final exam marketing

Servicescape / atmospherics / service setting

"The environment in which the service is delivered and where the firm and the customer interact, and any tangible commodities that facilitate performance or communication of the service." Physical facility= servicescape

Benefits of guarantees

- A good guarantee forces the company to focus on its customers. - An effective guarantee sets clear standards for the organization - A good guarantee generates immediate and relevant feedback from customers. - When the guarantee is invoked there is an instant opportunity to recover - Information generated through the guarantee can be tracked and integrated into continuous improvement efforts. - A service guarantee reduces customers' sense of risk and builds confidence in the organization

Relationship development strategies - switching strategies and costs ... very important

- Core service provision: Service foundations built upon delivery of excellent service: Satisfaction, perceived service quality, perceived value Switching barriers: Customer inertia Switching costs: Set up costs, search costs, learning costs, contractual costs Relationship bonds Financial bonds Social bonds Customization bonds Structural bonds Switching costs: 1. Learning costs are those costs associated with learning the idiosyncrasies of how to use a product or service; in many situations, a customer who wishes to switch firms may need to accumulate new user skills or customer know-how. 2. Contractual costs arise when the customer is required to pay a penalty to switch providers (e.g., prepayment charges for customer-initiated switching of mortgage companies or mobile telephone services), making it financially difficult, if not impossible, for the customer to initiate an early termination of the relationship. 3. Set-up costs....

Importance of Internal Marketing communications in services.

- Create effective vertical communications - Create effective horizontal communication - Sell the brand inside the company - Create effective upward communication - Align back-office and support personnel with external customers through interaction or measurement - Create cross-functional teams

Difference in service industry and professional services

- Professional Services: (lawyers, physicians, accountants, engineers, and architects) - Service Industry: (airlines, banking, telecommunications, trucking)

Importance of the service industry to the US economy and other sectors that make up the economy:

- Service marketing and strategies have developed in response to the tremendous growth of service industries, resulting in their increased importance to the US and world economies. - The service sector represents more than about 80% of the total employment and about 81% of gross domestic product in the US. - The service industry has grown the number of jobs available and jobs formations faster than any industry. - Another indicator of the importance of services is that trade in services is growing worldwide. The US is ranked #1 in the sales of services abroad.

Critical Incident study

- The critical incident technique (CIT), is a qualitative interview procedure in which customers are asked to provide verbatim stories about satisfying and dissatisfying service encounters they have experienced. - CIT has been used to study satisfaction in hotels, restaurants, airlines, amusement parks, automotive repair, retailing, banking, cable television, public transportation, and education. - With this technique, customers (either internal or external) are asked the following questions: 1. Think of a time when, as a customer, you had a particularly satisfying (or dissatisfying) interaction. 2. When did the incident happen? 3. What specific circumstances led up to this situation? 4. Exactly what did the employee (or firm member) say or do? 5. What resulted that made you feel the interaction was satisfying (or dissatisfying)? 6. What could or should have been done differently?

How do we deal with customer expectations?

-Make realistic promises -Offer services guarantees -Offer choices -Create tiered value service offerings -Communicate the criteria and levels of service effectiveness

Broad Categories of Service Promises to Delivery (14.2) NOTE - Under each category, there are SEVERAL INDIVIDUAL Components. Be familiar with them. Good "Which of the following is NOT a concern with Service Intangibility?" type questions, What does "leverage social media" mean?

1. Address service intangibility -Advertising and other communication strategies that clearly communicate service attributes and benefits to consumers -Strategies designed to encourage word-of-mouth communication 2. Use narrative to demonstrate the service experience -Many services are experiential, and a uniquely effective approach to communicating them involves story-based appeals 3. Present vivid information -Effective survival marketing communication creates a strong or clear impression and produces a distinct mental picture. 4. Use interactive imagery -Integrates two or more items in some mutual action, resulting in improved recall. 5. Focus on the tangibles -Another way that advertisements can increase the effectiveness of service communications is to feature the tangibles associated with the service such as showing a bank's marble columns or gold card. Showing the tangibles provides clues about the nature and quality of the service. 6. Use brand icons to make the services tangibles -How does an advertiser of services gain in competitive differentiation and strong brand awareness in a highly competitive market? In fast-food and insurance industries, one answer is to create a recognizable brand icon that represents the company and generates brand visibility. 7. Use association, physical representation, documentation, and visualization -Association means linking the service to a tangible person, place, or object. Physical representation means showing tangibles that are directly or indirectly part of the service, such as employees, buildings, or equipment. Documentation means featuring objective data and factual information. Visualization is a vivid mental picture of a service's benefits or qualities, such as showing people on vacation having fun. Our Strategy Insight shows how marketing communication icons can be used as tangibles. 8. Feature service employees in communication -Customer contact personnel are tangible representations of the service and are an important second audience for service advertising.11 Featuring actual employees doing their jobs or explaining their services in advertising is effective for both the primary audience (customers) and the secondary audience (employees) because it communicates to employees that they are important. 9. Use buzz, or viral, marketing - Buzz marketing, also called viral marketing, involves the use of real consumers to spread the word about products without (or without the appearance of) being paid by the company. Sometimes buzz marketing occurs simply because customers are avid fans of the service, and sometimes the company seeds customers with services or products. 10. Leverage social media -Social media—interactive communication among customers on the Internet through such sites as Twitter, YouTube, and Facebook—are becoming avenues for consumers to exchange information. 11. Aim messages to influencers -Improved technologies are now allowing companies to identify online influencers—those individuals with more connections than others and therefore more ability to influence others about services. Both researchers and research companies are developing technologies similar to the BuzzMetric approach described earlier that can identify those people in a viral community who are most critical to receive brand messages. 12. Create advertising that generates talk because it is humorous, compelling, or unique - Humorous advertisements are memorable and vivid. Over the years, GEICO has developed many of the most humorous service commercials. Many of the ads focus on the brand's gecko, but other campaigns are humorous in different ways. A current campaign emphasizes different content points, each with settings and characters that are funny. 13. Feature satisfied customers in the communication -Advertising testimonials featuring actual service customers simulate personal communications between people and are thereby a credible way to communicate the benefits of service. 14. Generate word of mouth through employee relationships - Research shows that customer satisfaction with a service experience alone is not sufficient to stimulate word-of-mouth activity. However, when customers gain trust in a specific employee, positive word of mouth results.

