Marketing Services Winning with Quality By Arun Kottolli.
Post on 30-Mar-2015
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Marketing ServicesWinning with Quality
By Arun Kottolli
Service Industry
• A guest at Holiday Inn Hotel
• You traveling on a plane
• A credit card customer calling to enquire his balance
• A fortune 10 company building a new IT system
• All these are the examples of various types of services and repeat business depends on the customer satisfaction
Traditional Marketing
• Traditional Marketing emphasized on:– Product, Price, Place & Promotion – 4P’s– A product based marketing strategy
• Marketing of Services emphasize in:– Segmentation, Targeting, Positioning and
Quality – STPQ– Effective services marketing is a strong
service concept delivered well, a desired service performed excellently.
Services Marketing
• Synergy of Strategy and Execution– CNN, FedEx, Domino’s Pizza, EDS, Infosys
• The big idea alone or strategy alone offers only a temporary advantage– Pioneers often see competitors imitate their
strategy– Superior execution is vital to sustaining
success– Quality of service is not easy to copy, unlike
the idea
Quality - A differentiator
• When the end service or products are similar, performance becomes the core product– Customers pay for performance– Quality earns customer’s confidence– Reinforces branding, advertising, selling and
pricing– Quality of service determines brand value
• Quality is the foundation for services marketing
Nature & Roles of Services Marketing
Word of MouthCommunication
Post-Sale Marketing
Con
sum
ptio
n
Production
Pre-Sale Marketing
Create Awareness
Induce Trail
Demonstrate Benefits
Build Brand Preference
Nature of Services Marketing
• Services are consumed as it is produced• Services marketing has limited influence on
customers prior to purchase than goods– Need to experience intangible service to know it
– Experience influences Post-Sale marketing
– Experience influences word-of-mouth communication
• Services marketers can create brand awareness & induce trial
• Experience of benefits builds brand preference and brand value
Nature of Services Marketing
• Services marketing is also done by service providing personnel – How they conduct themselves with customers– What they say, What they don’t say– How they behave, How they act– Overall appearance
• All these influences customer satisfaction and customer retention
• Delivering excellent quality service is the key!!
An Integrative Framework
Turning Marketing intoA Line Function
Identifying the right services
Doing the serviceRight the first time
Doing the serviceRight every time
Managing & Exceeding Customer
Expectations
Marketing toNew customers
Managing Experience Branding the firm
Marketing toExisting Customers
Marketing toEmployees
Maximize market
Potential
Delivering Quality Service
Building aMarketing
Organization
Doing it Right
• Service reliability – performing the service dependably and accurately – is the heart of services marketing excellence– We want pilots to be dependable– Surgeon to know their stuff
• Reliability is of paramount importance to service customers
• Doing it right the First Time sets off customer relations on good footing
Dimensions of Customer Satisfaction
• Reliability: Ability to perform as promised
• Tangibles: Appearance of physical facilities, equipment, personnel, & communications material
• Responsiveness: Willingness to help customers and provide prompt service
• Assurance: Ability to convey trust and confidence
• Empathy: Caring, individualized attention to customers
Foundation for Services Marketing Excellence
ServiceReliability
ServiceMarketing Excellence
QualityService
Benefits of Service Reliability
Improved Service Reliability
HIGHER PROFITS
Higher Retention of current Customers
Positive word of mouth marketing
Opportunity for charging Premium Prices
Reduced cost of redoing service
Higher Employee Morale &Enthusiasm
Lower EmployeeTurnover
Improved Marketing Effectiveness & higher
Sales Revenue
Increased Productivity and
Lower Costs
Delivering Reliable Service
• Building a “Zero Defects” culture is critical in services
• Performing service right the first time requires a greater immediacy & discipline than manufacturing
• Services are less concrete and more subjective – making real time delivery of defect less service difficult
• Leadership will be tested and needed
Service Leadership
• Believe that 100% reliability is feasible and worthwhile goal
• Frequently and effectively communicate their belief company wide
• Reward error-free service
• Empower frontline employees
• Never content with status quo and strive for continuous improvement
Three Pillars of service Reliability
ServiceLeadership
ServiceReliability
Through ServiceTesting
Infrastructure forError-free
Service
Action Checklist for Mangers
• Do we believe in 100% reliability is a worthwhile goal?
• Do we understand the challenges of delivering 100% reliability?
• Do we demonstrate our commitment to service reliability to all our employees?
• Do we rigorously test new services prior to introduction?
• Do we continuously reevaluate our service after introduction?
