Relationship and Services Marketing

Question 1

Interpersonal relationships

Answer 1

Combination of frequent interaction (frequent affectively pleasant interactions with another person) and persistent caring (interactions taking place in the context of a temporarily stable and enduring framework of affective concern for each other’s welfare)

Question 2

Investment model

Answer 2

Satisfaction = benefits - cost
-satisfaction increases when benefits increase and/or costs decrease
-satisfaction is the most important driver of commitment
-benefits and costs can either be material or psychological and can exist objectively or merely in the subjective perception of the individual (e.g. Intelligence, physical appearance, sense of humour)
-expectations influences perceptions of cost and benefits (derived from previous relationships or significant others)
Quality of alternatives: the perceived desirability of the best available alternative to a given relationship
-the extent to which the individual’s most important needs can be fulfilled ‘outside’ of the current relationship (the more attractive the lower the commitment)
Investment size: the magnitude and importance of the resources that are attached to a relationship
-invested resources enhance commitment because the cost of ending a relationship increases (the higher the investment, the higher commitment) e.g. mutual friends, shared material possessions, disclosing private thoughts (both material or psychological)
-quality of alternatives and investment size are if almost equal importance for commitment (e.g. If quality if alternative is high you will not leave your partner if satisfaction is high

Question 3

Why does commitment stabilise relationships

Answer 3

Linked to relationships maintenance mechanism

• accommodation
• forgiveness
• positive illusions
• willingness to sacrifice

Question 4

Personality

Answer 4

The psychological qualities that bring continuity to an individual’s behaviour in different situations at different times
-high conscientiousness and agreeableness will result in higher commitment and relationship length

Question 5

Why are strong customer-company relationships desirable

Answer 5

Over time the customer generates more profit

• no acquisition costs
• profits from reduced operations
• additional profits from referral
• profits from up and cross selling

Question 6

Cross-selling

Answer 6

Sales of additional items related (or sometimes unrelated) to a previously purchased item
E.g. iPhone to MacBook - from existing product portfolio you sell a new product

Question 7

Up-selling

Answer 7

The increase of order volume either by the sales of more units of the same purchased item, or the upgrading into a more expensive version of the purchased item
E.g. iPhone 6 to iPhone 6 Plus - can increase volume of what you sell or upgrade

Question 8

Commitment in customer company relationship

Answer 8

Normative commitment (based on norms): and obligation-based attachment to the company (i.e. customers remain with with the company because they ought to)
-reciprocity is key
1. Even if it were to my advantage, I do not feel it would be right to leave
2. The organisation deserves my loyalty
3. I would feel guilty if I left
4. I would not leave because I have some sense of obligation
Affective commitment (based on emotions): a desire-based attachment to the company (i.e.customer remain with the company because they want to)
1. I feel emotionally attached
2. I feel like part of the family
3. I feel a strong sense of belonging
Continuance (based in cost/benefit ratio): cost-based attachment where a customer feels he or she has to stay with the company (i.e. customer email with the company because they need to)
1. It would be very hard for me to leave
2. I wanted to
3. I would suffer economically if the relationship were broken
4. I use it because I have no other choice
-lead to loyalty intentions
-high cross-buying intentions
-leads to high profits
-affective commitment is more important than continuance commitment in a B2B context
-when affective commitment is highest, cross-buying intention is highest
-

Question 9

What is a key relational concept?

Answer 9

Commitment: the subjectively perceived dependence in a given relationship to fulfil relational needs and the resulting desire for a given relationship to persist
-strongest predictor of relationship length when controlling for intimacy and passions

Question 10

Drivers of commitment in customer-company relationships

Answer 10

• norm of reciprocity
• customer satisfaction (performance exceeds expectations - expectation confirmation model)
• switching costs and attractiveness of alternatives

Question 11

The loyalty-discount cycle

Answer 11

• when a customer is loyal to a company, he/she negotiates tougher because he/she expects more for loyalty ->gets a better discount -> satisfied with discount -> loyal customer
• companies want to keep customers to offer discounts
• loyal customers expect a reward and perceived negotiating power also increases
• the higher the negotiation intention, the higher the discount percent
• when the company has high customer orientation, the discount is less (customers don’t necessarily want material rewards, but just some reciprocity)

Question 12

Four key characteristics of services

Answer 12

Intangibility: cannot be feel, tasted or touched (hard to unrest and services - performed rather than an object)
Perishability: cannot be stored (services are performed and cannot be saved
Inseparability: sold and produced and consumed simultaneously (customers can bring own resources - e.g. car to car wash)
Heterogeneity: vary day to day, consumer to consumer (potential for high variability in service quality)

Question 13

How frontline workers can create favourable customer experiences

Answer 13

• service with a smile (contagious)
• emotional contagion theory: the tendency to automatically mimic and synchronise movements, expressions, postures, and vocalisation with those of another person and, consequently, to converge emotionally

