Download Service Marketers

TOPIC # 1 AN INTRODUCTION TO SERVICES
 Understanding the Concept of Service
 The Servuction System
 The Services Marketing Triangle
 The Services Marketing Mix
 The PBZ 5 Gap Model
 The Five Dimensions of Service Quality
REQUIRED READING: Chapters 1 & 2 of Services
Marketing; integrating Customer Focus Across the
Firm 4/e by Zeithaml, Bitner & Gremler
UNDERSTANDING THE CONCEPT OF SERVICE
A service is an act or performance offered by one
party to another. Although the process may be tied
to a physical product, the performance is essentially
intangible and does not result in the ownership of
any of the factors of production.
Services are economic activities that create value
and provide benefits for customers at specific times
and places, as a result of bringing about a desired
change in – or on behalf of – the recipient of the
service.
Services lie at the very heart of economic activity in
any modern, industrialised economy. Economic
activity flows between three principal sectors of an
economy; Extractive (Mining and Farming),
Manufacturing and Service.
The service sector itself can be divided into five
subgroups;
i. Business Services – Consulting, Finance, Banking,
Design etc.
ii. Trade Services – Retailing, Maintenance,
Construction, Repair etc.
iii. Infrastructure Services – Communications,
Transportation, Energy, Water etc.
iv. Social / Personal Services – Restaurants,
Hospitality, Health Care, Entertainment etc.
v. Public Administration – Education, Government,
Security etc.
*Infrastructure Services are the essential links between the
sectors of the economy and are a prerequisite for an economy to
successfully industrialise.
Inherent differences between goods and services
exist and these differences result in unique, or at
least different, management challenges for
service businesses and for manufacturers that
offer services as a core offering. These differences
can be clustered under four main headings;
Intangibility; Heterogeneity; Simultaneity;
Perishability
Because of these basic differences between goods
and services, marketers of services face some
very real and distinctive challenges. The
challenges revolve around understanding
customer needs and expectations of service,
tangibilising the service offering, dealing with a
myriad of people and delivery issues and keeping
promises made to customers.
Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its
Implications for Future Research,” Journal of Marketing 49 (Fall 1985), pp. 41–50.
Answers to questions such as those that follow
continue to challenge service marketers;
 How can service quality be defined and improved
when the “product” is intangible and nonstandardised?
 How can new services be designed and tested
effectively when the service is essentially an
intangible process?
 How can the firm be certain it is communicating a
consistent and relevant image when so many
elements in the marketing mix communicate to
customers and some of these elements are the
service providers themselves?
 How does the firm accommodate fluctuating demand
when capacity is fixed and the service itself is
perishable?
 How can the firm best motivate and select service
employees who, because the service is delivered in
real time, become a critical part of the product
itself?
 How should prices be set when it is difficult to
determine actual costs of production and price may
be inextricably intertwined with perceptions of
quality?
 How should the firm be organised so that good
strategic and tactical decisions are made when a
decision in any one of the functional areas of
marketing, operations and human resources may
have significant impact on the other two areas?
 How can the organisation protect new service
concepts from competitors when service processes
cannot be legally patented?
 How does the firm communicate quality and value
to consumers when the offering is intangible and
cannot be readily tried or displayed?
 How can the organisation ensure the delivery of
consistent quality service when both the
organisation’s employees and customers
themselves can affect the service outcome?
The Service Package is defined as a bundle of
goods and services provided in some service
production and delivery environment. It consists
of four features:
i.
Supporting Facility - the physical resources that
must be in place before a service can be offered.
ii. Facilitating Goods - the material purchased,
consumed and / or items provided by the
customer.
iii. Explicit Services - the benefits that are readily
observable by the senses and consist of the
essential or intrinsic features of the service.
iv. Implicit Services - psychological benefits that the
customer may sense only vaguely/subconsciously.
THE SERVUCTION SYSTEM MODEL
What the consumer purchases when he or she
purchases a service is an experience. The
Servuction System is what creates the experience
and it is the experience that creates the perceived
benefit.
The implications of the system are;
 In order to receive the benefit, the consumer must
be part of the system. (remote services?)
 Service managers must manage a variety of
disparate interactions and variables.
 The benefit bundle is a function of a variety of
inputs, some less controllable than others.
Back Stage
Organisation and
System
The
Servicescape /
Physical
Evidence
Customer
A
Other
Customers
Contact
Personnel
[This component of
the system is not
visible to the
customer]
[Visible to the
customer]
Bundle of Service Benefits
peceived by Customer A
The Servicescape - the inanimate, non-living physical
evidence used to create the service environment
Ambient Conditions
TemperatureAir Quality
Music
Noise
Odors
Signs, Symbols, Artifacts
Layout
Equipment
Furnishings
Space/Function
Personal Artifacts Signage
Style, Decor
Boundary Spanning Personnel (BSPs) are the public
face and “the permeable surface” of the service
organisation
Apathy:
DILLIGAD (Do I look like I give a damn)
Brush-off:
Dismisses the customer completely
Coldness:
Doesn’t care what the customer wants
Condescension:You are the customer, you must be stupid
Robotism:
Customers are inputs to be processed
Rulebook:
Adheres to rules which make no sense
Runaround:
Passes off to another service provider
Other Customers – can enhance or detract from an
individual’s service experience through Active
Influence (e.g. unruly customers, crying children)
Passive Influence (e.g. customers who show up
late for appointments).
Invisible Organization and Systems – People,
Processes, Equipment, Procedures [Hard and
Soft Technology]
THE SERVICES MARKETING TRIANGLE
The Services Marketing Triangle shows the
three interlinked groups that work together to
develop, promote and deliver services.
Adapted from
Bitner 1995
Management
Internal Marketing
(enabling promises)
External Marketing
(making promises)
Service
providers Interactive Marketing
(keeping promises)
Customers
THE SERVICES MARKETING MIX
Acknowledgement of the implications of the specific
characteristics of services has led service marketers
to adopt the concept of an expended marketing mix
for services;
Product,
Price,
Marketing Communications,
Logistics,
People,
Physical Evidence,
Process.
People; All human actors who play a part in
service delivery and thus influence the buyer’s
perceptions; namely, the firm’s personnel, the
customer, and other customers in the service
environment.
Physical Evidence; The environment in which the
service is delivered and where the firm and
customer interact, and any tangible components
that facilitate performance or communication of
the service.
Process; The actual procedures, mechanisms and
flow of activities by which the service is delivered
- the service delivery and operating systems.
THE PBZ FIVE GAP MODEL
Word of Mouth
Communication
Personal Needs
Past Experience
Expected Service
Gap 5
Perceived Service
Provider
Service Delivery
(including preand post- contacts)
Gap 3
Gap 1
Translation of
Perceptions into
Service Quality
Specs.
Gap 2
Management Perceptions
of Consumers Expectations
Gap 4
External
Communications
to Consumers
 Expected service < performance = satisfied customer
 Expected service > performance = unsatisfied
customer
 Expected service is a ƒ(past experiences, marketing
communications, peers, etc.)
 Performance = ƒ(expected service, perceived service)
Managing customer satisfaction;
 Perceived service, not actual service, is all that
matters (Perception is Reality).
 Possible to manage expectations to produce
satisfaction without altering the service.
Importance of customer satisfaction;
 Without customers the firm does not exist.
 Service businesses must engage in proactive
customer satisfaction observation.
 Waiting for complaints is simply too slow.
Why do people switch (or defect)?
45
40
40% service
35
30
25
20
15
10
5
0
8% price
1 in 4 unhappy
customers
switch
1 in 27 unhappy
customers
complain
Unhappy
customers tell
20 people
Happy
customers tell
4 people
It is easier and five
to seven times
cheaper to keep a
customer than to
gain a new one
Three Common Mistakes:
Customer service as
cost rather than an
investment.
Customer service is a
constantly rising bar.
Failure to link
customer satisfaction
to the bottom lines.
THE 5 DIMENSIONS OF SERVICE QUALITY
TOPIC # 2 SERVICE CONSUMER BEHAVIOUR
 Introduction
 Service Consumer Decision-Making
 The Role of Culture in Services
REQUIRED READING: Chapters 3, 4 & 5 of Services
Marketing; integrating Customer Focus Across the
Firm 4/e by Zeithaml, Bitner & Gremler
INTRODUCTION
 Service organisations must follow and successfully
deliver on the Marketing Concept.
 To achieve this, service marketers need to
understand how consumers choose and evaluate
their market offerings. The unique characteristics of
services necessitate different consumer evaluation
processes from those used in assessing tangible
goods. Recognising these differences and thoroughly
understanding consumer evaluation processes are
critical for the customer focus on which effective
services marketing is based.
 Search Qualities are attributes of a market offering
that a consumer can determine before purchasing it.
 Experience Qualities are attributes that can only be
discerned after purchase or during consumption.
 Credence Qualities are characteristics that the
consumer may find impossible to evaluate even after
purchase and consumption.
Market offerings high in search qualities are easiest to evaluate
prior to purchase. As we move to the right of the continuum,
evaluation becomes more difficult.
Most
Goods
Easy to evaluate
Most
Services
Difficult to evaluate
High in search
qualities
High in experience High in credence
qualities
qualities








