Chapter 8:Services Marketing and Customer Relationships
The Nature of Services regardless of the “product”, there is a services
aspect to the offerings of all firms. Services organizations now account for a major part of the national economy
in some cases, a service is the principal purpose of the transaction, as in the rental of a car, a haircut, or legal services -- we refer to this as the core service
in others, service is performed in support of the sale of a tangible product -- these are referred to as supplementary services
Figure 8-1 A Goods-Services Continuum
Marketing in Service Organizations marketing has historically been focused on tangible
products many service organizations are in the not-for-profit
sector and have not been particularly marketing-oriented or customer-focused
service industries have become much more competitive in recent years; technology has made it difficult to compete on tangible products
service is now seen to offer competitive advantage
Characteristics of Services
intangibility: difficult to sample and evaluate inseparability: difficult to separate services
from the provider; staff are essential to the delivery of quality services
heterogeneity: virtually every service is different; very difficult to standardize quality
perishability: those not sold can not be stored fluctuating demand: demand for some services
fluctuates by season, or by time of day
Strategic Services Management
intangibility generally makes the marketing of services a challenge
understanding how people buy services and the segments that exist is just as important
knowing more about the value of customer segments is important -- some are more valuable than others
knowing what they value so that service levels can be tailored is also important
Services Value Proposition
the value proposition in a services setting is influenced by services’ characteristics
services firms must get the core service right they must provide solid support serviceand they must deliver excellent service to
their customersmake sure we understand these three
different uses of the term “service”
Figure 8-2 The Services Value Proposition
Strategic Aspects of the Core
to succeed at the marketing of services, the essential marketing mix principles apply:understand the customerplan the core offer (product/service)set an attractive and fair pricedistribute the service convenientlypromote it effectively
Strategic Product Implications
service organizations have to plan the introduction of new services and the management of the life-cycle
the core service can be enhanced through the addition of supplementary services, thereby creating added value (the service mix)
the branding of a service can be difficult as the customer often has nothing tangible to show
Pricing of Services pricing is more difficult in services because of
heterogeneity and variability of the “product” because of intangibility, buyers of services often
have difficulty assessing value received it is more difficult to standardize a price for a
service than it is for most physical products nevertheless, services firms use many of the
same pricing strategies: volume and frequency discounts, variable pricing, etc..
Distribution of Services because most services are tied directly to a specific
service provider, most have been distributed directly to customers
with advancing technology, many firms are now delivering services through technology channels
channels of distribution are necessarily short; some firms use one agent intermediary, such as insurance, real estate, and travel agents
some firms use franchises to distribute services
Promotion of Services customer contact personnel represent the main
channel of customer communication service providers must ensure that each service
encounter is a positive one if customers are to develop a positive image
many professional service firms are now permitted to advertise
other elements of the promotional mix used include publicity and community affairs
Supplementary Services
regardless of the quality of the core service, a firm must offer a range of support services that enhance the attractiveness of the core
customers need information they need the service to be accessible they need warranties, installation and repair they need a selection to choose from it should be delivered in pleasant surroundings
Figure 8-3 Types of Supplementary Services
The Role of Customer Service
one of the most effective ways to compete and to differentiate one’s company is on the basis of providing superior service
in many ways the distinction between tangible products and services is becoming less important for marketing purposes
marketers must pay attention to delivering superior quality in both the tangible and service components of the total offering
Managing Service Quality quality is more difficult to define in services;
depends on customer’s perception very difficult to maintain consistent quality perceived quality varies across customers, and
over time and circumstances the customer is concerned about the quality of
the core product or outcome, the process of service delivery, and interaction with staff
many companies turn to an internal marketing program to encourage staff buy-in
Components of Service Quality
the core service: the basic telephone call quality of support services such as billing, repair,
installation, voice mail, etc. technical aspects of service quality, including
whether errors are made; on-time service interaction with staff: whether our people are
friendly, courteous, helpful, attentive, etc. emotional dimensions: how the customer is made
to feel in dealing with the company
Service Failure and Recovery
no matter how well designed the core service, things will occasionally go wrong
how the company responds to service failure is key to customer satisfaction
effective service recovery can actually make a customer more satisfied than he or she was before the problem occurred
many firms encourage complaints! WHY?
Service Drives Relationships
the level of core, support and personal service provided to customers is a key driver of satisfaction and relationships
service represents a valuable form of value – customers appreciate good service
firms are able to create both functional and emotional value for customers – it is the emotional value that leads to relationship formation
Services Marketing Challenges possibly the greatest challenge for services firms
is to ensure consistently high quality of service and increased productivity
many are investing heavily in technology -- they need to assess its impact on service quality
firms will need to improve their approach to measuring the quality of the service they provide and to benchmark against other firms
growth in emphasis on service will continue and firms will have to deliver better services