1. Services Marketing MBA-TERM-05-2014 MODULE-02 MODULE-02 Faculty-Salil Bhatia Faculty-Salil Bhatia

2. MODULE-02A Duration-4 Lectures. ► FUNDAMENTALS OF SERVICE MARKETING ► Assessing service marketing opportunities. ► Expanded marketing mix for services. ► Perceptions of services ► Customer behavior specific to usage of services ► Service quality Determinants.

3. Services could meet ► Personal needs – haircuts, tuition, restaurants. ► Business needs – courier services, office cleaning services, delivering fresh flowers

4. Situation Analysis A study of the marketing strengths, weaknesses, and opportunities of an existing business or other type of organization.

5. Marketing Of Services- MARKETER IS VIEWED AS A DECIDER AN ARTIST OR/& A MIXER OF INGREDIENTS”

6. Service Marketing ► Creating a market for services offered by market communication.

7. Marketing Mixes ► Traditional Mixes 4Ps Product- Product- Price PricePlacePromotion

8. The Four additional ‘P’s of Service Marketing ► People ► Physical evidence ► Process ► Productivity and quality management

9. Integrated Services Marketing Mix - the 8Ps Customer service/ Experience Place Promotion People Price Product Physical evidence Processes Productivity & Quality

10. Applying the Services Marketing Mix Product Product Price Price Promotion Promotion Place Place Physical evidence Physical evidence People People Process Process Productivity & Quality Productivity & Quality Customer value Cost Explanation/Communication Convenience Confirmation Consideration Co-ordination/concern Experience Organisational perspective Customer perspective

11. Link to lecture on 7 ps ► https://www.youtube.com/watch?v=ys7zx1 Vc9po

12. Why Classify Services? ► Differences among services affect customer behaviour ► Help to understand what the service organisation actually does ► What sorts of processes are involved ► Where do customers fit into the operation ► Useful in benchmarking ► Classification helps marketers develop different strategies for different types of services

13. Four Categories of Services Employing Different Underlying Processes People ProcessingPossession Processing Mental Stimulus Processing Information Processing (directed at intangible assets) e.g., airlines, hospitals, haircutting, restaurants hotels, fitness centers e.g., freight, repair, cleaning, landscaping, retailing, recycling e.g., broadcasting, consulting, education, psychotherapy e.g., accounting, banking, insurance, legal, research TANGIBLE ACTS INTANGIBLE ACTS DIRECTED AT PEOPLEDIRECTED AT POSSESSIONS What is the Nature of the Service Act? Who or What is the Direct Recipient of the Service?

14. Figure 4-1 Customer Perceptions of Service Quality and Customer Satisfaction Service Quality Reliability Responsiveness Assurance Empathy Tangibles Product Quality Price Personal Factors Customer Satisfaction Situational Factors

15. Purchase process for services Awareness of need Information search Evaluation of alternative service suppliers Request service from chosen supplier Service delivery Evaluation of service performance Future intentions prepurchase stage Service encounter stage Post purchase stage Needs &expectations Clues to service quality Expectation vs. Perception

16. Components of Customer Expectations ► Desired Service Level: wished-for level of service quality that customer believes can and should be delivered ► Adequate Service Level: minimum acceptable level of service ► Predicted Service Level: service level that customer believes firm will actually deliver ► Zone of Tolerance: range within which customers are willing to accept variations in service delivery

17. Factors that Influence Customer Expectations of Services Predicted Service Explicit & Implicit Service Promises Word-of-Mouth Past Experience Desired Service ZONE OF TOLERANCE Adequate Service Personal Needs Beliefs about What Is Possible Perceived Service Alterations Situational Factors Source: Adapted from Zeithaml, Parasuraman & Berry

18. Qualities of services ► Search qualities ► Experience qualities ► Credence qualities

19. Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate ► Search attributes – Tangible characteristics that allow customers to evaluate a product before purchase ► Experience attributes – Characteristics that can be experienced when actually using the service ► Credence attributes – Characteristics that are difficult to evaluate confidently even after consumption ► Goods tend to be higher in search attributes, services tend to be higher in experience and credence attributes ► Credence attributes force customers to trust that desired benefits have been delivered

20. How Product Attributes Affect Ease of Evaluation) Source: Adapted from Zeithaml Most Goods High in search attributes High in experience attributes High in credence attributes Difficult to evaluate Easy to evaluate Most Services Clothing Chair Motor vehicle Foods Restaurant meals Lawn fertilizer Haircut Entertainment Computer repair Legal services Complex surgery Education

21. Service Quality ► The customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. ► Process and outcome quality are both important.

