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4/18/2016 1 Service Marketing Management Session-2 Types of Marketing for Service Enabling the promise Delivering the promise Setting the promise

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Page 1: service

4/18/2016

1

Service Marketing Management

Session-2

Types of Marketing for Service

Enabling thepromise

Delivering the promise

Setting the promise

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Consumer Behaviour: Service

Consumers are rarely involved in manufacture of goods but often participate in service creation & delivery

Challenge for service marketers is to understand how customers interact with service operations

Does differences among Services affect Consumer behavior & if so, then how?

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Consumer Behavior: Service

Based on differences in nature of service act (tangible/intangible) & who or what is direct recipient of service (people/possessions), four categories of services:

– People processing

– Possession processing

– Mental stimulus processing

– Information processing

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Service: Four Categories

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Information processing

(services directed at intangible assets):

Accounting

Banking

Nature of Service Act People Possessions

Tangible Actions People processing

(services directed at people’s bodies):

Hair cut

Health care

Who or What is Direct Recipient of Service?

Possession processing

(services directed at physical possessions):

Package Transport

Laundry ServiceMental stimulus processing(services directed at people’s minds):

Education

Advertising/PR

Intangible Actions

Service: People Processing

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People ProcessingCustomers must:– Physically enter service factory

– Co-operate actively with service operation

Managers should think about process & output from customer’s perspective – To identify benefits created &

non-financial costs (time, mental, physical effort)

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Service: Possession Processing

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Possession Processing

Customers are less physically involved compared to people processing services

Involvement is limited

Production & consumption are separable

Service: Mental Stimulus Processing

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Mental Stimulus Processing

Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers

Physical presence of recipients not required

Core content of services is information-based

Can be “inventoried”

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Service: Information Processing

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Information Processing

Information is the most intangible form of service output

But may be transformed into enduring forms of service output

Line between information processing & mental stimulus processing may be blurred.

Purchase Process

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Prepurchase StageService

Encounter Stage

Post-

Encounter Stage

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Purchase Process for Services

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Prepurchase Stage

Service Encounter Stage

Post-Encounter Stage

Prepurchase Stage: Overview

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Prepurchase Stage

Service Encounter Stage

Post-Encounter Stage

Customers seek solutions to aroused needs

Evaluating a service may be difficult

Uncertainty about outcomes increases perceived risk

What risk reduction strategies can service suppliers develop?

Understanding customers’ service expectations

Components of customer expectations

Making a service purchase decision

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Perceived Risks in Purchasing Services

Functional—unsatisfactory performance outcomes.

Financial—monetary loss, unexpected extra costs .

Temporal—wasted time, delays leading to problems.

Physical—personal injury, damage to possessions.

Psychological—fears and negative emotions.

Social—how others may think and react

Sensory—unwanted impact on any of five senses.

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How Consumer can handle Perceived Risk?

Seeking information from respected personal sources

Relying on a firm that has a good reputation

Looking for guarantees & warranties

Visiting service facilities or trying aspects of service before purchasing

Asking knowledgeable employees about competing services

Examining tangible cues or other physical evidence

Using the Internet to compare service offerings & search for independent reviews & ratings

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Marketing Action to Manage Risk Perceptions

Offer performance warranties, guarantees to protect against fears of monetary loss

For products where customers worry about performance, sensory risks:

Offer previews, free trials (provides experience)

Advertising (helps to visualize)

For products where customers perceive physical or psychological risks:

Institute visible safety procedures. Ex. Airline – O2 bags.

Deliver automated messages about anticipated problems

Websites offering FAQs & more detailed background

Train staff members to be respectful & empathetic

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Customers evaluate service quality by comparing what they expect against what they perceive they have received (service experience)

When usually Expectation gets formed?– Search & decision making;

– Shaped by information search & evaluation of attributes

Is it constant or evolving?– Evolving & Dynamic

– Expectations vary from one business to another, and among differently positioned service providers in the same industry.

– Expectations change over time depending on innovation, price, advertisement etc.

Customer Expectation

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What could different types of Expectation?

