MKT 5207 Service Marketing

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MKT 5207Service Marketing

• Afjal Hossain
• Assistant Professor
• Department of Marketing

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Chapter 18The Financial and EconomicImpact of
Service
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The Direct Relationship between Service and
Profits
?
Service
Profits
Figure 18.1
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Offensive Marketing Effects of Serviceon Profits
Profits
Service
Market share
Sales
Reputation
Price premium
Figure 18.2
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Defensive Marketing Effects of Serviceon Profit
Lower costs
Margins
Volume of purchases
Customer retention
Service
Price premium
Profits
Word of mouth
Figure 18.3
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Top Box Scores, Repurchase Intentions, and
Referral Intentions
Definitely Will Repurchase fromXYZ
Definitely Would Recommend XYZ
Overall Satisfaction with XYZ ( of customers)
TOP BOXVery Satisfied (64)
96
91
55-point drop
44-point drop
SECOND BOX Somewhat Satisfied (29)
All Customers
52
36
BOTTOM 3 BOXES Neutral to Very Dissatisfied (7)
7
4
Source Technical Assistance Research Bureau
(TARP), 2007.
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The Effects of Service
Lower costs
Margins
Volume of purchases
Customer Retention
Behavioral Intentions
Service
Price premium
Profits
Word of mouth
Sales
Figure 18.4
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The Key Drivers of Service Quality,Customer
Retention, and Profits
Service Attributes
Service Encounters
Service encounter
Service encounter
Customer Retention
Behavioral Intentions
Service Quality
Profits
Service encounter
Service encounter
Figure 18.6
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Sample Measurements for the Balanced Scorecard
Financial Measures Price Premium Volume
increases Value of customer referrals Value of
cross sales Long-term value of customer
Customer Perspective Service perceptions
Service expectations Perceived value Behavioral
intentions Loyalty Intent to Switch
Customer Referrals Cross Sales
of Defections
Operational Perspective Right first time (
hits) Right on time ( hits) Responsiveness (
on time) Transaction time (hours,
days) Throughput time Reduction in waste Process
quality
Innovation and Learning Perspective Number of
new products Return on innovation Employee
skills Time to market Time spent talking to
customers
Figure 18.7
Source Adapted from R.S. Kaplan and D.P.
Norton, The Balanced ScorecardMeasures That
Drive Performance, Harvard Business Review 70
(January-February 1992), pp. 71-79.
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Service Quality Spells Profits
Lower costs
Margins
Defensive Marketing
Volume of purchases
Service
Price premium
Customer Retention
Profits
Word of mouth
Market share
Sales
Offensive Marketing
Reputation
Price premium
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The Measures That Matter MostFast Food Example
Figure 18.8
Source Christopher D. Ittner and David F.
Larcker, Coming Up Short on Nonfinancial
Performance Measurement, Harvard Business Review
81 (November 2003), pp. 8895.