Services Characteristics V/s Goods

Goods Services Resulting implications

Tangible Intangible - Services cannot be inventoried.
- Patented.
- Readily displayed or communicated.
- Pricing is difficult.

Standardized Heterogeneous - Service delivery and customer satisfaction
depend on employee actions.
- Service quality depends on uncontrollable
factors

Production Simultaneous production - Customers & employees affect the service
separate from and consumption outcome.
consumption

Nonperishable Perishable - Difficult to synchronize supply and
demand with services.
- Services cannot be returned or resold.




The services triangle and technology

Providers
Customers
Company
Technology
Internal Marketing
Enabling promises
Interactive Marketing
Keeping promises
External Marketing
Making promises
Service Quality Model
Word-of-mouth
communications
Personal needs
Past experience
Expected service
Perceived service
Service delivery
(including pre-and
post-contacts )
Translation of
perceptions into
service-quality
specifications
Management
perceptions of
consumer
expectations
External
communications
to consumers
GAP 5
GAP4
GAP3
GAP2
GAP 1
CONSUMER
MARKETER
The provider gaps are the underlying causes behind the
customer gap:

Gap 1 -- Not knowing what customers expect.
Gap 2 -- Not selecting the right service designs and
standards.
Gap 3 -- Not delivering to service standards.
Gap 4 -- Not matching performance to promises.


Nature and determinants of customer expectations of
service
Enduring Service Intensifiers
* Derived expectations from others (customers,family)
* Personal Service Philosophies ( your own trained
standards).

Personal Needs
Eg diabetic and refrigerator
Explicit Service promises
* Advertising
* Personal Selling
* contracts
* Other communications
Implicit Service Promises
* Tangibles
* Price
Word of Mouth
* Personal
* Expert (Consumer Reports,
publicity, Consultants,
surrogates)
Past Experience
Across Industries
Predicted Service

Zone of
Tolerance
Desired
Service
Adequate
Service
Expected Service

Perceived Service
Gap 5
Transitory Service Intensifiers
* Emergencies
* Service problems earlier
Perceived Service Alternatives
Self- Perceived Service Role
e.g. articulate customer
Situational Factors
* Bad weather * Catastrophe
* Random overdemand
Customer perceptions of quality and customer
satisfaction
Reliability

Responsiveness

Assurance

Empathy

Tangibles

Service
Quality
Product
Quality
Price
Situational
Factors
Customer
Satisfaction
Personal Factors - emotions,
attributions for service
success or failure,
Perceptions of equity or fairness
Service Quality Dimensions

Reliability : Ability to perform the promised service
dependably and accurately.
Responsiveness: Willingness to help customers , answer
questions,solves problems and provide prompt service, be
flexible and customise.
Assurance : Employees knowledge and courtesy and their
ability to inspire trust and confidence.
Empathy: Caring individualized attention given to
customers and made to feel special..
Tangibles: Appearance of physical facilities, equipment,
personnel and written materials.
Sometimes customers will use all of the dimensions to
determine service quality perceptions, at other times not.
E.g. ATM
SERVQUAL ATTRIBUTES
Reliability -5 Employees who have the knowledge to
Providing service as promised answer customer questions
Dependability in handling customers service Empathy -5
problems
Performing services right the first time Giving customers individual attention
Providing services at the promised time Employees who deal with customers in a
caring fashion
Maintaining error-free records
Responsiveness-4 Having the customers best interests at heart
Keeping customer informed as to when services Employees who understand the needs of their
will be performed customers

Prompt service to customers Convenient business hours
Willingness to help customers Tangibles -4
Readiness to respond to customers requests Modern equipment
Assurance-4 Visually appealing facilities
Employees who instill confidence in customers Employees who have a neat, professional appear-
ance
Making customers feel safe in their transactions Visually appealing materials associated
Employees who are consistently courteous with the service

Evidence of service tangibilizes the offerings
(from customers point of view)












