service 8ttributes
In gro$"s o& &ie3 choose a serices ind$str# and s"end 10 min$tes
brainstorming s"eci&ic re)$irements o& c$stomers in each o& the &ie
serice )$alit# dimensions! Be certain the requirements reflect the
customers point of view.
6eliabilit#:
8ssurance:
"angibles:
Empath#:
6esponsiveness:
!"
S
M
SE6<:&8( 8ttributes
SE6<:&8( 8ttributes

%roviding service as promised

2ependabilit# in handling customersC

service problems

%erforming services right the first time

%roviding services at the promised time

Maintaining error!free records

Deeping customers informed as to

4hen services 4ill be performed

%rompt service to customers

7illingness to help customers

6eadiness to respond to customersC

re=uests
6E(I83I(I";
6ES%O9SI<E9ESS

Emplo#ees 4ho instill confidence in

customers

Making customers feel safe in their

transactions

Emplo#ees 4ho are consistentl# courteous

Emplo#ees 4ho have the kno4ledge to

ans4er customer =uestions
8SS&689CE

1iving customers individual attention

Emplo#ees 4ho deal 4ith customers in a

caring fashion

5aving the customerCs best interest at heart

Emplo#ees 4ho understand the needs of

their customers

Convenient business hours

EM%8"5;

Modern e=uipment

<isuall# appealing facilities

Emplo#ees 4ho have a

neatE professional
appearance

<isuall# appealing materials

associated 4ith the service
"891I3(ES
!+
S
M
"he Service Encounter
"he Service Encounter
#
is the Bmoment of truthC
#
occurs an& time the customer interacts with the firm
#
can potentiall& )e critical in determinin' customer satisfaction and lo&alt&
#
t&pes of encounters<
9
remote encounters
9
phone encounters
9
face-to-face encounters
#
is an opportunit& to<
9
)uild trust
9
reinforce *ualit&
9
)uild )rand identit&
9
increase lo&alt&
!!
S
M
Check-In
Check-In
Request Wake-Up Call
Request Wake-Up Call
Checkout
Checkout
Bellboy Takes to Room
Bellboy Takes to Room
Restaurant Meal
Restaurant Meal
igure +!+ igure +!+
8 Service Encounter
8 Service Encounter
Cascade for a 5otel <isit
Cascade for a 5otel <isit
!8
S
M
Sales Call
Sales Call
Ordering Supplies
Ordering Supplies
Billing
Billing
Delivery and Installation
Delivery and Installation
Servicing
Servicing
igure +!, igure +!,


8 Service Encounter
8 Service Encounter
Cascade for an Industrial
Cascade for an Industrial
%urchase
%urchase
!:
S
M
Critical Service Encounters
Critical Service Encounters
6esearch
6esearch
#
,%- ' understanding actual events and
behaviors that cause customer dis/satisfaction
in service encounters
#
&(TH# ' Critical $ncident Techni.ue
#
#%T% ' stories from customers and employees
#
/TP/T ' identification of themes underlying
satisfaction and dissatisfaction "ith service
encounters
!9
S
M
Sample :uestions for Critical
Sample :uestions for Critical
Incidents "echni=ue Stud#
Incidents "echni=ue Stud#
#
4hink of a time when- as a customer- &ou had a
particularl& satisfying (dissatisfying interaction
with an emplo&ee of .
#
Jhen did the incident happenI
#
Jhat specific circumstances led up to this situationI
#
E$actl& what was said and doneI
#
Jhat resulted that made &ou feel the interaction was
satisfying (dissatisfyingI
8
S
M
Common "hemes in Critical
Common "hemes in Critical
Service Encounters
Service Encounters
6esearch
6esearch
6ecover#: 8daptabilit#:
Spontaneit#: Coping:
Emplo#ee 6esponse
to Service 2eliver#
S#stem ailure
Emplo#ee 6esponse
to Customer 9eeds
and 6e=uests
Emplo#ee 6esponse
to %roblem Customers
&nprompted and
&nsolicited Emplo#ee
8ctions and 8ttitudes
81
S
M
6ecover#
6ecover#
#
=cknowled'e
pro)lem
#
E$plain causes
#
=polo'i7e
#
2ompensateLup'rade
#
Qa& out options
#
4ake responsi)ilit&
#
I'nore customer
#
>lame customer
#
Qea%e customer to
fend for himLherself
#
6own'rade
#
=ct as if nothin' is
wron'
2O
2O9C"
82
S
M
8daptabilit#
8daptabilit#
#
0ecogni1e the
seriousness of the need
#
%ckno"ledge
#
%nticipate
#
%ttempt to accommodate
#
()plain rules/policies
#
Take responsibility
#
()ert effort to
accommodate
#
Promise, then fail to
follo" through
#
$gnore
#
Sho" un"illingness to
try
#
(mbarrass the customer
#
-augh at the customer
#
%void responsibility
2O 2O9C"
83
S
M
Spontaneit#
Spontaneit#
#
Take time
#
2e attentive
#
%nticipate needs
#
-isten
#
Provide information
*even if not asked+
#
Treat customers fairly
#
Sho" empathy
#
%ckno"ledge by name
#
E$hi)it impatience
#
I'nore
#
YellLlau'hLswear
#
,teal from or cheat a
customer
#
6iscriminate
#
4reat impersonall&
2O
2O9C"
8"
S
M
Coping
Coping
#
Qisten
#
4r& to accommodate
#
E$plain
#
Qet 'o of the customer
#
4ake customerKs
dissatisfaction
personall&
#
Qet customerKs
dissatisfaction affect
others
2O
2O9C"
8+
S
M
igure +!- igure +!-
Evidence of Service from the
Evidence of Service from the
CustomerCs %oint of <ie4
CustomerCs %oint of <ie4
%eople
%rocess
%h#sical
Evidence
Contact emplo#ees
Customer
himFherself
Other customers

Operational flo4 of
activities

Steps in process

lexibilit# vs'
standard

"echnolog# vs'
human

"angible
communication

Servicescape

1uarantees

"echnolog#
8!
S
M
S
M
%art $
LISTENING TO
CUSTOMER
REQUIREMENTS
88
S
M
%rovider 18% 1
%rovider 18% 1
Compan#
%erceptions of
Consumer
Expectations
Expected
Service
C&S"OME6
COM%89;
18% 1
%art 2 ="ener
8:
S
M
S
M
Chapter ,
UNDERSTANDING
CUSTOMER
EXPECTATIONS AND
PERCEPTIONS THROUGH
MARKETING RESEARCH
89
S
M
Objectives for Chapter ,:
Objectives for Chapter ,:
&nderstanding Customer Expectations
&nderstanding Customer Expectations
and %erceptions through
and %erceptions through
Marketing 6esearch
Marketing 6esearch
#
;resent the t&pes of and 'uidelines for marketin'
research in ser%ices
#
,how the wa&s that marketin' research information
can and should )e used for ser%ices
#
6escri)e the strate'ies )& which companies can
facilitate interaction and communication )etween
mana'ement and customers
#
;resent wa&s that companies can and do facilitate
interaction )etween contact people and mana'ement
:
S
M
Common 6esearch Objectives
Common 6esearch Objectives
for Services
for Services
#
4o identif& dissatisfied customers
#
4o disco%er customer re*uirements or e$pectations
#
4o monitor and track ser%ice performance
#
4o assess o%erall compan& performance compared to
competition
#
4o assess 'aps )etween customer e$pectations and perceptions
#
4o 'au'e effecti%eness of chan'es in ser%ice
#
4o appraise ser%ice performance of indi%iduals and teams for
rewards
#
4o determine e$pectations for a new ser%ice
#
4o monitor chan'in' e$pectations in an industr&
#
4o forecast future e$pectations
:1
S
M
igure ,!1 igure ,!1
Criteria for 8n Effective
Criteria for 8n Effective
Services 6esearch %rogram
Services 6esearch %rogram
0esearch
()Aecti%es
$
n
c
l
u
d
e
s
3
u
a
l
i
t
a
t
i
v
e
0
e
s
e
a
r
c
h
$ncludes
3
uantitative
0esearch Includes
;erceptions
and
E$pectations
of
2ustomers
$ncludes
&easures
of
-oyalty or
2ehavioral
$ntentions
>
a
l
a
n
c
e
s