Because experience and credence qualities
dominate in services, consumers deploy different
evaluation processes than those they use with
tangible goods, where search qualities dominate.
Specific areas where the characteristics of services
lead to divergent evaluation processes and altered
consumer behaviours are;
Information search,
Evaluative criteria,
Size and composition of the evoked set,
Perceived risk,
Adoption of innovations,
Brand loyalty,
Assessment of value,
Attribution of dissatisfaction.
SERVICE CONSUMER DECISION-MAKING
Using an adaptation of the basic consumer
decision-making process, we can investigate
service consumer behaviour under four major
headings;
I.
II.
III.
IV.
Information Search.
Evaluation of Alternatives.
Purchase and Consumption.
Post-purchase Evaluation.
In the purchase and consumption of services,
these steps do not occur in a linear sequence
as they do in the purchase of tangible goods.
Information
Search
 Use of personal sources
 Perceived risk
Purchase and
Consumption
 Service provision as drama
 Service roles and scripts
 Compatibility of customers
Evaluation of
Alternatives
 Evoked set
 Emotion and mood
Post-Purchase
Evaluation
 Attribution of dissatisfaction
 Innovation diffusion
 Brand loyalty
THE ROLE OF CULTURE IN SERVICES
Culture is learned, shared, transmitted from one
generation to the next, and is multidimensional.
Culture is important in services marketing because
of its effects on the ways customers evaluate and
use service. Also influences the way companies &
their service employees interact with customers.
Culture is important when we consider
international services marketing but it is also
critical within countries. More and more, individual
countries are becoming multicultural, making the
need to understand how this factors affects
evaluation, purchase, and use of services critical.
Definitions of the elements of culture vary, but a
simple list of the major areas would include;
Language (both verbal and nonverbal), Values and
Attitudes, Manners and Customs, Material Culture,
Aesthetics, Education and Social Institutions.
TOPIC # 3 CUSTOMER EXPECTATIONS OF SERVICE
 Introduction
 Factors that influence Customer Expectations of
Service
 Current Issues involving Expectations of Service
Customers
REQUIRED READING: Chapter 3 (3/e) or Chapter 4
(4/e) of Services Marketing; Integrating Customer
Focus Across the Firm by Valarie A. Zeithaml and
Mary Jo Bitner
INTRODUCTION
Customer expectations are beliefs about service
delivery that function as standards or reference
points against which performance is judged.
Because customers compare their perceptions of
performance with these reference points when
evaluating service quality, thorough knowledge
about customer expectations is critical to service
marketers.
Zeithaml, Berry and Parasuraman (1993) have put
forward a methodology for understanding customer
service expectations which recognises that; [A]
Customers hold different types of expectations
about service (Desired & Adequate Service), [B]
Customers are willing to accept a level of variation
in service; a so-called Zone of Tolerance exists, [C]
Zones of Tolerance vary for different service
dimensions and [D] Zones of Tolerance vary for
First-time and Recovery Service.
[A] Dual Customer
Expectation Levels
[B] The Zone of Tolerance
Desired Service
Desired Service
Zone of
Tolerance
Zone of
Tolerance
Adequate Service
Adequate Service
[C] Zones of Tolerance for Different Service Dimensions
Desired Service
Level
of
Expectation
Zone of
Tolerance
Adequate Service
Desired
Desired Service
Service
Zone
of
Tolerance
Adequate
Adequate
Service
Service
Most Important Factors
Least Important Factors
Source: Berry, Parasuraman, and Zeithaml (1993)
[D] Zones of Tolerance for First-Time and Recovery Service
First-Time Service
Outcome
Process
Recovery Service
Outcome
Process
LOW
Source: Parasuraman, Berry and Zeithaml (1991)
Expectations
HIGH
FACTORS THAT INFLUENCE CUSTOMER
EXPECTATIONS OF SERVICE
“Service expectations are formed by many
uncontrollable factors, from the experience of
customers with other companies and their
advertising to a customer’s psychological state
at the time of service delivery. Strictly
speaking, what customers expect is as diverse
as their education, values and experience. The
same advertisement that shouts “personal
service” to one person tells another that the
advertiser has promised more than it can
possibly deliver”. (Davidow and Uttal 2000)
Factors that Influence Desired Service
Enduring Service
Intensifiers e.g. Personal
Service Philosophy, Derived
Service Expectations
(family, peers)
Desired
Service
Personal Needs;
Physical, Social,
Psychological,
Functional.
Zone
of
Tolerance
Adequate
Service
Factors that Influence Adequate Service
Transitory Service
Intensifiers
Perceived Service
Alternatives
Self-Perceived
Service Role
Situational
Factors
Desired
Service
Zone
of
Tolerance
Adequate
Service
Predicted Service
Enduring Service Intensifiers are long term individual
factors that make a customer more aware of the need
for good service and the quality of service received
e.g. personal service philosophy, derived Service
expectations (family, peers, experience, education)
Transitory Service Intensifiers are temporary, usually
short-term, individual factors that make a customer
more aware of the need for service e.g. breakdown in
office equipment during a busy period, auto
insurance when car has been written off.
Perceived Service Alternatives are other providers
from whom the customer can obtain service. If
customers have multiple service providers to choose
from, or if they can provide the service for
themselves, their levels of adequate service are
higher than those of customers who believe it is not
possible to get better service elsewhere.
Customer’s Self-perceived Service Role is a
customers perceptions of the degree to which
customers exert an influence on the level of service
they receive. In other words, customers’ expectations
are partly shaped by how well they believe they are
performing their own roles in service delivery i.e. in
specifying the level of service expected, in assuming
the responsibility for complaining when service is
poor. Customers’ Zones of Tolerance expand when
they sense they are not fulfilling their roles.
Situational Factors are service performance
conditions that customers view as beyond the control
of the service provider. Customers who recognise
that these contingencies are not the fault of the
service company may accept lower levels of adequate
service given the context. In general, situational
factors temporarily lower the level of adequate
service, widening the zone of tolerance.
The final factor that influences adequate service is
Predicted Service, the level of service customers
believe they are likely to get. This type of service
expectation can be viewed as predictions made by
the customers about what is likely to happen during
an impending transaction or exchange. If customers
predict good service, their levels of adequate service
are likely to be higher than if they predict poor
service.
When consumers are interested in purchasing
services, they are likely to seek or take in information
from several different sources. In addition to active
and passive types of external search for information,
consumers may conduct an internal search by
reviewing the information held in memory about the
service.
Factors that Influence Predicted Service & Desired Service
Explicit Service
Promises
Implicit Service
Promises
Word-of-Mouth
Desired
Service
Zone
of
Tolerance
Adequate
Service
Past Experience
Predicted
Service
Explicit Service Promises are personal and nonpersonal statements about the service made by the
organisation to customers. The statements are
personal when they are communicated by
salespeople or service or repair personnel. They are
non-personal when they come from advertising,
brochures or other written publications. Explicit
service promises are one of the few influences on
expectations that are completely in the control of the
service provider.
Implicit Service Promises are service-related cues
other than explicit promises that lead to inferences
about what the service should and will be like. These
quality cues are dominated by price and the tangibles
associated with the service. In general, the higher
the price and the more impressive the tangibles, the
more a customer will expect from the service.
The importance of Word-of-Mouth (WOM)
Communication in shaping expectations of service is
well documented. These personal and sometimes
non-personal statements made by parties other than
the organisation convey to customers what the
service will be like and influence both predicted and
desired service. WOM tends to be very important in
services that are difficult to evaluate before purchase
and direct experience of them. Development of WOW
Past Experience, the customer’s previous exposure
to service that is relevant to the focal service, is
another force in shaping predictions and desires. In a
general sense, past experience may incorporate
previous experience with the focal brand, typical
performance of a favourite brand, experience with
the brand last purchased or the top-selling brand, as
well as the average performance a customer believes
represents a realistic level of service to expect.
CURRENT ISSUES INVOLVING EXPECTATIONS OF
SERVICE CUSTOMERS
Four key questions are at the forefront of modern
services marketing;
i.
What does a service marketer do if customer
expectations are “unrealistic”?
ii. How does a company exceed customer service
expectations?
iii. Do customer service expectations escalate?
iv. How does a service company stay ahead of
competition in meeting customer expectations?
TOPIC # 4 CUSTOMER PERCEPTIONS OF SERVICE
 Introduction
 What is Customer Satisfaction?
 Service Quality
 Building Blocks of Satisfaction & Service Quality
 Critical Service Encounters Research; The Critical
Incident Technique
 The Evidence of Service
 Influencing Customer Perceptions
REQUIRED READING: Ch. 4 (3/e) or Ch. 5 (4/e)
of Services Marketing; Integrating Customer
Focus Across the Firm by Zeithaml and Bitner
INTRODUCTION
Understanding how customers perceive services, how
they assess whether they have experienced quality
service and whether they are satisfied is at the heart
of successful services marketing. In gaining this
understanding it is essential to remember that the
entire issue of quality & satisfaction is based on
perception of service – not some predetermined
objective criteria of what service is and should be.
A tendency exists to use the terms satisfaction and
quality interchangeably but the two concepts are
fundamentally different in terms of their underlying
causes and outcomes. While they have things in
common, satisfaction is generally viewed as a
broader concept while service quality assessment
focuses specifically on dimensions of service. In other
words perceived service quality is a component of
customer satisfaction as illustrated over page.
Service
Quality
Dimensions
Service
Quality
Product
Quality
Price
Situational
Factors
Customer
Satisfaction
Personal
Factors
WHAT IS CUSTOMER SATISFACTION?
“Satisfaction is the consumer’s fulfillment response.
It is a judgement that a … service feature, or the …
service itself, provides a pleasurable level of
consumption-related fulfillment”.
(Oliver 1997)
In essence this means that satisfaction is the
customers’ evaluation of a service in terms of
whether that service has met their needs and
expectations. Failure to meet needs and expectations
is disconfirmation and thus assumed to result in
dissatisfaction with the service.
Service customer satisfaction will be influenced by
specific service features and by perceptions of service
quality as seen in the earlier diagram.
Service customer satisfaction will also be influenced
by;
 Customer emotions; mood state, life satisfaction.
 Attributions for Service Success or Failure; i.e. the
perceived cause of the events leading to service
failure or success.
 Perceptions of Equity or Fairness; treated equitably
and fairly relative to other customers?
Outcomes of service customer satisfaction are;
 Increased customer retention
 Positive word-of-mouth communications
 Increased revenues
SERVICE QUALITY
Technical and Functional (Process) Service Quality.
Research suggests that customers do not perceive
service quality as a uni-dimensional concept but
rather that customers’ assessments of service quality
include perceptions of multiple factors.
 Reliability; the ability to perform the promised
service dependably and accurately.
 Assurance; knowledge and courtesy of employees
and their ability to convey trust and confidence.
 Tangibles; physical facilities, equipment, and
appearance of personnel.
 Empathy; caring, individualized attention the firm
provides its customers.
 Responsiveness; willingness to help customers and
provide prompt service.
RELIABILITY





