Managing Markets Strategically www.wessexlearning.com Managing Markets Strategically Professor Noel Capon R.C. Kopf Professor of International Marketing Columbia Business School New York, NY
Managing Markets Strategically www.wessexlearning.com Section 1: Marketing and the Firm Section 2: Fundamental Insights for Strategic Marketing Section 3: Strategic Marketing Section IV: Implementing the Market Strategy Part A: Providing Customer Value Chapter 12: Managing the Product Line Chapter 13: Managing Services, Customer Service Chapter 14: Developing New Products
Managing Services, Customer Service www.wessexlearning.com Chapter 12 Managing Services, Customer Service
The Fundamental Business Model www.wessexlearning.com Shareholder Value Organizational Survival, Growth Current, Potential Profits Competitors Attract, Retain, Grow Customers Competitors Customer Value Company
Six Marketing Imperatives www.wessexlearning.com • Imperative 1: Determine, recommend which markets to address • Imperative 2: Identify, target market segments • Imperative 3: Set strategic direction, positioning • Imperative 4: Design the market offer • Imperative 5: Secure support from other functions • Imperative 6: Monitor, control execution/performance
Chapter Roadmap Products, Services, Customer Service www.wessexlearning.com Products, Services, Customer Service Growth in the Service Sector Characteristics of Services Intangibility Inseparability Variability Perishability Divisibility Lack of Acquisition Role of Customers Service Quality Customer Service Measuring, Managing Service Quality Issues in Improving Service Quality Types of Customer Service Delivering Exceptional Customer Service
Session Roadmap A Managing Services, Customer Service www.wessexlearning.com Session Roadmap A • Products, Services, Customer Service • Growth in services • Key service characteristics • Service quality • Customer service
Session Roadmap A Managing Services, Customer Service www.wessexlearning.com Session Roadmap A • Products, Services, Customer Service • Growth in services • Key service characteristics • Service quality • Customer service
Service Distinctions www.wessexlearning.com A product is any core offering, including both physical products and services. However, we separate products as a tangible product – cannot be dropped on your foot! A service is any act or performance that one party can offer another that is essentially intangible and does not result in the ownership of anything. Customer service is a key component of the market offer. Customer service enhances the customer value inherent in the core product or service.
Session Roadmap A Managing Services, Customer Service www.wessexlearning.com Session Roadmap A • Service distinctions • Growth in services • Key service characteristics • Service quality • Customer service
Growth in Services • Account for more than 70% of employment and GDP www.wessexlearning.com • Account for more than 70% of employment and GDP • Factors driving growth of private-sector services: • Rising incomes • Age-related demographic shifts – increased demand healthcare and financial services • Customer behavior changes – decreased concern for ownership • Deregulation – spurs innovation • Franchising – critical in fast food and hospitality industries • Globalization – fast transfer across national borders • Leveraging core competence – in-house activities offered as services • Outsourcing – internal activities counted as part of manufacturing; or sourced activities are services • Technology – increased customer/firm communication
Session Roadmap A Managing Services, Customer Service www.wessexlearning.com Session Roadmap A • Service distinctions • Growth in services • Key service characteristics • Service quality • Customer service
Key Service Characteristics www.wessexlearning.com • Intangibility – not physical in nature • Inseparability – production and consumption at same time • modify supply • modify demand • Variability – lack of consistency • focus on human capital • substitute capital for labor • Perishability – cannot be inventoried • demand sufficient but unpaid • demand insufficient • Lack of acquisition – unlike products, cannot be acquired • Role of customers – customers are part of the offer • Divisibility – services combine many individual activities
Key Service Characteristics www.wessexlearning.com Addressing Intangibility • Service facilities • exterior • interior • onstage • offstage • Service equipment • Service personnel • Service guarantees
USAA Case Study Classroom Discussion www.wessexlearning.com Classroom Discussion • How could your educational institute learn from USAA customer service practices to deliver improved educational services?
