CUSTOMER EXPECTATIONS AND PERCEPTIONS THROUGH MARKETING RESEARCH

WHY RESEARCH FOR SERVICES?

To discover requirement or expectation for services To monitor and track service performance To identify dissatisfied customers and need of service recovery To forecast future expectations of customers To determine customers expectation for a new service

CRITERIA FOR EFFECTIVE RESEARCH PROGRAM

Includes both qualitative and quantitative research Includes both expectation and perception of customers. Includes statistical validity when necessary. Includes measurement of loyalty, behavioral intensions or actual behavior. Balance cost of research and value of information

CRITERIA FOR AN EFFECTIVE SERVICES RESEARCH PROGRAM

Occurs with Appropriate Frequency

Includes Perceptions and Expectations of Customers

Research Objectives

Measures Priorities or Importance

Includes Statistical Validity When Necessary

Includes Measures of Loyalty or Behavioral Intentions

ELEMENTS IN SERVICE MARKETING RESEARCH

PROGRAM
Complaint solicitation Critical incident studies Reuirement research Relationship and SERVQUAL survey

PORTFOLIO OF SERVICES RESEARCH

Research Objective
Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action

Type of Research
Customer Complaint Solicitation Relationship Surveys

Assess companys service performance compared to competitors; identify service-improvement priorities; track service improvement over time Obtain customer feedback while service experience is still fresh; act on feedback quickly if negative patterns develop Use as input for quantitative surveys; provide a forum for customers to suggest service-improvement ideas Measure individual employee service behaviors for use in coaching, training, performance evaluation, recognition and rewards; identify systemic strengths and weaknesses in service

Post-Transaction Surveys
Customer Focus Groups Mystery Shopping of Providers Employee Surveys Lost Customer Research Future Expectations Research Service

Measure internal service quality; identify employee-perceived obstacles to improve service; track employee morale and attitudes Determine the reasons why customers defect To forecast future expectations of customers To develop and test new service ideas

STAGES IN THE RESEARCH PROCESS

Stage 1 : Stage 2 : Stage 3 : Stage 4 : Stage 5 : Stage 6 :

Define Problem Develop Measurement Strategy Implement Research Program Collect and Tabulate Data Interpret and Analyze Findings Report Findings

FIGURE 5-6

IMPORTANCE/PERFORMANCE MATRIX
HIGH

High Leverage
Attributes to Improve

Attributes to Maintain

Importance

Low Leverage

Attributes to Maintain

Attributes to De-emphasize

LOW

Performance

HIGH

DELIVERING AND PERFORMING SERVICE

SERVICE CULTURE
A culture where an appreciation for good service exists, and where giving good service to internal as well as ultimate, external customers, is considered a natural way of life and one of the most important norms by everyone in the organization. - Christian Gronroos (1990)

THE CRITICAL IMPORTANCE OF SERVICE EMPLOYEES

They

are the service. They are the organization in the customers eyes. They are the brand. They are marketers. Their importance is evident in:
the services marketing mix (people) the service-profit chain the services triangle

THE SERVICES MARKETING TRIANGLE

Company (Management)

Internal Marketing
Enabling the promise

External Marketing
Making the promise

Employees
Interactive Marketing
Delivering the promise

Customers
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

THE SERVICE PROFIT CHAIN

Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A. Schlesinger, Putting the Service-Profit Chain to Work, Harvard Business Review, March-April 1994, p. 166.

SERVICE EMPLOYEES
Who

are they? are these jobs like?

boundary spanners

What

emotional labor many sources of potential conflict

person/role organization/client interclient

quality/productivity tradeoffs

BOUNDARY SPANNERS INTERACT WITH BOTH INTERNAL AND EXTERNAL CONSTITUENTS

External Environment

Internal Environment

BOUNDARY-SPANNING WORKERS JUGGLE MANY ISSUES

Person

versus role versus client

Organization

Client

versus client

HUMAN RESOURCE STRATEGIES FOR DELIVERING SERVICE QUALITY THROUGH PEOPLE

Compete for the best people Measure and reward strong service performers Hire for service competencies and service inclination Be the preferred employer Train for technical and interactive skills

Hire the right people

Treat employees as customers

Retain the best people

CustomerOriented Service Delivery

Develop people to deliver service quality

Empower employees

Include employees in the companys vision Develop service-oriented internal processes