22. Determinants of service quality ► Reliability – delivering on promises ► Responsiveness – willing to help ► Assurance – inspiring trust and confidence ► Empathy – individualising customers ► Tangibles- physical representation

23. SERVQUAL Attributes n Providing service as promised n Dependability in handling customers’ service problems n Performing services right the first time n Providing services at the promised time n Maintaining error-free records n Keeping customers informed as to when services will be performed n Prompt service to customers n Willingness to help customers n Readiness to respond to customers’ requests RELIABILITY RESPONSIVENESS n Employees who instill confidence in customers n Making customers feel safe in their transactions n Employees who are consistently courteous n Employees who have the knowledge to answer customer questions ASSURANCE n Giving customers individual attention n Employees who deal with customers in a caring fashion n Having the customer’s best interest at heart n Employees who understand the needs of their customers n Convenient business hours EMPATHY n Modern equipment n Visually appealing facilities n Employees who have a neat, professional appearance n Visually appealing materials associated with the service TANGIBLES

24. Managing Service quality BY REDUCING THE GAPS- ► Gap between management perceptions and consumer expectations ► Gap between management perceptions and service quality specifications ► Gap between service quality specifications and service delivery ► Gap between service delivery and external communication ► Gap between expected service and perceived service

25. Gaps Model of Service Quality ► Customer Gap:  difference between customer expectations and perceptions ► Provider Gap 1 (The Knowledge Gap):  not knowing what customers expect ► Provider Gap 2 (The Service Design & Standards Gap):  not having the right service designs and standards ► Provider Gap 3 (The Service Performance Gap):  not delivering to service standards ► Provider Gap 4 (The Communication Gap):  not matching performance to promises

26. Perceived Service Expected Service CUSTOMER COMPANY Customer Gap Gap 1 Gap 2 Gap 3 External Communications to Customers Gap 4 Service Delivery Customer-Driven Service Designs and Standards Company Perceptions of Consumer Expectations Figure 2.6 Gaps Model of Service Quality

27. Customer Expectations Company Perceptions of Customer Expectations Figure 2.2 Key Factors Leading to Provider Gap 1 Gap 1

28. Customer-Driven Service Designs and Standards Management Perceptions of Customer Expectations Figure 2.3 Key Factors Leading to Provider Gap 2 Gap 2

29. Service Delivery Customer-Driven Service Designs and Standards Figure 2.4 Key Factors Leading to Provider Gap 3 Gap 3

30. Service Delivery External Communications to Customers Figure 2.5 Key Factors Leading to Provider Gap 4 Gap 4

31. Service quality is directly proportional to employee satisfaction

32. 2. The Flower of Service (Fig 3.6) Core Information Consultation Order Taking Hospitality Payment Billing Exceptions Safekeeping Facilitating elements Enhancing elements KEY:

33. Satisfied employees will produce satisfied customers ► Morale ► Motivation ► Mood

34. When customers visit a service establishment Their satisfaction will be influenced by ► Encounters with service personnel ► Appearance and features of service facilities – exterior and interior ► Interactions with self service equipment ► Characteristics and behavior of other customers

35. Managing Service Encounters ► Service encounter: A period of time during which customers interact directly with a service ► Moments of truth: Defining points in service delivery where customers interact with employees or equipment ► Critical incidents: specific encounters that result in especially satisfying/dissatisfying outcomes for either customers or service employees

36. Types of complainers ► Passives ► Voicers ► Irates ► Activists

37. Customer complaints ► It pays to resolve customer complaints ► On an average only 5 % dissatisfied customers complain. Others simply go over to the competitor ► A satisfied consumer speaks to an average of 3 people on his her experience ► A dissatisfied consumer gripes to on an average 11 persons about his/her unpleasant experience

38. Managing Service Productivity ► Giving quality service is an expensive business ► Not every consumer is willing to pay extra for service quality ► Service providers would have to find their optimum service quality/cost ratios ► Can technology substitute part of the labour content? ► Can customers substitute part of the labour content? ► Making services obsolete by product innovations

39. In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be good, you have to be consistently good