2
o
s
t
a
n
d

1
a
l
u
e

o
f
I
n
f
o
r
m
a
t
i
o
n
Includes
,tatistical
1alidit&
Jhen /ecessar&
5easures
;riorities
or
Importance
(ccurs
with
=ppropriate
Mre*uenc&
:2
S
M
%ortfolio of Services 6esearch
%ortfolio of Services 6esearch
Customer Complaint
Solicitation
G6elationshipH Surve#s
%ost!"ransaction Surve#s
Customer ocus 1roups
GM#ster# ShoppingH of
Service %roviders
Emplo#ee Surve#s

(ost Customer 6esearch

Identif# dissatisfied customers to attempt recover#I
identif# most common categories of service failure
for remedial action
Obtain customer feedback 4hile service experience is still
freshI act on feedback =uickl# if negative patterns develop
&se as input for =uantitative surve#sI provide a
forum for customers to suggest service!improvement
ideas
8ssess compan#Cs service performance compared to
competitorsI identif# service!improvement prioritiesI track
service improvement over time
Measure individual emplo#ee service behaviors for use in
coachingE trainingE performance evaluationE recognition and
re4ardsI identif# s#stemic strengths and 4eaknesses in
service
Measure internal service =ualit#I identif# emplo#ee!
perceived obstacles to improve serviceI track
emplo#ee morale and attitudes
2etermine the reasons 4h# customers defect
6esearch Objective
"#pe of 6esearch
uture Expectations 6esearch
"o forecast future expectations of customers
"o develop and test ne4 service ideas
:3
S
M
Stages in the 6esearch
Stages in the 6esearch
%rocess
%rocess
#
,ta'e 1 < 6efine ;ro)lem
#
,ta'e 2 < 6e%elop 5easurement ,trate'&
#
,ta'e 3 < Implement 0esearch ;ro'ram
#
,ta'e " < 2ollect and 4a)ulate 6ata
#
,ta'e + < Interpret and =nal&7e Mindin's
#
,ta'e ! < 0eport Mindin's
:"
S
M
igure ,!, igure ,!,
Service :ualit# %erceptions
Service :ualit# %erceptions
6elative to Aones of "olerance
6elative to Aones of "olerance
b# 2imensions
b# 2imensions
6etail Chain
0
/
.
-
,
+
*
$
1
)
6eliabilit# 6esponsiveness 8ssurance Empath# "angibles
O
O
O
O
Aone of "olerance S':' %erception O
O
:+
S
M
Service :ualit# %erceptions
Service :ualit# %erceptions
6elative to Aones of "olerance b#
6elative to Aones of "olerance b#
2imensions
2imensions
Computer
Manufacturer
1)
/
-
+
$
)
6eliabilit# 6esponsiveness 8ssurance Empath# "angibles
O
O
O
O
O
Aone of "olerance S':' %erception
O
:!
S
M
igure ,!- igure ,!-
ImportanceF%erformance Matrix
ImportanceF%erformance Matrix
5I15
5I15
(O7
%erformance
I
m
p
o
r
t
a
n
c
e

Attributes to Improve Attributes to Maintain

High
Leverage
Attributes to De-emphasie Attributes to Maintain
Low
Leverage
:8
S
M
S
M
Chapter -
BUILDING
CUSTOMER
RELATIONSHIPS
::
S
M
Objectives for Chapter -:
Objectives for Chapter -:
3uilding Customer
3uilding Customer
6elationships
6elationships
#
E$plain relationship marketin'- its 'oals- and the )enefits
of lon'-term relationships for firms and customers
#
E$plain wh& and how to estimate customer lifetime %alue
#
,pecif& the foundations for successful relationship
marketin'--*ualit& core ser%ices and careful market
se'mentation
#
;ro%ide &ou with e$amples of successful customer
retention strate'ies
#
Introduce the idea that Bthe customer isnKt alwa&s ri'htC
:9
S
M
6elationship Marketing
6elationship Marketing
#
is a philosoph& of doin' )usiness that focuses on keepin'
and impro%in' current customers
#
does not necessaril& emphasi7e ac*uirin' new customers
#
is usuall& cheaper Dfor the firmE--to keep a current
customer costs less than to attract a new one
#
'oal R to )uild and maintain a )ase of committed
customers who are profita)le for the or'ani7ation
#
thus- the focus is on the attraction- retention- and
enhancement of customer relationships
9
S
M
(ifetime <alue of a Customer
(ifetime <alue of a Customer
#
=ssumptions
#
Income
9
E$pected 2ustomer Qifetime
9
=%era'e 0e%enue DmonthL&earE
9
(ther 2ustomers con%inced %ia J(5
9
Emplo&ee Qo&alt&II
#
E$penses
9
2osts of ,er%in' 2ustomer IncreaseII
91
S
M
8 (o#al Customer is One 7ho'''
8 (o#al Customer is One 7ho'''
#
Sho"s 2ehavioral Commitment
9
)u&s from onl& one supplier- e%en thou'h other options
e$ist
9
increasin'l& )u&s more and more from a particular supplier
9
pro%ides constructi%e feed)ackLsu''estions
#
()hibits Psychological Commitment
9
wouldnKt consider terminatin' the relationship--
ps&cholo'ical commitment
9
has a positi%e attitude a)out the supplier
9
sa&s 'ood thin's a)out the supplier
92
S
M
Customer (o#alt# Exercise
Customer (o#alt# Exercise
#
4hink of a ser%ice pro%ider &ou are lo&al to.
#
Jhat do &ou do D&our )eha%iors- actions- feelin'sE
that indicates &ou are lo&alI
#
Jh& are &ou lo&al to this pro%iderI
93
S
M
3enefits to the OrganiJation
3enefits to the OrganiJation
of Customer (o#alt#
of Customer (o#alt#
#
lo&al customers tend to spend more with the
or'ani7ation o%er time
#
on a%era'e costs of relationship maintenance are
lower than new customer costs
#
emplo&ee retention is more likel& with a sta)le
customer )ase
#
lifetime %alue of a customer can )e %er& hi'h
9"
S
M
3enefits to the Customer
3enefits to the Customer
#
inherent )enefits in 'ettin' 'ood %alue
#
economic- social- and continuit& )enefits
9
contri)ution to sense of well-)ein' and *ualit&
of life and other ps&cholo'ical )enefits
9
a%oidance of chan'e
9
simplified decision makin'
9
social support and friendships
9
special deals
9+
S
M
G
G
"he Customer IsnCt 8l4a#s
"he Customer IsnCt 8l4a#s
6ightH
6ightH
#
/ot all customers are 'ood relationship
customers<
9
wron' se'ment
9
not profita)le in the lon' term
9
difficult customers
9!
S
M
Strategies for 3uilding
Strategies for 3uilding
6elationships
6elationships
#
Moundations<
9
E$cellent Nualit&L1alue
9
2areful ,e'mentation
#
>ondin' ,trate'ies<
9
Minancial >onds
9
,ocial F ;s&cholo'ical >onds
9
,tructural >onds
9
2ustomi7ation >onds
#
0elationship ,trate'ies Jheel
98
S
M
Getting
Satisfying
Retaining
Enhancing
igure -!1 igure -!1
Customer 1oals of
Customer 1oals of
6elationship Marketing
6elationship Marketing
9:
S
M
igure -!* igure -!*
&nderl#ing (ogic of Customer
&nderl#ing (ogic of Customer
6etention 3enefits to the
6etention 3enefits to the
OrganiJation
OrganiJation
Customer 6etention K
Increased %rofits
Emplo#ee (o#alt#
:ualit#
Service
Customer Satisfaction
99
S
M
igure -!, igure -!,
Steps in Market Segmentation
Steps in Market Segmentation
and
and
"argeting for Services
"argeting for Services