Provide needed support systems

Promote teamwork

Provide supportive technology and equipment

Measure internal service quality

EMPOWERMENT
Benefits:

Drawbacks:

quicker responses to customer needs during service delivery quicker responses to dissatisfied customers during service recovery employees feel better about their jobs and themselves employees tend to interact with warmth/enthusiasm empowered employees are a great source of ideas great word-of-mouth advertising from customers

potentially greater dollar investment in selection and training higher labor costs potentially slower or inconsistent service delivery may violate customers perceptions of fair play employees may give away the store or make bad decisions

TRADITIONAL ORGANIZATIONAL CHART

Manager

Supervisor

Supervisor

Front-line Employee

Front-line Employee

Front-line Employee

Front-line Employee

Front-line Employee

Front-line Employee

Front-line Employee

Front-line Employee

Customers

CUSTOMER-FOCUSED ORGANIZATIONAL CHART

Customers
Front-line Employee Front-line Employee Front-line Employee Front-line Employee
Front-line Employee Front-line Employee Front-line Employee Front-line Employee

Supervisor

Supervisor

Manager

TABLE 13.1

LEVELS OF CUSTOMER PARTICIPATION ACROSS DIFFERENT SERVICES

Source: Adapted from A. R. Hubbert, Customer Co-Creation of Service Outcomes: Effects of Locus of Causality Attributions, doctoral dissertation, Arizona State University, Tempe, Arizona, 1995.

HOW CUSTOMERS WIDEN THE SERVICE PERFORMANCE GAP

Lack Not No

of understanding of their roles

being willing or able to perform their roles rewards for good performance with other customers market segments

Interfering

Incompatible

IMPORTANCE OF OTHER (FELLOW) CUSTOMERS IN SERVICE DELIVERY

Other

customers can detract from satisfaction:

disruptive behaviors overly demanding behaviors excessive crowding incompatible needs

Other

customers can enhance satisfaction:

mere presence socialization/friendships roles: assistants, teachers, supporters, mentors

CUSTOMER ROLES IN SERVICE DELIVERY

Productive Resources

Contributors to Service Quality and Satisfaction

Competitors

SERVICES PRODUCTION CONTINUUM

Customer Production Joint Production Firm Production

Gas Station Illustration 1. Customer pumps gas and pays at the pump with automation 2. Customer pumps gas and goes inside to pay attendant 3. Customer pumps gas and attendant takes payment at the pump 4. Attendant pumps gas and customer pays at the pump with automation 5. Attendant pumps gas and customer goes inside to pay attendant 6. Attendant pumps gas and attendant takes payment at the pump

CUSTOMERS AS PRODUCTIVE RESOURCES

customers

can be thought of as partial employees

contributing effort, time, or other resources to the production process

customer key

inputs can affect organizations productivity

issue:

should customers roles be expanded? reduced?

 customers

may compete with the service provider internal exchange vs. external exchange internal/external decision often based on:

CUSTOMERS AS COMPETITORS

expertise capacity resources capacity time capacity economic rewards psychic rewards trust control

STRATEGIES FOR ENHANCING CUSTOMER PARTICIPATION

STRATEGIES FOR ENHANCING CUSTOMER PARTICIPATION

Define

customers jobs

helping oneself helping others promoting the company

Recruit,

educate, and reward customers

recruit the right customers educate and train customers to perform effectively reward customers for their contributions avoid negative outcomes of inappropriate customer participation
Manage

the customer mix

CHARACTERISTICS OF SERVICE THAT INCREASE THE IMPORTANCE OF COMPATIBLE SEGMENTS

Source: Adapted from C. I. Martin and C. A. Pranter, Compatibility Management: Customer-to-Customer Relationships in Service Environments, Journal of Services Marketing, 3, no. 3 (Summer 1989), pp. 515.

MANAGING CAPACITY AND DEMAND

Week 10

DEMAND PATTERN
Predictable cycles Random Demand fluctuations Demand pattern by market segment

TABLE 14.2 CONSTRAINTS ON

Time

CAPACITY
Type of service
Legal Consulting Accounting Medical Law firm Accounting firm Consulting firm Health clinic Delivery services Telecommunication Utilities Health club Hotels Restaurants Hospitals Airlines Schools Theaters Churches

Nature of the constraint

Labor

Equipment

Facilities

MANAGING DEMAND AND CAPACITY

Strategies for matching supply and demand through (a) shifting demand to match capacity or (b) adjusting capacity to meet demand.