3 broad pricing polices for services (same that was taught in MKTG 300 - cost-based, del based competition-based

1. Cost-based pricing - Special challenges in cost-based pricing for services - Examples of cost-based pricing strategies used in services -- Cost-plus pricing is a commonly used approach in which component costs are calculated and a markup added. -- Fee for service is the pricing strategy used by professionals; it represents the cost of the time involved in providing the service. 2. Competition-based pricing - Special challenges in competition-based pricing for services - Examples of competition-based pricing in service industries 3. Demand-based pricing - Special challenges in demand-based pricing for services - Four meanings of perceived value

Key issues with respect to service promises?

1. Create a strong service brand -a presented brand is the part of the brand image that the company controls and disseminates through all personal and impersonal channels. -These messages lead to brand awareness, the customer's recall and recognition of the brand. The higher and more positive the brand awareness, the stronger the brand image and the more differentiation—or brand equity—the service company has. -Customer experience with the company—the actual interactions with company employees and other firm manifestations—is another element that shapes the brand and is likely to be more powerful than any marketing messages. -First, non controllable external brand communications involve information—such as word-of-mouth communication and publicity—that the company does not have in its power. 2. Coordinate external communication -Advertising is any paid form of nonpersonal presentation and promotion of a company's offerings by an identified sponsor. -Sales promotion includes short-term incentives such as coupons, premiums, discounts, and other activities that stimulate customer purchases and stretch media spending. -Public relations includes activities that build a favorable company image with a firm's publics through publicity, relations with the news media, and community events. -Direct marketing includes the use of mail, telephone, fax, e-mail, and other tools to communicate directly with specific consumers to obtain a direct response. -Personal selling is a face-to-face presentation by a representative from the firm to make sales and build customer relationships.

3 Key ways prices are different for customers - be familiar with what falls under each Non Monetary costs (one of the 3 keys above)

1. Customers often have inaccurate or limited reference prices for services - Service variability limits knowledge - Individual customer needs vary - Collection of price information is overwhelming in services - Prices are not visible 2. Monetary price is not the only price relevant to service customers - Time costs - Search costs - Convenience costs - Psychological costs - Reducing non-monetary costs 3. Price is a key signal of quality in services -One of the intriguing aspects of pricing is that buyers are likely to use price as an indicator of both service costs and service quality—price is at once an attraction variable and a repellent

Four combinations of capacity and demand.

1. Excess demand. The level of demand exceeds maximum capacity. In this situation some customers will be turned away, resulting in lost business opportunities. For the customers who do receive the service, its quality may not match what was promised because of crowding or overtaxing of staff and facilities. 2. Demand exceeds optimum capacity. No one is being turned away, but the quality of service may still suffer because of overuse, crowding, or staff being pushed beyond their abilities to deliver consistent quality. 3. Demand and supply are balanced at the level of optimal capacity. Staff and facilities are occupied at an ideal level. No one is overworked, facilities can be maintained, and customers are receiving quality service without undesirable delays. 4. Excess capacity. Demand is below optimal capacity. Productive resources in the form of labor, equipment, and facilities are underutilized, resulting in low productivity and lower profits. Customers may receive excellent quality on an individual level because they have the full use of the facilities, no waiting, and complete attention from the staff. If, however, service quality depends on the presence of other customers, customers may be disappointed or may worry that they have chosen an inferior service provider.

four factors that influence Desired (and predicted service). Why is past experience most difficult for service providers?

1. Explicit services promises- are personal and nonpersonal statements about the service made by the organization to customers. - The statements are personal when they are communicated by the firm's salespeople or service personnel; they are nonpersonal when they come from the company's web pages, advertising, brochures, and other written publications. 2. 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. 3. Word-of-mouth communication- in shaping expectations of service is well documented. These statements made by parties other than the organization—such as those found on social networking websites—convey to customers what the service will be like and influence both predicted and desired service. - Word-of-mouth communication carries particular weight as an information source because it is perceived as unbiased. - Word-of-mouth communication tends to be very important in services that are difficult for customers to evaluate before purchase and before having direct experience of them. 4. *Past experience- the customer's previous exposure to service that is relevant to the focal service, is another force in shaping predictions and desires. For example, you probably compare each stay in a particular hotel with all previous stays in that hotel. But past experience with the focal hotel is likely to be a very limited view of your past experience. You may also compare each stay with your experiences in other hotels and hotel chains. Customers also compare across industries: hospital patients, for example, compare hospital stays against the standard of hotel visits. Past experience may incorporate previous experience with the focal service provider, typical performance of similar service offerings, and experience with the last service purchased

Provider Gaps of Performance, Communication and Service/Standards are "internal / within the company" and therefore are within the "power" of the company to address more easily. Be familiar with the Key factors in each gap

1. Gap 1- the listening gap (more listed above) -Not knowing what customers expect 2. Gap 2- the service design and standards gap -Not having the right service designs and standards -the difference between company understanding of customer expectations and the development of customer-driven service designs and standards. Customer-driven standards are different from the conventional performance standards that companies establish for service in that they are based on pivotal customer requirements that are visible to and measured by customers. 3. Gap 3- the service performance gap -Not delivering to service standards -is the discrepancy between the development of customer-driven service standards and actual service performance by company employees. Even when guidelines exist for performing services well and treating customers correctly, high-quality service performance is not a certainty. 4. Gap 4- the communication gap -Not matching performance to promises - illustrates the difference between service delivery and the service provider's external communications. Promises made by a service company through its media advertising, sales force, and other communications may raise customer expectations, the standards against which customers assess service quality.