Identify
Bases for
Segmenting
the Market
STEP 1:
Dee!op
Pro"!es of
Res#!ting
Segments
STEP $:

Dee!op
Meas#res
of Segment
%ttractie&
ness
STEP
':
Se!ect the
Target
Segments
STEP(:
Ens#re that
Segments
%re
Compati)!e
STEP
*:
1
S
M
,Bcellent
E$alit#
and
1al$e
igure -!- igure -!-

(evels of 6etention Strategies
(evels of 6etention Strategies
I' inancial
3onds
II'
Social
3onds
I<'
Structural
3onds
III' CustomiJation
3onds
1ol$me and
?re)$enc#
@e+ards
5$ndling and
Cross Selling
Stable
%ricing
Social 5onds
0mong
C$stomers
%ersonal
@elationshi"s
Contin$o$s
@elationshi"s
C$stomer
Intimac#
.ass
C$stomi'ation
0ntici"ation
F Innoation
Shared
%rocesses
and
,)$i"ment
>oint
Inestments
Integrated
In&ormation
S#stems
11
S
M
S
M
Chapter .

SERVICE RECOVERY
12
S
M
Objectives for Chapter .:
Objectives for Chapter .:
Service 6ecover#
Service 6ecover#
#
Illustrate the importance of reco%er& from ser%ice
failures in )uildin' lo&alt&
#
6iscuss the nature of consumer complaints and wh&
people do and do not complain
#
;ro%ide e%idence of what customers e$pect and the
kind of responses the& want when the& complain
#
;ro%ide strate'ies for effecti%e ser%ice reco%er&
#
6iscuss ser%ice 'uarantees
13
S
M
igure .!1 igure .!1
&nhapp# CustomersC
&nhapp# CustomersC
6epurchase Intentions
6epurchase Intentions
0,B
.)B
+-B
*.B
/$B
,+B
10B
0B
Complaints 6esolved :uickl#
Complaints 6esolved
Complaints 9ot 6esolved
Minor complaints >L1!L, losses? Major complaints >over L1)) losses?
&nhapp# Customers 7ho 2onCt Complain
&nhapp# Customers 7ho 2o Complain
%ercent of Customers 7ho 7ill 3u# 8gain
Source: 0da"ted &rom data re"orted b# the Technical 0ssistance @esearch %rogram!
1"
S
M
igure .!* igure .!*
Customer 6esponse
Customer 6esponse
ollo4ing Service ailure
ollo4ing Service ailure
Serice ?ail$re
-o /othing Ta*e 0ction
Sta# +ith %roider
S+itch %roiders
Com"lain to
%roider
Com"lain to
?amil# G ?riends
Com"lain to
Third %art#
Sta# +ith %roider
S+itch %roiders
1+
S
M
igure .!, igure .!,
Service 6ecover# Strategies
Service 6ecover# Strategies
(
e
a
r
n

f
r
o
m
6
e
c
o
v
e
r
#

E
x
p
e
r
i
e
n
c
e
s
"
r
e
a
t

C
u
s
t
o
m
e
r
s

a
i
r
l
#
(
e
a
r
n

f
r
o
m
(
o
s
t

C
u
s
t
o
m
e
r
s
7
e
l
c
o
m
e

a
n
d

E
n
c
o
u
r
a
g
e

C
o
m
p
l
a
i
n
t
s

a
i
l

S
a
f
e

t
h
e

S
e
r
v
i
c
e
8
c
t

:
u
i
c
k
l
#
Service
6ecover#
Strategies
1!
S
M
igure .!- igure .!-
Causes 3ehind Service
Causes 3ehind Service
S4itching
S4itching
Service
S4itching
3ehavior
H (igh %rice
H %rice Increases
H Un&air %ricing
H -ece"tie %ricing
%ricing
H 4ocationF(o$rs
H Wait &or 0""ointment
H Wait &or Serice
Inconvenience
H Serice .ista*es
H 5illing ,rrors
H Serice Catastro"he
Core Service ailure
H Uncaring
H Im"olite
H Unres"onsie
H Un*no+ledgeable
Service Encounter ailures
H /egatie @es"onse
H /o @es"onse
H @el$ctant @es"onse
6esponse to Service ailure
H ?o$nd 5etter Serice
Competition
H Cheat
H (ard Sell
H Unsa&e
H Con&lict o& Interest
Ethical %roblems
H C$stomer .oed
H %roider Closed
Involuntar# S4itching
,ource< ,ue Gea%ene&
18
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Service 1uarantees
Service 1uarantees
#
'uarantee R an assurance of the fulfillment of a condition
D!ebster"s #ictionaryE
#
for products- 'uarantee often done in the form of a
warrant&
#
ser%ices are often not 'uaranteed
9
cannot return the ser%ice
9
ser%ice e$perience is intan'i)le
9
Dso what do &ou 'uaranteeIE
1:
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"able .!. "able .!.

Characteristics of an
Characteristics of an
Effective Service 1uarantee
Effective Service 1uarantee
&nconditional
"he guarantee should make its promise unconditionall# !
no strings attached'
Meaningful
It should guarantee elements of the service that are
important to the customer'
"he pa#out should cover full# the customerMs
dissatisfaction'
Eas# to &nderstand and Communicate
or customers ! the# need to understand 4hat to expect'
or emplo#ees ! the# need to understand 4hat to do'
Eas# to Invoke and Collect
"here should not be a lot of hoops or red tape in the 4a#
of accessing or collecting on the guarantee'
Source: Christo"her W!4! (art3 6The %o+er o& Unconditional I$arantees37 Harvard Business Revie3 >$l#<0$g$st3 19993 ""! :4<62!
19
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7h# a 1ood 1uarantee
7h# a 1ood 1uarantee
7orks
7orks
#
forces compan& to focus on customers
#
sets clear standards
#
'enerates feed)ack
#
forces compan& to understand wh& it failed
#
)uilds Bmarketin' muscleC
11
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Service 1uarantees
Service 1uarantees
#
6oes e%er&one need a 'uaranteeI
#
0easons companies do /(4 offer 'uarantees<
9
'uarantee would )e at odds with compan&Ks ima'e
9
too man& uncontrolla)le e$ternal %aria)les
9
fears of cheatin' )& customers
9
costs of the 'uarantee are too hi'h
111
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Service 1uarantees
Service 1uarantees
#
ser%ice 'uarantees work for companies who are
alread& customer-focused
#
effecti%e 'uarantees can )e >I. deals - the& put the
compan& at risk in the e&es of the customer
#
customers should )e in%ol%ed in the desi'n of ser%ice
'uarantees
#
the 'uarantee should )e so stunnin' that it comes as a
surprise -- a J(JSS factor
#
BitKs the icin' on the cake- not the cakeC
112
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%art *

ALIGNING STRATEGY,
SERVICE DESIGN
AND STANDARDS
113
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C&S"OME6
COM%89;
18% $
Customer!2riven
Service 2esigns and
Standards
Compan#
%erceptions of
Consumer
Expectations

%rovider 18% $
%rovider 18% $
%art 3 ="ener
11"
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Chapter /
SERVICE DEVELOPMENT
AND DESIGN
11+
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Objectives for Chapter /:
Objectives for Chapter /:
Service 2evelopment and
Service 2evelopment and
2esign
2esign
#
6escri)e the challen'es inherent in ser%ice desi'n
#
;resent steps in the new ser%ice de%elopment
process
#
,how the %alue of ser%ice )lueprintin' and *ualit&
function deplo&ment DNM6E in new ser%ice desi'n
and ser%ice impro%ement
#
;resent lessons learned in choosin' and
implementin' hi'h-performance ser%ice inno%ations
11!
S
M
igure /!1 igure /!1
6isks of 6el#ing on 7ords
6isks of 6el#ing on 7ords
8lone to
8lone to
2escribe Services
2escribe Services

Oversimplification

Incompleteness

Subjectivit#

3iased Interpretation
118
S
M
igure /!$ igure /!$
9e4 Service 2evelopment %rocess
9e4 Service 2evelopment %rocess
Source< >oo7-=llen F Hamilton- 19:2@ >owers- 19:+@ 2ooper- 1993@ Ghurana F 0osenthal 1998.

