Business Services Marketing

deeds, process, and performances provided or coproduced by one entity or person for another entity or person
1. all economic activity whose output is not a physical product or construction
2. generally consumed at the time it is produced
3. provides added value in form that are essentially intangible concerns
Service Industries and Companies
core product is a service
Service as a Product
wide range of intangible product offerings sold by service and nonservice companies
Customer Service
service provided in support of a company’s core product
not services provided for sale by the company
Derived Service
value derived from physical goods is the service provided by good
Tangibility Spectrum
services tend to be less tangible than manufactured
Spectrum illustrates the tangibility of the product/service
Service-Based Economics
developed in response to the growth of service industries world wide
Why be service oriented in a goods business?
1. commoditization of products-> price and margin pressures. Services customize offerings to add value
2. Customers demand a solution to their problem or challenge that involves multiple products/services
3. higher profit margins b/c customer loyalty and satisfaction are driven by service quality and offerings
4. Can be a differentiator
Characteristics of Service

Simultaneous Production and Consumption

Characteristic of Service

cannot be seen, felt, tasted, or touched

cannot be inventoried
demand fluctuations are difficult to measure
cannot be easily patented
easily copied by competitors
quality difficult to assess, communicate and display
Difficult to price b/c “unit of service” costs are hard to determine
price/quality relationship is complex

Characteristic of Service

no two services will be precisely alike
customer behavior introduces variability and uncertainties result of human interaction and behaviors

ensuring consistent service quality is hard
depends on factors that cannot be controlled

Characteristic of Service

cannot be saved, stored, resold, returned

cannot be inventory
hard demand forecasting and creative planning for capacity utilization
strong recovery strategies when things do go wrong

Simultaneous Production and Consumption
Characteristic of Service

sold first and then produced and consumed @ same time
producers are playing a role as a part of the product and are an essential in the experience

mass production is difficult
dependent on what happens in “real time”
not usually possible to gain significant economies of scale
customer involved in and observes the production process and thus may affect outcome

Search Qualities
Attributes that a customer can determine before purchasing a product
Experience Qualities
attributes that can be discerned only after purchase or during consumption
Credence Qualities
Characteristics that the consumer may find impossible to evaluate even after purchase and consumption (medical, auto, etc)
Service Marketing Mix
elements an organization controls that can be used to signify or communicate with customers

Physical Evidence

Service Marketing Mix

All human actors who play a part in service delivery and thus influence buyers perceptions

Physical Evidence
Environment in which the services is delivered, where firm/customer interact, tangible comp
Procedures, mechanisms, flow of activities by which the service is delivered
Customer Gap
difference between customer expectations and perceptions
Customer Expectations
standard/reference pts brought to the service experiences
beliefs about service delivery that serve as standards or reference points against which performance in judged
Customer Perceptions
Subjective assessments of actual service experiences
Where does Quality Service begin?
A clear understanding of the customers
Service Gaps
Listening Gap
The Service Design and Standards Gap
Service Performance Gap
Communication Gap
Listening Gap
difference between customer expectations of service and company understanding of those expectations

Inadequate customer research orientation
Lack of Upward Communication
Insufficient relationship focus
Inadequate service recovery

The Service Design and Standards Gap
Difficulty experienced in translating customer expectations into service quality specifications that employees can understand execute

Poor Service Design
Absence of Customer-Driven Standards
Inappropriate Physical evidence and service scrape

Service Performance Gap
discrepancy between the development of customer driven service standards and actual service performance by employees

Deficiencies in HR policies
Failure to match Supply/Demand
Customers not fulfilling roles
Problems with service intermediaries

Communication Gap
difference between service delivery and service providers external communications

Lack of integrated services marketing communications
Ineffective management of customer expectations
Inadequate horizontal communications
Inappropriate price

Desired Service
level of service the customer hopes to receive
Adequate Service
Minimum level of service the customer will accept
Zone of Tolerance
extent to which customers will recognize and are willing to accept variation. Range in which customers do not particularly notice service performance. Can expand/contract mostly due to adequate service.

different customer have different standards

Sources of Desire Expectations
Personal Need
Personal Service Philosophy
Derived Service Expectations
Personal Needs
Source of Desire Expectations

states or conditions essential to physical/psychological well-being of customer

Personal Service Philosophy
Source of Desire Expectations

underlying generic attitude about service and proper conduct

Derived Service Expectations
Source of Desire Expectations

expectations are driven by another person of group of people

Sources of adequate Service Expectations
short term and tend to fluctuate more than the factors that influence desired service

Perceived Service Alternatives
Situational factors
Personal situational factors

Perceived Service Alternatives
other providers from whom the customer can obtain service

customer’s perception that service alternatives exist raises the level of adequate service and narrows the zone of tolerance

Situational factors
service performance conditions that customers view as beyond the control of the service provider

customers who recognize that situational factors are not the fault of the service company may accept lower levels of adequate service, given the context.

often temporarily lower the level of adequate service widening the zone of tolerance

Personal situational factors
consist of short-term, individual facts that make a customer more aware of the need for service

when urgency is needed raise the love of adequate service

Predicted Service
level of service that customers believe they are likely to get

predict good service leads to higher adequate service than if they predicted poor service

an estimate or a calculation of the service that a customer will receiver in an individual transaction rather than in the overall relationship with a service provider while desired and adequate are global assessments

