Chapter 15: SERVICES MARKETING

I. Services marketing.

Services marketing The important of service marketing. Characteristics of services marketing. The extended marketing mix for services. The importance of people. Service quality.

The important of service marketing. Services are the distinguished from products mainly because they are generally produced at the same time as they are consumed and cannot be stored or taken away. An enhanced marketing mix needs to be deployed.

Services marketing. The growth of service sector in advanced industrial societies. An increasingly market-oriented trend within service-providing organizations

II. Characteristic of services marketing

Intangibility….. Refers to lack of physical substance. Involved with services delivery.

This insubstantiality is a continuum

Marketing entities Tangible Intangible –By customers opinions –By the offering of marketer to customer something tangible to present the purchase.

Marketing implications…(enhance tangibility) Increasing the level of tangibility Focusing the attention of the customer on the principle benefits of consumptions. Differentiating the service and reputation- building.

Owner ship Services do not result in the transfer of property. An item of service provision is defined by the length of time it is available.

Ownership (cont’…) Lessen the perceived customer value of a service. Make for unfavourable comparisons with tangible alternatives. Attempt: providing symbolic tangible items.

 A service cannot be separated from the provider of the service  The performance of a service often occurs at the same moment as its consumption

Marketing implication Providing marketing services may not be separated from the providers  Increasing the values of quality and reliability  Transferring customer service ethic to the service provision The need for customer orientation

2.4 Perish ability Services can not be stoned  Managers need to change the services in their availability (capital, labor force …) for the period of time to meet customer needs

There are 2 risks  Inadequate level of demand -> accompanied by substantial fixed cost  Excess demand may result in lost custom through inadequate service  Policies must seek to match demand with supply by price variations and promotions

2.5/ Heterogeneity and variability It is difficult to attain: Precise standardization of the service offered Influences or control over perceptions of what is good or bad customer service  Problems of Maintaining consistency in the standard of services Variability of quality in delivery

Marketing implication It is necessary to practice: Consistency of quality control Consistency of customer service Effective staff selection, training and motivation Other important matters Clear and objective quality measures Standardizing within the service The Pareto principle

III. THE EXTENDED MARKETING MIX FOR SERVICES

The additional elements 4Ps are extended for services to make 7Ps, including: Product Price Place Promotion People Process Physical evidence

The additional elements (cont’d…) People provide services: wrong service -> spoiled service Services are provided through process (number of sequential steps): spoiled service can appear at any step in the sequence Physical evidence (ambience) can be a maker or spoiler of the service

The additional elements (cont’d…) An alternative approach identifies 4 extra Ps: Personal selling Place of availability (operations management) People and customer service Physical evidence

Personal selling  Personal selling is very important in the marketing of services, because of: –The greater of perceived risk –The greater uncertainty about quality and reliability  Personal contact with a competent, effective representative may provide the necessary confidence when consumers seek reassurance

Place of availability Place of availability is really covered by the distribution system There are special problems for services in operations management

Place of availability (cont’d…)  The level and quality of service are sensitive to the processes by which services are delivered. There are 3 key factos: Capacity utilisation Managing customer contact Establishing objectives within the non-for-profit sector  Minimising exposure to negative feedback, and promoting the dissemination of positive messages about the service are important

People and customer service To satisfy customers, the physical presence of people is a vital aspect Customer orientation is needed in all sectors organization activity

People and customer service (cont’d…) Evidences of customer orientation on the part of staff include: Appearance Attitude Commitment Behaviour Professionalism Skills Discretion

People and customer service (cont’d…) The staff role in adding value is very crucial when improve higher level of customer contact The delivery of the service and physical presence of the personnel involved are completely inseparable

Physical evidence The remedy for intangibility of the product is physical evidence Physical evidence may: Associate with the service itself (e.g: credit cards) Buid up by identification with a specific individual Incorporate into the design and specification

IV. The importance of people

Selection and training Internal marketing to promulgate the culture of service within the firm Ensuring conformance with standards: –Behavior –Dress and appearance –Procedures –Modes of dealing with the public Service marketing organizations have to emphasize:

Con’t… Mechanising procedures where possible Constantly auditing personnel performance and behavior Extending the promotion of the service and its qualities into the design of service environments and the engineering of interactions between staff and customers and among the customers them selves.

V. COMPONENTS OF SERVICE QUALITY

5.1 Service Quality

Definition Service quality is the totality of features and characteristics of that service which bears on its ability to meet customer needs. Quality can only be defined by customers

Improving service quality Two ways: Higher sales revenues Improved productivity and reduced costs

Grönroos' Service Quality model

5.2 COMPONENTS OF SERVICE QUALITY Two principal components Mediating influence Major determinants Methods to improve

Two principal components Technical quality: What the customer is left with, when the production process is finished. Functional quality: How the customer receives the technical quality in the interactions between customer & service provider & other customer.

Mediating influence Image: View of the company

Major determinants 2 major quality dimensions: -People -Infrastructure and process

People 7 factors: Reliability Responsiveness Communication Credibility Competence Courtesy Understanding customers’ needs

Reliability Accuracy and Dependability Getting it right in the first time

Responsiveness Ability to address all issues Willingness to deal with customer’s queries

Communication Non-technical language Easily to access informations

Credibility Honest Trustworthy Willingness to share negative references

Competence Understanding product range Interpreting the needs of the customers

Courtesy Polite Respectful Friendly

Understanding customers’ needs Use customer record to know customers’ need

Infrastructure and process 3 factors: Tangibles Security Access

Tangible Physical evidence: Report, Inspection Quality of fixtures

Security Private Confidential Restriction to access customer database

Access Fair queuing system Avoid customers’ irritation Pleasant relaxing environment

Methods to improve Develop customer orientated mission statement Support for quality improvement initiatives Regular customer satisfaction research Monitor standards and communicating results Establish systems for customers complaints and feedback Encourage employee participation Reward excellent service