3usiness Strateg# 2evelopment or 6evie4

9e4 Service Strateg# 2evelopment

Idea 1eneration

Concept 2evelopment and Evaluation

3usiness 8nal#sis

Service 2evelopment and "esting

%ostintroduction Evaluation

CommercialiJation

Market "esting
Screen ideas against ne service strateg!
Test conce"t ith customers and em"lo!ees
Test for "rofita#ilit! and feasi#ilit!
Conduct service "rotot!"e test
Test service and other marketing$mi% elements
?ront ,nd
%lanning
Im"lementation
11:
S
M
igure /!* igure /!*
9e4 Service Strateg# Matrix
9e4 Service Strateg# Matrix
for Identif#ing 1ro4th
for Identif#ing 1ro4th
Opportunities
Opportunities
Markets
Offerings
,Bisting
Serices
/e+
Serices
C$rrent C$stomers /e+ C$stomers
S(0@, 5UI4-I/I
-I1,@SI?IC0TI=/
.0@J,T
-,1,4=%.,/T
S,@1IC,
-,1,4=%.,/T
igure /!+ igure /!+
Service MappingF3lueprinting
Service MappingF3lueprinting
= tool for simultaneousl& depictin' the ser%ice
process- the points of customer contact- and the
e%idence of ser%ice from the customerKs point of
%iew.
Service
Mappin
g
Proces
s
Points of
Contact
Eidenc
e
12
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Service 3lueprint Components
Service 3lueprint Components
C+ST,MER %CTI,-S
line of interaction
.,-ST%GE/ C,-T%CT EMP0,1EE %CTI,-S
line of visibility
.B%C2ST%GE/ C,-T%CT EMP0,1EE %CTI,-S
line of internal interaction
S+PP,RT PR,CESSES
121
S
M
-rier
%ic*s
U" %*g!
-is"atch
-rier
0ir"ort
@eceies
G 4oads
Sort
%ac*ages
4oad on
0ir"lane
Fly to
Destinati
on
Unload
G
Sort
4oad
=n
Tr$c*
Express Mail 2eliver# Service
Express Mail 2eliver# Service
S
U
P
P
O
R
T

P
R
O
C
E
S
S
C
O
N
T
A
C
T


P
E
R
S
O
N
(

a
c
!

S
t
a
g
e
"
(
O
n

S
t
a
g
e
"
C
U
S
T
O
M
E
R
P
#
$
S
%
C
A
&
E
'
%
D
E
N
C
E
C$stomer
Calls
C$stomer
Iies
%ac*age
Tr(c!
Pac!aging
For)s
#an*+,el*
Co)p(ter
Unifor)
@eceie
%ac*age
Tr(c!
Pac!aging
For)s
#an*+,el*
Co)p(ter
Unifor)
-elier
%ac*age
C$stomer
Serice
=rder
?l# to
Sort
Center
122
S
M
Overnight 5otel Sta#
Overnight 5otel Sta#
S
U
P
P
O
R
T

P
R
O
C
E
S
S
C
O
N
T
A
C
T

P
E
R
S
O
N
(

a
c
!

S
t
a
g
e
"
(
O
n

S
t
a
g
e
"
C
U
S
T
O
M
E
R
#otel
E-terior
Par!ing
Cart for
ags
Des!
Registration
Papers
&obby
.ey
Elevators
#all/ays
Roo)
Cart for
ags
Roo)
A)enities
at,
Men( Delivery
Tray
Foo*
Appearance
Foo*
ill
Des!
&obby
#otel
E-terior
Par!ing
0rrie
at
(otel
Iie 5ags
to
5ell"erson
Chec* in
Io to
@oom
@eceie
5ags
Slee"
Sho+er
Call
@oom
Serice
@eceie
?ood
,at
Chec* o$t
and
4eae
Ireet and
Ta*e
5ags
%rocess
@egistration
-elier
5ags
-elier
?ood
%rocess
Chec* =$t
Ta*e 5ags
to @oom
Ta*e
?ood
=rder
@egistration
S#stem
%re"are
?ood
@egistration
S#stem
P
#
$
S
%
C
A
&
E
'
%
D
E
N
C
E
123
S
M
igure /!/ igure /!/
3uilding a Service 3lueprint
3uilding a Service 3lueprint
Ste" 1
Identi&# the
"rocess to
be bl$e<
"rinted!
Ste" 1
Identi&# the
"rocess to
be bl$e<
"rinted!
Ste" 2
Identi&# the
c$stomer or
c$stomer
segment!
Ste" 2
Identi&# the
c$stomer or
c$stomer
segment!
Ste" 3
.a" the
"rocess &rom
the
c$stomerKs
"oint o& ie+!
Ste" 3
.a" the
"rocess &rom
the
c$stomerKs
"oint o& ie+!
Ste" 4
.a" contact
em"lo#ee
actions3
onstage and
bac*<stage!
Ste" 4
.a" contact
em"lo#ee
actions3
onstage and
bac*<stage!
Ste" :
4in* c$stomer
and contact
"erson
actiities to
needed
s$""ort
&$nctions!
Ste" :
4in* c$stomer
and contact
"erson
actiities to
needed
s$""ort
&$nctions!
Ste" 6
0dd
eidence o&
serice at
each
c$stomer
action ste"!
Ste" 6
0dd
eidence o&
serice at
each
c$stomer
action ste"!
12"
S
M
8pplication of Service
8pplication of Service
3lueprints
3lueprints
#
/ew ,er%ice 6e%elopment
#
concept de%elopment
#
market testin'
#
,upportin' a BPero 6efectsC 2ulture
#
mana'in' relia)ilit&
#
identif&in' empowerment issues
#
,er%ice 0eco%er& ,trate'ies
#
identif&in' ser%ice pro)lems
#
conductin' root cause anal&sis
#
modif&in' processes
12+
S
M
3lueprints Can 3e &sed 3#:
3lueprints Can 3e &sed 3#:
#
,er%ice 5arketers
9
creatin' realistic customer
e$pectations
# ser%ice s&stem desi'n
# promotion
#
(perations 5ana'ement
9
renderin' the ser%ice as promised
# mana'in' fail points
# trainin' s&stems
# *ualit& control
#
Human 0esources
9
empowerin' the human element
#
Ao) descriptions
# selection criteria
#
appraisal s&stems
#
,&stem 4echnolo'&
9
pro%idin' necessar& tools<
#
s&stem specifications
#
personal preference data)ases
12!
S
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S
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Chapter 0
CUSTOMER-DEFINED
SERVICE STANDARDS
128
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Objectives for Chapter 0:
Objectives for Chapter 0:
Customer!defined Service
Customer!defined Service
Standards
Standards
#
6ifferentiate )etween compan&-defined and
customer-defined ser%ice standards
#
6istin'uish amon' one-time ser%ice fi$es and
BhardC and BsoftC customer-defined standards
#
E$plain the critical role of the ser%ice encounter
se*uence in de%elopin' customer-defined standards
#
Illustrate how to translate customer e$pectations
into )eha%iors and actions that are defina)le-
repeata)le- and actiona)le
12:
S
M
igure 0!1 igure 0!1


