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I PowerPoint to accompany Services vs. goods • Differences between goods and services Revision • Most service products cannot be inventoried • Services typically have both tangible and intangible elements but intangible elements dominate value creation. Services marketing • Services are often difficult to visualise and evaluate • Customers may be involved in co-production • The time factor often assumes great importance • Distribution may take place through non-physical channels Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Categorising service processes I Figure 1.7 The service marketing system for a high-contact service • people processing • possession processing • mental-stimulus processing • information processing Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 1.8 The service marketing system for a low-contact service Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 1.9 An expanded marketing mix for services Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Figure 2.1 A typical model of a customer’s decision process I Impact of culture • Culture is the sum of learned beliefs, values and customs that create behavioural norms for a given society • Hofstede identified four underlying dimensions of cultural values: (1) collectivism/individualism (2) uncertainty avoidance (3) power distance (4) masculinity/femininity Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Stage 1: Pre-purchase decision making Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I • Need arousal Stage 2: Purchase and consumption— the service encounter • Service encounters: three levels of customer contact • Information search • Mood states • Evaluating alternatives • Role and script theory • Perceived risk • Control theory • Risk and uncertainty aversion • Employees also need control • Strategies for risk reduction • Understanding customers’ psychological needs and values • Information sources used to select business services • Critical incidents in service encounters Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 3.1 Basic focus strategies for services Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Important versus determinant attributes • Importance attributes • Determinant attributes Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Figure 3.5 Developing a marketing positioning strategy I Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 4.5 A services branding model Figure 4.1 The Flower of Service: core product surrounded by clusters of supplementary services that enhance the core Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Distribution strategy in a services context • What is being distributed? • Distinguishing between distribution of supplementary and core services • Distribution options for serving customers: determining the type of contract • Channel preferences vary between consumers Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Channel preferences vary between consumers Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I The role of intermediaries - Franchising • For complex and high-perceived-risk services, people tend to rely on personal channels. • Individuals with higher confidence and knowledge are more likely to use impersonal and self-service channels. • Customers with social motives tend to use personal channels. • Convenience is a key driver of channel choice for the majority of consumers. Figure 5.2 Splitting responsibilities for service delivery Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Factors responsible for the internationalisation of services I Three basic requirements for a service blueprint • Market drivers • Must show time dimensions • Competition drivers • Must identify and handle errors, bottlenecks, and reiterations • Technology drivers • Must precisely define how much variation from standards can be allowed in execution • Cost drivers • Common customer needs drivers • Government drivers Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I The role of price in marketing strategy Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I The three foundations of pricing strategy • The functional role • Costs • The strategic role • Competition • Value to customer Figure 6.1 The pricing tripod Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Revenue management for services Revenue management can be applied if: • Capacities are relatively fixed and perishable Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition PowerPoint to accompany Chapter 8 • Different market segments exist • Service is sold in advance • Variable and uncertain demand • Low marginal sales variable cost but high marginal production cost Integrated services marketing communication Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Figure 8.1 The role of marketing communications in services I Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 8.2 The characteristics of services present four key communications challenges Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Figure 8.3 Sources of messages received by a target audience PowerPoint to accompany Chapter 14 Managing people for service advantage Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I The service profit chain I Frontline work is difficult and stressful • Boundary spanning • Sources of conflict (i.e. person–role conflict; organisation–client conflict; inter-client conflict) • Emotional labour • Service sweat shops? Figure 14.1 The service profit chain Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Figure 14.3 The cycle of failure I Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 14.6 The cycle of success Figure 14.5 The cycle of mediocrity Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Human resource management— how to get it right • Hiring the right people • Identify the best people • Train service employees actively • Empower the frontline • Build high-performance service delivery teams • Motivate and energise people Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Service leadership and culture Figure 14.10 Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition PowerPoint to accompany Chapter 9 (a) The traditional organisational pyramid. Managing the customer service function (b) The inverted organisational pyramid with a customer and frontline