Transcript
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G U J K I N G
Marketing Service
Organisations
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Overview
Defining services
Understanding the services economy
The service sector in Australia
Mega-trends and the service sector: Professional services
Characteristics of services
Marketing implications
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Gujking Assessment
Service Watch individual assignment: 4 September
Report (1,000) words & presentation (10 mins)
Group Case Study assignment: 30 October
Written summary (500 words) & presentation (40 mins)
Service Encounter assignment: 17 November
Report (2,500) plus attachments
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Defining services?
Any act, performance or experience that one partycan offer another; one that is essentially intangible,and does not result in the ownership of anything. Itsproduction may or may not be tied to a physicalproduct
Lovelock (2004)
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Other service concepts
Service industries and companies: Classified within the service sector whose core product is
service
Service as products: Represent the wide range of intangible product offerings that
customers value and pay for. Sold by service and non-servicecompanies
Customer Service: Service provided in support of companys core products
(typically not charged for)
Hidden services: Another way of thinking about products and services
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The dominance of tangible versus intangibleelements in goods and services
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The Services sector in Australia
Distribution services: Wholesale and retail trade, transport and storage and
communications
Social services:
Health and community services, education and governmentadministration and defence
Producer services: Property and business services, finance and insurance
Personal services:
Accommodation, cafes and restaurants, personal and otherservices, cultural and recreational services
Utilities and construction services: Electricity, gas and water, and construction
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The service sector in Australia Services dominate economic growth in Australia
Account for more than three quarters ofeconomys output
4 out of every 5 jobs are in the services sector Services also provide essential inputs, eg
communications and transport, into nearlyeverything Australia produces
ITR (2001) Industry Brief Services Sector
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Australias service sector
Accounts for 76% of GDP
Property and business services is largest serviceindustry (14% of economys output)
Retail trade is the biggest service employer (15% ofeconomys jobs)
Travel services was the sectors biggest export earner(10%+ of economys exports)
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Australias service sector
Service sector output grew at a trend annual rate of3.6% over period 1975 2001
Communications was the fastest growing service
industry (8.4%) Property and business services exhibited the highest
employment growth (5.8%)
Access Economics (2001b)
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Australias service sector: the future
Service output is expected to grow over next 5 10years at similar rates
Highest growth industries: communications,property & business services, finance & insurance,transport and storage
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Factors responsible for the transformation ofthe service economy
Business trends (e.g. Relaxation ofprofessional association standards, Marketing
emphasis by non profit organisations,Outsourcing of non-core services, Services qualitymovement, Franchising and service chains)
Advances in technology(Convergence ofcomputers and telecommunications,Miniaturisation, Digitalisation, Enhanced software)
M t t P
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Mega-tren s mpact ng on Pro ess onaServices Firms
Client sophistication
Governance
Connectivity
Transparency Modularisation
Globalisation
Commoditisation
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Characteristics of ServicesCompared to Goods
Intangibility
Perishability
SimultaneousProduction
andConsumption
Heterogeneity
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Implications of Intangibility
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed orcommunicated
Pricing is difficult
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Implications of Heterogeneity
Service delivery and customer satisfaction depend onemployee and customer actions
Service quality depends on many uncontrollablefactors
There is no sure knowledge that the service delivered
matches what was planned and promoted
li i f Si l d i d
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Implications of Simultaneous Production andConsumption
Customers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
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Implications of Perishability
It is difficult to synchronize supply and demand withservices
Services cannot be returned or resold
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Challenges for Services
Defining and improving quality Designing and testing new services
Communicating and maintaining a consistentimage
Accommodating fluctuating demand
Ensuring the delivery of consistent quality
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Challenges for Services (cont.)
