1. Services Marketing Session 4th Dated: -28-03-2010
BY: -Neeraj Gupta

2. Service provider needs to change according to the change of customer’s needs and preferences.
Service provider needs to perceive the view of the customer about the services.

3. Customer wants the fulfillment of words which were told by the service provider.
Customers do not expect that all their needs will be fulfilled but at least those promised by the company.
Affected by: -
Assurance
Reliability
Empathy
Responsiveness
Tangibiltiy

4. Model of Consumer Expectations
Ideal Service
Desired Service
Predicted
Service
Zone of
Tolerance
Adequate Service
Source: Adapted from Valarie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Services” Journal of Academy of Marketing Science,
Vol. 21 (Winter 1993), pp. 1-12

5. Factors that influence Customer Service Expectations
Customer Needs
Enduring Service Intensifiers
Derived Service Expectations
Customer Philosophy
Transitory Service Intensifier: - Personal emergencies & failure of a service provider to offer quality service the first time & push factors
Perceived Service Alternative
Situational Factors
Predicated Service Expectations due to factors that are out of control of everybody
Explicit Service Promises
Implicit Service Promises
Word of mouth publicity
Past Experience
Speed of delivery
Certainty of delivery
Ease
Personal Reognition

6. Managing Customer Expectations
Managing promises
Reliability “Getting it right for the first time”
Effective Communication

7. Exceeding Customer Expectations
To exceed customer expectations, companies need to know the customer expectations.
The Process dimension of service gives service providers an opportunity to exceed their customer’s expectations and surprise them with their competence, courtesy, and commitment. 7

8. Factors that Influence Customer Perceptions
Service Encounter
Remote encounter
Phone encounter
Face-to-face encounter
Factors leading to satisfaction or dissatisfaction in service encounters
Recovery
Adaptability
Spontaneity
Coping

9. Types of Service encounter
Remote encounters
Phone encounters
Face-to-face encounters

10. Types of Service encounter
A. Remote encounters
No direct human contact
Example: ATM machines
Tangible clues of the service
Air-conditioning
Piped music
Quality of technical processes & systems

11. Types of Service encounter
B. Phone encounters
Use of telecommunications
Eg: Utilities, Insurance, Telecommunication & Banking
Telephone services
Customer inquiry
Registration of complaints
Taking orders
Reserving tickets

12. Types of Service encounter
C. Face-to-face encounters
Direct contact b/w service provider & a customer
Eg: Restaurants, banks & Grocery stores
Assessment of both verbal & non-verbal behaviour

13. Factors that Influence Customer Perceptions
Service Evidence
Service personnel
Physical environment
Shaping the first impression of the customer
Managing the trust of the customer
Facilitating quality service
Providing a sensory stimulation to customers
Changing the image of service organizations
Management of Hotel services to its customers

14. Factors that Influence Customer Perceptions Contd..
Image: The Image of service provider definitely gives a clue of service quality to the customers.
Price: Price also give the picture of quality of service provided by service provider
Chapter - 04 14

15. Marketing Research in Services
Marketing research is a necessary and useful analytical tool for service firms for the following reasons:
Keeps in Touch
Perceptual Veil: Success might breed arrogance in a service firm and they might suffer from marketing myopia. They then may not perceive the real needs of the customers. This blindness also comes when a successful service firm has many layers and tiers of management and the market information has to go through all of them, leading to a distortion of the message.
Minimizing Risks
Growing customer expectations resulting in expanded markets

16. Scope of Marketing Research In Services
Research of services environment like the political and socio-economic factors
Research into customer needs
Research into customer expectations
Customer perception studies
Benchmarking Studies
Service Distribution Studies
Pricing Research
Promotion Research
Communications Research
Key Client Analysis
Panel studies for customer satisfaction indices and brand tracking

17. Using Marketing Research in Services
Examples
FedEx entered into partnership with the Post office - synergize their strengths -better service
FedEx allows the Post office to use its planes to deliver letters - in urgent category

18. Using Marketing Research in Services
Examples
Citibank partnered with American airlines – enhanced customer benefits

19. Influencing Customer Perceptions
Service encounters
Reflect evidence of service
Communicate and create a realistic Image
Quality and value through Pricing

20. CRM in pricing services
For a service firm, its marketing philosophy should be:
To acquire customers
To retain customers
To do business with only profitable customers.

