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,McGraw-Hill, 2000 The McGraw-Hill Companies,Chapter 1,INTRODUCTION TO SERVICES,A note on the PowerPoint Slides.,These PowerPoint slides contain selected exhibits, figures and tables from the chapters as well as objectives for the chapters. For many chapters, we include extra lecture slides and in-class exercises that we have compiled and used in our classes. The lecture slides are not intended to provide full outlines or complete lectures for the chapters, but rather may be used selectively to enhance class sessions.,Objectives for Chapter 1:Introduction to Services,Explain what services are and identify service trendsExplain the need for special services marketing concepts and practicesOutline the basic differences between goods and services and the resulting challenges for service businessesIntroduce the service marketing triangleIntroduce the expanded services marketing mixIntroduce the gaps model of service quality,Challenges for Services,Defining and improving qualityCommunicating and testing new servicesCommunicating and maintaining a consistent imageMotivating and sustaining employee commitmentCoordinating marketing, operations and human resource effortsSetting pricesStandardization versus personalization,Examples of Service Industries,Health Carehospital, medical practice, dentistry, eye careProfessional Servicesaccounting, legal, architecturalFinancial Servicesbanking, investment advising, insuranceHospitalityrestaurant, hotel/motel, bed & breakfast, ski resort, raftingTravelairlines, travel agencies, theme parkOthers:hair styling, pest control, plumbing, lawn maintenance, counseling services, health club,Figure 1-1Tangibility Spectrum,TangibleDominant,IntangibleDominant,Salt,Soft Drinks,Detergents,Automobiles,Cosmetics,AdvertisingAgencies,Airlines,InvestmentManagement,Consulting,Teaching,Fast-foodOutlets,Fast-foodOutlets,Figure 1-2 Percent of U.S. Labor Force by Industry,0,10,20,30,40,50,60,70,80,1929,1948,1969,1977,1984,1996,Percent of GDP,Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.,Year,Services Manufacturing Mining & Agriculture,0,10,20,30,40,50,60,70,80,1948,1959,1967,1977,1987,1996,Figure 1-3 Percent of U.S. Gross Domestic Product by Industry,Percent of GDP,Year,Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.,Services Manufacturing Mining & Agriculture,Differences Between Goods and Services,Intangibility,Perishability,SimultaneousProductionandConsumption,Heterogeneity,Implications of Intangibility,Services cannot be inventoriedServices cannot be patentedServices cannot be readily displayed or communicatedPricing is difficult,Implications of Heterogeneity,Service delivery and customer satisfaction depend on employee actionsService quality depends on many uncontrollable factorsThere is no sure knowledge that the service delivered matches what was planned and promoted,Implications of Simultaneous Production and Consumption,Customers participate in and affect the transactionCustomers affect each otherEmployees affect the service outcomeDecentralization may be essentialMass production is difficult,Implications of Perishability,It is difficult to synchronize supply and demand with servicesServices cannot be returned or resold,Table 1-2 Services are Different,Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,” Journal of Marketing 49 (Spring 1985): 33-46.,Figure 1-5The Services Marketing Triangle,Internal Marketing,Interactive Marketing,External Marketing,Company(Management),Customers,Employees,“enabling thepromise”,“delivering the promise”,“setting thepromise”,Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler,Services Marketing Triangle Applications Exercise,Focus on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle?How is each type of marketing being carried out currently?Are the three sides of the triangle well aligned?Are there specific challenges or barriers in any of the three areas?,Ways to Use the Services Marketing Triangle,Overall Strategic AssessmentHow is the service organization doing on all three sides of the triangle?Where are the weaknesses?What are the strengths?,Specific Service ImplementationWhat is being promoted and by whom?How will it be delivered and by whom?Are the supporting systems in place to deliver the promised service?,Source: Adapted from A. Parasuraman,Company,Customers,Providers,Technology,Figure 1-6 The Services Triangle and Technology,Services Marketing Mix:7 Ps for Services,Traditional Marketing MixExpanded Mix for Services: 7 PsBuilding Customer Relationships Through People, Processes, and Physical EvidenceWays to Use the 7 Ps,Traditional Marketing Mix,All elements within the control of the firm that communicate the firms capabilities and image to customers or that influence customer satisfaction with the firms product and services: Product Price Place Promotion,Expanded Mix for Services -the 7 Ps,ProductPricePlacePromotionPeopleProcessPhysical Evidence,Table 1-3Expanded Marketing Mix for Services,Table 1-3 (Continued)Expanded Marketing Mix for Services,Ways to Use the 7 Ps,Overall Strategic AssessmentHow effective is a firms services marketing mix?Is the mix well-aligned with overall vision and strategy?What are the strengths and weaknesses in terms of the 7 Ps?,Specific Service ImplementationWho is the customer?What is the service?How effectively does the services