8"K"Cs %rocess Map for Measurements
8"K"Cs %rocess Map for Measurements
6eliabilit# >+)B?
Eas# "o &se >$)B?
eatures F unctions >+)B?
Dno4ledge >*)B?
6esponsive >$,B?
ollo4!&p >1)B?
2eliver# Interval Meets 9eeds >*)B?
2oes 9ot 3reak >$,B?
Installed 7hen %romised >1)B?
9o 6epeat "rouble >*)B?
ixed ast >$,B?
Dept Informed >1)B?
8ccurac#E 9o Surprise >+,B?
6esolve On irst Call >*,B?
Eas# "o &nderstand >1)B?
3usiness %rocess
Customer 9eed
Internal Metric
*)B %roduct
*)B Sales
1)B Installation
1,B 6epair
1,B 3illing
B 6epair Call
B Calls for 5elp
unctional %erformance "est
Supervisor Observations
B %roposal Made on "ime
B ollo4 &p Made
8verage Order Interval
B 6epair 6eports
B Installed On 2ue 2ate
B 6epeat 6eports
8verage Speed Of 6epair
B Customers Informed
B 3illing In=uiries
B 6esolved irst Call
B 3illing In=uiries
"otal
:ualit#
Source: 8"K" 1eneral 3usiness S#stems
129
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Exercise for Creating
Exercise for Creating
Customer!2efined Service
Customer!2efined Service
Standards
Standards
#
Morm a 'roup of four people
#
3se &our schoolKs under'raduate or 'raduate
pro'ram- or an appro%ed alternati%e
#
2omplete the customer-dri%en ser%ice standards
importance chart
#
Esta)lish standards for the most important and
lowest-performed )eha%iors and actions
#
>e prepared to present &our findin's to the class
13
S
M
Service Encounter
Customer 6e=uirements Measurements
Service
:ualit#



C$stomer<-rien Standards and
C$stomer<-rien Standards and
.eas$rements ,Bercise
.eas$rements ,Bercise
131
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igure 0!$ igure 0!$
1etting to 8ctionable Steps
1etting to 8ctionable Steps
Satisfaction <alue
6elationship
Solution %rovider
6eliabilit# Empath#
8ssurance "angibles
6esponsiveness %rice
2elivers on "ime
6eturns Calls :uickl#
Dno4s M# Industr#
2elivers b# 7eds 11F+
6eturns Calls in $ 5rs
Dno4s Strengths of
M# Competitors
6e=uirements:
8bstract
Concrete
2ig
2eeper
2ig
2eeper
2ig
2eeper
2iagnosticit#:
(o4
5igh
1eneral Concepts
2imensions
3ehaviors
and 8ctions
8ttributes
132
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igure 0!* igure 0!*


%rocess for Setting
%rocess for Setting
Customer!2efined Standards
Customer!2efined Standards

1' Identif# Existing or 2esired Service Encounter Se=uence
$' "ranslate Customer Expectations Into 3ehaviorsF8ctions
$' "ranslate Customer Expectations Into 3ehaviorsF8ctions
+' Set 5ard or Soft Standards
,' 2evelop eedback
Mechanisms
,' 2evelop eedback
Mechanisms
.' "rack Measures 8gainst Standards
Measure b#
8udits or
Operating 2ata
5ard
Soft
Measure b#
"ransaction!
3ased Surve#s
*' Select 3ehaviorsF8ctions for Standards
*' Select 3ehaviorsF8ctions for Standards
-' Establish Measures and "arget (evels
-' Establish Measures and "arget (evels
/' &pdate "arget (evels and Measures
/' &pdate "arget (evels and Measures
133
S
M ImportanceF%erformance Matrix
ImportanceF%erformance Matrix
5I15
5I15
%erformance

1)')
/')
.')
0')
(O7
/') 0') 1)')
Importance
Improve
Maintain
2elivers on promises specified in proposalFcontract >0'+0E /',1?
1ets project 4ithin budgetE on time >0'*1E .'/+?
Completes projects
correctl#E on time >0'$0E .'-/?
2oes 4hatever it takes to
correct problems >0'$-E .'0-?
%rovides e=uipment that operates as vendor said it 4ould >0'$+E /'1+?
1ets price 4e originall# agreed upon >0'$1E /'-+?
"akes responsibilit# for their mistakes >0'1/E /')1?
2elivers or installs on
promised date >0')$E .'/+?
"ells me cost ahead of time >0')-E /'+-?

1ets back to me 4hen

promised >0')+E .'-*?
13"
S
M
igure 0!, igure 0!,


(inkage bet4een Soft Measures and
(inkage bet4een Soft Measures and
5ard Measures for Speed of
5ard Measures for Speed of
Complaint 5andling
Complaint 5andling
S
8
"
I
S

8
C
"
I
O
9
$ + - / 1$ 1- $) $+
7 O 6 D I 9 1 5 O & 6 S
(arge Customers
Small Customers
1)
0
/
.
-
,
+
*
$
1
)
13+
S
M
igure 0!- igure 0!-


8ligning Compan# %rocesses
8ligning Compan# %rocesses
4ith Customer Expectations
4ith Customer Expectations
Customer Expectations
Customer
%rocess
3lueprint
Compan#
%rocess
3lueprint
Compan# Se=uential %rocesses
8
8
3
3
C
C
2
2
E
E

1
1
5
5
+) 2a#s
9e4 Card
Mailed
(ost Card
6eported
6eport (ost
Card
6eceive 9e4
Card
+/ 5ours
13!
S
M
S
M
Chapter 1)
PHYSICAL EVIDENCE
AND THE SERVICESCAPE
138
S
M
Objectives for Chapter 1):
Objectives for Chapter 1):
%h#sical Evidence and the
%h#sical Evidence and the
Servicescape
Servicescape
#
E$plain the impact on customer perceptions of ph&sical
e%idence- particularl& the ser%icescape
#
Illustrate differences in t&pes and roles of ser%icescapes
and their implications for strate'&
#
E$plain wh& the ser%icescape affects emplo&ee and
customer )eha%ior
#
=nal&7e four different approaches for understandin' the
effects of ph&sical en%ironment
#
;resent elements of an effecti%e ph&sical e%idence
strate'&
13:
S
M
"able 1)!1 "able 1)!1
Elements of %h#sical
Elements of %h#sical
Evidence
Evidence
Sericesca"e =ther tangibles
?acilit# eBterior
,Bterior design
Signage
%ar*ing
4andsca"e
S$rro$nding enironment
?acilit# interior
Interior design
,)$i"ment
Signage
4a#o$t
0ir )$alit#Ftem"erat$re
5$siness cards
Stationer#
5illing statements
@e"orts
,m"lo#ee dress
Uni&orms
5roch$res
InternetFWeb "ages
139
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"able 1)!$ "able 1)!$
Examples of %h#sical Evidence from the
Examples of %h#sical Evidence from the
CustomerCs %oint of <ie4
CustomerCs %oint of <ie4
Service %h#sical evidence
Servicescape Other tangibles
Insurance /ot a""licable %olic# itsel&
5illing statements
%eriodic $"dates
Com"an# broch$re
4ettersFcards
5ospital 5$ilding eBterior
%ar*ing
Signs
Waiting areas
0dmissions o&&ice
%atient care room
.edical e)$i"ment
@ecoer# room
Uni&orms
@e"ortsFstationer#
5illing statements
8irline 0irline gate area
0ir"lane eBterior
0ir"lane interior 8dLcor3 seats3 air
)$alit#;
Tic*ets
?ood
Uni&orms
Express mail /ot a""licable %ac*aging
Tr$c*s
Uni&orms
Com"$ters
Sporting
event
%ar*ing3 Seating3 @estrooms
Stadi$m eBterior
Tic*eting area3 Concession 0reas
,ntrance3 %la#iing ?ield
Signs
Tic*ets
%rogram
Uni&orms
1"
S
M
"able 1)!* "able 1)!*
"#polog# of Service OrganiJations
"#polog# of Service OrganiJations
3ased on <ariations in orm
3ased on <ariations in orm
and &se of the Servicescape
and &se of the Servicescape
Com"leBit# o& the sericesca"e eidence
Sericesca"e
$sage
,laborate 4ean
Self!service
8c$stomer onl#;
Iol& 4and
S$r& MnM S"lash
0T.
Tic*etron
%ost o&&ice *ios*
Internet serices
,B"ress mail dro"<o&&
Interpersonal
services
8both c$stomer and
em"lo#eee;
(otel
@esta$rants
(ealth clinic
(os"ital
5an*
0irline
School
-r# cleaner
(ot dog stand
(air salon
6emote service
8em"lo#ee onl#;
Tele"hone com"an#
Ins$rance com"an#
Utilit#
.an# "ro&essional serices
Tele"hone mail<order des*
0$tomated oice<messaging<
based serices
1"1
S
M
igure 1)!* igure 1)!*


