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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 1

Managing Markets Strategically


Professor Noel Capon
R.C. Kopf Professor of International Marketing
Columbia Business School
New York, NY, U.S.A.

&
Professor Siddharth Shekhar Singh
Director Fellow Programme in Management & Associate Professor of Marketing
Indian School of Business
Hyderabad & Mohali, India
www.axcesscapon.com www.wileyindia.com Managing Markets Strategically
© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 2

Section I: Marketing and the Firm


Section II: Fundamental Insights for Strategic Marketing
Section III: Strategic Marketing
Section IV: Implementing the Market Strategy
Part A: Providing Customer Value
Chapter 12: Managing the Product Line
Chapter 13: Managing Services and Customer Service
Chapter 14: Developing New Products

Section V: Special Marketing Topics


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CHAPTER 13

Managing Services
and Customer Service
www.axcesscapon.com www.wileyindia.com The Fundamental Business Model
© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 4

Shareholder Value

Organizational Survival and Growth

Current and Potential Profits


Competitors
Attract, Retain, and Grow Customers
Competitors
Customer Value

Company
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• Imperative 1: Determine and recommend which markets to address


• Imperative 2: Identify and target market segments
• Imperative 3: Set strategic direction and positioning
• Imperative 4: Design the market offer
• Imperative 5: Secure support from other functions
• Imperative 6: Monitor and control
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 6

Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 7

Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
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A service is any act or performance that one party can offer another that is
essentially intangible and does not result in the ownership of anything.

Customer service is a key component of the market offer. Customer service


enhances the customer value inherent in the core product or service.
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 9

Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
www.axcesscapon.com www.wileyindia.com Growth in Services
© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 10

• Factors driving growth of private-sector services:


• Rising incomes
• Age-related demographic shifts
• Customer behavior changes
• Deregulation
• Franchising
• Globalization
• Leveraging core competence
• Outsourcing
• Technology
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Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
www.axcesscapon.com www.wileyindia.com Key Service Characteristics
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• Intangibility
• Inseparability
• modify supply
• modify demand
• Variability
• focus on human capital
• substitute capital for labor
• Perishability
• demand sufficient but unpaid
• demand insufficient
• Lack of acquisition
• Role of customers
• Divisibility
www.axcesscapon.com www.wileyindia.com Key Service Characteristics
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Addressing Intangibility
• Service facilities
• exterior
• interior
• onstage
• offstage

• Service equipment
• Service personnel
• Service guarantees
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Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 15

Illustration: An Evening Adult Education Course


Start
No class piques End of
interest Process
See a catalog and Do research
browse through • Call and wait for
See class that
someone to help Decide not to take
looks interesting • Visit college
• Select teacher

Do research
• Call and wait for Do more research
Decide to take a
someone to help Pick a course • Call and wait for Decide to register
course on own • Visit college someone to help
• Order catalog

Register by mail Register by phone


End Unsuccessful

Go to registrar Call school


Attend second class School receives and
• Wait for someone Wait for someone to help
etc. processes registration
• Try to get in Complete registration process

Enrollment confirmation sent


Successful Like class, but
not registered
Course full
Keep class Enrolled

Drop class Do not like Attend first class Still want class End of
process
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Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 17

• Service quality and customer satisfaction


• SERVQUAL model
• Service quality expectations and performance
• Perceived service quality drivers
• Service quality limitations: Satisfaction and loyalty
• Enhance service quality
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 18

Service Quality and Customer Satisfaction

Value Proposition Delivered Value

Expected Value Perceived Value

Customer Satisfaction = f(Perceived Value less Expected Value)


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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 19

Service Quality and Customer Satisfaction

f(Perceived Value less Expected Value) = Customer Satisfaction

Expected Value Perceived Value Customer Satisfaction


Firm A 5 hours 6 hours low
Firm B 8 hours 7 hours high
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 20

SERVQUAL Model

Word-of-mouth
Personal needs Past experience
communications

Expected service
Gap 5
Perceived service

External communications to
Gap 1 Service delivery
customers
Gap 3 Gap 4
Service quality specifications
Gap 2
The firm’s perceptions of
customer expectations
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 21

SERVQUAL Model
Gap 1: The firm does not understand customer service expectations
Gap 2: Service quality specifications do not reflect the firm’s beliefs about
customer service expectations
Gap 3: Service delivery performance does not meet service specifications
Gap 4: External communications about service quality do not reflect service
performance
Gap 5: Expectations disconfirmation: The difference between perceived service
quality and expected service quality
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 22

Service Quality Expectations and Performance


Trouble Keep it up

High
Customer
Performance
Expectations
Low

Low High
Be low key Customer Performance Perceptions Too much effort
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 23

SERVQUAL Model
Tangibles Appearance of communication materials, equipment, personnel,
and physical facilities
Reliability Ability to perform the promised service accurately and dependably
Responsiveness Willingness to help customers and provide prompt service
Assurance Courtesy and knowledge of employees, and ability to convey
confidence and trust
Empathy Provision of caring, individualized attention to customers
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 24

Service Quality Limitations: Satisfaction and Loyalty

High A’
B’
Monopoly-type market
Customer Loyalty

Increasing
competition

A Competitive-type market
Low B
Low High

Customer Satisfaction
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 25

Enhance Service Quality


• Customer co-production
• Improve the offer
• Maintain the service environment
• Service performance and information
• Service quality failures and service recovery
www.axcesscapon.com www.wileyindia.com Managing Services and Customer Service
© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 26

Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
www.axcesscapon.com www.wileyindia.com Customer Service
© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 27

• Customer service dimensions


• Customer service and the purchase process
• Deliver high-level customer service
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 28

Customer Service Dimensions: Flower of Customer Service

Information

Consultation
Payment

Billing Order-taking
Exceptions

Safekeeping

Hospitality

Source: C.H. Lovelock and J. Wirtz, Services Marketing, 7th ed., Upper Saddle River, NJ: Prentice Hall, 2011.
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 29

Customer Service and the Purchase Process

Pre-purchase During purchase Post-purchase


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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 30

Deliver High-Level Customer Service

Customer service
strategy

Top management
Human resource
support and
management
involvement High-level
customer service

Measuring
Service
customer service
infrastructure
quality
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 31

Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
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© Noel Capon and Siddharth Shekhar Singh, 2014. All rights reserved. PRESENTATION 13 OF 24 / 32

CHAPTER 13

Managing Services
and Customer Service