1. Managing Markets Strategically
Managing Markets Strategically
Professor Noel Capon
R.C. Kopf Professor of International Marketing
Columbia Business School
New York, NY

2. Managing Markets Strategically
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

3. Managing Services, Customer Service
Chapter 12
Managing Services, Customer Service

4. The Fundamental Business Model
Shareholder Value
Organizational Survival, Growth
Current, Potential Profits
Competitors
Attract, Retain, Grow Customers
Competitors
Customer Value
Company

5. Six Marketing Imperatives
• 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

6. Chapter Roadmap Products, Services, Customer Service
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

7. Session Roadmap A Managing Services, Customer Service
Session Roadmap A
• Products, Services, Customer Service
• Growth in services
• Key service characteristics
• Service quality
• Customer service

8. Session Roadmap A Managing Services, Customer Service
Session Roadmap A
• Products, Services, Customer Service
• Growth in services
• Key service characteristics
• Service quality
• Customer service

9. Service Distinctions
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.

10. Session Roadmap A Managing Services, Customer Service
Session Roadmap A
• Service distinctions
• Growth in services
• Key service characteristics
• Service quality
• Customer service

11. Growth in Services • Account for more than 70% of employment and GDP
• 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

12. Session Roadmap A Managing Services, Customer Service
Session Roadmap A
• Service distinctions
• Growth in services
• Key service characteristics
• Service quality
• Customer service

13. Key Service Characteristics
• 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

14. Key Service Characteristics
Addressing Intangibility
• Service facilities
• exterior
• interior
• onstage
• offstage
• Service equipment
• Service personnel
• Service guarantees

15. USAA Case Study Classroom Discussion
Classroom Discussion
• How could your educational institute learn from USAA customer service practices to deliver improved educational services?

16. Session Roadmap A Managing Services, Customer Service
Session Roadmap A
• Service distinctions
• Growth in services
• Key service characteristics
• Service quality
• Customer service

17. Service Quality Session Roadmap AA
Session Roadmap AA
• Service quality and customer satisfaction
• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Enhance service quality

18. Service Quality Session Roadmap AA
Session Roadmap AA
• Service quality and customer satisfaction
• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Enhance service quality

19. Customer Satisfaction = f(Perceived Value less Expected Value)
Service Quality
Service Quality and Customer Satisfaction
Value Proposition
Delivered Value
Expected Value
Perceived Value
Customer Satisfaction = f(Perceived Value less Expected Value)

20. f(Perceived Value less Expected Value) = Customer Satisfaction
Service Quality
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

21. Service Quality Session Roadmap AA
Session Roadmap AA
• Service quality and customer satisfaction
• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Enhance service quality

22. Service Quality
SERVQUAL Model

23. Service Quality SERVQUAL Model
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

24. Service Quality Session Roadmap AA
Session Roadmap AA
• Service quality and customer satisfaction
• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Enhance service quality

25. Service Quality Service Quality Expectations and Performance
Service Quality Expectations and Performance

26. Service Quality Session Roadmap AA
Session Roadmap AA
• Service quality and customer satisfaction
• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Enhance service quality

27. Service Quality Perceived Service Quality Drivers
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

28. Service Quality Session Roadmap AA
Session Roadmap AA
• Service quality and customer satisfaction
• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Enhance service quality

29. Service Quality Enhance Service Quality • Customer co-production
Enhance Service Quality
• Customer co-production
• Improve the offer
• Maintain the service environment
• Service performance and information
• Service quality failures and service recovery

30. Session Roadmap Managing Services, Customer Service • Customer service
Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service

31. Customer Service Customer Service
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

32. Customer Service
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.

33. Customer Service Customer Service and the Purchase Process
Customer Service and the Purchase Process
Pre-purchase
During purchase
Post-purchase
Help identify needs
Help make choice
Help with many issues

34. Customer Service Deliver High-Level Customer Service
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

35. Delivering Exceptional Customer Service
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.”

36. Session Roadmap Managing Services, Customer Service
Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service quality
• Customer service

37. Managing Services, Customer Service
Chapter 12
Managing Services, Customer Service