8 rame4ork for &nderstanding
8 rame4ork for &nderstanding
Environment!user 6elationships
Environment!user 6elationships
in Service OrganiJations
in Service OrganiJations
Source: 0da"ted &rom .ar# >o 5itner3 6Sericesca"es!7
%(CSIC04
,/1I@=/.,/T04
-I.,/SI=/S
(=4ISTIC
,/1I@=/.,/T
I/T,@/04
@,S%=/S,S
5,(01I=@
0mbient
Conditions
S"aceF?$nction
Signs3 S#mbols3
and 0rti&acts
%erceied
Sericesca"e
Cognitie
,motional
%h#siological
Cognitie
,motional
%h#siological
,m"lo#ee
@es"onses
C$stomer
@es"onses
Indiid$al
5ehaiors
Social
Interactions
bet+een and
among
c$stomer and
em"lo#ees
Indiid$al
5ehaiors
1"2
S
M
S
M
%art +
DELIVERING AND
PERFORMING SERVICE
1"3
S
M
C&S"OME6
COM%89;

%rovider 18% *
%rovider 18% *
Service 2eliver#
18% *
Customer!2riven
Service 2esigns and
Standards
%art 4 ="ener
1""
S
M
S
M
Chapter 11
EMPLOYEES ROLES IN
SERVICE DELIVERY
1"+
S
M
Objectives for Chapter 11:
Objectives for Chapter 11:
Emplo#eesC 6oles in
Emplo#eesC 6oles in
Service 2eliver#
Service 2eliver#
#
Illustrate the critical importance of ser%ice emplo&ees
in creatin' customer satisfaction and ser%ice *ualit&
#
6emonstrate the challen'es inherent in )oundar&-
spannin' roles
#
;ro%ide e$amples of strate'ies for creatin' customer-
oriented ser%ice deli%er&
#
,how how the strate'ies can support a ser%ice culture
where pro%idin' e$cellent ser%ice is a wa& of life
1"!
S
M
Service Emplo#ees
Service Emplo#ees
#
4he& are the ser%ice
#
4he& are the firm in the customerKs e&es
#
4he& are marketers
#
Importance is e%ident in
9
4he ,er%ices 5arketin' 5i$ D;eopleE
9
4he ,er%ice-;rofit 2hain
9
4he ,er%ices 4rian'le
1"8
S
M
Service Emplo#ees
Service Emplo#ees
#
Jho are the&I
9
B)oundar& spannersC
#
Jhat are these Ao)s likeI
9
emotional la)or
9
man& sources of potential conflict
#
personLrole
#
or'ani7ationLclient
#
interclient
#
*ualit&Lproducti%it&
1":
S
M
igure 11!* igure 11!*
3oundar# Spanners Interact
3oundar# Spanners Interact
4ith 3oth Internal
4ith 3oth Internal
and External Constituents
and External Constituents
Internal Environment
External Environment
1"9
S
M
igure 11!+ igure 11!+
Sources of Conflict for
Sources of Conflict for
3oundar#!Spanning 7orkers
3oundar#!Spanning 7orkers
#
;erson %s. 0ole
#
(r'ani7ation %s. 2lient
#
2lient %s. 2lient
#
Nualit& %s. ;roducti%it&
1+
S
M
igure 11!, igure 11!,
5uman 6esource Strategies for Closing 18% * 5uman 6esource Strategies for Closing 18% *
C$stomer<
oriented
Serice
-elier#
(ire the
@ight %eo"le
%roide
/eeded S$""ort
S#stems
@etain the
5est
%eo"le
-eelo"
%eo"le to
-elier
Serice
E$alit#
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1+2
S
M
Service Culture
Service Culture
B= culture where an appreciation for 'ood ser%ice
e$ists- and where 'i%in' 'ood ser%ice to internal
as well as ultimate- e$ternal customers- is
considered a natural wa& of life and one of the
most important norms )& e%er&one in the
or'ani7ation.C
1+3
S
M
S
M
Chapter 1$
CUSTOMERS ROLES IN
SERVICE DELIVERY
1+"
S
M
Objectives for Chapter 1$:
Objectives for Chapter 1$:
CustomersC 6oles in Service
CustomersC 6oles in Service
2eliver#
2eliver#
#
Illustrate the importance of customers in successful
ser%ice deli%er&
#
Enumerate the %ariet& of roles that ser%ice customers
pla&
#
;roducti%e resources
#
2ontri)utors to *ualit& and satisfaction
#
2ompetitors
#
E$plain strate'ies for in%ol%in' ser%ice customers
effecti%el& to increase )oth *ualit& and producti%it&
1++
S
M
Importance of
Importance of
,ther
,ther