Session Roadmap A Managing Services, Customer Service www.wessexlearning.com Session Roadmap A • Service distinctions • Growth in services • Key service characteristics • Service quality • Customer service
Service Quality Session Roadmap AA www.wessexlearning.com Session Roadmap AA • Service quality and customer satisfaction • SERVQUAL model • Service quality expectations and performance • Perceived service quality drivers • Enhance service quality
Service Quality Session Roadmap AA www.wessexlearning.com Session Roadmap AA • Service quality and customer satisfaction • SERVQUAL model • Service quality expectations and performance • Perceived service quality drivers • Enhance service quality
Customer Satisfaction = f(Perceived Value less Expected Value) Service Quality www.wessexlearning.com Service Quality and Customer Satisfaction Value Proposition Delivered Value Expected Value Perceived Value Customer Satisfaction = f(Perceived Value less Expected Value)
f(Perceived Value less Expected Value) = Customer Satisfaction Service Quality www.wessexlearning.com Service Quality and Customer Satisfaction f(Perceived Value less Expected Value) = Customer Satisfaction Expected Value Perceived Value Customer Satisfaction Firm A 5 hours 6 hours low Firm B 8 hours 7 hours high
Service Quality Session Roadmap AA www.wessexlearning.com Session Roadmap AA • Service quality and customer satisfaction • SERVQUAL model • Service quality expectations and performance • Perceived service quality drivers • Enhance service quality
Service Quality www.wessexlearning.com SERVQUAL Model
Service Quality SERVQUAL Model www.wessexlearning.com SERVQUAL Model Gap 1: The firm does not understand customer service expectations Gap 2: Service quality specifications do not reflect the firm’s beliefs about customer service expectations Gap 3: Service delivery performance does not meet service specifications Gap 4: External communications about service quality do not reflect service performance Gap 5: Expectations disconfirmation: The difference between perceived service quality and expected service quality
Service Quality Session Roadmap AA www.wessexlearning.com Session Roadmap AA • Service quality and customer satisfaction • SERVQUAL model • Service quality expectations and performance • Perceived service quality drivers • Enhance service quality
Service Quality Service Quality Expectations and Performance www.wessexlearning.com Service Quality Expectations and Performance
Service Quality Session Roadmap AA www.wessexlearning.com Session Roadmap AA • Service quality and customer satisfaction • SERVQUAL model • Service quality expectations and performance • Perceived service quality drivers • Enhance service quality
Service Quality Perceived Service Quality Drivers www.wessexlearning.com Perceived Service Quality Drivers Tangibles Appearance of communication materials, equipment, personnel, and physical facilities Reliability Ability to perform the promised service accurately and dependably Responsiveness Willingness to help customers and provide prompt service Assurance Courtesy and knowledge of employees, and ability to convey confidence and trust Empathy Provision of caring, individualized attention to customers
Service Quality Session Roadmap AA www.wessexlearning.com Session Roadmap AA • Service quality and customer satisfaction • SERVQUAL model • Service quality expectations and performance • Perceived service quality drivers • Enhance service quality
Service Quality Enhance Service Quality • Customer co-production www.wessexlearning.com Enhance Service Quality • Customer co-production • Improve the offer • Maintain the service environment • Service performance and information • Service quality failures and service recovery
Session Roadmap Managing Services, Customer Service • Customer service www.wessexlearning.com Session Roadmap • Service distinctions • Growth in services • Key service characteristics • Service blueprint • Service quality • Customer service
Customer Service Customer Service www.wessexlearning.com Customer Service Any act, performance, or information that enhances the firm’s core product or service • Customer service dimensions • Customer service and the purchase process • Deliver exceptional customer service
Customer Service www.wessexlearning.com Customer Service Dimensions: Flower of Customer Service Information Payment Consultation Billing Order-taking Exceptions Hospitality Safekeeping Source: C.H. Lovelock and J. Wirtz, Services Marketing, 7th ed., Upper Saddle River, NJ: Prentice Hall, 2011.
Customer Service Customer Service and the Purchase Process www.wessexlearning.com Customer Service and the Purchase Process Pre-purchase During purchase Post-purchase Help identify needs Help make choice Help with many issues
Customer Service Deliver High-Level Customer Service www.wessexlearning.com Deliver High-Level Customer Service Customer service strategy Top management support and involvement Human resource management High-level customer service Measuring customer service quality Service infrastructure
Delivering Exceptional Customer Service www.wessexlearning.com Delivering Exceptional Service Tools include: • Top Management Support – Communicate and champion of importance of customer service • Customer Service Strategy – Focus on customer needs for customer service • Human Resource Management – HR planning for high customer service oriented personnel • Service Infrastructure – Design infrastructure to enhance to customer service delivery • Measuring Customer Service quality – “If you can’t measure it, you can’t manage it.”
Session Roadmap Managing Services, Customer Service www.wessexlearning.com Session Roadmap • Service distinctions • Growth in services • Key service characteristics • Service quality • Customer service
Managing Services, Customer Service www.wessexlearning.com Chapter 12 Managing Services, Customer Service