Sources of both desired and predicted service expectations
Explicit service promises
Implicit Service Promises
Word of Mouth Communication
Past Experience
explicit service promises
personal and non personal statements about the service made by the organization to customers

personal are by the firm’s sale people or service personnel

non personal come from the company’s webpage, ads, brochures, and other written publications

influence the levels of both desired and predicted service

Implicit Service Promises
Service related cues, other than explicit promises, that lead to inferences about what the service should and will be like.

dominated by price and the tangibles associated with the service

Word of Mouth Communication
made by parties other than the organization

convey to customers what the service will be like and influence both predicted and desired service

perceived as unbiased

Past Experience
previous exposure to service that is related to the focal service
What does a service Marketer do if customer expectations are “unrealistic”
one inhibitor to learn about customer expectation is management and employee’s fear of asking

belief that customer expectations will be extravagant and unrealistic and asking will set itself up for even loftier expectation levels

main expectations and generally quite simple and basic

company may not b able-and indeed does not always have to -deliver on expressed expectations and the reasons that desired service is not being provided at this time and describe efforts planned to deliver such service in future

profoundly positive emotional state that results from having one’s expectations exceeded to a surprising degree

unexpected and surprisingly enjoyable

attributes central to the basic function of the product or service
potential to further satisfaction beyond the basic function of the product
Staying power
how long a company can expect an experience of delight to maintain the consumer’s attention
Competitive implication
impact on expectations of other firms in the same industry
How does a company exceed customer service expectations?
exceeding customer expectations on the basics is impossible

developing customer relationship

deliberately under promise the service to increase the likelihood of exceeding customer expectations

backfires: people with whom the company interacts regularly are likely to notice the under promising and adjust their expectations

reduced competitive appeal of an offering and must be tempered by what the company is offering

position unusual service as unique rather than the standard

broader concept, it is influenced by perceptions of service quality, product quality, and price, as well as situational factors and personal factors

customer’s evaluation of a product or service in terms of whether that product or service has met the customer’s needs and expectations.

Service Quality
dimensions of service, focused evaluation that reflects the customer’s perception of reliability, assurance, responsiveness, empathy, and tangibles
when you fail to meet satisfaction expectations
knowledge that one’s needs have been met
passive response that customer’s may associate with services they do not think a lot about or they receive routinely over time
makes customer feel good or in a positive way
removal of a negative leads to satisfaction
mix of positive and negative experiences
What determine Customer Satisfaction?
Product and service features
Customer Emotions
Attributions for Service Success or Failure
Perceptions of Equity or Fairness
Other customers, family members, and coworkers
American Customer Satisfaction Index (ACSI)
customer perceptions across 200 firms representing all major economic sectors

250 interviews/ company

measured by customer perceptions of quality, value, satisfaction, expectations, complaints, and future loyalty

Service Quality Dimensions
• judge quality based on multiple factors relevant to the context
• affected by culture



Service Quality Dimensions

ability to perform the promised service dependably and accurately

Service Quality Dimensions

willingness to help customers and proves prompt service
• attentiveness and promptness in dealing with customer requests, questions, complaints, and problems

Service Quality Dimensions

employees’ knowledge and courtesy and their ability to inspire trust and confidence
• important for services that customers perceive as high risk or for services of which they feel uncertain about their ability to evaluate the outcomes

Service Quality Dimensions

caring, individualized attention given to customers
• personalized service
• customers are unique and special and their needs are understood

Service Quality Dimensions

appearance of physical facilities, equipment, personnel, and communication materials
• enhance their image, provide continuity, and signal quality to customers, most companies combine tangibles with another dimension to create service quality strategy for the firm

E-service Quality Judgements
• use to judge websites
o Efficiency
o Fulfillment
o System Availability
o Privacy

o Responsiveness
o Compensation
o Contact

E-service Quality Judgements

• the ease and speed of accessing and using the site

E-service Quality Judgements

• the extend to which the site’s promises about order delivery and item availability are fulfilled

System Availability
E-service Quality Judgements

• the correct technical functioning of the site

E-service Quality Judgements

• the degree to which the site is safe and protects customer info

E-service Quality Judgements

• the effective handling of problems and returns through the site

E-service Quality Judgements

• degree to which the site compensates customers for problems

E-service Quality Judgements

• availability of assistance through telephone or online representatives

Service Encounters / moments of truth
• when the customer interacts with the service firm
• any encounter can be critical in determine customer satisfaction and loyalty
• each encounter with different people and departments representing the food service provider adds to or detracts from the potential for a continuing relationship
• not all encounters are equally important in building relationships although the average quality of the individual events in a service encounter sequence are important, satisfaction can be enhanced by providing a positive peak experience within the sequence.
Types of service encounters
• remote encounter
• technology mediated encounters
• face-to-face encounters
remote encounter
o encounters can occur without any direct human contact
o opportunity for firm to reinforce or establish quality perceptions in the customer
o tangible evidence of the service and the quality of the technical processes and system become the primary bases for judging quality
technology mediated encounters
o allow technology based communication with a real person in real time
o greater potential variability in the interaction
o tone of voice, employee knowledge, and effectiveness/efficiency in handling customer issues become important criteria for judging quality
face-to-face encounters
o occurs between an employee and a customer in direct personal contact
o verbal and non verbal behaviors
o tangible cues like employee dress and other symbols of service
o customer also plays a role in creating quality service for herself through her own behavior during the interaction
Sources of Pleasure and Displeasure in Service Encounter
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