Customers in Service
Customers in Service
2eliver#
2eliver#
#
(ther customers can detract from satisfaction
#
disrupti%e )eha%iors
#
e$cessi%e crowdin'
#
incompati)le needs
#
(ther customers can enhance satisfaction
#
mere presence
#
sociali7ationLfriendships
#
roles< assistants- teachers- supporters
1+!
S
M
5o4 Customers 7iden 1ap *
5o4 Customers 7iden 1ap *
#
Qack of understandin' of their roles
#
/ot )ein' willin' or a)le to perform their roles
#
/o rewards for B'ood performanceC
#
Interferin' with other customers
#
Incompati)le market se'ments
1+8
S
M
igure 1$!$ igure 1$!$
Customer 6oles in Service
Customer 6oles in Service
2eliver#
2eliver#
%roductive 6esources
Contributors to
:ualit# and
Satisfaction
Competitors
1+:
S
M
Customers as %roductive
Customers as %roductive
6esources
6esources
#
Bpartial emplo&eesC
9
contri)utin' effort- time- or other resources to
the production process
#
customer inputs can affect or'ani7ationKs
producti%it&
#
ke& issue<
9
should customersK roles )e e$pandedI reducedI
1+9
S
M
Customers as Contributors
Customers as Contributors
to Service :ualit# and
to Service :ualit# and
Satisfaction
Satisfaction
#
2ustomers can contri)ute to
9
their own satisa!ti"# with the ser%ice
#
)& performin' their role effecti%el&
#
)& workin' $ith the ser%ice pro%ider
9
the $%a&it' of the ser%ice the& recei%e
#
)& askin' *uestions
#
)& takin' responsi)ilit& for their own satisfaction
#
)& complainin' when there is a ser%ice failure
1!
S
M
Customers as Competitors
Customers as Competitors
#
customers ma& BcompeteC with the ser%ice pro%ider
#
Binternal e$chan'eC %s. Be$ternal e$chan'eC
#
internalLe$ternal decision often )ased on<
9
e$pertise
9
resources
9
time
9
economic rewards
9
ps&chic rewards
9
trust
9
control
1!1
S
M
"echnolog# Spotlight:
"echnolog# Spotlight:
Services %roduction Continuum
Services %roduction Continuum
1 $ * + , -
1as Station Illustration
1! C$stomer "$m"s gas and "a#s at the "$m" +ith a$tomation
2! C$stomer "$m"s gas and goes inside to "a# attendant
3! C$stomer "$m"s gas and attendant ta*es "a#ment at the "$m"
4! 0ttendant "$m"s gas and c$stomer "a#s at the "$m" +ith a$tomation
:! 0ttendant "$m"s gas and c$stomer goes inside to "a# attendant
6! 0ttendant "$m"s gas and attendant ta*es "a#ment at the "$m"
Customer %roduction @oint %roduction irm %roduction
1!2
S
M
igure 1$!* igure 1$!*
Strategies for Enhancing
Strategies for Enhancing
Customer %articipation
Customer %articipation
Effective
Customer
%articipation
6ecruitE EducateE
and 6e4ard
Customers
2efine Customer
@obs
Manage the
Customer
Mix
1!3
S
M
Strategies for Enhancing
Strategies for Enhancing
Customer %articipation
Customer %articipation
1. 6efine customersK Ao)s
- helpin' himself
- helpin' others
- promotin' the compan&
2. Indi%idual differences< not e%er&one wants
to participate
1!"
S
M
Strategies for 6ecruitingE
Strategies for 6ecruitingE
Educating and 6e4arding
Educating and 6e4arding
Customers
Customers
1. 0ecruit the ri'ht customers
2. Educate and train customers to perform
effecti%el&
3. 0eward customers for their contri)ution
". =%oid ne'ati%e outcomes of inappropriate
customer participation
&anage the Customer &i)
1!+
S
M
S
M
Chapter 1+
MANAGING DEMAND
AND CAPACITY
1!!
S
M
Objectives for Chapter 1+:
Objectives for Chapter 1+:
Managing 2emand and
Managing 2emand and
Capacit#
Capacit#
#
E$plain<
#
the underl&in' issue for capacit&-constrained ser%ices
#
the implications of capacit& constraints
#
the implications of different t&pes of demand patterns on
matchin' suppl& and demand
#
Qa& out strate'ies for matchin' suppl& and demand throu'h<
#
shiftin' demand to match capacit& or
#
fle$in' capacit& to meet demand
#
6emonstrate the )enefits and risks of &ield mana'ement strate'ies
#
;ro%ide strate'ies for mana'in' waitin' lines
1!8
S
M
&nderstanding Capacit#
&nderstanding Capacit#
Constraints and 2emand
Constraints and 2emand
%atterns
%atterns
#
4ime- la)or- e*uipment
and facilities
#
(ptimal %ersus ma$imal
use of capacit&
#
2hartin' demand
patterns
#
;redicta)le c&cles
#
0andom demand
fluctuations
#
6emand patterns )&
market se'ment
Ca"acit# Constraints
-emand %atterns
1!:
S
M
?ig$re 14<3 ?ig$re 14<3
Strategies &or Shi&ting -emand
Strategies &or Shi&ting -emand
to .atch Ca"acit#
to .atch Ca"acit#
# 3se si'na'e to communicate )us& da&s and
times
# (ffer incenti%es to customers for usa'e durin'
non-peak times
# 4ake care of lo&al or re'ular customers first
# =d%ertise peak usa'e times and )enefits of
non-peak use
# 2har'e full price for the ser%ice--no discounts
# 3se sales and ad%ertisin' to
increase )usiness from current
market se'ments
# 5odif& the ser%ice offerin' to
appeal to new market se'ments
# (ffer discounts or price
reductions
# 5odif& hours of operation
# >rin' the ser%ice to the
customer
-emand Too (igh -emand Too 4o+ Shift 2emand
1!9
S
M
?ig$re 14<4 ?ig$re 14<4
Strategies &or ?leBing Ca"acit#
Strategies &or ?leBing Ca"acit#
to .atch -emand
to .atch -emand
# ,tretch time- la)or- facilities and e*uipment
# 2ross-train emplo&ees
# Hire part-time emplo&ees
# 0e*uest o%ertime work from emplo&ees
# 0ent or share facilities
# 0ent or share e*uipment
# ,u)contract or outsource acti%ities
#
;erform maintenance
reno%ations
#
,chedule %acations
#
,chedule emplo&ee trainin'
#
Qa& off emplo&ees
-emand Too (igh -emand Too 4o+ lex Capacit#
18
S
M
"able 1+!1 "able 1+!1
7hat is the 9ature of 2emand
7hat is the 9ature of 2emand
6elative to Suppl#N
6elative to Suppl#N
,Btent o& demand &l$ct$ations oer time
,Btent to +hich
s$""l# is
constrained
Wide /arro+
%ea* demand can
$s$all# be met
+itho$t a maNor
dela#
1
,lectricit#
/at$ral gas
Tele"hone
(os"ital maternit# $nit
%olice and &ire
emergencies
2
Ins$rance
4egal serices
5an*ing
4a$ndr# and dr# cleaning
%ea* demand
reg$larl# eBceeds
ca"acit#
4
0cco$nting and taB
"re"aration
%assenger trans"ortation
(otels and motels
@esta$rants
Theaters
3
Serices similar to those in
2 b$t +hich hae
ins$&&icient ca"acit# &or
their base leel o& b$siness
Source: Christo"her (! 4oeloc*3 6Classi&#ing Serices to Iain Strategic .ar*eting Insights37 Journal of Marketing3 4D3 3 8S$mmer 1993;: 1D!
181
S
M
"able 1+!$ "able 1+!$
7hat is the Constraint on
7hat is the Constraint on
Capacit#N
Capacit#N
9ature of the constraint "#pe of service
"ime 4egal
Cons$lting
0cco$nting
.edical
(abor 4a+ &irm
0cco$nting &irm
Cons$lting &irm
(ealth clinic
E=uipment -elier# serices
Telecomm$nication
Utilities
(ealth cl$b
acilities (otels
@esta$rants
(os"itals
0irlines
Schools
Theaters
Ch$rches
182
S
M
7aiting (ine Issues
7aiting (ine Issues
and Strategies
and Strategies
#
unoccupied time feels lon'er
#
preprocess waits feel lon'er
#
an$iet& makes waits seem lon'er
#
uncertain waits seem lon'er than finite waits
#
une$plained waits seem lon'er
#
unfair waits feel lon'er
#
lon'er waits are more accepta)le for B%alua)leC
ser%ices
#
solo waits feel lon'er
183
S
M
S
M
%art ,
MANAGING SERVICE
PROMISES
18"
S
M
C&S"OME6
COM%89;
External
Communications
to Customers
18% +
Service 2eliver#