Characteristics of services. What are they and what do they mean?

1. Intangibility—They can not be seen, felt, tasted, or touched under the same manner that you can sense tangible goods Services cannot be inventoried Services cannot be easily patented Services cannot be readily displayed or communicated Pricing is difficult 2. Perishability—the fact that the service cannot be saved, stored, resold, or returned It is difficult to synchronize supply and demand with services Services cannot be returned or resold Services for any given time-period cannot be sold or delivered at a later date 3. Inseparability—the service cannot be separated from the service provider Example: the knowledge offered by Dr. Field cannot be the exact same as the knowledge gained from Maught even though they are both qualified their services are totally different in the way they are delivered 4. Heterogeneity—no two services will be precisely alike Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted 5. Simultaneous Production/Consumption—many services are sold first and then produced and consumed at the same time Example: getting a haircut—you are consuming the haircut as it is being provided to you Makeup artist—you are consuming the work of the makeup artist as she is producing the work of her service Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

Different demand patterns. Important as some can be "planned for" and "adjustments" made

1. Predictable cycles- For example, in the restaurant industry, especially in seasonal tourist locations, demand can vary predictably by month, by week, by day, and by hour. 2. Random demand fluctuations- Sometimes the patterns of demand appear to be random—there is no apparent predictable cycle. Yet even in this case, causes can often be identified. For example, day-to-day changes in the weather may affect the use of recreational, shopping, or entertainment facilities. 3. Demand patterns by market segment- An organization that has detailed records on customer transactions may be able to disaggregate demand by market segment, revealing patterns within patterns. Or the analysis may reveal that demand from one segment is predictable, whereas demand from another segment is relatively random. For example, for a bank, the visits from its commercial accounts may occur daily at a predictable time, whereas personal account holders may visit the bank at seemingly random intervals.

5 dimensions of service quality

1. Reliability: ability to perform the promised service dependably and accurately. reliability means that the company delivers on its promises—-promises about delivery, service provision, problem resolution, and pricing. Customers want to do business with companies that keep their promises, particularly their promises about the service outcomes and core service attributes. 2. Responsiveness: willingness to help customers and provide prompt service. This dimension emphasizes attentiveness and promptness in dealing with customer requests, questions, complaints, and problems. Responsiveness is communicated to customers by the length of time they have to wait for assistance, answers to questions, or attention to problems. 3. Assurance: employees' knowledge and courtesy and their ability to inspire trust and confidence. This dimension is likely to be particularly important for services that customers perceive as high risk or for services of which they feel uncertain about their ability to evaluate outcomes—for example, banking, insurance, brokerage, medical, and legal services. 4. Empathy: caring, individualized attention given to customers. The essence of empathy is conveying, through personalized service, that customers are unique and special and that their needs are understood. Customers want to feel understood by and important to firms that provide service to them 5. Tangibles: appearance of physical facilities, equipment, personnel, and communication materials. Tangibles provide physical representations or images of the service that customers, particularly new customers, will use to evaluate quality. Service industries that emphasize tangibles in their strategies include services in which the customer visits the establishment to receive the service, such as restaurants and hotels, retail stores, and entertainment companies.

Search, experience, and credence qualities

1. Search qualities- attributes that a customer can determine before purchasing a product Search qualities include color, style, price, fit, feel, hardness, and smell Products high in search qualities are the easiest to evaluate 2. experience qualities- attributes that can be discerned only after purchase or during consumption. experience qualities include taste, wearability, and comfort Products high in experience qualities are more difficult to evaluate because they must be purchased and consumed before assessment is possible 3. credence qualities- includes characteristics that the consumer may find impossible to evaluate even after purchase and consumption. Credence qualities are appendix operations, brake relinings on a car, and computer software updates. Products high in credence qualities are the most difficult to evaluate because the customer may be unaware of or may lack sufficient knowledge to appraise whether the offerings satisfy given wants or needs even after usage and/or consumption

PERCEIVED VALUE - 4 consumer provided definitions.

1. Value is low price - Some consumers equate value with low price, indicating that what they have to give up in terms of money is most salient in their perceptions of value, as typified in these representative comments from customers: -- For dry cleaning: "value means the lowest price." -- For carpet steam cleaning: "Value is price-which one is on sale." -- For a fast-food restaurant: "When i can use coupons, I feel that the service is value." -- For airline travel: "value is when airline tickets are discounted." 2. Value is whatever i want in a product or service - Rather than focusing on the money given up, some consumers emphasize the benefits they receive from a service or product as the most important component of value. In this value definition, price is far less important than the quality or features that match what the consumer wants. -- For an MBA degree: "Value is the very best education I can get." -- For a medical services: "value is high quality." -- For a social club: "Value is what makes me look good to my friends and family." -- For a rock or country music concert: "Value is the best performance" -- For a hotel room for a honeymoon: "Value is a luxurious room with a hot tub." 3. Value is the quality I get for the price I pay - Other consumers see value as a trade-off between the money they give up and the quality they receive. -- For a hotel for vacations: "Value is price first and quality second." -- For a hotel for business travel: " Value is the lowest price for a quality brand." --For a computer services contract: "value is the same as quality. No- value is affordable quality." 4. Value is what i get for what i give finally - Some consumers consider all the benefits they receive as well as all sacrifice components (money, time, effort) when describing value. -- For a housekeeping service: "Value is how many rooms i can get cleaned for what the price is." -- For a hairstylist: "value is what i pay in cost and time for the look I get." -- For executive education: "Value is getting a good educational experience in the shortest time possible."

what impacts customer expectations?

