Services marketing Flashcards
What are the most important service characteristics as well as the internal and external marketing implications?
- Heterogeneity INTERNAL: - Technical and personal input interdependencies EXTERNAL: - Uncertainty service quality
Intangibility INTERNAL: - No valid ouput measures - Role ambiguity / role conflict EXTERNAL: - Increased risk perception
Inseperarability INTERNAL: - Managing client-organizational interface - Increased functional interdependencies EXTERNAL: - Visibility of production - Customer participation
- Perishability (bederfelijkheid) INTERNAL: - capacity management EXTERNAL: - waiting lines / reservating systems
What different types of services expectations exist?
Demonstrate with examples.
- Ideal Expectations or desires
- Normative ‘should’ expectations
- Experienced based norms
- Acceptable expectations
- Minimum tolerable expectations
Example of a restaurant:
- Everyone thinks the restaurant is something really special
- “As expensive as this restaurant is, it should have excellent food and service”
- “Most of the times the restaurant is good, but when it gets busy the service is slow.”
- I expect that the people are polite
- “I expect terrible service from this restaurant but come because the price is low”
On what way could an airline company manage capacity?
Give an example and explain.
- By shifting demand to match capacity
- Communicate busy days and times to customers
- Modify timing and location of service delivery
- Offer incentives for non-peak usage
- Set priorities by taking care of loyal or high-need usage
- Charge full price for the service - no discount
- By shifting capcity to match demand
- Hire more people
- Request overtime work
- subcontract or outsource activities
- Rent or share facilities and equipment
- Revenue management
The process of allocating the right type of capacity to the right kind of customer at the right time at the right price so as to maximize revenue or yield (ex. Train their managers worldwide for providing the right service at the right customer at the right time)
What variables influence expectations patterns within a services context?
Clear distinguish between the different expectations levels that exist for services!
Expectation levels: - desired service Uncontrollable * lasting service intensifiers * Derived service expectations (afgeleid) * Personal service philosophy * Personal needs
- zone of tolerance
Controllable- explicit service promises (communication)
- Implicit service promises (price, tangibles
- word of mouth
- past experience
- adequate service Uncontrollable * Temporary service intensifiers * Perceived alternatives * Self-perceived service role (waargenomen) * Situational factors (* Predicted service)
Discuss the so-called service triangle in services marketing.
What different types of marketing exist? Who are the actors?
Triangle:
Company - Customer - Employees
Company-Employees: Internal marketing
- vertical communications
- horizontal communications
Customer - Emplyees: Interactive marketing
- Personal selling
- Customer service centre
- Service encounters
- Servicescapes
Company - Customers: External marketing
- communications
- advertising
- sales promotion
- public relations
- direct marketing
- websites
- mobile apps
Internal marketing was really launched by services marketing because we know that employees need to experience quality (be satisfied, happy with their job) in their work to be able to have external marketing success. We will emphasize this in the relationship between company and employee.
Provide a couple of characteristics of effective advertising in the case of services.
Services advertising strategies matched with properties of intagibility
- Physical representation: Show physical components of service that are unique, indicate high quality, and create the right association
- System documentation: objectively document physical system capacity by showing facts and figures
- Performance documentation: document and cite past positive performance statistics
- Service performance episode: present a vivid story of an actual service delivery incident that relates to the important service, evoking particular incidents
- Service consumption episode: Capture and display typical customers benefiting from the service, evoking particular incidents
- Performance documentation: Cite independently audited performance
- Consumption documentation: Obtain and present customer testimonials
- Service process episode: Present a vivid decumentary on the step-by-step service process
- Case history episode: Present an actual case history of what the firm did for a specific client
Describe the Service Dominant Logic perspective for services.
Link this to the value-in-use creation model and explain
The service dominant logic explains that value creation doesn’t take place at the time of exchange of the offer, but when the consumer is using it. It is the active participation of the customer and producer that cocreates value. This is also what the value-in-use creation model emphasizes. It is in the interaction joint sphere that co-creation takes place between producer and customer.
Another example: think about a race bike, it’s not the bike itself as product that is valuable since the bike is just the carrier of value for the client. The value creation takes place when the client can use the bike and ‘interact’ with the bike. When it can
use services attached to the bike by the producer (breakdown services). During this interaction process value is really created.