Question 14

Two types of emotional contagion

Answer 14

Primitive emotional contagions (e.g. I laugh an then you laugh)
-result of unconscious process: spontaneous imitation of facial expression and/or other nonverbal cues -> experience of corresponding emotions though physiological links
-spurred by the extent to which the sender displays emotions: greater emotional display by the sender results in higher levels of emotional contagion in the receiver
-high positive emotional display = perceive higher quality = higher tips
-positive affect make us perceive higher quality because think emotions towards objects contain valuable judgemental information
Employee display of positive emotion-> customer positive affect-> customer service quality perceptions
Conscious emotional contagion (e.g. adopt a person’s mood to signal liking by reciprocating smile)
-based on social comparison process: emotions serve as a type of social information: comparison of ones own mood with another person’s mood -> adoption if necessary
-based on desire to reduce perceived ambiguity
-less determined by the extent of displayed emotions, but by authenticity

Question 15

Perceived service quality

Answer 15

A customers judgement about the overall excellence or superiority of a service
-hard to accurately judge service quality (intangibility and heterogeneity)
SERVQUAL: important measure off service quality
-Can be negative if expectations are higher than performance perceptions
Perceived service quality = performance perceptions -expectations (desired)

Question 16

SERVQUAL dimensions

Answer 16

Tangibles, reliability, responsiveness, assurance, empathy
-items are included twice: expectations and perceived quality
-tangibles most related to the environment, while other dimensions are more about behaviour from the service
-if positivity increases by 1, loyalty increase/ decreases by X
Pro:
-taps several important dimensions of service quality no attention to process, or script, of service delivery items need considerable adaptation across industries use of difference score not ideal
Cons:
-problematic to ask participants to rate both directions service expectations and actual service performance perceptions
-some items might not fit specific service context (e.g. Feeling safe)
-have to do a pre-survey to measure expectations

Question 17

How service failures impact customer satisfaction with a service

Answer 17

An incident that happens during the process of service delivery and causes a customer to subjectively perceive a loss

• loss pertains to economic (e.g. money) or social resources (e.g. statuts or esteem)
• failure can be a good thing because it leads to an increase in customer satisfaction

Question 18

Confirmation/disconfirmation paradigm

Answer 18

When your service expectations are higher than you perceived service performance then you have a higher service disconfirmation - this will end up in dissatisfaction
Three distinctive forms of attribution:
-locus (who is responsible)
-control (did the responsible party have control over the cause)
-stability (is the cause likely to reoccur)
Once you make an attribution, satisfaction goes down - when you can attribute these to external causes rather than the service provider, you can shield some customer dissatisfaction
-control and stability attributions equally impact customer satisfaction
-the more you attribute control to the service provider, the less satisfaction you feel after the service provided
-the more you think this service is likely to reoccur, the less satisfaction you feel afterwards

Question 19

Service recovery

Answer 19

Learn how we can successfully perform passive proactive service recovery one a failure has occurred
Service recovery types:
-apology
-immediate monetary (e.g. discount, money back)
-delayed monetary (e.g. voucher, store credit)
-new/re-performed service (e.g. cocktail on the house)

Question 20

Service recovery paradox

Answer 20

The assumption is that the customer is happy with the recovery, but it might not always be the case
-when customer is happy with recovery, the customer has a higher satisfaction level
Boundaries
-service recovery paradox tends to hold only for single failure with satisfactory recovery - after tour stability attribution changes, if there are two or three service failures the customer will think the company consistently does something wrong (satisfaction decreases below pre-failure levels)
-if the service recovery wasn’t successful, you have a double deviation affect - deviation on effect from the service failure and again deviation from the unsuccessful service recovery (satisfaction level is even lower than it was prior to the service failure)

Question 21

Customer inoculation

Answer 21

Strengthening customer satisfaction against change by presenting weak or refuted counter arguments
-active service recovery strategy
By exposing customers to a minor counter argue to satisfaction, you strengthen it by protecting it from future stacks by more stronger counter arguments
-assumption: people are motivated to elaborate on their attitude
-model to strengthen service failure (works proactively before the service failure)
Supportive: mild threat + supporting arguments
Refutational: mild threat + refuting threat + supporting arguments
E.g. customers will receive in email 7 days before
-supportive less effective in stabilising satisfaction than refutational
-customer inoculation equips managers with alternative (proactive) strategy to mitigate negative consequences of service failures in customer satisfaction
-easy to implement and cost effective
-used when companies are not responsible for thee seer revive failure
-not harmful to cubist time satisfaction in situations of no subsequent attacks - inoculation always involves discounting certain attributes off a service
-effectiveness f customer inoculation depends on customers service involvement (message should be tailored)
-inoculation cannot completely impede change in satisfaction (inoculation should be complemented with more traditional reactive service recovery strategies)