Week 7: Services Marketing Management

1
Week 7Services Marketing Management

2
Services Marketing Management

• By the end of this session you will
• Appreciate the particular characteristics of
  services
• Understand the composition of the services
  marketing mix
• Appreciate the importance of internal and
  relationship marketing activity in a service
  oriented business

3
What is a Service?

• A service is a form of product that is
  essentially intangible. Any activity or benefit
  that one party can offer another that does not
  result in the ownership of anything. Examples
  include

4
Growth in Services /or Service Culture

• Dramatic growth in recent years for many
  economies, services represent up to 60-70 of GDP
• More sophisticated products require more design,
  production and maintenance services
• Outsourcing trend means that manufacturers are
  buying more services in
• All offer additional challenges for the marketing
  manager

5
5 Distinguishing Characteristics of Services

• Intangibility - a deed, performance or effort
  cannot be seen, tasted, felt, heard or smelled
  before purchase (Armstrong Kotler, 2006)
• Inseparability - simultaneous production and
  consumption cant be separated from providers
• Variability / Heterogeneity - quality depends on
  who provides them and when, where and how
  (standardisation is difficult)
• Perishability - services cannot be stored for
  later sale or use
• Lack of Ownership no transfer of ownership of
  anything (no goods change hands)

6
Differences between Services and Physical Goods

• The nature of the product
• Customers involvement in the production process
• People as part of the product
• Greater problems in maintaining quality
• Harder for customers to evaluate
• Absence of inventories
• Relative importance of time factors
• Structure and nature of distribution channels

7
The Product Spectrum

• High service, low physical product (
• Medium service, medium product (
• High physical content, low service (

8
Characteristics of Services

• Buyers look for signals of service quality,
  from place, people, price, equipment and
  communications that they can see, so
• The service providers task is to make the
  service tangible in one or more ways and send the
  right signals or cues about quality
• Role of evidence management

9
Marketing Strategies for Service Firms

• As per manufacturing business, good service firms
  use marketing to position themselves strongly in
  chosen target markets through marketing mix
  activities but may need more
• Effective interactions with customers to create
  superior value during service encounters
  requires
• Effective skills of front-line service employees
• Support processes backing these employees

10
Marketing Strategies at the Ritz-Carlton

• 3 Steps of Service
• A warm and sincere greeting. Use the guest name,
  if and when possible
• Anticipation and compliance with guest needs
• Fond farewell. Give them a warm good-bye and use
  their name, if and when possible
• We are Ladies and Gentleman Serving Ladies and
  Gentlemen

11
The Service-Profit Chain (Heskett et al, 1997,
in Armstrong Kotler, 2006)

• Links service firm profits with both employee and
  customer satisfaction 5 links are
• Internal service quality (employee selection and
  training, work environment) which results in
• Satisfied and productive service employees
  (satisfied, loyal, hardworking) which results in
  
• Greater service value (effective/efficient value
  creation and service delivery) which results in
• Satisfied and loyal customers (who will repeat
  purchase and refer others) which results in
• Healthy service profits and growth (superior
  performance)

12
Marketing for Services

• Happy employees will unleash their enthusiasm
  on customers, creating even greater customer
  satisfaction
• (H. Schultz, CEO Starbucks)
• Service Marketing requires more than just
  traditional external marketing using the 4 Ps
  also requires internal marketing, interactive
  marketing and relationship marketing activity

13
The Services Marketing Mix 7Ps?

• While it is possible to discuss the following
  within the original 4 Ps framework, many propose
  adding
• People-
• Physical Evidence-
• Process-
• How do these additional Ps affect implementation
  of the marketing concept?

14
Internal Marketing

• The service firm must effectively train and
  motivate its customer-contact employees and
  supporting service people to work as a team, to
  provide customer satisfaction
• Get everyone to be customer-centred
• Internal marketing must precede external
  marketing
• NB

15
Interactive Marketing Managing Service Quality

• Service quality depends heavily on the quality of
  the buyer-seller interaction during the service
  encounter
• Service deliverer quality of the delivery
• Need a balance to
• Increase service differentiation (offer,
  delivery, image )
• Manage service quality (consistently high and/or
  have good service recovery)
• Manage service productivity (but dont take the
  service out of service!)

16
Relationship Marketing Meeting customer
expectations

• Key to providing service quality is to understand
  and meet customer expectations
• In evaluating outcome and experience of a service
  encounter, consider
• 1. Access 2. Reliability
• 3. Credibility 4. Security
• 5. Ustand customer 6. Responsiveness
• 7. Courtesy 8. Competence
• 9. Communication 10. Tangibles

17
Customer Relationship Marketing

• Delivering excellent service quality creates the
  opportunity to build an ongoing relationship with
  customers. Use when
• There is an ongoing/periodic desire for the
  service by the customer
• The customer controls the selection of a service
  provider
• The customer has alternatives from which to
  choose

18
Customer Relationship Marketing - Benefits

• Increased purchases
• Lower cost
• Lifetime value of a customer
• Sustainable competitive advantage
• Additional business through word-of-mouth
  promotion
• Employee satisfaction and retention
• Net result