Chapter 13 MMAAA

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com
© 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
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

www.axcesscapon.com www.wileyindia.com
CHAPTER 13
Managing Services
and Customer Service
www.axcesscapon.com www.wileyindia.com The Fundamental Business Model
Shareholder Value
Organizational Survival and Growth
Current and Potential Profits

Competitors
Attract, Retain, and Grow Customers
Competitors
Customer Value
Company
www.axcesscapon.com www.wileyindia.com Six Marketing Imperatives
• 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
www.axcesscapon.com www.wileyindia.com Managing Services and Customer Service
Session Roadmap
• Service distinctions
• Growth in services
• Key service characteristics
• Service blueprint
• Service quality
• Customer service
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com Service Distinctions
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.
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com Growth in Services
• Factors driving growth of private-sector services:

• Rising incomes
• Age-related demographic shifts
• Customer behavior changes
• Deregulation
• Franchising
• Globalization
• Leveraging core competence
• Outsourcing
• Technology
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com Key Service Characteristics
• 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
Addressing Intangibility
• Service facilities
• exterior
• interior
• onstage
• offstage
• Service equipment
• Service personnel
• Service guarantees
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com Service Blueprint
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
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com Service Quality
• 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
Service Quality and Customer Satisfaction
Value Proposition Delivered Value
Expected Value Perceived Value
Customer Satisfaction = f(Perceived Value less Expected Value)

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
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
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
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
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
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
Enhance Service Quality

• Customer co-production
• Improve the offer
• Maintain the service environment
• Service performance and information
• Service quality failures and service recovery
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com Customer Service
• Customer service dimensions

• Customer service and the purchase process
• Deliver high-level customer service
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.
Customer Service and the Purchase Process
Pre-purchase During purchase Post-purchase

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
Session Roadmap
• Service quality
www.axcesscapon.com www.wileyindia.com
CHAPTER 13
Managing Services
and Customer Service

Chapter 13 MMAAA

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www.axcesscapon.com www.wileyindia.

Managing Markets Strategically

Section I: Marketing and the Firm

Section V: Special Marketing Topics

Organizational Survival and Growth

Current and Potential Profits

• Imperative 1: Determine and recommend which markets to address

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

• Factors driving growth of private-sector services:

Illustration: An Evening Adult Education Course

Register by mail Register by phone

Go to registrar Call school

Enrollment confirmation sent

• Service quality and customer satisfaction

Service Quality and Customer Satisfaction

Value Proposition Delivered Value

Expected Value Perceived Value

Customer Satisfaction = f(Perceived Value less Expected Value)

Service Quality and Customer Satisfaction

f(Perceived Value less Expected Value) = Customer Satisfaction

Expected Value Perceived Value Customer Satisfaction

Service Quality Expectations and Performance

Service Quality Limitations: Satisfaction and Loyalty

Enhance Service Quality

• Customer service dimensions

Customer Service Dimensions: Flower of Customer Service

Customer Service and the Purchase Process

Pre-purchase During purchase Post-purchase

Deliver High-Level Customer Service

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