Providing service as promised
Dependability in handling customers’ service
problems
Performing services right the first time
Providing services at the promised time
Maintaining error-free records
ASSURANCE




RESPONSIVENESS




Keeping customers informed as to when
services will be performed
Prompt service to customers
Willingness to help customers
Readiness to respond to customers’ requests
EMPATHY


TANGIBLES




Modern equipment
Visually appealing facilities
Employees who have a neat, professional
appearance
Visually appealing materials associated
with the service
Employees who instill confidence
in customers
Making customers feel safe in
their transactions
Employees who are consistently
courteous
Employees who have the
knowledge to answer customer
questions



Giving customers individual
attention
Employees who deal with
customers in a caring fashion
Having the customer’s best
interest at heart
Employees who understand the
needs of their customers
Convenient business hours
BUILDING BLOCKS OF SATISFACTION AND
SERVICE QUALITY; SERVICE ENCOUNTERS
From the customer’s point of view, the most vivid
impression of service occurs in the service encounter,
at the Moment of Truth, when the customer interacts
with the service firm. (Interactive Marketing)
It is in these encounters that customers receive a
snapshot of the organisation’s service quality, and
each encounter contributes to the customer’s overall
satisfaction and willingness to do business with the
organisation again.
Types of encounters: (1) remote encounters
(2) phone encounters (3) face-to-face encounters
Each service encounter is an opportunity for the
service organisation to: build trust; reinforce quality;
build brand identity; increase loyalty
CRITICAL SERVICE ENCOUNTERS RESEARCH; THE
CRITICAL INCIDENT TECHNIQUE
GOAL - understanding actual events & behaviors that
cause customer dis/satisfaction in service encounters
METHOD - Critical Incident Technique (CIT)
DATA - stories from customers and employees
OUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service encounters
Questions employed in CIT research:-
 Think of a time when, as a customer, you had a particularly