Motivating and sustaining employee commitment
Coordinating marketing, operations, and humanresource efforts
Setting prices Finding a balance between standardization versus
personalization
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Further challenges for services managers
Differentiation and competitive advantage may bedifficult to achieve
Marketing orientation is still relatively new to manymanagers
Operations management, rather than marketing,continues to dominate
Customer service management and marketing is oftenin the hands of lower paid subordinates, possibly in
multiple locations Limited data on competitive performance is available
Problems in determining costs for pricing purposes
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Traditional Marketing Mix
All elements within the control of the firm thatcommunicate the firms capabilities and image tocustomers or that influence customer satisfaction
with the firms product and services:
Product
Price
Place
Promotion
E d d Mi f S i
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Expanded Mix for Services --The 7 Ps
PeopleAll human actors who play a part in service delivery and thus
influence the buyers perceptions: namely, the firms personnel, thecustomer, and other customers in the service environment.
Physical Evidence The environment in which the service is delivered and where the
firm and customer interact, and any tangible components thatfacilitate performance or communication of the service.
Process The actual procedures, mechanisms, and flow of activities by which
the service is deliveredthe service delivery and operating systems.
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An expanded marketing mix for services
Customers PricePlace &Time
Promotion
Product(Service)People
Process
PhysicalEvidence
Customers PricecustomersPlace,Cyber-space& Time
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Table 1.3
Expanded Marketing Mix for Services
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Ways to Use the 7 Ps
Overall StrategicAssessment
How effective is a firmsservices marketing mix?
Is the mix well-alignedwith overall vision andstrategy?
What are the strengths
and weaknesses in termsof the 7 Ps?
Specific ServiceImplementation
Who is the customer?
What is the service?
How effectively does theservices marketing mix fora service communicate itsbenefits and quality?
What changes/improvements areneeded?
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Internal
marketing
Traditional
marketing
Organisation
Employees Customers
Satisfaction; Quality;Brand Loyalty
Relationshipmanagement
A framework for analysing servicesmarketing
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Managing the 7Ps Requires Collaboration betweenMarketing, Operations, and HR Functions (Fig. 1.14)
Customers
OperationsManagement MarketingManagement
Human ResourcesManagement
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Models of service quality
The evolution of
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The evolution ofservice quality
Disconfirmation of expectations
The Nordic model
The Gaps model of service quality & SERVQUAL The three component model
Integrating perspectives
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Disconfirmation of expectations (Oliver 1980)
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The Nordic model(Gronroos 1990)
Represents the service experience on the basis offunctional and technical elements
Technical quality refers to what the customer receivesfrom the service
Functional quality refers to service delivery
Model emphasises companies must be careful whatthey promise
The SERVQUAL dimensions
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The SERVQUAL dimensions Perceived Service Quality
(Parasuraman, Zeithaml & Berry 1988)
Reliability(dependability, accurate performance)
Assurance (competence, courtesy, credibility & security) Tangibles (appearance of physical elements)
Empathy(easy access, good communications & customerunderstanding)
Responsiveness (promptness & helpfulness)
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SERVQUAL
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SERVQUAL (cont.)
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The Gaps model of service quality(Zeithaml,Parasuraman & Berry 1990)
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The three-component model Rust & Oliver(1994)
Source:Rust & Oliver, 1994. p. 11
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Hierarchical model
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Model Advantages Disadvantages
Disconfirmationof expectations Takes into consideration expectations as wellas actual perceptions The use of expectations in measuring servicequality has currently come under a lot of
criticism in the literature
Nordic model
(Gronroos) Focuses on the service outcome and process,that is, what the customer receives from theservice and how the service is delivered
Does not explicitly consider the impact of the
physical environment of the service setting on
service quality perceptions. Uses the
disconfirmation of expectations model as a
basis
Servqual/Gaps Identifies a number of areas important toservice quality assessment. Has been widely
used in the literature and in practice
Uses gap scores as derived from the
disconfirmation of expectations model. Does
not have an outcome orientation does not
measure service outcome perceptions
Three-
component
modelExtends Gronroos model to include the physical
environment. Has received increasing support
in the literature
Some three-component models are still based
on disconfirmation. Not well tested in the
literature.
Integrated
model
Looks at service quality in a new light. Provides
a more sensitive analysis by looking at the
different tiers of service quality dimensions
Has not been well tested in the literature as it is
a new model. Needs more research to test its
usefulness
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