Discuss the 3 problems suggested by Grönroos on the disconfirmation paradigm (i.e., measuring comparisons between expectations and experiences for service quality)
Criticism on servqual
- Timing measurement expectation: Many companies measure expectations after experience, you measured something influenced. Grönroos wants to say that you are not really measuring expectations but somthing that was impacted/influenced by experience.
- Impact experiences on expectations ex-post: In restaurants you are not really paying attention to the music, when they measure your expectations it is not a factor for you that is part of your criteria. But when you go to a restaurant with a nice live band, you can take the factor into account, experiences have impact on expectations.
- Impact previous expectations on current expectations: If the expectations are measured and then experiences, your experience is based on prior expectations. You are measuring expectations twice since the two are related.
Explain the 3 basic marketing price structures and challenges for services
- Cost based princing
- Costs are difficult to trace
- Labour is more difficult to price than materials
- Costs may not equal the value that customers perceive the services are worth
- Competition-based pricing
- Small firms may charge too little to be viable
- Heterogeneity of service limits comparability
- Prices may not reflect customer value
- Demand-based pricing
- Monetary price must be adjusted to reflect the value of non-monetary costs
- Information on service costs is less available to customers; hence, price may not be a central factor
Elaborate on the traditional marketing mix for services. What marketing instrument deserve attention and what are the extra marketing mix elements that are added in the case of services?
Traditional:
- Product (service) : innovation and quality management
- Price : quality indicator and demand, cost or competitive pricing
- Promotion : personal selling (compensate for lack of tangible elements) & WOM (because of risk perception & lack of trust)
- Place: decentralization of service production & networks
Extended marketing mix:
SERVUCATION: service production
- Participants; contact personnel & clients
- Physical evidence / environment: material environment
- Process: sequential procedures / steps (one of the biggest differences with products)
How do satisfaction and service quality relate to one another? How do they finally relate to profitability and what are their major antecedents?
The quality-satisfaction link: this framework explains the three factors that impact customer satisfaction. The factors are service quality, product quality and price. Besides these 3 controllable factors there are also situational factors and personal factors that play a role in customer satisfaction. Once your customers are satisfied, you try to keep them that way and you try to create loyal customers.The ultimate goal is to have loyal customers = holy grail. They are much more profitable (more WOM & less price sensitive).
In what way can a company like Thomas Cook apply capacity planning? Provide examples and explain.
- By shifting demand to match capacity
- Communicate busy days and times to customers
- Modify timing and location of service delivery
- Offer incentives for non-peak usage
- Set priorities by taking care of loyal or high-need usage
- Charge full price for the service - no discount
- By shifting capcity to match demand
- Hire more people
- Request overtime work
- subcontract or outsource activities
- Rent or share facilities and equipment
- Revenue management
The process of allocating the right type of capacity to the right kind of customer at the right time at the right price so as to maximize revenue or yield (ex. Train their managers worldwide for providing the right service at the right customer at the right time)
Explain the GAP-model of Zeithaml et. al. (1985) and specify the main determinants that cause these gaps.
This model positions the key concepts, strategies and decisions in services marketing. The main gap is the customer gap (sometimes known as GAP 5). This is the difference between what customers expect and perceive.
GAP 1: Knowledge/listening gap: not knowing what customers expect. It’s the gap between customer expectations and company perceptions of customer expectations
- Inadequate marketing research orientation
- Inadequate use of marketing research
- Insufficient relationship focus
GAP 2: Service design and standards gap - not selecting the right service quality designs and standards. Gap between customer-driven service designs and standards and company perceptions of customer expectations
- Poor service design
- Absence of customer-driven standards
- Inappropriate physical evidence and servicecsape (servicescape includes: appearance, equipment, signage and layout of a service outlet
GAP 3: Delivery/ performance gap - not delivering to service designs and standards. Gap between service delivery and customer-driven service designs and standards
- Deficiencies in human resource policies
- Customers who do not fulfil roles
- Problems with service intermediaries (franchising)
- Failure to match supply and demand (capacity management)
- Inadequate service recovery
GAP 4: Not matching performance to promise. Service gap between service delivery and external communications to customers
- Lack of integrated marketing communications
- Ineffictive management of customers expectations
- Over promising
- Inadequate horizontal communications
What is “The critical incident technique”? Under what circumstances or for what type of problems can this method be used the best?