1. What does a service marketer do if customer expectations are "unrealistic"? Start by asking expectations At minimum, address the expectations of customers and express that you will put effort towards meeting those expectations 2. Should a company try to delight the customer? Delight seems like a good idea, but can lead to extra effort and extra costs 3. How does a company exceed customers' service expectations? Develop a good customer relationship Deliberately under promise Position unusual service as unique rather than the standard 4. Do customers' service expectations continually escalate? Adequate expectations can vary and are very dynamic Desired expectations tend to stay stable 5. How does a service company stay ahead of competition in meeting customer expectations? Use service quality for competitive advantage Consider how they present their promises to the customer compared to the competitor

Blueprints & reasons for them

A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer's point of view. Blueprints are particularly useful at the design stage of service development. A service blueprint visually displays the service by simultaneously depicting the process of service delivery, the points of customer contact, the roles of customers and employees, and the visible elements of the service. It provides a way to break a service down into its logical components and to depict the steps or tasks in the process, the means by which the tasks are executed, and the evidence of service as the customer experiences it.

Environmental components of the servicescape

Ambient conditions: affect the 5 senses, but may be imperceptible or affect us subconsciously. Temperature, lighting, noise, music, scent, color Spatial layout and functionality: size, shape, and arrangement of machinery, equipment, and furnishings and the ability of such to facilitate customer and employee goals. Accessibility, aesthetics, seating comfort Signs, symbols, artifacts: explicit or implicit communication of meaning; often culturally embedded; important in forming first impressions way -finding, labels, rules of behavior, creating aesthetic impression

benefits of relationship marketing to company, customers

Benefits for customers -Receipt of greater value -Confidence benefits: Trust, confidence in provider, and reduced anxiety -Social benefits: Familiarity, social support, and personal relationships -Special treatment benefits: Special deals and Price breaks Benefits for firms: -Economic benefits: Increased revenues, Reduced marketing, and administrative costs, Regular revenue stream -Customer behavior benefits: Strong word-of-mouth endorsements, Customer voluntary performance, Social benefits to other customers, Mentors to other customers -Human resource management: Easier jobs for employees, Social benefits for employees, Employee retention

Internal components / responses to servicescapes

Cognition: environment can affect beliefs about a place and the people and products found in that place Emotion: color, decor, music, scent affect mood pleasure/ displeasure Degree of arousal Physiology: volume, temperature, air quality, lighting can cause physical discomfort and even pain Ergonomics Personally differences Arousal seekers vs. arousal avoiders Environmental screeners Purpose for being in the service scape business/pleasure utilitarian/ hedonistic Temporary mood state

Mystery shoppers

Companies hire outside research organizations to send people into service establishments and experience the service as if they were customers. These mystery shoppers are trained in the criteria important to customers of the establishment. They deliver objective assessments about service performance by completing questionnaires about service standards or, in other cases, open-ended questions that have a qualitative feel to them.

Customer gap- most difficult to address it is "within the customer" Listening gap (also provider gap)- between the company and consumer

Customer Gap- is the difference between customer expectations and perceptions. -Customer expectations are standards or reference points that customers bring into the service experience, whereas customer perceptions are subjective assessments of actual service experiences. -Customer expectations often consist of what a customer believes should or will happen. Example- when you visit an expensive restaurant, you expect a high level of service, one that is considerably superior to the level you would expect in a fast-food restaurant. Closing the gap between what customers expect and what they perceive is critical to delivering quality service; it forms the basis for the gaps model. (Gap 1) The Listening Gap- is the difference between customer expectations of service and company understanding of those expectations. -The primary reason that many firms do not meet customers' expectations is that the firms lack an accurate understanding of exactly what those expectations are.

Market-oriented ethnography customer panels

Customer panels are groups of customers assembled to provide attitudes and perceptions about a service over time. They offer the company regular and timely customer information—virtually a pulse on the market. Firms can use customer panels to represent large segments of end-customers. Customer panels are used in the entertainment industry to screen movies before they are released to the public.

Customer-contact service employees are important because of 4 critical roles they play.

Customer-contact service employees are important because of 4 critical roles they play. 1. They are service 2. They are the organization in the customer's eyes 3. They are the brand 4. They are marketers 5. Their importance is evident in: -The services marketing mix (people) -The services triangle -The service-profit chain

"evolution of customer relationship" types

Customers as strangers Strangers are those customers who have not yet had any transactions with a firm and may not even be aware of the firm. The firm's primary goal with these potential customers ("strangers") is to initiate communication with them to attract them and acquire their business. Customers as acquaintances Once customer awareness and trial are achieved, familiarity is established and the customer and the firm become acquaintances, creating the basis for an exchange relationship. A primary goal for the firm at this stage of the relationship is satisfying the customer. Customers as friends As a customer continues to make purchases from a firm and to receive value in the exchange relationship, the firm begins to acquire specific knowledge of the customer's needs, allowing it to create an offering that directly addresses the customer's situation. A primary goal for firms at the friendship stage of the relationship is customer retention. Customers as partners As a customer continues to interact with a firm, the level of trust often deepens and the customer may receive more customized product offerings and interactions. At the partnership stage, the firm is concerned with enhancing the relationship. Customers are more likely to stay in the relationship if they feel that the company understands their changing needs and is willing to invest in the relationship by constantly improving and evolving its product and service mix.