marketing mix for a service communicate its benefits and quality?What changes/improvements are needed?,PerceivedService,Expected Service,CUSTOMER,COMPANY,CustomerGap,GAP 1,GAP 2,Gaps Model of Service Quality,GAP 3,External Communications to Customers,GAP 4,Service Delivery,Customer-Driven Service Designs and Standards,Company Perceptions of Consumer Expectations,Part 1 Opener,Gaps Model of Service Quality,Customer Gap:difference between expectations and perceptionsProvider Gap 1:not knowing what customers expectProvider Gap 2:not having the right service designs and standardsProvider Gap 3:not delivering to service standardsProvider Gap 4:not matching performance to promises,Part 1 Opener,The Customer Gap,ExpectedService,PerceivedService,GAP,Part 1 Opener,Chapter 2,CONSUMER BEHAVIOR IN SERVICES,McGraw-Hill, 2000 The McGraw-Hill Companies,Objectives for Chapter 2:Consumer Behavior in Services,Overview the generic differences in consumer behavior between services and goodsIntroduce the aspects of consumer behavior that a marketer must understand in five categories of consumer behavior:Information searchEvaluation of service alternativesService purchase and consumptionPostpurchase evaluationRole of culture,Consumer Evaluation Processes for Services,Search Qualitiesattributes a consumer can determine prior to purchase of a productExperience Qualitiesattributes a consumer can determine after purchase (or during consumption) of a productCredence Qualitiescharacteristics that may be impossible to evaluate even after purchase and consumption,Figure 2-1Continuum of Evaluation for Different Types of Products,ClothingJewelryFurnitureHousesAutomobilesRestaurant mealsVacationsHaircutsChild careTelevision repairLegal servicesRoot canalsAuto repairMedical diagnosis,Difficult to evaluate,Easy to evaluate,High in searchqualities,High in experiencequalities,High in credencequalities,MostGoods,MostServices,Figure 2-2Categories in Consumer Decision-Making and Evaluation of Services,Information Search,Evaluation of Alternatives,Purchase and Consumption,Post-Purchase Evaluation, Use of personal sources Perceived risk, Evoked set Emotion and mood, Service provision as drama Service roles and scripts Compatibility of customers, Attribution of dissatisfaction Innovation diffusion Brand loyalty,Figure 2-3 Categories in Consumer Decision-Making and Evaluation of Services,Global Feature:Differences in the Service Experience in the U.S. and Japan,Authenticity Caring Control Courtesy Formality Friendliness Personalization Promptness,Objectives for Chapter 3:Customer Expectations of Service,Recognize that customers hold different types of expectations for service performanceDiscuss controllable and uncontrollable sources of customer expectations Distinguish between customers global expectations of their relationships and their expectations of the service encounterAcknowledge that expectations are similar for many different types of customersDelineate the most important current issues surrounding customer expectations,Figure 3-1Dual Customer Expectation Levels,Adequate Service,Desired Service,Zone ofTolerance,Figure 3-2 The Zone of Tolerance,Adequate Service,Desired Service,Zone ofTolerance,Figure 3-3 Zones of Tolerance forDifferent Service Dimensions,Most Important Factors,Least Important Factors,Level of Expectation,Source: Berry, Parasuraman, and Zeithaml (1993),Adequate Service,Desired Service,Zone ofTolerance,Desired Service,Adequate Service,Figure 3-4 Zones of Tolerance forFirst-Time and Recovery Service,First-Time Service,Outcome,Process,Outcome,Process,Recovery Service,Expectations,LOW,HIGH,Source: Parasuraman, Berry and Zeithaml (1991),Figure 3-5 Factors that InfluenceDesired Service,DesiredService,AdequateService,Zone of Tolerance,Enduring ServiceIntensifiers,Personal Needs,Figure 3-6 Factors that InfluenceAdequate Service,DesiredService,AdequateService,Zone of Tolerance,Self-PerceivedService Role,Situational Factors,Perceived ServiceAlternatives,Transitory ServiceIntensifiers,Figure 3-7 Factors that InfluenceDesired and Predicted Service,DesiredService,AdequateService,Zone of Tolerance,Predicted Service,Explicit ServicePromises,Implicit ServicePromises,Word-of-Mouth,Past Experience,Objectives for Chapter 4:Customer Perceptions of Service,Provide you with definitions and understanding of customer satisfaction and service qualityShow that service encounters or the “moments of truth” are the building blocks of customer perceptionsHighlight strategies for managing customer perceptions of service,Figure 4-1Customer Perceptions of Service Quality and Customer Satisfaction,ServiceQuality,Reliability,Responsiveness,Assurance,Empathy,Tangibles,ProductQuality,Price,PersonalFactors,CustomerSatisfaction,SituationalFactors,Factors Influencing Customer Satisfaction,Product/service qualityProduct/service attributes or featuresConsumer EmotionsAttributions for product/service success or failureEquity or fairness evaluations,Outcomes of Customer Satisfaction,Increased customer retentionPositive word-of-mouth communicationsIncreased revenues,Figure 4-3 Relationship between Customer Satisfaction and Loyalty in Competitive Industries,Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.,Service Quality,The customers judgment of overall excellence of the service provided in relation to the quality that was expected.Process and outcome quality are both important.,The Five Dimensions of Service Quality,Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to convey trust and confidence.Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers. Willingness to help customers and provide prompt service.,Tangibles,Reliability,Responsiveness,Assurance,Empathy,Exercise to Identify Service Attributes,In groups of five, choose a services industry and spend 10 minutes brainstorming specific requirements of customers in each of the five service quality dimensions. Be certain the requirements reflect the customers point of view.,Reliability:Assurance:Tangibles:Empathy:Responsiveness:,SERVQUAL Attributes,Providing service as promisedDependability in handling customers service problemsPerforming services right the first timeProviding services at the promised timeMaintaining error-free records,Keeping customers informed as to when services will be performedPrompt service to customersWillingness to help customersReadiness to respond to customers requests,RELIABILITY,RESPONSIVENESS,Employees who instill confidence in customersMaking customers feel safe in their transactionsEmployees who are consistently courteousEmployees who have the knowledge to answer customer questions,ASSURANCE,Giving customers individual attentionEmployees who deal with customers in a caring fashionHaving the customers best interest at heartEmployees who understand the needs of their customersConvenient business hours,EMPATHY,Modern equipmentVisually appealing facilitiesEmployees who have a neat, professional appearanceVisually appealing materials associated with the service,TANGIBLES,The Service Encounter,is the “moment of truth”occurs any time the customer interacts with the firmcan potentially be critical in determining customer satisfaction and loyaltytypes of encounters:remote encountersphone encountersface-to-face encounters is an opportunity to:build trustreinforce qualitybuild brand identityincrease loyalty,Check-In,Request Wake-Up Call,Checkout,Bellboy Takes to Room,Restaurant Meal,Figure 4-4 A Service Encounter Cascade for a Hotel Visit,Sales Call,Ordering Supplies,Billing,Delivery and Installation,Servicing,Figure 4-5 A Service Encounter Cascade for an Industrial Purchase,Critical Service Encounters Research,GOAL - understanding actual events and behaviors that cause customer dis/satisfaction in service encountersMETHOD - Critical Incident TechniqueDATA - stories from customers and employeesOUTPUT - identification of themes underlying satisfaction and dissatisfaction with service encounters,Sample Questions for Critical Incidents Technique Study,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)?,Common Themes in CriticalService Encounters Research,Recovery:,Adaptability:,Spontaneity:,Coping:,Employee Responseto Service DeliverySystem Failure,Employee Responseto Customer Needsand Requests,Employee Responseto Problem Customers,Unprompted andUnsolicited EmployeeActions and Attitudes,Recovery,Acknowledge problemExplain causesApologizeCompensate/upgradeLay out optionsTake responsibility,Ignore customerBlame customerLeave customer to fend for him/herselfDowngradeAct as if nothing is wrong,DO,DONT,Adaptability,Recognize the seriousness of the needAcknowledgeAnticipateAttempt to accommodateExplain rules/policiesTake responsibilityExert effort to accommodate,Promise, then fail to follow throughIgnoreShow unwillingness to tryEmbarrass the customerLaugh at the customerAvoid responsibility,DO,DONT,Spontaneity,Take timeBe attentiveAnticipate needsListenProvide information (even if not asked)Treat customers fairlyShow empathyAcknowledge by name,Exhibit impatienceIgnoreYell/laugh/swearSteal from or cheat a customerDiscriminateTreat impersonally,DO,DONT,Coping,ListenTry to accommodateExplainLet go of the customer,Take customers dissatisfaction personallyLet customers dissatisfaction affect others,DO,DONT,Figure 4-6 Evidence of Service from theCustomers Point of View,People,Process,PhysicalEvidence,Contact employees Customer him/herself Other customers,Operational flow of activities Steps in process Flexibility vs. standard Technology vs. human,Tangible communication Servicescape Guarantees Technology,Provider GAP 1,Company Perceptions of Consumer Expectations,Expected Service,CUSTOMER,COMPANY,GAP 1,Part 2 Opener,McGraw-Hill, 2000 The McGraw-Hill Companies,Chapter 5,UNDERSTANDING CUSTOMER EXPECTATIONS AND PERCEPTIONS THROUGH MARKETING RESEARCH,Objectives for Chapter 5:Understanding Customer Expectations and Perceptions through Marketing Research,Present the types of and guidelines for marketing research in servicesShow the ways that marketing research information can and should be used for servicesDescribe the strategies by which companies can facilitate interaction and communication between management and customersPresent ways that companies can and do facilitate interaction between contact people and management,Common Research Objectives for Services,To identify dissatisfied customersTo discover customer requirements or expectationsTo monitor and track service performanceTo assess overall company performance compared to competitionTo assess gaps between customer expectations and perceptionsTo gauge effectiveness of changes in serviceTo appraise service performance of individuals and teams for rewardsTo determine expectations for a new s
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