satisfying (dissatisfying) interaction with an employee of
.
When did the incident happen?
What specific circumstances led up to this situation?
Exactly what was said and done?
What resulted that made you feel the interaction was satisfying
(dissatisfying)?
On the basis of thousands of service encounter stories, four
common themes have been identified as the sources of customer
satisfaction / dissatisfaction in memorable service encounters. The
themes encompass service behaviours in encounters spanning a
wide variety of industries.
1. Recovery:
Employee Response
to Service Delivery
System Failure
2. Adaptability:
Employee Response
to Customer Needs
and Requests
4. Coping:
3. Spontaneity:
Employee Response
to Problem Customers
Unprompted and
Unsolicited Employee
Actions and Attitudes
THEME #1 RECOVERY
DO
•
•
•
•
•
•
Acknowledge problem
Explain causes
Apologize
Compensate/upgrade
Lay out options
Take responsibility
DON’T
• Ignore customer
• Blame customer
• Leave customer to
fend for him/herself
• Downgrade
• Act as if nothing is
wrong
THEME #2 ADAPTABILITY
DO
• Recognize the
seriousness of the need
• Acknowledge
• Anticipate
• Attempt to
accommodate
• Explain rules/policies
• Take responsibility
• Exert effort to
accommodate
DON’T
• Promise, then fail to
follow through
• Ignore
• Show unwillingness to
try
• Embarrass the
customer
• Laugh at the customer
• Avoid responsibility
THEME #3 SPONTANEITY
DO
•
•
•
•
•
Take time
Be attentive
Anticipate needs
Listen
Provide information
(even if not asked)
• Treat customers fairly
• Show empathy.
• Acknowledge by name
DON’T
•
•
•
•
Exhibit impatience
Ignore
Yell/laugh/swear
Steal from or cheat a
customer
• Discriminate
• Treat impersonally
THEME #4 COPING
DO
•
•
•
•
Listen
Try to accommodate
Explain
Let go of the
customer
DON’T
• Take customer’s
dissatisfaction
personally
• Let customer’s
dissatisfaction affect
others
THE EVIDENCE OF SERVICE
Because services are intangible, customers are
searching for evidence of service in every
interaction they have with an organisation.
The diagram over page depicts the three major
categories of evidence as experienced by the
customer : People, Process and Physical Evidence.
These categories together represent the service and
provide the evidence that tangibilises the market
offering.
All of these evidence elements, or a subset of them,
are present in every service encounter a customer
has with a service firm and are critically important
in managing service encounter quality and creating
customer satisfaction.
Evidence of Service from the Customer’s Point of View
 Contact employees
 Customer him/herself
 Other customers
People
 Operational
flow of
activities
 Steps in
process
 Flexibility vs.
standard
 Technology
vs. human
Process
Physical
Evidence
 Tangible
communication
 Servicescape
 Guarantees
 Technology
INFLUENCING CUSTOMER PERCEPTIONS
Measure and manage Customer Satisfaction and
Service Quality. (Service Quality Information
System - SQIS)
Aim for Customer Quality and Satisfaction in every
service encounter. (Zero defects)
Plan for effective Service Recovery. (Theme #1)
Facilitate Adaptability and Flexibility. (Theme #2)
Encourage Spontaneity. (Theme #3)
Help employees Cope with Problem Customers.
(Theme #4)
Manage the Evidence of Service to reinforce
perceptions.
TOPIC # 5 SERVICE MARKET RESEARCH
REQUIRED READING: Chapter 6 of Services
Marketing; integrating Customer Focus Across the
Firm 4/e by Zeithaml, Bitner & Gremler
The Services Marketing Information System/SQIS.
In services, as with any offering, a firm that does no
marketing research will suffer marketing myopia
and will fail to fulfill the marketing concept.
Marketing research must focus on service issues
such as what features are most important to
customers, what level of these features customers
expect, and what customers think the company can
and should do when problems occur in service
delivery.
COMMON SERVICE RESEARCH OBJECTIVES
•
•
•
•
•
•
•
•
•
•
To identify dissatisfied customers.
To discover customer requirements or expectations.
To monitor and track service performance.
To assess overall company performance compared
to competition.
To assess customer expectations/perceptions gaps.
To gauge effectiveness of changes in service.
To appraise service performance of individuals and
teams for rewards.
To determine expectations for a new service.
To monitor changing expectations in an industry
To forecast future expectations.
CRITERIA FOR AN EFFECTIVE SERVICES RESEARCH
PROGRAMME
A Services Research Programme can be defined
as the composite of separate studies and types
needed to address research objectives and
execute an overall measurement strategy.
Myriad types of research could be considered in
a research programme but certain criteria must
be met if the programme is to be effective and
efficient.
Understanding these criteria will help a
company evaluate different types of research
and chose the ones most appropriate to its
research objectives.
CRITERIA FOR EFFECTIVE SERVICES RESEARCH
Occurs
with
Appropriate
Frequency
Includes
Perceptions
and
Expectations
of
Customers
Research
Objectives
Measures
Priorities
or
Importance
Includes
Statistical
Validity
When Necessary
Includes
Measures
of
Loyalty or
Behavioral
Intentions
ELEMENTS IN AN EFFECTIVE SERVICES
MARKETING RESEARCH PROGRAMME
A good services marketing research programme
includes multiple types of research studies.
The composite of studies and types of research
will differ by company, and the particular
portfolio for any company will match company
resources and the particular services marketing
issues being addressed.
All service organisations require a rich,
multifaceted flow of information to operate
successfully.
A Selection of Services Research Techniques.
Primary Research Objective
Identify dissatisfied customers to
attempt recovery; identify most
common categories of service
failure for remedial action
Assess company’s service performance
compared to competitors; identify
service-improvement priorities; track
service improvement over time
Obtain customer feedback while
service experience is still fresh; act on
feedback quickly if negative patterns
develop
Use as input for quantitative
surveys; provide a forum for
customers to suggest serviceimprovement ideas
Type of Research
Customer Complaint
Solicitation
“Relationship” Surveys
Post-Transaction Surveys
Customer Focus Groups
Measure individual employee
service behaviors for use in
coaching, training, performance
evaluation, recognition and
rewards;
Identify systemic strengths and
weaknesses
in service
Measure internal service
quality; identify employeeperceived obstacles to improve
service;
Track employee morale and
attitudes
Determine the reasons why
customers defect
To forecast future expectations of
customers
To develop and test new service
ideas
“Mystery Shopping” of
Service Providers.
Employee Surveys.
Lost Customer Research.
Future Expectations Research
TOPIC # 6 SERVICE RECOVERY
Service failure is inevitable even for the best of firms,
with the best of intentions and even for those with
“world class” service systems.
To fully understand and retain their customers, firms
must understand what customers expect when
service failures occur, and implement effective
strategies for service recovery.
Service Recovery refers to actions taken by an
organisation in response to service failure.
Service Failure occurs for all kinds of reasons.
An effective service recovery strategy has multiple
potential impacts. It can increase customer
satisfaction and loyalty and generate positive wordof-mouth.
A well-designed, well-documented service recovery
strategy also provides information that can be used
to improve service as part of a continuous
improvement effort.
By making adjustments to service processes,
systems and outcomes based on learning points from
service recovery experiences, companies increase
the likelihood of “doing it right the first time” (zero
defects). In turn this reduces costs of failures and
increases initial customer satisfaction. There are
tremendous downsides to having no service recovery
or ineffective service recovery strategies.
Poor recovery following a bad service experience can
lead to customers who are so dissatisfied they
become “ terrorists”, actively pursuing opportunities
to openly criticise the company.
Repeated service failures without an effective
recovery strategy in place can aggravate the best
employees. The costs in employee morale and lost
employees can be huge, but are often overlooked.
The Service Recovery Paradox.
CUSTOMER RESPONSE FOLLOWING SERVICE FAILURE
Service Failure
Take Action
Do Nothing
Switch Providers
Complain to
Provider
Complain to Family
& Friends
Switch Providers
Complain to
Third Party
Stay with Provider
Stay with Provider
TYPES OF COMPLAINERS




Research suggests that people can be grouped into
categories based on how they respond to service
failures. Four categories of response types have
been identified by Singh (1990);
Passives; least likely to take action, less likely to
engage in WOM. Personal values are anticomplaining.
Voicers; actively complain, less likely to engage in
negative WOM or switching behaviour. S.O.’s “best
friends”.
Irates; above average in propensity to complain,
prone to WOM and switching behaviour.
Activists; above average propensity to complain and
participate in WOM. Can become “terrorists”.
CUSTOMER COMPLAINT EXPECTATIONS
When they take the time and effort to complain,
customers generally have high expectations. They
expect to be helped quickly, to be compensated for
the grief and hassle of being inconvenienced, and to
be treated nicely in the process.
Specifically, customers want justice and fairness in
handling their complaints. Brown et al (1998) have
documented three specific types of justice sought
by complaining customers:
Outcome Fairness; matched level of dissatisfaction.
Procedural Fairness; fairness of rules and policies.
Interaction Fairness; hassle free, speedy, honest.
SERVICE RECOVERY STRATEGIES
Service
Recovery
Strategies
Pricing
•
•
•
•
High Price
Price Increases
Unfair Pricing
Deceptive Pricing
Inconvenience
• Location/Hours
• Wait for Appointment
• Wait for Service
Core Service Failure
CAUSES BEHIND
SERVICE SWITCHING
• Service Mistakes
• Billing Errors
• Service Catastrophe
Service Encounter Failures
•
•
•
•
Uncaring
Impolite
Unresponsive
Unknowledgeable
Response to Service Failure
• Negative Response
• No Response
• Reluctant Response
Competition
• Found Better Service
Ethical Problems
•
•
•
•
Cheat
Hard Sell
Unsafe
Conflict of Interest
Involuntary Switching
• Customer Moved
• Provider Closed
Service
Switching
Behavior
SERVICE GUARANTEES
Service organisations are beginning to
recognise that guarantees serve not only as a
marketing tool but as a means for defining,
cultivating and maintaining quality throughout
an organisation.
guarantee = an assurance of the fulfillment of
a condition (Webster’s Dictionary).
for products, guarantee often done in the form
of a warranty.
services are often not guaranteed
cannot return the service
service experience is intangible, (so what do
you guarantee?)
Characteristics of an Effective Service Guarantee
Unconditional
 The guarantee should make its promise unconditionally no strings attached.
Meaningful
 It should guarantee elements of the service that are
important to the customer.
 The payout should cover fully the customer's
dissatisfaction.
Easy to Understand and Communicate
 For customers - they need to understand what to expect.
 For employees - they need to understand what to do.
Easy to Invoke and Collect
 There should not be a lot of hoops or red tape in the way
of accessing or collecting on the guarantee.
Source: Christopher W.L. Hart, “The Power of Unconditional Guarantees,” Harvard Business
Review, July-August, 1988, pp. 54-62.
 Why a Good Guarantee Works:





forces company to focus on customers.
sets clear standards.
generates feedback.
forces company to understand why it failed.
builds “marketing muscle”.
Does everyone need a guarantee?
Reasons companies do NOT offer guarantees:
 guarantee would be at odds with company’s
image.
 too many uncontrollable external variables.
 fears of cheating by customers.
 costs of the guarantee are too high.
Service guarantees work for companies who are
already customer-focused.
Effective guarantees can be BIG deals - they put
the company at risk in the eyes of the customer.
Customers should be involved in the design of
service guarantees.
The guarantee should be so stunning that it
comes as a surprise -- a WOW!! Factor.
“It’s the icing on the cake, not the cake”
REQUIRED READING: Chapter 8 of Services
Marketing; integrating Customer Focus Across
the Firm 4/e by Zeithaml, Bitner & Gremler
TOPIC # 7 SERVICE DEVELOPMENT & DESIGN
Introduction
Risks of Verbalisation
Service Blueprinting
Benefits of Service Blueprinting
Building a Service Blueprint
Components of a Service Blueprint
Application of Service Blueprints
Service Process Characteristics
Service Positioning through Structural Change
New Service Development Process
REQUIRED READING: Chapter 9 of Services
Marketing; integrating Customer Focus Across
the Firm 4/e by Zeithaml, Bitner & Gremler
GAP 2
CUSTOMER
Customer-Driven
Service Designs and
Standards
COMPANY
GAP 2
Company
Perceptions of
Consumer
Expectations
INTRODUCTION
Because services are intangible, they are difficult to
describe and communicate. Because services are
typically people-intensive they are heterogeneous.
Because services cannot be touched, examined or
tried out (due to lack of search qualities), people
frequently resort to words in their efforts to describe
them.
“Verbal and/or written descriptions are inadequate for
understanding service systems. Dependence on words leads to
communication problems at every level in the service
organisation, creating confusion, misunderstanding and poor
decision-making. Blueprinting provides an objective, visual and
quantitative method for describing service systems down to the
lowest level of detail. Through Blueprinting, all parties involved in
services marketing, management and planning, can gain greater
awareness of the complexities of service systems, a common
ground for communication, and a mechanism for capturing and
sharing information across functional and organisational lines on
an ongoing basis to help improve decisions & actions”.
(Shostack 1992)
RISKS OF VERBALISATION
 Oversimplification.
 Incompleteness.
 Subjectivity.
 Biased Interpretation.
Service Blueprinting
is a methodology for
overcoming these problems.
SERVICE BLUEPRINTING; WHAT IS IT?
Service Blueprinting is a mapping technique
designed to fully and accurately portray any
service system in it’s entirety so that the
system can be understood objectively and
dealt with by all components of the service
organisation on the same basis.
It allows the service organisation to
simultaneously depict the service process, the
points of customer contact, and the evidence
of service from the customer’s point of view.
BENEFITS OF SERVICE BLUEPRINTING
1.
2.
3.
Macro and micro-benefits – Kingman-Brundage
& Gummesson (1991) from course text.
One of the greatest benefits of Service
Blueprinting is how educational it can be;
It forces people to confront exactly how little
they know about their service system.
The effort to visualise the entire system makes
one consider the system in a new and more
comprehensive way.
The difficulties and explorations that
Blueprinting creates are, in their own right, an
important contribution to the knowledge every
service manager and marketer needs in order to
effectively deal with the challenges of the job.
4.
5.
Service Blueprints have an equally great
benefit in managing and planning services on
a day-to-day basis. They provide a means for a
group of people to communicate and share
knowledge, debate and refine their
understanding, and prioritise and focus their
efforts by having a visible map as a reference
point.
Service Blueprints also bring bias and
interpretation issues out into the open where
resolution on the basis of facts rather than
subjective opinion is possible.
BUILDING A SERVICE BLUEPRINT
Creating a Service Blueprint begins with developing
a picture of the entire service system at an
overview level. Services are integrated systems that
can be broken down into three basic components
and all services can be understood in their entirety
by understanding these three elements;
First are the steps, tasks and activities necessary to
the rendering of the service i.e. the service process.
Next are the means by which the tasks are
executed, typically some combination of people
interactions and tangible goods.
Finally, the evidence presented to the consumer
which is everything he / she experiences sensorially
that relates to the service.
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Identify
the
process
to be
blueprinted.
Identify
the
customer
or
customer
segment.
Map the
process
from the
customer’
s point of
view.
Map
contact
employee
actions,
onstage
and backstage.
Link
customer
and contact
person
activities to
needed
support
functions.
Add
evidence
of service
at each
customer
action
step.
COMPONENTS OF A SERVICE BLUEPRINT
CUSTOMER ACTIONS
line of interaction
“ONSTAGE” CONTACT EMPLOYEE ACTIONS
line of visibility
“BACKSTAGE” CONTACT EMPLOYEE ACTIONS
line of internal interaction
SUPPORT PROCESSES
CONTACT PERSON CUSTOME PHYSICAL
EVIDENCE
(Back Stage) (On Stage) R
Express Mail Delivery Service
Customer
Calls
Customer
Gives
Package
Receive
Package
Driver
Picks
Up Pkg.
Deliver
Package
Customer
Service
Order
Dispatch
Driver
SUPPORT
PROCESS
Truck
Packaging
Forms
Hand-held
Computer
Uniform
Truck
Packaging
Forms
Hand-held
Computer
Uniform
Airport
Receives
& Loads
Fly to
Sort
Center
Load on
Airplane
Sort
Packages
Fly to
Destinatio
n
Unload
&
Sort
Load
On
Truck
CONTACT PERSON
SUPPORT PROCESS (Back Stage) (On Stage)
CUSTOMER PHYSICAL
EVIDENCE
Overnight Hotel Stay
Hotel
Exterior
Parking
Arrive
at
Hotel
Cart for
Bags
Desk
Elevators Cart for
Registration Hallways Bags
Papers
Room
Lobby
Key
Give Bags
Check in
to
Bellperson
Go to
Room
Greet and
Process
Take
Registration
Bags
Receive
Bags
Room
Menu
Amenities
Bath
Sleep
Shower
Call
Room
Service
Deliver
Bags
Take Bags
to Room
Registration
System
Delivery
Food
Tray
Food
Appearance
Receive
Food
Deliver
Food
Eat
Bill
Desk
Lobby
Hotel
Exterior
Parking
Check out
and
Leave
Process
Check Out
Take
Food
Order
Prepare
Food
Registration
System
APPLICATION OF SERVICE BLUEPRINTS
New Service Development;
• concept development.
• market testing.
Supporting a “Zero Defects” Culture;
• managing reliability.
• identifying empowerment issues.
Service Recovery Strategies;
• identifying service problems.
• conducting root cause analysis.
• modifying processes.
Blueprints Can Be Used By:
Service Marketers;
 creating realistic customer expectations, service
system design, promotion.
Operations Management;
 rendering the service as promised, managing fail
points, training systems, quality control.
Human Resources;
 empowering the human element, job
descriptions, selection criteria, appraisal
systems.
System Technology;
 providing necessary tools, system specifications,
personal preference databases.
SERVICE PROCESS CHARACTERISTICS
i.
ii.
There are two complementary ways to describe
service processes:
According to the steps and sequences that
constitute the process i.e. the complexity of the
process. We can define a service’s complexity by
analysing the number and intricacy of the steps
required to perform it.
According to the executional latitude or variability
of those steps and sequences. The degree of
freedom / choice allowed or inherent in a process
step or sequence can be thought of as its
divergence. High divergence – a largely
customised service. Low divergence – largely
standardised.