%rovider 18% +
%rovider 18% +
%art : ="ener
18+
S
M
S
M
Chapter 1,
INTEGRATED
MARKETING
COMMUNICATION
18!
S
M
Objectives for Chapter 1,:
Objectives for Chapter 1,:
Integrated Services
Integrated Services
Marketing Communications
Marketing Communications
#
Introduce the concept of Inte'rated ,er%ices 5arketin'
2ommunication
#
6iscuss the ke& reasons for ser%ice communication pro)lems
#
;resent four ke& wa&s to inte'rate marketin' communication
in ser%ice or'ani7ations
#
;resent specific strate'ies for mana'in' promises- mana'in'
customer e$pectations- educatin' customers- and mana'in'
internal communications
#
;ro%ide perspecti%e on the popular ser%ice o)Aecti%e of
e$ceedin' customer e$pectations
188
S
M
igure 1,!1 igure 1,!1
Communications and the
Communications and the
Services Marketing "riangle
Services Marketing "riangle
Internal Mar(eting Internal Mar(eting
1ertical Comm$nications
(ori'ontal Comm$nications
Interactive Mar(eting
%ersonal Selling
C$stomer Serice Center
Serice ,nco$nters
Sericesca"es
'-ternal Mar(eting
!ommunication
0dertising
Sales %romotion
%$blic @elations
-irect .ar*eting
!ompan&
!ustomers
'mplo&ees
,ource< ;arts of model adapted from work )& 2hristian .ronroos and ;hillip Gotler
18:
S
M
0""roaches &or
0""roaches &or
Integrating Serices .ar*eting
Integrating Serices .ar*eting
Comm$nication
Comm$nication
1oal:
2eliver#
greater than
or e=ual to
promises
Improve
Customer
Education
Manage
Service
%romises
Manage
Customer
Expectations
Manage
Internal
Marketing
Communication
?ig$re 1:<3 ?ig$re 1:<3
189
S
M
1oal:
2eliver#
greater than
or e=ual to
promises
Offer
Service
1uarantees
Create
Effective
Services
Communications
M8981I91 SE6<ICE %6OMISES
Make
6ealistic
%romises
Coordinate
External
Communication
igure 1,!+ igure 1,!+
8pproaches for
8pproaches for
Managing Service %romises
Managing Service %romises
1:
S
M
Communicate Criteria for
Service Effectiveness
Create "iered!<alue
Offerings
igure 1,!/ igure 1,!/
8pproaches for
8pproaches for
Managing Customer Expectations
Managing Customer Expectations
9egotiate
&nrealistic
Expectations
1oal:
2eliver#
greater than
or e=ual to
promises
Offer Choices
1:1
S
M
1oal:
2eliver#
greater than
or e=ual to
promises
%repare
Customers
for the
Service
%rocess
Clarif#
Expectations
after the Sale
igure 1,!0 igure 1,!0
8pproaches for
8pproaches for
Improving Customer Education
Improving Customer Education
"each
Customers
to 8void
%eak
2emand
%eriods
and
Seek Slo4
%eriods
Confirm
%erformance
to Standards
1:2
S
M
1oal:
2eliver#
greater than
or e=ual to
promises
igure 1,!1) igure 1,!1)
8pproaches for Managing
8pproaches for Managing
Internal Marketing Communications
Internal Marketing Communications
Create Effective
<ertical
Communications
8lign 3ack
Office %ersonnel
4F External Customers
Create Effective
5oriJontal
Communications
Create
Cross!unctional
"eams
Contact: +923006641921 Usman Waheed
1:3
S
M
S
M
Chapter 1.
THE FINANCIAL AND
ECONOMIC IMPACT OF
SERVICE QUALITY
Contact: +923006641921 Usman Waheed
1:"
S
M
Objectives for Chapter 1.:
Objectives for Chapter 1.:
"he inancial and Economic
"he inancial and Economic
Impact of Service
Impact of Service
#
E$amine the direct effects of ser%ice on profits
#
2onsider the impact of ser%ice on 'ettin' new customers
#
E%aluate the role of ser%ice in keepin' customers
#
E$amine the link )etween perceptions of ser%ice and
purchase intentions
#
Emphasi7e the importance of selectin' profita)le
customers
#
6iscuss what is know a)out the ke& ser%ice dri%ers of
o%erall ser%ice *ualit&- customer retention and
profita)ilit&
#
6iscuss the )alanced performance scorecard to focus on
strate'ic measurement other than financials
Contact: +923006641921 Usman Waheed
1:+
S
M
igure 1.!1 igure 1.!1
"he 2irect 6elationship bet4een
"he 2irect 6elationship bet4een
Service and %rofits
Service and %rofits
%rofits
4
Service
:ualit#
Contact: +923006641921 Usman Waheed
1:!
S
M
igure 1.!$ igure 1.!$
Offensive Marketing Effects of
Offensive Marketing Effects of
Service on %rofits
Service on %rofits
%rofits
Market
Share
6eputation
Sales
%rice
%remium
Service
:ualit#
Contact: +923006641921 Usman Waheed
1:8
S
M
igure 1.!* igure 1.!*
2efensive Marketing Effects of
2efensive Marketing Effects of
Service on %rofit
Service on %rofit
Margins
%rofits
Customer
6etention
Costs
%rice
%remium
7ord of
Mouth
<olume of
%urchases
Service
:ualit#
Contact: +923006641921 Usman Waheed
1::
S
M
igure 1.!, igure 1.!,
%erceptions of ServiceE
%erceptions of ServiceE
3ehavioral
3ehavioral
Intentions and %rofits
Intentions and %rofits
Customer
6etention
Costs
%rice
%remium
7ord of
Mouth
Margins
%rofits
<olume of
%urchases
Serice
3ehavioral
Intentions
Sales
Contact: +923006641921 Usman Waheed
1:9
S
M
igure 1.!- igure 1.!-
"he G/)F$)H Customer %#ramid
"he G/)F$)H Customer %#ramid
Most %rofitable
Customers
(east %rofitable
Customers
7hat segment spends more 4ith
us over timeE costs less to maintainE
spreads positive 4ord of mouthN
7hat segment costs us in
timeE effort and mone# #et
does not provide the return
4e 4antN 7hat segment is
difficult to do business 4ithN
=ther
C$stomers
3est
Customers
Contact: +923006641921 Usman Waheed
19
S
M
igure 1.!. igure 1.!.
"he Expanded Customer %#ramid
"he Expanded Customer %#ramid
Most %rofitable
Customers
(east %rofitable
Customers
7hat segment spends more 4ith
us over timeE costs less to maintainE
spreads positive 4ord of mouthN
7hat segment costs us in
timeE effort and mone# #et
does not provide the return
4e 4antN 7hat segment is
difficult to do business 4ithN
1old
Iron
(ead
%latinum
Contact: +923006641921 Usman Waheed
191
S
M
igure 1.!/ igure 1.!/
"he De# 2rivers of Service :ualit#E
"he De# 2rivers of Service :ualit#E
Customer 6etentionE and %rofits
Customer 6etentionE and %rofits
Je# -riers
Service
:ualit#
Service
Encounter
Service
Encounter
Service
Encounter
Customer
6etention
3ehavioral
Intentions
%ro&its
Service
Encounter
Serice ,nco$nters
Contact: +923006641921 Usman Waheed
192
S
M
?ig$re 1D<9 ?ig$re 1D<9


Sam"le .eas$rements &or the
Sam"le .eas$rements &or the
5alanced Scorecard
5alanced Scorecard
=dapted from Gaplan and /orton
Innovation and
(earning %erspective
Customer
%erspective
Service %erceptions
Service Expectations
%erceived <alue
3ehavioral Intentions:
Operational
%erspective:
6ight first time >B hits?
6ight on time >B hits?
6esponsiveness >B on
time?
"ransaction time >hoursE
da#s?
"hroughput time
6eduction in 4aste
%rocess =ualit#
inancial Measures
%rice %remium
<olume Increases
<alue of Customer
6eferrals
<alue of Cross Sales
(ong!term <alue of
Customer
B (o#alt#
B Intent to S4itch
O Customer
6eferrals
O Cross Sales
O of 2efections
9umber of ne4 products
6eturn on innovation
Emplo#ee skills
"ime to market
"ime spent talking to
customers
Contact: +923006641921 Usman Waheed
193
S
M
?ig$re 1D<10 ?ig$re 1D<10


Serice E$alit# S"ells %ro&its
Serice E$alit# S"ells %ro&its
Service
:ualit#
Customer
6etention
Costs
%rice
%remium
7ord of
Mouth
Margins
%rofits
Defensie
Marketing
<olume of
%urchases
Market
Share
6eputation
Sales
%rice
%remium
,3ensie
Marketing