Various roles that customers have in the service.

Customers can be contribute to: 1. Their own satisfaction with the service -By performing their role effectively -By working with the service provider 2. The quality of the service they receive -By asking questions -By taking responsibility for their own satisfaction -By complaining when there is a service failure. Customers as Competitors 1. Customers may "compete" with the service provider 2. "Internal exchange" vs. "external exchange" 3. internal /external decision often based on: -Expertise capacity -Resource capacity -Time capacity -Economic rewards -Psychic rewards -Trust -Control

Customers are "Cocreators" or "Coproducers" of the service. What do we mean by this?

Customers create service value for themselves through active involvement and customization and they enjoy value-in-use of the service over time through their own continued engagement and actions.

Service employees are "the face" of the business.

Demonstrate the importance of creating a service culture in which providing excellent service to both internal and external customers is a way of life. Illustrate the pivotal role of service employees in creating customer satisfaction and service quality. Identify the challenges inherent in boundary-spanning roles. Provide examples of strategies for creating customer-oriented service delivery through hiring the right people, developing employees to deliver service quality, providing needed support systems, and retaining the best employees.

expanded mix for services

Elements on organization controls that can be used to satisfy or communicate with customers: Product Physical good features, quality level, accessories, packaging, warranties, product lines, branding, product-support services Price Flexibility, price level, terms, differentiation, discounts, allowances Place Channel types, exposure, intermediaries, outlet locations, transportation, storage, managing channels Promotion Promotion blend, salespeople, selection, training, incentives, sales promotion, publicity, internet/web strategy 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. Employees: recruiting, training, motivation, rewards, teamwork, rewards. Customers: education, training 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. Facility design Equipment Signage Employee dress Web pages Other tangibles Process The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems. Flow of activities Number of steps Customer involvement

Purpose and benefits of Upward Communication. Where does upward communication come from?

Executive visits to customers- to gain firsthand knowledge about customers Executive listening to customers- to gain firsthand knowledge about customers Research on intermediate customers- to gain in-depth information on end customers Employee internal satisfaction surveys- to improve internal service quality Employee visits or listening- to gain firsthand knowledge about employees Employee suggestions- to obtain ideas for services improvements Benefits: - Upward communication of this sort provides information to upper-level managers about activities and performances throughout the organization. - Specific types of communication that may be relevant are formal (such as reports of problems and exceptions in service delivery) and informal (like discussions between contact personnel and upper-level managers). - Managers who stay close to their contact people benefit not only by keeping their employees happy but also by learning more about their customers. - These companies encourage, appreciate, and reward upward communication from contact people. - Through this important channel, management learns about customer expectations from employees in regular contact with customers and can thereby reduce the size of provider gap 1.

Components in the service culture and how it is created.

Exhibiting Service Leadership -A strong service culture begins with leaders in the organization who demonstrate a passion for service excellence. Developing a Service Culture -A service culture cannot be developed overnight, and there is no easy way to sustain a service culture. Transporting a Service Culture -Transporting a service culture through international business expansion is also very challenging. Attempting to "export" a corporate culture to another country creates additional issues.

Internal / external exchange and key components (p 362).

Expertise capacity. The likelihood of producing the service internally is increased if the household or firm possesses the specific skills and knowledge needed to produce it. Having the expertise will not necessarily result in internal service production, however, because other factors (available resources and time) will also influence the decision. (For firms, making the decision to outsource is often based on recognizing that, although they may have the expertise, someone else can do it better.) Resource capacity. To decide to produce a service internally, the household or firm must have the needed resources, including people, space, money, equipment, and materials. If the resources are not available internally, external exchange is more likely. Time capacity. Time is a critical factor in internal/external exchange decisions. Households and firms with adequate time capacity are more likely to produce services internally than are groups with time constraints. Economic rewards. The economic advantages or disadvantages of a particular exchange decision will be influential in choosing between internal and external options. The actual monetary costs of the two options will sway the decision. Psychic rewards. Rewards of a noneconomic nature have a potentially strong influence on exchange decisions. Psychic rewards include the degree of satisfaction, enjoyment, gratification, or happiness associated with the external or internal exchange. Trust. In this context, trust means the degree of confidence or certainty the household or firm has in the various exchange options. The decision will depend to some extent on the level of self-trust in producing the service versus trust of others. Control. The household or firm's desire for control over the process and outcome of the exchange will also influence the internal/external choice. Entities that desire and can implement a high degree of control over the task are more likely to engage in internal exchange.

Steps in creating a blueprint. BE FAMILIAR. Know First and Last step.

First is the line of interaction, representing direct interactions between the customer and the organization. Anytime a vertical line crosses the horizontal line of interaction, a direct contact between the customer and the organization, or a service encounter, has occurred. The next horizontal line is the critically important line of visibility. This line separates all service activities visible to the customer from those not visible. The third line is the line of internal interaction, which separates customer-contact employee activities from those of other service support activities and people. Vertical lines cutting across the line of internal interaction represent internal service encounters.