People
Physical
Evidence
Process
* Contact employees
* Customer him/ herself
* Other customers
* Tangible communication
* Servicesscape
* Guarantees
* Technology


* Operational flow of
activities
* Steps in process
* Flexibility versus standard
* Technology versus human
Key factors leading to provider gap 1
Gap 1
Customer Expectations
Company Perceptions of
Customer Expectations
- Inadequate Marketing Research Orientation
Insufficient marketing research
Research not focused on service quality
Inadequate use of market research
- Lack of Upward Communication
Lack of interaction between management and customers
Insufficient communication between contact employees
and managers
Too many layers between contact personnel and top management
- Insufficient Relationship Focus
Lack of market segmentation
Focus on transactions rather than relationships
Focus on new customers rather than relationship customers
- Inadequate Service Recovery
Techniques of Services Marketing
Research
1. Complaint solicitation in hope of identifying common service failure
points. But only 4% customers complain.
2. Critical incidents studies customers are asked to provide verbatim
stories about satisfying & dissatisfying service encounters. Helps
especially in behavioral dimensions in service encounters.
3. Requirements research involve identifying benefits & attributes that
customers expect in a service through qualitative followed by
quantitative technique. Facilitators asks what, why & how questions
(how customers will understand when they receive a service feature)
4. Relationship surveys to track performance on all elements in
customers relationship with service i.e. service, product, price.
5. Trailer calls or post transactions surveys to capture information
about one or all of key service encounters immediately after transaction.
6. Service expectation meetings & reviews in business to business
situations.
7. Process checkpoint evaluations used in professional service like
consulting, construction, architecture etc.where services are provided
over a long period of time.




8. Market-oriented ethnography to capture cultural nuances of
service usage. Done through observation, interviews with key
informants, studying documents & examining material
possessions such as artifacts.

9. Mystery shopping hired outside research organisation
personnel visit & experience the service as if they were
customers.

10. Customer panels ongoing groups of customers provide
attitudes & perceptions about service over time.

11. Lost customer research acts as early warning system for
future defectors.

12. Future expectations research features research involves
querying of customers about desirable features. Lead user
research asks opinion leaders / innovators. Synectics
approach
define users more broadly.

Building Customer Relationships
- Lifetime value of customer(retention/relationship focus instead of
Acquisition/ transaction focus)
- Attracting,satisfying,retaining,enhancing
- Foundation for relationship strategies are
a. Quality in the core service
b. Market segmentation & selecting best targets
c. Compatibility of target segments must be ensured
d. Monitoring, relationships through database
e. Retention strategies - financial, social, customization & intimacy
bonds, structural bonds
f. Customer appreciation

- Note that all customers aren't right
(wrong segment, non profitable, difficult customers)
Understanding Behavioral
Styles(Personality factor)
Relational/Amiable- Ask assertive and
Emote responsive
Expressive-Tell assertive and Emote
responsive
Analytical-Ask assertive and Control
responsive
Dominant/Drivers-Tell assertive and
control responsive
Providing services
The Freezer- low in both personal and
procedural we dont care
The Factory-high procedural but low personal
you are a number.We are here to process you
The Friendly Zoo-high personal but low
procedura proficiency we are trying hard ,but
we dont know what we are doing
Quality customer service strong in both
personal and procedural we care and we
deliver