22. Service Profit Chain Model
The 'service-profit chain' model is based on the following seven theorems:
Profit and growth are linked to customer loyalty.
Customer loyalty is linked to customer satisfaction.
Customer satisfaction is linked to service value.
Service value is linked to employee productivity.
Employee productivity is linked to employee loyalty.
Employee loyalty is linked to employee satisfaction.
Employee satisfaction is linked to internal quality of work life (internalizing the firm's brand).
The limitations of this model are:
Relationship between satisfaction and loyalty is not always linear.
The relationship depends on the type of industry. Where the choices for the customer are very high, the relationship is very strong and customer migration is possible; in monopolistic competition (utilities, public transportation, government/ public service, etc.), the relationship is weak.

24. Benefits of Customer Retention programme
Customer retention is cheaper than customer acquisition
Reduces communication costs for customer acquisitions like advertising and other promotions.
Loyal customers tend to do repeat purchase, reducing marketing costs but increasing revenues.
Loyal customers tend to avoid substitutes and other competition and perform repeat purchases even if the price of the service is more - increasing revenue and profit.
Satisfied customers who metamorphose into 'advocates' or 'apostles' perform the role of unpaid salesmen, promoting the service of their own free will.
Repeat customers are less expensive to serve than first time customers, as they are well aware of the offer and do not require customer support, education, guidance and training.

25. Components of CRM Customers Relationship Management
CRM extends itself from customer acquisition to customer retention to customer delight. The important steps are:
Identifying the right customer
Retaining the right customer
Delighting the customer

26. CRM Business Cycle Acquisition and Retaining
Understand and Differentiate
Several activities are important:
Profiling to understand demographics, purchase patterns and channel preference.
Segmentation to identify logical unique groups of customers that tend to look alike and behave in a similar fashion. While the promise of one-one marketing sounds good, not many organizations have mastered the art of treating each customer uniquely. Identification of actionable segments is a practical place to start.
Primary research to capture needs and attitudes.
Customer valuation to understand profitability, as well as lifetime value or long-term potential. Value may also be based on the customer's ability or inclination to refer other profitable customers.
Develop and Customize
Interact and deliver

27. Customer Relationship Analysis
The Bottom Line of CRM: Know Your Customer
Returns
Bringing Knowledge into the equation
Business drivers
Customer analysis solutions
Technology Drivers
Importance of Customer-relationship Analytics

28. Customer Relationship Analytics
Customer value assessment, for examining customer – and channel-value from multiple perspectives, such as lifetime sales, gross margin contribution, and by factors that affect profitability such as discounts, freight and handling, and average selling price.
Customer acquisition and targeted selling, for additional profiling, segmentation and ranking of customers based on the propensity to buy, order frequency, and overall purchasing behaviour.
Customer management, for understanding the impact of order fulfillment, returns and call-centre activity on actual sales performance. This will allow companies to review year-to-date sales and revenue and problems reported by customers to identify correlations and better understand how customer service issues are impacting profits.

29. Lifetime Value of a Customers
The basic idea is that customers should be judged on their profitability to the firm over the total time they make purchases. Profitability is usually based on net value, that is, the mark-ups over cost less the cost of acquiring and keeping the customer. Fixed costs are not considered because it is assumed that these costs will be incurred with or without the particular customer.
Approach
The simplest approach to lifetime value is to compute the average net revenue by multiplying four quantities together:
Avg. sale * No. of purchases/year * Stay of customer * Average Profit %
Having the net revenue, the lifetime value can be determined by subtracting acquisition and retention costs:
Lifetime value = Lifetime revenue – Cost to acquire – (Cost to retain × no. of purchases)

30. Lifetime Value of a Customers
Three strategies can be followed to increase the value of the customer:
Increase size of average sales (tie-ins, package multiple items).
Increase the number of sales (find other customer-needs you can provide and satisfy them with).
Increase profit margin (reduce overhead costs, reduce cost of goods and raise price if market will stand it).

31. Any
questions