Impact of technology on standardization/customization Types of service standards (summarized in figure 9.1)

Hard customer-defined standards Things that can be counted, timed, or observed through audits. Soft customer-defined standards Not all customer priorities can be counted, timed, or observed through audits. As Albert Einstein said, "Not everything that counts can be counted, and not everything that can be counted, counts." For example, "understanding and knowing the customer" is a customer priority that cannot be adequately captured by a standard that counts, times, or observes employees. One-time fixes One-time fixes are technology, policy, or procedure changes that, when instituted, address customer requirements. We further define one-time fixes as company standards that can be met by an outlet (e.g., a franchisee) making a one-time change that does not involve employees and therefore does not require motivation and monitoring to ensure compliance.

types of customer expectations zone of tolerance

Ideal expectations or desires "Everyone says this restaurant is as good as one in France and I want to go somewhere very special for my anniversary." Normative "should" expectations "As expensive as this restaurant is, it ought to have excellent food and service." Experience-based norms "Most times this restaurant is very good, but when it gets busy the service is slow" Acceptable expectations "I expect this restaurant to serve me in an adequate manner." Minimum tolerable expectations "I expect terrible service from the restaurant but come because the price is low" Zone of tolerance- services are heterogeneous in that performance may vary across providers, across employees from the same provider, and even with the same service employee. The extent to which customers recognize and are willing to accept this variation Example- If service drops below adequate service—the minimum level considered acceptable—customers will be frustrated and most likely dissatisfied with the company. If service performance is above the zone of tolerance at the top end—where performance exceeds desired service—customers will be very pleased and probably quite surprised as well.

Factors that create Provider Gap 1

Inadequate customer research orientation - Insufficient customer research - Research not focused on service quality - Inadequate use of market research Lack of upward communication - Lack of interaction between management and customers - Insufficient communication between contact employees and managers - Too many layers between contact personnel and top management Insufficient relationship focus - Lack of market segmentation - Focus on transactions rather than relationships - Focus on new customers rather than relationships customers Inadequate service recovery -Lack of encouragement to listen to customer complaints -Failure to make amends when things go wrong -No appropriate recovery mechanisms in place for service failures

E-S-QUAL- what is it/ why is it important?

Is the extent to which a website facilitates efficient and effective shopping, purchasing, and delivery. The four core dimensions that customers use to judge websites at which they experience no questions or problems are as follows: Efficiency: The ease and speed of accessing and using the site. Fulfillment: The extent to which the site's promises about order delivery and item availability are fulfilled. System availability: The correct technical functioning of the site. Privacy: The degree to which the site is safe and protects customer information. The study also revealed three dimensions that customers use to judge recovery service when they have problems or questions: Responsiveness: The effective handling of problems and returns through the site. Compensation: The degree to which the site compensates customers for problems. Contact: The availability of assistance through telephone or online representatives.

criteria for creating service standards

One outcome of following the process for developing customer-defined standards is a service performance index. Service performance indexes are comprehensive composites of the most critical performance standards. Development of an index begins by identifying the set of customer-defined standards that the company will use to drive behavior.

Type of customer "fairness"

Outcome fairness- outcome (compensation) should match the customer's level of dissatisfaction; equality with what other customers receive; choices Procedural fairness: fairness in terms of policies, rules, timeliness of the complaint process; clarity, speed, no hassles; also choices; "what can we do to compensate you....?" Interactional fairness: politeness, care, honesty on the part of the company and its employees; rude behavior on the part of employees may be due to lack of training and empowerment

what two factors create "adequate service" levels in customers

Perceived Service Alternatives—other providers from whom customer can or perceive they can obtain service -If customers believe they have multiple service providers to choose from, or if they can provide the service themselves, their levels of adequate service are higher than those of customers who believe it is not possible to get better service elsewhere -Service marketers must discover the alternatives that the customer views as comparable rather than those in the company's competitive set Situational Factors— Uncontrollable situational factors: service performance conditions that customers view as beyond the control of the service provider (hurricanes, pandemic) -Customers who recognize that situational factors are not the fault of the service provider may accept lower levels of adequate service -Often temporarily lower the level of adequate service, widening the zone of tolerance -Personal situational factors: short-term, individual factors that make a customer more aware of the need for service -Personal emergency situations in which service is urgently needed raise the level od adequate service expectations, particularly in terms of the level of responsiveness required and considered acceptable Predictive Service: the level of service that customers anticipate they are likely to get

factors that influence customer expectations

Personal needs- are those states or conditions essential to the physical or psychological well-being of the customer and are pivotal factors that shape what customers desire in service. Personal service philosophy- the customer's underlying generic attitude about the meaning of service highest expectations and the proper conduct of service providers. Derived service expectations- which occur when customer expectations are driven by another person or group of people.

Physical Evidence "strategy" or components of the servicescape (recall I asked how you could use this information incorporate it into your concessions stand design).

Recognize the strategic impact of physical evidence -Physical evidence can play a prominent role in determining service quality expectations and perceptions. -For physical evidence strategy to be effective, it must be linked clearly to the organization's overall goals and vision. Blueprint the physical evidence of service -Everyone in the organization should be able to see the service process and the existing elements of physical evidence. An effective way to depict service evidence is through the service blueprint. -The actions involved in service delivery are visible, as are the complexity of the process, the points of human interaction that provide evidence opportunities, and the tangible representations present at each step. To make the blueprint even more useful, photographs or videos of the process can be added to develop a photographic blueprint that provides a vivid picture of physical evidence from the customer's point of view. Clarify strategic roles of the servicescape. -Clarifying the roles played by the servicescape in a particular situation will aid in identifying opportunities and deciding who needs to be consulted in making facility design decisions. -Clarifying the strategic role of the servicescape also forces recognition of the importance of the servicescape in creating customer experiences. Assess and identify physical evidence opportunities -A strategy might then be developed to provide more evidence of service to show customers exactly what they are paying for. -Another set of questions addresses whether the current physical evidence of service suits the needs and preferences of the target market. Update and modernize the evidence -Some aspects of the evidence, particularly the servicescape, require frequent or at least periodic updating and modernizing. -Even if the vision, goals, and objectives of the company do not change, time itself takes a toll on physical evidence, necessitating change and modernization. -Clearly, an element of fashion is involved, and over time different colors, designs, and styles may come to communicate different messages. Work cross-functionally -a service firm is concerned with communicating a desired image, with sending consistent and compatible messages through all forms of evidence, and with providing the type of service evidence the target customers want and can understand.