focus Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Employees and customer service I • Delivering the core service as promised—reliability—is often totally within the control of frontline employees • A growing trend for frontstage staff to be supplied on a contract basis by specialist human resource companies • One of the future challenges in managing the customer service function will be to manage this network of customer service function suppliers • Employees are critical to service recovery efforts Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I How technology is leveraging customer service Outsourcing customer service Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Factors shaping the customer service function • Presence or absence of intermediaries • Customer service is becoming increasingly technology based. • High contact versus low contact • Duration of service delivery process • Technology can improve operational efficiency. • Capacity-constrained services • Frequency of use and repurchase • Technology is creating opportunities for real-time feedback from the marketplace. • Level of complexity Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I PowerPoint to accompany Chapter 10 Crafting the service environment What is the purpose of service environments? • Engineer the customers’ experience and shape their behaviours • Convey the planned image of the firm and support its positioning and differentiation strategy • Act as part of the value proposition • Facilitate the service encounter and enhance both service quality and productivity Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I The Mehrabian–Russell Stimulus-Response Model I Figure 10.3 The servicescape model Figure 10.1 Model of environmental responses Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I PowerPoint to accompany Adjusting capacity to match demand • Schedule downtime during periods of low demand Chapter 7 • Cross-train employees • Use part-time employees • Invite customers to perform self-service (coproduction) Balancing productive capacity and demand • Ask customers to share • Create flexible capacity • Rent or share extra facilities and equipment Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Demand and supply imbalance I Strategies for managing demand • Basic approaches to managing demand • Using marketing mix elements to shape demand patterns • Inventorying demand through queuing and reservations • Inventory demand through a reservation system • Create alternative demand for otherwise wasted capacity Figure 7.2 Implications of variations in demand relative to capacity Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I PowerPoint to accompany The pivotal role of satisfaction Chapter 11 Customer satisfaction and service quality Figure 11.1 Benefits of customer satisfaction and service quality Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Customer satisfaction and financial performance I Figure 11.3 The link between value, satisfaction and customer retention (loyalty) Figure 11.2 An experience to profits model Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 11.4 Non-linear effects of satisfaction on customer loyalty Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Modelling customer satisfaction processes Figure 11.5 The disconfirmation of expectations model Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I I Satisfaction Expectations • Satisfaction and dissatisfaction are two independent and separate constructs affected by satisfiers and dissatisfiers • Formation of expectations • Other influences on satisfaction evaluations: • Impact of culture on customer expectations • Managing expectations • Prior attitudes towards the brand • Consumers’ attributions to unexpected events • Equity theory or perceived fairness • Perceived value Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Dimensions of service quality PowerPoint to accompany 1. Tangibles (appearance of physical elements) Chapter 12 2. Reliability (dependable, accurate performance) 3. Responsiveness (promptness and helpfulness) 4. Assurance (competence, courtesy, credibility and security) Managing customer 5. Empathy (easy access, good communications and customer understanding) relationships Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Segmentation of relational markets Figure 12.3 The diamond of loyalty Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I A customer-value approach to segmentation Figure 12.5 Customers’ profitability matrix Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I A customer-value approach to segmentation I Figure 12.7 Three customer retention strategies Figure 12.5 Customers’ profitability matrix Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Figure 12.9 What customer relationship management really comprises PowerPoint to accompany Chapter 13 Handling customer complaints and managing service recovery Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 13.2 How customers handle dissatisfaction I Stress and Coping Theory • 2 key psychological processes: • Cognitive appraisal: process of categorizing an encounter, with respect to its significance to their well being • Coping: efforts, both behavioral and cognitive, employed to control, tolerate or minimize a stressful situation • Emotion-focused • Problem-focused Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia I Purposes for complaining I • Customers complain to recover some economic loss (distributive/outcome justice) Customer complaining types • Passives • Voicers • Customers complain to rebuild self-esteem (Stress & coping theory) • Irates • Activists Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Figure 13.8 Components of an effective service recovery system Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Justice theory and service recovery Figure 13.9 The role of justice in the complaint-handling procedure Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition I Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition What’s more? • Exam format: • Closed book exam • MCQs, discussion questions, case and problem solving included • Time: 120 minutes Copyright © 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442517011/Lovelock/Services Marketing/5th edition Gibson and Fraser: Business Law 4e © 2009 Pearson Education Australia