A qualitative interview procedure in which customers are asked to provide verbatim stories about satisfying and dissatisfying service encounters they have experienced.
The goal: understanding actual events and behaviors that cause customer dis/satisfaction in service encounters
Data: stories from customers and employees
Output: identification of themes underlying satisfaction and dissatisfaction with service encounters
- It is useful when the topic or service is new and very little other information exists. You then identify customer requirements as input for quantitative studies.
- The method is well-suited for assessing perceptions of customers from different cultures because it allows respondents to share their perceptions rather than answer researcher-defined questions
How can loyalty be measured within a service context?
Loyality is measured by:
- the intention to repurchase
- positive WOM
- sensitivity to price: more loyality, less price sensitive
(- postpurchase evaluation)
(- customer databases and big data: information on relationship length, value, profitability)
Dicuss the framework of the service profit chain and its integrating elements. What is the main philosofy underlying this framework?
The service profit chain is one of the first frameworks that linked internal and external marketing environment.
Chain: Internal service quality –> employee satisfaction –> employee retention + employee productivity –> external service value –> customer satisfaction –> customer loyalty –> profitability
The Service profit chain is a management philosophy which enhances:
- internal service quality (equipping employees with the skills and power to serve customers)
- raising employee satisfaction,
- which fuels employee loyalty and productivity
- and boosts external service value
- which then increases customer satisfaction and loyalty.
The Service profit chain attempts to examine the impact of employee attributes on business performance
What type of strategy does a company like “Ryanair” apply? Explain in terms of “blueprinting-dimensions”.
When making the blueprint of Ryanair there will be less interactions between customers and front and back office personal, but more with online apps/reservation tools/Backoffice systems & technologies (also explains the
reduced complexity and possible divergence and hence the lower cost for Ryanair). Just also look at the 2 blueprinting examples we showed in class (compare hotel with DHL) – DHL is also the type of blueprint with less complexity in terms of the number of interactions in comparison to hotels.
Blueprinting is a tool for simultaneously depicting the service process, the point of customer contact, and the evidence of service from the customer’s point of view.
What are the main service quality dimensions indicated for e-services?
Core dimensions customers use to assess the quality of a website
- Efficiency: the ability of customers to get to the website, find products and information
- Fulfilment: the accuracy of service promises, having products in stock, and delivering as promised
- Reliability: the technical functioning of the site, the extent to which it is available and functioning properly
- Privacy: the assurance that shopping behaviour data are not shared and that the information is secure
Discuss the different stages of the consumer decision process. What are the typical criteria that play an important role within a services context?
- Need recognition: Maslow’s hierarchy of needs (physiological, safety, love/belonging, esteem, self-actualization)
- Information search: research has shown that customers tent to trust WOM and personal sources more
- Evaluation of alternatives: Assume as a customer that you assess as much info as possible, a third step then is evaluating the alternatives (evoked set). Normally this evoked set is smaller in services since they are more unique (with internet this fades).
- Purchase and consumption: It’s all about customer experience
- moods and emotions
- service provision
- service roles and scripts
- compatibility of service customers
- customer co-production - Postpurchase evaluation
- Attribution of satisfaction: who is to blame, thanks to whom am I satisfied?
- WOM: general perceived risk and tangiblility make WOM very important
- Brand loyality: When brand loyality is created, it is much stronger and prominent compared to products
TYPICAL CRITERIA The role of culture in service - Language - Values and attitudes - Manners and customs - Material culture - Aesthetics - Group decision making
Explain the concept of revenue management. Under what circumstances is it appropriate to implement revenue management? Provide an example.
Definition: The process of allocating the right type of capacity to the right kind of customer at the right time at the right price so as to maximize revenue or yield.
Example: Hyatt Hotels: Train their managers worldwide for providing the right service at the right customer at the right time.
It is most profitable where:
- relatively fixed capacity
- perishable inventory (you cannot stock the demand)
- different market segements/customers, who arrive/make their reservations at different times
- Low marginal sales costs and high marginal capacity change costs
- product is sold in advance
- Fluctuating demand
- customers who arrive/reserve early are more price sensitive than those who arrive late