relationship marketing- why important

Relationship marketing- essentially represents a paradigm shift within marketing-away from an acquisition/transactions focus toward a retention/relationship focus. Relationship marketing is a philosophy of doing business, a strategic orientation, that focuses on keeping and improving relationships with current customers rather than on acquiring new customers. Is usually cheaper (for the firm)- keeping a current customer costs less than attracting a new one The focus is less on attraction, and more on retention and enhancement of customer relationships.

How employees effect the SERVQUAL dimensions

Reliability: delivering the services as promised is often totally within the control of front line employees. Responsiveness: front line employees may exhibit a range of responses in terms of promptness and willingness to help Assurance: highly dependent on employees' ability to communicate their credibility and inspire trust Empathy: implies that employees will pay attention, listen, and adapt to customer's needs.

Determinants of Customer satisfaction. How satisfied are US customers is general?

Satisfaction- is the consumer's fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfillment. Factors: Product and service features Perceptions of product and service quality Price Customer emotions Attributions for service success or failure Perceptions of equity or fairness Other customers, family members, and coworkers

Types of servicescapes Roles in servicescapes

Self-service (customer only) Interpersonal services (both customer and employee) Remote service (employee only) Roles in servicescapes Package -Conveys expectations -Influences perceptions Facilitator -Facilitates the flow of the service delivery process -Provides information (how am i to act?) -Facilitates the ordering process (how does this work?) -Facilitates service delivery Socializer -Facilitates interaction between: -Customers and employees -Customers and fellow customers Differentiator -Sets providers apart from competition in the mind of the consumer.

Impact of technology leading to increased self-service environments and roles SST Ways/strategies to enhance customer participation Impact of technology leading to increased self-service environments and roles.

Self-service technologies (SSTs) are services produced entirely by the customer without any direct involvement or interaction with the firm's employees. As such, SSTs represent the ultimate form of customer participation along a continuum from services produced entirely by the firm to those produced entirely by the customer. Advances in technology, particularly the Internet, have allowed the introduction of a wide range of self-service technologies that occupy the far left end of the customer participation continuum in. These technologies have proliferated as companies see the potential cost savings and efficiencies that can be achieved, potential sales growth, increased customer satisfaction, and competitive advantage. The following is a partial list of some of the self-service technologies available to consumers. Throughout the text we have highlighted some of the most successful self-service technologies in the marketplace: Amazon.com , Cisco Systems, and others. These companies have been successful because they offer clear benefits to customers, the benefits are well understood and appreciated compared to the alternative delivery modes, and the technology is user-friendly and reliable. In addition, customers understand their roles and have the capability to use the technology.

Service failure. Service failures are inevitable. How you recover from it can be the difference in losing a customer or not

Service failure- occurs when service performance falls below a customer's expectations in such a way that leads to customer dissatisfaction. Service recovery-refers to the actions taken by a firm in response to service failure to improve the situation for the customer.

Service / product / customer service - be able to differentiate them:

Service industries and companies: those industries and companies typically classified within the service sector where the core product is a service. Service as a product: represents a wide range of intangible product offerings that customers value and pay for in the marketplace Customer service: the service provided in support of a company's core products Derived service: the value derived from physical goods is really the service provided by the good, not the good itself

Challenges in relationships / why is it so hard to maintain good customer relationships Ending Customer Relationships / FIRING CUSTOMERS

Some segments of customers will not be profitable for the company even if their needs can be met by the services offered. Some examples of this situation are when there are not enough customers in the segment to make it profitable to serve, when the segment cannot afford to pay the cost of the service, and when the projected revenue flows from the segment would not cover the costs incurred to originate and maintain their business. Relationships end in different ways—depending on the type of relationship in place. In some situations, a relationship is established for a certain purpose and/or time period and then dissolves when it has served its purpose or the time frame has elapsed. For example, a house painting service may be engaged with the customer for four days while painting the house exterior, but both parties understand that the end of the relationship is predetermined—the end occurs when the house has been painted and the customer has paid for the service. Sometimes a relationship has a natural ending. "Firing" a customer is the negative effect that these customers can have on employee quality of life and morale. Companies today are making it easier to justify firing customers. Service providers such as uber, lyft, and airbnb, allow drivers and hosts to review and rate customers. If a customer receives low scores or has several complaints from enough people, that customer may not be chosen to receive services, or, even more, no longer be allowed to use the company's website to schedule services.

Standardization vs customization

Standardization- usually implies a non varying sequential process similar to the production of goods. The goal of standardization is for the service firm to produce a consistent service product from one transaction to the next. Customization- usually refers to some level of adaptation or tailoring of the process to the individual customer. The goal of customization for the service firm is to develop a service that meets each customer's individual needs.