Services therefore can be classified and analysed
according to their overall complexity and
divergence;
Highly complex, highly divergent: Physician,
Professions.
High complexity, low divergence: Hotel,
Telecoms company.
Low complexity, high divergence: Entertainment.
Low complexity, low divergence: Car wash, Fast
food.
SERVICE POSITIONING THRU STRUCTURAL CHANGE
Once a service has been documented accurately it
can be analysed for opportunities either to increase
or decrease one or both variables.
Four generic strategic restructuring alternatives;
1. Reduced divergence.
2. Increased divergence.
3. Reduced complexity.
4. Increased complexity.
It is critically important to recognise that any shift
in overall complexity or divergence, or the
introduction of any new service design, must be
implemented with a clear understanding of the
potential impact on the people and facilitating
goods dimension of the service process.
TOPIC # 8 PHYSICAL EVIDENCE & THE SERVICESCAPE
Introduction
Elements of Physical Evidence
The S-O-R Paradigm
Types of Servicescapes
Servicescapes – Mary Jo Bitner 1992
Roles of the Servicescape
Framework for Understanding Servicescape Effects
on Behaviour
Guidelines for Physical Evidence Strategy
REQUIRED READING: Chapter 11 of Services
Marketing; integrating Customer Focus Across the
Firm 4/e by Zeithaml, Bitner & Gremler
INTRODUCTION
Because services are intangible, customers often
rely on tangible cues, or physical evidence, to
evaluate the service before its purchase and to
assess their satisfaction with the service during and
after consumption.
The heart of the service product is the experience of
the consumer which takes place in real time and
with the consumer’s involvement in production.
This means that in many service situations the
consumer is “in the factory”. For this reason,
service marketers must pay consideration to the
promotional and evaluative dimensions of “the
factory” or servicescape.
ELEMENTS OF PHYSICAL EVIDENCE
Servicescape
Other tangibles
Facility exterior
Business cards
Stationery
Billing statements
Reports
Employee dress
Uniforms
Brochures
Internet/Web pages
Exterior design
Signage
Parking
Landscape
Surrounding environment
Facility interior
Interior design
Equipment
Signage
Layout
Air quality/temperature
THE S-O-R PARADIGM
Environmental psychology has provided a valuable
model for studying the effects of atmospherics on
consumer behaviour.
Using a stimulus-organism-response model
Mehabrian, Russell and Pratt offer a description of
environments, intervening variables and
behaviours relevant to service settings.
The S-O-R model has the following requisites:
 A stimulus taxonomy.
 A set of intervening or mediating variables.
 A taxonomy of responses.
RESPONSE TAXONOMY: The model postulates
that all responses to an environment can be
considered as approach or avoidance behaviours;
i.
A desire to enter / stay in (approach) or to get out
of (avoid) the environment.
ii. A desire or willingness to look around and to
explore the environment (approach) versus a
tendency to avoid moving through or interacting
with the environment or a tendency to remain
inanimate in the environment (avoidance).
iii. A desire or willingness to communicate with
others in the environment (approach) as opposed
to a tendency to avoid interacting with others or
to ignore communication attempts from others
(avoidance).
iii. Satisfaction or dissatisfaction with the
environmental experience and a desire to revisit
(approach) or decision not to return (avoidance).
EMOTIONAL STATES AS INTERVENING VARIABLES:
 The model posits that any environment will
produce an emotional state in an individual that
can be characterised in terms of three PAD
dimensions which are “factorially orthogonal” i.e.
 Pleasure / displeasure (joyful, happy).
 Arousal / non-arousal (relaxed, stimulated etc.).
 Dominance / submissiveness (perceived control).




STIMULUS FACTORS:
Visual,
Aural,
Olfactory,
Tactile.
Stimulus.
Organism
State.
Response.
Exercise; Apply the above SOR Model in the context
of your responsibilities as Market Development
Manager for a large suburban retail mall.
TYPES OF SERVICESCAPES
Organisations differ in terms of who the
servicescape will actually have an effect on i.e. who
actually comes into the service facility and thus is
potentially influenced by its design – customers,
employees, or both groups.
Three types of service differ on this dimension; selfservice, interpersonal services and remote services.
The second factor that influences servicescape
management is the complexity of the servicescape.
Some service environments are very simple, with
few elements, few spaces and few pieces of
equipment. Such environments are termed lean.
For lean servicescapes, design decisions are
relatively straightforward.
Other servicescapes are very complicated, with
many elements and many forms. They are termed
elaborate environments and require more
considered and careful management.
Complexity of the servicescape evidence
Servicescape
usage
Elaborate
Lean
Self-service
(customer only)
Golf Land
Surf 'n' Splash
ATM
Ticketron
Post office kiosk
Internet services
Express mail drop-off
Interpersonal
services
(both customer and
employeee)
Hotel
Restaurants
Health clinic
Hospital
Bank
Airline
School
Dry cleaner
Hot dog stand
Hair salon
Remote service
(employee only)
Telephone company
Insurance company
Utility
Many professional services
Telephone mail-order desk
Automated voice-messagingbased services
By locating itself in the appropriate cell of the
typology, an organisation can start to answer the
following questions:
I.
Who should be consulted in making servicescape
and other evidence decisions? (customers
primarily, employees primarily, both parties).
II. What organisational goals might be targeted
through servicescape design? (customer goals
primarily, employee goals primarily, some mix of
both)
III. How complex is the set of decisions regarding
the servicescape? (elaborate or lean
servicescape)
SERVICESCAPES – MARY JO BITNER 1992
“Because services generally are purchased and
consumed simultaneously, and typically require
direct human contact, customers and employees
interact with each other within the organisation’s
physical facility. Ideally therefore, the
organisation’s environment should support the
needs and preferences of both service employees
and customers simultaneously”.
A clear implication of this line of thinking is that
the physical setting can aid or hinder the
accomplishment of both internal organisational and
external marketing goals and objectives.
i.
ii.
Bitner’s research throws up some interesting
propositions;
For interpersonal services positive (negative)
internal responses to the servicescape enhance
(detract from) the nature and quality of social
interactions between and among customers and
employees.
Optimal design for encouraging employee
(customer) approach behaviour may be
incompatible with the design required to meet
customer (employees) needs and / or facilitate
employee – customer interactions.
iii. Perceptions of the servicescape and associated
positive (negative) cognitions can lead to positive
(negative) beliefs and attributions associated
with the organisation, its people and its market
offerings.
iv. Perceptions of the servicescape influence how
people categorise the organisation; thus, the
service environment serves as a mnemonic in
differentiating among service firms.
v. The servicescape’s influence on beliefs,
attributions and categorisation of the
organisation is stronger for inexperienced
customers, or new employees, and when few
intrinsic cues are available on which to categorise
or base beliefs.
ROLES OF THE SERVICESCAPE
An examination of the variety of roles the
servicescape can play, and how they interact,
makes clear how strategically important it is to
provide appropriate physical evidence of the
service;
 Package; physically wraps the service.
 Facilitator; efficiency from signage, traffic flow,
ambient light and temperature.
 Socialiser; open-plan, comfortable.
 Differentiator; branding through colour etc.
FRAMEWORK FOR UNDERSTANDING
SERVICESCAPE EFFECTS ON BEHAVIOUR
The framework overpage builds on the basic
SOR model already covered. In the framework
the multidimensional environment is the
STIMULUS, consumers and employees are the
ORGANISMS that respond to the stimuli, and
behaviours directed at the environment are
the RESPONSES.
Dimensions of the servicescape will impact
customers and employees and they will behave
in certain ways depending on their internal
reactions to the servicescape.
PHYSICAL
ENVIRONMENTAL
DIMENSIONS
HOLISTIC
ENVIRONMENT
INTERNAL
RESPONSES
BEHAVIOR
Cognitive
Emotional
Physiological
Employee
Responses
Ambient
Conditions
Space/Function
Individual
Behaviors
Social
Interactions
between and
among customer
and employees
Perceived
Servicescape
Signs, Symbols,
and Artifacts
Customer
Responses
Individual
Behaviors
Cognitive
Emotional
Source: Adapted from Mary Jo Bitner, “Servicescapes.”
Physiological
GUIDELINES FOR PHYSICAL EVIDENCE STRATEGY
I.
Recognise the Strategic Impact of Physical
Evidence; It is an integral part of Strategic
Services Marketing & the Services Marketing Mix.
II. Map the Physical Evidence of Service; Blueprint.
III. Clarify Roles of the Servicescape.
IV. Assess and Identify Evidence Opportunities.
V.
Be Prepared to Update and Modernise the
Evidence.
VI. Work Cross-Functionally; H.R. Manager ( e.g.
uniforms), Operations Manager., Architect,
Marketing Communications Manager all involved.
TOPIC # 9 MANAGING PEOPLE IN SERVICE
ORGANISATIONS; AN INTRODUCTION TO SHRM IN
SERVICE ORGANISATIONS
Introduction
Emotional Labour
Service Human Resource Strategies
Internal Marketing
REQUIRED READING: Chapter 12 of Services
Marketing; integrating Customer Focus Across the
Firm 4/e by Zeithaml, Bitner & Gremler
PBZ GAP 3
CUSTOMER
Service Delivery
COMPANY
GAP 3
Customer-Driven
Service Designs and
Standards
INTRODUCTION
The old adage “People are your most important
asset” is wrong. The right people are your most
important asset.
Among the most demanding jobs in service
businesses are so-called boundary spanning
positions, where employees are expected to be fast
and efficient at executing operational tasks as well
as courteous and helpful in dealing with customers.
As a result, many service encounters have the
potential to be a three-cornered fight among the
needs of partially conflicting parties; the customer,
the server, and the service firm.
If the job is not designed carefully or the wrong
people are picked to fill it, there is a real risk that
employees may become stressed and unproductive.
Most of the published research in service
management tends to focus on employees in highcontact environments. This is not entirely surprising
because the people in these jobs are so visible.
But a growing number of service jobs are being
created in telephone-based call centres and
internet-based retail and information centres.
And what of the numerous service employees who
appear to have no customer contact at all, but
instead fulfill an internal service role?
Effective service performance is just as important in
these remote and back-stage services as it is in
face-to-face services and the people-management
challenges and the human resource task are
essentially the same.
Findings from research on service quality have
contributed to greater awareness among top
management of the key role that service employees
play in both creating customer satisfaction and
working toward service recovery when things go
wrong.
There is also greater awareness in management
circles of the competitive advantage inherent in a
dedicated, enthusiastic, motivated set of employees
who support the corporate mission, understand how
their individual work activities contribute – directly
and indirectly – to customer satisfaction, and have
the tools and skills needed to be both productive
and quality oriented.
Service Employees are the essence of the service;
 Representation; the firm in the
customer’s eyes.
 Information Transfer.
 Marketers (Interactive Marketing).
Their importance is evident in;
 The Services Marketing Mix (People), The
Servuction System, The Services Triangle.
Who are they?
 Boundary Spanners, Back Stagers & Subordinate
Service Roles.
What are these jobs like?
 Many sources of potential conflict: Person vs. Role
(Emotional Labour), Organisation vs. Client, Client
vs. Client, Quality vs. Productivity.
EMOTIONAL LABOUR
Service encounters entail more than just correct
execution of a task. They also involve such human
elements as personal demeanor, courtesy and
empathy. This brings us to the notion of emotional
labour; the act of expressing socially desired
emotions during service transactions e.g.
friendliness, sincerity, compassion, self-effacing .
The problem is the employee may not feel such
emotions. Trying to conform to customer
expectations on these dimensions can prove to be a
psychological burden for some service workers when
they perceive themselves as having to act out
emotions they do not feel. At worst, policies that
impose such requirements raise troubling ethical
questions about how far it is appropriate for
organisations to control & shape social aspects of
work.
Customer-contact employees comply with so-called
Display Rules through both acting and the
expression of spontaneous and genuine emotion.
Display rules generally reflect the norms imposed
by society – which may vary from one country to
another – and by specific occupations and
organisations. Customer expectations may also
reflect the nature of a particular encounter.
Surface Acting requires employees to simulate
emotions that they do not actually feel,
accomplished by careful presentation of verbal and
non-verbal cues, such as facial expression, gestures
and vocal tone. Within limits, such acting skills can
be taught; some people are natural actors.
Deep Acting goes further; it involves trying to psych
oneself into actually experiencing the desired
emotion. One way to do this in a service context is
to try to imagine how the customer is currently
feeling.
HR managers in service organisations need to be
aware that performing emotional labour, day after
day, can be stressful for employees as they strive to
display toward customers feelings that may be false.
The challenge for HR managers is to determine what
customers expect, recruit the most suitable
employees and train them well. Investment in such
HR strategies is most worthwhile for service
situations in which exchanges between employees
and customers take place in the context of longterm relationships.
SERVICE HUMAN RESOURCE STRATEGIES
Hire for
Service
Competencies
and Service
Inclination
Retain the
Best
People
Customeroriented
Service
Delivery
Provide
Needed Support
Systems
Provide
Supportive
Technology
and
Equipment
Develop
People to
Deliver
Service
Quality
Empower
Employees
Treat
Employees
as
Customers
Hire the
Right People
INTERNAL MARKETING
The Internal Marketing Concept states that the
internal market of employees is best motivated for
service-mindedness and prepared for customeroriented performance by an active, goal-oriented
approach where a variety of activities and processes
is used internally in an active, marketing-like and
coordinated way. In this way, internal relationships
between people in various departments and
processes (customer contact employees, internal
support employees, team-leaders, supervisors and
managers) can best be enhanced and geared
towards service oriented management and
implementation of external relationships with
customers and other parties.
Internal Marketing is the management philosophy
of treating employees as customers.
The objective of Internal Marketing is to create,
maintain and enhance internal relationships
between people in the organisation, regardless of
their position, so that they first feel motivated to
provide services to internal customers as well as to
external customers in a customer-oriented and
service-minded way, and second, have the skills
and knowledge required as well as the support
needed from managers and supervisors, internal
service providers, systems and technology to be
able to perform in such a manner.
Such internal relationships can only be achieved if
employees feel that they can trust each other, and
above all, trust the firm and its management to
continuously provide the physical and emotional
support required to deliver service excellence.
If internal marketing activities are implemented
purely as a campaign, or, even worse, as separate
activities without connections to other
management factors / functions, the risk that
nothing enduring will be achieved is overwhelming.
The three pre-requisites for successful internal
marketing are;
 Internal marketing has to be considered an integral
part of strategic management.
 The internal marketing process must not be
counteracted by the organisational structure of a
firm or by a lack of management support.
 Top management must constantly demonstrate
active support for the internal marketing activity.