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Adequate Service

Desired Service

Zone ofTolerance

Expectation LevelsZone of Tolerance

Components of Customer Expectations

Desired Service Level: – Wished-for level of service quality that customer believes can & should be

delivered

Adequate Service Level:– Minimum acceptable level of service

Predicted Service Level:– Service level that customer believes firm will actually deliver

Zone of Tolerance:– Range within which customers are willing to accept variations in service

delivery

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Can Zones of Tolerance be different?

Zone of Tolerance for Different Service Dimensions

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Most Important Factors Least Important Factors

Leve

l of E

xpe

ctat

ion

Adequate Service

Desired Service

Zone ofTolerance

Zone of

Tolerance

Desired Service

Adequate Service

Customer Expectation

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Factors: Desired Expectation

•Derived expectation•Personal Service philosophies

Factors: Adequate Expectation

•Emergencies•Service Problem

•Bad Weather•Catastrophe•Random Overdemand

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Factors: Desired & Predicted Expectation•Advertising•Personal selling•Contracts•Other Communication

•Tangibles•Price

•Personal•Expert Review

PredictedService

Explicit ServicePromises

Implicit ServicePromises

Word-of-Mouth

Past ExperienceZone of

Tolerance

Desired Service

Adequate Service

Self-PerceivedService Role

Situational Factors

Perceived ServiceAlternatives

Temporary ServiceIntensifiers

Personal Needs

Lasting ServiceIntensifiers

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Service Encounter Stage: Overview

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Prepurchase Stage

Service Encounter Stage

Post-Encounter Stage

Service encounters range from high- to low-contact

Role in high-contact vs. low-contact delivery

Moment of Truth

Customer Experience

High-Contact vs Low-Contact Services

High-Contact Services

– Customers visit service facility & remain throughout service delivery

– Active contact between customers & service personnel

– Includes most people-processing services

Low-Contact Services

– Little or no physical contact with service personnel

– Contact usually at arm’s length through electronic or physical distribution channels

– New technologies (e.g. Web) help reduce contact levels

Medium-Contact Services

– Lie in between These Two

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Service Encounter: High-Contact vs Low-Contact

2718 April 2016

High-Contact Service: Marketing System

Most parts of operations, service delivery, & marketing systems are exposed to customers

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TheCustomer

TechnicalCore

Interior & Exterior Facilities

Equipment

Service People

Other Customers

Advertising

Sales Calls

Market Research Surveys

Billing/Statements

Misc. Mail, Phone Calls, E-mails, Faxes, etc.

Website

Random Exposure to Facilities/Vehicles

Chance Encounters with Service Personnel

Word of Mouth

Service Delivery System Other Contact Points

Service Operations System

Backstage(invisible)

Front Stage(visible)

Other Customers

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Low-Contact Service: Marketing System

Some parts of systems are invisible to customers

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TheCustomer

Backstage(invisible)

Front Stage(visible)

Advertising

Market Research Surveys

Billing/Statements

Random Exposure to Facilities/Vehicles

Word of MouthPhone, Fax, Web-site, etc.

Self Service Equipment

Mail

Technical Core

Other Contact PointsService Delivery System

Service Operations System

Contact points between customers & service providers.

“Portals” from which customers get to interact with providers & influence their overall experience.

Represent skill, motivation, & tools employed by firm’s representative and expectations & behavior of client, which together will create service delivery process.

What are “moments of truth”?

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Post-Encounter Stage: Overview

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Prepurchase Stage

Service Encounter Stage

Post-Encounter Stage

Evaluation of service performance

Future intentions

Customer Satisfaction

Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions

Customers have expectations prior to consumption, observe service performance, compare it to expectations

Satisfaction judgments are based on this comparison

– Positive disconfirmation if better than expected

– Confirmation if same as expected

– Negative disconfirmation if worse than expected

Satisfaction reflects perceived service quality, price/quality tradeoffs, personal & situational factors

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Delight: Going Beyond Satisfaction

Research shows that delight is a function of three components:

– Unexpectedly high levels of performance

– Arousal (e.g., surprise, excitement)

– Positive affect (e.g., pleasure, joy, or happiness)

Getting feedback during service delivery help to boost customer loyalty

Is it possible for customers to be delighted by mundane services?

Is delivering delight to Customers good or bad?

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