Impact of technology on services:

Technology: Is the foundation of many service offerings Provides new ways to deliver service Enables both customer and employees Extends the global reach of services -The internet is a service! -Some outcomes may be negative -examples: Automated voicemail Interactive voice response system Cell phones Automated teller machines Positive outcomes: Universities offer degree programs online, providing access to education for many who would not have it otherwise. amazon/google: offer services previously unheard of and smart phone now offer innumerable services applications that were not even imaginable in the recent past. Negative outcomes: Technology can facilitate a sense of freedom and independence for individuals, but it can also be constraining or restrictive if it is perceived as inflexible. Customer concerns about privacy and confidentiality Technology infusion comes a loss of human contact Payback in technology investments is often uncertain

Service Encounters - what are they and importance of them Types of Service Encounters

The most vivid impression of service occurs in the service encounter when the customer interacts with the service firm. It is the "moment of truth" Any service encounter can potentially be critical in determining customer satisfaction and loyalty. Depending on the context and situation, early, late, and intense encounters are likely to be more important in customer evaluations of the overall service experience. Types of Service Encounters 1. Remote encounters: no direct human contact; automated; the bases for quality evaluations are tangibles and technical processes. 2. Technology-mediated encounters: communication with a real person in real time via talk, text, live chats; the bases for quality evaluations are tone of voice, employee knowledge, and effectiveness/efficiency. 3. Face-to-face encounters: direct personal contact between an employee and a customer; bases for quality are verbal and non-verbal cues, symbols.

lost customer research importance / performance matrix

This type of research involves deliberately seeking customers who have dropped the company's service to inquire about their reasons for leaving. Some lost customer research is similar to exit interviews with employees in that it asks open-ended, in-depth questions to expose the reasons for defection and the particular events that led to dissatisfaction. It is also possible to use more standard surveys on lost customers.

Research objectives for services. Note that all of these are to help maintain and improve customer satisfaction of the service, see what new services could be offered and future expectations of customers.

To discover customer requirements or expectations for service. To monitor and track service performance. To assess overall company performance compared with that of competition. To assess gaps between customer expectations and perceptions. To identify dissatisfied customers, so that service recovery can be attempted. To gauge the effectiveness of changes in service delivery. To appraise the service performance of individuals and teams for evaluation, recognition, and rewards. To determine customer expectations for a new service. To monitor changing customer expectations in an industry. To forecast future expectations of customers. Additional Objectives: Includes both qualitative and quantitative research Includes both expectations and perceptions of customers Balances the cost of the research and the value of the information Includes a statistical validity when necessary Measures priorities or importance of attributes Occurs with appropriate frequency Includes measurement of loyalty, behavioral intentions, or actual behavior.

Types of service innovations

User-centered: services should be experienced and designed through the customers eyes. Cocreative: all stakeholders should be included in the service design process Sequencing: a service should be visualized as a sequence of interrelated actions Evidencing: intangible services should be visualized in terms of physical artifacts Holistic: the entire environment of a service should be considered.

Capacity issues. Note optimal vs maximum and why maximum is not always good.

Using capacity at an optimal level means that resources are fully employed but not overused and that customers are receiving quality service in a timely manner. Maximum capacity, on the other hand, represents the absolute limit of service availability. In the case of a sporting event, optimal and maximum capacity may be the same. Maximum use of capacity may result in excessive waiting by customers, as in a popular restaurant. From the perspective of customer satisfaction, optimal use of the restaurant's capacity will be less than maximum use. In the case of equipment or facilities constraints, the maximum capacity at any given time is obvious.

Yield Management. What is it? Why is it important? What are the challenges and risks? Wait times (remember consumer behavior and the psychology of waiting times)? We have already touched on this topic. My example with a mechanic shop and having my truck ready early (ex2 review session).

What is it? Yield management is a term that has become attached to a variety of methods, some very sophisticated, employed to match demand and supply in capacity-constrained services. Using yield management models, organizations find the best balance at a particular point in time among the prices charged, the segments sold to, and the capacity used. Why is it important? The goal of yield management is to produce the best possible financial return from a limited available capacity. Specifically, yield management—also referred to as revenue management—attempts to allocate the fixed capacity of a service provider (e.g., seats on a flight, rooms in a hotel, rental cars) to match the potential demand in various market segments (e.g., business traveler, tourist) so as to maximize revenue or yield. Challenges and risks of yield management: Yield management programs can significantly improve revenues. However, although yield management may appear to be an ideal solution to the problem of matching supply and demand, it is not without risks. By becoming focused on maximizing financial returns through differential capacity allocation and pricing, an organization may encounter these problems:14 -Loss of competitive focus. Yield management may cause a firm to overfocus on profit maximization and inadvertently neglect aspects of the service that provide long-term competitive success. -Customer alienation. If customers learn that they are paying a higher price for service than someone else, they may perceive the pricing as unfair, particularly if they do not understand the reasons. However, a study done in the restaurant industry found that, when customers were informed of different prices being charged by time of day, week, or table location, they generally felt the practice was fair, particularly if the price difference was framed as a discount for less desirable times rather than a premium for peak times or table locations.15 Customer education is thus essential in an effective yield management program. -Overbooking. Customers can be further alienated if they fall victim (and are not compensated adequately) to the overbooking practices often necessary to make yield management systems work effectively. Research suggests that customers who experience negative consequences of revenue management (i.e., denied service or downgrades), particularly high-value customers, subsequently reduce their number of transactions with the firm.16 -Incompatible incentive and reward systems. Employees may resent yield management systems that do not match incentive structures. For example, many managers are rewarded on the basis of capacity utilization or average rate charged, whereas yield management balances the two factors. -Inappropriate organization of the yield management function. To be most effective with yield management, an organization must have centralized reservations. Although airlines and some large hotel chains and shipping companies do have such centralization, smaller organizations may have decentralized reservations systems and thus find it difficult to operate a yield management system effectively.