Typical internal marketing activities include;
Training – functional and technical, developing and
enhancing favourable attitudes towards service.
Management support and internal dialogue –
active encouragement, feedback, coaching.
Internal communication and information support –
brochures, memos, intranet, appropriate access to
the MKTIS & SQIS.
Proactive HRM – status of preferred employer,
recruitment and selection of “service enthusiasts”.
Development of systems and technology support –
internal complaint and internal recovery systems,
internal service quality monitoring systems.
Internal market research and segmentation.
EMPLOYEE EMPOWERMENT
“It is necessary to “dehumiliate” work by
eliminating the policies and procedures (almost
always tiny) of the organisation that demean and
belittle human dignity. It is impossible to get
peoples best efforts, involvement and caring
concern for things you believe important to your
customers and the long term interests of your
organisation, when we write policies and
procedures that treat them like thieves and
bandits”.
(Tom Peters)
“To free someone from rigorous control by
instructions, policies and orders and to give that
person freedom to take responsibility for his ideas,
decisions and actions is to release hidden resources
that would otherwise remain inaccessible to both
the individual and the organisation.” (Jan Carlson)
Under the right conditions, providing employees
with greater discretion (and training in how to use
their judgement) may enable them to provide
superior service on the spot without referring to rule
books or taking time to seek permission from higher
authority.
From a humanistic standpoint, the notion of
encouraging employees to exercise initiative and
discretion is an appealing one. Empowerment looks
to the performer of the task to find solutions to
service problems and to make appropriate decisions
about customising service delivery.
It depends for its success on what is sometimes
called enablement – giving workers the tools and
resources they need to take on these new
responsibilities.
TOPIC # 10 SERVICE MARKETING COMMUNICATIONS
The Communication Process
Tools of Marketing Communications
The Marketing Communications Process
REQUIRED READING: Chapter 16 of Services
Marketing; integrating Customer Focus Across
the Firm 4/e by Zeithaml, Bitner & Gremler
THE COMMUNICATION PROCESS
Message
Encoding
Source
Channel
Noise
Receiver
Decoding
Feedback
TOOLS OF MARKETING COMMUNICATIONS
Advertising
Personal
Selling
Publicity
Integrated
Marketing
Communications
Sales
Promotion
P-O-P
Sponsorship
THE MARKETING COMMUNICATIONS PROCESS
Selecting Target Market
Establishing Objectives
Setting Budget
Formulating and Implementing
Message and Media Strategies
Evaluating Program
Effectiveness
TOPIC # 11 SERVICE PRICING
Introduction; Defining Price
Setting Price Policy
REQUIRED READING: Chapter 17 of Services
Marketing; integrating Customer Focus
Across the Firm 4/e by Zeithaml, Bitner &
Gremler
INTRODUCTION; DEFINING PRICE