FIGURE 14.1 VARIATIONS IN DEMAND RELATIVE TO CAPACITY

STRATEGIES FOR SHIFTING DEMAND TO MATCH CAPACITY

Demand Too High

Shift Demand

Demand Too Low

Use signage to communicate busy days and times. Offer incentives to customers for usage during non-peak times. Take care of loyal or regular customers first. Advertise peak usage times and benefits of non-peak use. Charge full price for the service--no discounts.

Use sales and advertising to increase business from current market segments. Modify the service offering to appeal to new market segments. Offer discounts or price reductions. Modify hours of operation. Bring the service to the customer.

SHIFTING DEMAND TO MATCH CAPACITY

Vary service offering Communicat with customers Modify timing and location of service offering Differentiate on price

STRATEGIES FOR ADJUSTING CAPACITY TO MATCH DEMAND

Demand Too High

Flex Capacity

Demand Too Low

Perform maintenance, renovations. Schedule vacations. Schedule employee training. Lay off employees.

Stretch time, labor, facilities and equipment. Cross-train employees. Hire part-time employees. Request overtime work from employees. Rent or share facilities. Rent or share equipment. Subcontract or outsource activities. Outsource.

ADJUSTING CAPACITY TO MATCH DEMAND

Stretch existing capacity Stretch time Stretch labour Stretch facilities Stretch equipments

AIGNING CAPACITY WITH DEMAND FLUCTUATIONS

Use part time employees Outsourcing Rent or share facilities or equipments Cross train employees Modify or move facilities and equipment

WAITING ISSUES (MAISTER, 1986)

unoccupied time feels longer preprocess waits feel longer anxiety makes waits seem longer uncertain waits seem longer than finite waits unexplained waits seem longer unfair waits feel longer longer waits are more acceptable for valuable services solo waits feel longer

WAITING LINE STRATEGIES

Employ

operational logic

modify operations adjust queuing system

Establish

a reservation process

Differentiate

waiting customers

Important customer urgency of the job duration of the service transaction payment of a premium price

FIGURE 14.6 WAITING LINE

CONFIGURATIONS

SERVICE PROVIDER PARTICIPANTS

service

principal (originator)

creates the service concept

(like a manufacturer)
service

deliverer (intermediary)

entity that interacts with the customer in the execution of the service

(like a distributor/wholesaler)

SERVICES INTERMEDIARIES Franchisees

service outlets licensed by a principal to deliver a unique service concept it has created

e.g., Jiffy Lube, Blockbuster, McDonalds

Agents

and Brokers

representatives who distribute and sell the services of one or more service suppliers

e.g., travel agents, independent insurance agents

Electronic

Channels

all forms of service provision through electronic means

e.g., ATMs, university video courses, TaxCut software

BENEFITS AND CHALLENGES FOR FRANCHISEES OF SERVICE

Benefits:
Challenges:

An established business format National or regional brand marketing Minimized risk of starting a business

Encroachment Disappointing profits and revenues Lack of perceived control over operations High fees

BENEFITS AND CHALLENGES IN DISTRIBUTING SERVICES THROUGH AGENTS AND BROKERS

Benefits: Challenges:

Reduced selling and distribution costs Intermediarys possession of special skills and knowledge Wide representation Knowledge of local markets Customer choice

Loss of control over pricing Representation of multiple service principals

BENEFITS AND CHALLENGES IN ELECTRONIC DISTRIBUTION OF SERVICES

Benefits: Challenges:

Consistent delivery for standardized services Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback

Price competition Inability to customize with highly standardized services Lack of consistency due to customer involvement Changes in consumer behavior Security concerns Competition from widening geographies

COMMON ISSUES INVOLVING INTERMEDIARIES

conflict

over objectives and performance controlling quality and consistency across outlets

difficulty

tension

between empowerment and control

ambiguity

channel

STRATEGIES FOR EFFECTIVE SERVICE DELIVERY THROUGH INTERMEDIARIES

Control

Strategies:

Empowerment

Measurement Review

Strategies:
Help the intermediary develop customer-oriented service processes Provide needed support systems Develop intermediaries to deliver service quality Change to a cooperative management structure

Partnering

Strategies:

Alignment of goals Consultation and cooperation