Levels of retention strategies
Excellent Service
Quality and Value
Integrated
Information
Systems Joint
Investments
Shared
Processes
and Equip.
Anticipation /
Innovation
Mass
Customization
Customer
Intimacy
Social
Bonds among
Customers
Personal
Relationships
Continuous
Relationships
Stable
Pricing
Bundling and
Cross Selling
Volume and
Frequency
Rewards
IV. Structural
Bonds
I. Financial
Bonds
III. Customization
Bonds
II. Social
Bonds
CUSTOMER RELATIONSHIP BUILDING
BASIC MARKETING Simply Sell
REACTIVE MARKETING Sell & encourage customer to call if
any Questions, comments or complaints.
ACCOUNTABLE MARKETING Salesman phones after sale
PROACTIVE MARKETING Salesperson contacts from time to
time with suggestions about improved product uses or new products
PARTNERSHIP MARKETING Company works continuously with
customer to discover ways to effect customer savings or help customer
perform better.
LEVELS OF RELATIONSHIP MARKETING
HIGH
MARGIN
MEDIUM
MARGIN
LOW
MARGIN
Many customers/
distributors
Accountable Reactive
Accountable
Basic or
reactive
Proactive
Reactive
Medium number
of customers/
distributors
Proactive Accountable
Few customers /
distributors
Partnership
CUSTOMER / PRODUCT PROFITABILITY
ANALYSIS
Customers
Products
C
1
C
2
C
3

P
1
+ + +
Highly profitable product
P
2
+
Profitable product
P
3
- -
Losing product
P
4

+ - Mixed bag product
High-profit
customer
Mixed-bag
customer
Losing
customer
Recovery Paradox
Service Failure
Take Action Do Nothing
Stay with Provider Switch Providers
Complain to
Third Party
Complain to
Family and Friends
Complain to
Provider
Switch Providers Stay with Provider
Types of Complainers - No.& proportion will vary across
industries & contexts.

1. Passives - no action

2. Voicers - friends of service providers

3. Irates - engage in ( -) ve word of mouth to friends &
relatives & switch.

4. Activists - complain to all.



Types of Complainers
Complaining Customers Expectations
- Customers more likely to complain for
expensive, high-risk & ego involving products.
- Fair treatment (outcome, procedural &
interactional fairness).

A. Outcome- compensation that matches the
level of their dissatisfaction.
B. Procedural - fairness in terms of policies,
rules & timeliness, easy access.
C.Interactional - Politeness, care, honesty


Service Recovery Strategies
1. Right first time- fail safe the service.
2. Welcome & encourage complaints
3. Act quickly - ownership of complaint, empowerment of
employees, anticipate problems (e.g. delayed flight &
hunger), allow customers to solve problems.
4. Treat customers fairly.
5. Learn from recovery experiences (source of diagnostic ,
prescriptive information)
6. Learn from lost customers.












* High Price
* Price Increases
* Unfair Pricing
* Deceptive Pricing


* Location / Hours
* Wait for Appointment
* Wait for service

* Service Mistakes
* billing Errors
* Service catastrophe

* Negative Response
* No Response * Reluctant Response

* Uncaring * Impolite * Unresponsive
* Unknowledgeable
Ethical Problems
* Chat * Hard Sell * Unsafe
* Conflict of Interest

* Found Better Service
Involuntary Switching
* customer Moved * Provider Closed
Pricing
Inconvenience
Core Service Failure
Service Encounter Failure
Response to Service Failure
Competition
Causes behind
service switching
Service
Switching
Behavior
Key factor leading to provider gap 2
Gap 2
Customer- Driven Service
Designs and Standards
* Poor Service Design
Unsystematic new-service development process
Vague, undefined service designs
Failure to connect service design to service positioning
* Absence of Customer-Defined Standards
Lack of customer-defined service standards
Absence of process management to focus on customer requirements
Absence of formal process for setting service quality goals
* Inappropriate physical Evidence and Servicescape
Management Perceptions of
Customer Expectations
New service development process
1. Business strategy development or renew
2. New service strategy development
3. Idea generation (brainstorming, lead-user research, learning
from competitors offerings, observation (empathic design)
4. Concept development & evaluation (with customers &
employees) Service blueprint
5. Business analysis (test for profitability & feasibility)
6. Service development & testing (prototype test)
7. Market testing
8. Commercialization
9. Post introduction evaluation

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New service strategy matrix for
identifying growth opportunities


Offerings

Markets
Current Customers New Customers
Existing Services

SHARE BUILDING MARKET
DEVELOPMENT
New Services
SERVICE
DEVELOPMENT
DIVERSIFICATION