Price is the sacrifice that one party pays another
to receive something in exchange.
Price is a monetary value charged by an
organization for the sales of its products.
Pricing decisions are complex - not solely driven
by cost, or demand, or public perception. A range
of factors may influence the pricing decision:
Competitive pressures.
Buyer Power.
Life Cycle Stage.
Environmental factors (Economic, Legal etc.)
Internal company factors (cost structure,
servuction system capacity, market positioning
strategy etc.)
SETTING PRICE POLICY
Setting Price can be viewed as a 6 step process;
SELECTING THE PRICING OBJECTIVE; Skimming,
Penetration, Survival
DETERMINING DEMAND
ESTIMATING COSTS
ANALYSING COMPETITORS’ COSTS, PRICES AND OFFERS
SELECTING A PRICING METHOD; Perceived Value, Mark-up,
Target Return
SELECTING THE FINAL PRICE
TOPIC # 12 THE FIVE GAPS MODEL
If one accepts the view that quality entails
consistently meeting customers’ expectations,
then the service manager’s task is to balance
customer expectations and perceptions and to
close any gaps between the two. Zeithaml, Berry
and Parasuraman (1988) identify four potential
shortfalls within the service organisation that
may lead to a gap between what customers
expect and what they receive;
I.
Not knowing what customers expect.
II. Specifying service quality standards that do not
reflect what management believes to be
customers’ expectations.
III. Service performance does not match
specifications.
IV. Not living up to the levels of service performance
that are promised through the service
organisation’s marketing communications
activities.
The Five Gaps Model, as subsequently developed
by Parasuraman, Berry and Zeithaml, positions
the key concepts, strategies and decisions in
services management and marketing in a manner
that begins with the customer and builds the
organisation’s tasks around what is needed to
close the gap between customer expectations and
perceptions.
The central focus of the gaps model is the
customer gap, the difference between customer
expectations and perceptions. Firms need to close
this gap in order to satisfy their customers and
build long-term, mutually beneficial, relationships
with them.
To close this all-important customer gap, the four
provider gaps need to be closed.
The PBZ Five Gap Model
Word of Mouth
Communication
Personal Needs
Past Experience
Expected Service
Gap 5
Perceived Service
Customer
Provider
Gap 1
Service Delivery
(including preand post- contacts)
Gap 4
Gap 3
Translation of
Perceptions into
Service Quality
Specs.
Gap 2
Management Perceptions
of Consumers Expectations
External
Communications
to Consumers
GAP # 1: NOT KNOWING WHAT CUSTOMERS EXPECT
CUSTOMER
EXPECTATIONS.
COMPANY
PERCEPTIONS
OF CUSTOMER
EXPECTATIONS.
KEY FACTORS LEADING
TO GAP #1;

Inadequate Marketing
Research Orientation:

Insufficient marketing
research.
Research not focused on
service quality.
Inadequate use of
market research.


II.
Lack of Upward Communication

Lack of interaction between management and
customers.
Insufficient communication between contact
employees (BSPs) and managers.
Too many layers between contact personnel
and top management.


III. Insufficient Relationship Focus:



IV.
Lack of market segmentation.
Focus on transactions rather than
relationships.
Focus on new customers rather than
relationship customers.
Inadequate Service Recovery.
GAP # 1 PRESCRIPTION:
LEARN WHAT CUSTOMERS EXPECT
 Get a better understanding of customer
expectations through survey research, complaint
analysis, customer panels, individual depth
interviews etc.
 Increase direct interactions between service
managers and customers to improve empathy and
understanding.
 Improve upward communication from contact
personnel (BSPs) to management and reduce the
number of levels between the two.
 Turn information and insights into action (avoid
paralysis by analysis).
GAP # 2: NOT SELECTING THE RIGHT SERVICE
DESIGNS AND STANDARDS
CUSTOMER-DRIVEN
SERVICE DESIGN &
STANDARDS.
MANAGEMENT
PERCEPTIONS OF
CUSTOMER EXPECTATIONS.
KEY FACTORS
LEADING TO GAP
#2;




Poor Service Design:
Unsystematic newservice development
process.
Vague, undefined
service designs.
Failure to connect
service design to
service positioning.
II.
Absence of Customer-Defined Standards:


Lack of customer-defined service standards.
Absence of process management to focus
on customer requirements.
Absence of formal process for setting
service quality goals.


Inappropriate Physical Evidence and
Servicescape.




Visual.
Aural.
Olfactory.
Tactile.
GAP # 2 PRESCRIPTION:
ESTABLISH THE RIGHT SERVICE QUALITY STANDARDS
 Ensure that top management displays continuing
commitment to quality as defined from the
customers’ point of view.
 Get middle management to set, communicate and
reinforce customer-oriented service standards for
their work units.
 Train managers in the skills needed to lead
employees to deliver quality service.
 Become receptive to new ways of doing business
that overcome barriers to delivering quality
service.
 Standardise repetitive work tasks to ensure
consistency and reliability by substituting hard
technology for human contact and improving
work methods (soft technology).
 Establish clear service quality goals that are
challenging, realistic and explicitly designed to
meet customer expectations.
 Clarify to employees which job tasks have the
biggest impact on quality and thus should
receive the highest priority.
 Ensure that employees understand and accept
(have bought into) goals and priorities.
 Measure performance and provide regular
feedback.
 Reward managers and employees for attaining
quality goals.
GAP # 3: NOT DELIVERING TO SERVICE STANDARDS
SERVICE
DELIVERY.
KEY FACTORS LEADING TO
GAP #3:




CUSTOMERDRIVEN
SERVICE DESIGN
& STANDARDS.


Deficiencies in Human
Resource Policies;
Ineffective recruitment.
Role ambiguity and role
conflict.
Poor employee-technology
job fit.
Inappropriate evaluation and
compensation systems.
Lack of empowerment,
perceived control and
teamwork.
II.
Failure to Match Supply and Demand

Failure to smooth peaks and valleys of
demand.
Inappropriate customer mix.
Over-reliance on price to smooth demand.


III. Customers not Fulfilling Roles


IV.




Customers lack knowledge of their roles and
responsibilities.
Customers negatively affect each other.
Problems with Service Intermediaries
Channel conflict over objectives and
performance.
Channel conflict over costs and rewards.
Difficulty controlling quality and consistency.
Tension between empowerment and control.
GAP # 3 PRESCRIPTION:
ENSURE THAT SERVICE PERFORMANCE MEETS
STANDARDS
 Clarify employee roles.
 Ensure that all employees understand how their jobs
contribute to customer satisfaction.
 Match employees to jobs by selecting on the basis of
the abilities and skills needed to perform each job
well.
 Provide employees with the technical training
needed to perform their assigned tasks effectively.
 Develop innovative recruitment and retention
methods to attract the best people and build loyalty.
 Enhance employee performance by selecting the
most appropriate and reliable technology and
equipment.
 Teach employees about customer expectations,
perceptions and problems.
 Train employees in interpersonal skills, especially
for dealing with customers under stressful
conditions.
 Eliminate role conflict among employees by
involving them in the process of setting service
quality standards.
 Train employees in priority setting and time
management.
 Measure employee performance and tie
compensation and recognition to delivery of
quality service.
 Develop reward systems that are meaningful,
timely, simple, accurate and fair.
 Empower managers and employees in the field by
pushing decision-making power down the
organisation; allow them greater discretion in the
methods they use to reach goals.
 Ensure that employees working at internal
support jobs provide good service to customer
contact / boundary spanning personnel.
 Build teamwork so that employees work well
together, and use team rewards as incentives.
 Treat customers as “partial employees”; clarify
their roles in service delivery, train and motivate
them to perform well in their roles as coproducers.
# 4: NOT MATCHING PERFORMANCE TO PROMISES
SERVICE
DELIVERY.
EXTERNAL
COMMUNICATIONS
TO CUSTOMERS.
KEY FACTORS LEADING
TO GAP #4:
I.
Lack of Integrated
Marketing
Communications

Tendency to view each
external communication
as independent.
Not including interactive
marketing communication
in communications plan.
Absence of strong
internal marketing
programme.


II.
Ineffective Management of Customer
Expectations

Not managing customer expectations through all
forms of communication.
Not adequately educating customers.

III. Over-promising

IV.



Over-promising in advertising, personal selling
and through physical evidence cues.
Inadequate Horizontal Communications
Insufficient communication between sales and
operations.
Insufficient communication between advertising
and operations.
Differences in policies and procedures across
branches and units.
GAP # 4 PRESCRIPTION: ENSURE THAT SERVICE
DELIVERY MATCHES PROMISES
 Seek inputs from operations personnel when new
marketing communications programmes are being
created.
 Develop advertising that features real employees
performing their jobs.
 Allow service providers to preview advertisements
before customers are exposed to them.
 Get sales staff to involve operations staff in face-toface meetings with customers.
 Develop internal educational, motivational and
advertising campaigns to strengthen links between
marketing, operations and human resource
departments / functions.
 Ensure that consistent standards of service are
delivered across multiple locations.
 Ensure that advertising content accurately
reflects those service characteristics that are
most important to customers in their encounters
with the organisation.
 Manage customers’ expectations by letting them
know what is and is not possible – and the
rationale behind such determinations.
 Identify and explain uncontrollable reasons for
shortcomings in service performance.
 Offer customers different levels of service at
different prices, explaining the differences
between these levels and the logic underpinning
the associated alternate prices.