• Are we doing enough to keep employees motivated for 100% reliability
• Do we encourage, facilities & require teamwork and communication across all units
Service Recovery
• Even the best service company can’t avoid snafus
• Mistakes are a critical part of every service especially when services are performed in customer’s presence
• Inevitability of service errors motivates firm to improve service reliability
• Service recovery is critical for a quality based services firm
Resolve Problems Effectively
• Prepare employees for Recovery– Communication skills– Creativity– Competence– Understanding Customer’s Expectations
• Empower Employees
• Facilitate Employees
• Reward Employees for service recovery
Make Amends for Hassle Factor
• Service problem is at best an inconvenience to customer, at worst it can be a major problem
• Customer incurs some cost even when the problem is resolved
• Make amends for customer’s hassle – A suggestion box– On-the-spot mitigations ( a reward or gift)– Try to exceed customer’s expectations
Learn from Service Recovery
• Conduct Root-Cause Analysis– To prevent recurrent problems or defects from
reaching the customer– Blame systems & not people
• Modify Service-Process Monitoring– Monitoring service process is a strategy for proactive
identification of service problems
• Set up problem Tracking System– Nature of customer problem– An ongoing system to capture information pertaining
to service recovery– Nature of problem, Actions taken in response
Service Recovery & Customer
• Even companies with excellent reputation will experience service failures
• A strong recovery effort can restore customer confidence & gain customer loyalty
• Yet, Many firms respond reluctantly which often reinforces customers’ negative feelings
• Customers are more emotionally involved & more attentive observers of recovery service than routine service
• Service recovery excellence with a reputation for service reliability is a powerful, profitable strategy for gaining & retaining customers
Managing and Exceeding Customers’ Expectations
• Customers’ expectations play a pivotal role in judging a company’s service
• Firms earn reputation for quality service by surpassing customer expectations
• Customers are the sole judges of service quality
• Customer expectations has two parts:– What customers want to occur?– What customers believe will occur?
Structure of Customers Expectations
• Two Levels of Expectations– A Desired Level: What a customer hopes to
receive.– An Adequate Level: What the customer
believes “can be” or “should be”
• A zone of tolerance separates the desired level and what is deemed adequate
• Performance level above the tolerance zone will surprise customers & increase loyalty
Two Levels of Expectations
Desired Level of Service
Zone of
Tolerance
Adequate Service
Zone of Tolerance
• Consider a bank customer who wishes to cash a check in 3 minutes ( desired level)
• In the past, customers have waited for up to 10 minutes ( adequate level)
• The range between 3 minutes to 10 minutes is Range of Tolerance
• Service time below3 minutes will thrill customers
• Service time above 10 minutes will annoy customers
Changes in Expectation Levels
• Customers’ expectation levels are dynamic & fluctuate in response to a variety of factors
• Desired level of service tends to change more slowly and in smaller amounts
• Adequate service level appears to move readily up and down – into zone to tolerance
Changing Expectation Levels
Exp
ecta
tion
Leve
ls
Desired Service
Desired Service
Adequate Service
Adequate Service
Tolerance Zone
Tolerance Zone
Outcome Dimension
ProcessDimension
Influencing Expectation Levels
• Factors that influence customers’ expectation levels:– Enduring Service Intensifiers
– Personal Needs
– Transitory Service Intensifiers
– Perceived Service Alternatives
– Self-perceived Service Role
– Explicit Service Promises
– Implicit Service Promises
– Past Experiences
– Word of Mouth Communications
Establishing Customer Franchise
Ensure PromisesReflect Reality
Establish Customer Franchise
Communicate With Customers
Capitalize onService Recovery
Place a premiumOn Reliability
Excel inService Delivery
ManageExpectations
ExceedExpectations
Expectation levels & Service Recovery
OutcomeDimension
Exp
ecta
tion
Leve
ls
ProcessDimension
OutcomeDimension
ProcessDimension
First Time Service Recovery Service
DesiredService
DesiredService
DesiredService Desired
Service
AdequateService
AdequateService
AdequateService
AdequateService
= Zone of Tolerance
Establish Customer Franchise
• There is a gap between customer perceptions and customer expectations
• Two potential service gaps must be assessed:– Gap between perceived & adequate service -
called Measure of Service Adequacy(MSA)– Gap between perceived & desired service –
called Measure of Service superiority (MSS)
• MSA & MSS score will determine a firm’s competitive position from a service standpoint
MSS, MSA &Competitive Status Customer
Perceptions/Expectation levels
MSSMSA Competitive Status
Customer Franchise
CompetitiveAdvantage
CompetitiveDisadvantage
MSS = Negative
MSA = Positive
MSA = Positive
MSS = Positive
MSS = Negative
MSA = Negative
Adequate Service
Perceived Service
Perceived Service
Perceived Service
Desired Service
Competitive Advantage
• Companies must perform above the adequate service level to gain competitive advantage
• This however is a temporary advantage• Customers’ adequate service levels will
raise rapidly when competitors deliver higher level of service
• Companies performing in the region of competitive advantage can ill-afford complacency
Customer Franchise
• Develop true customer franchise i.e,. Unwavering customer loyalty by:
• Exceeding the desired service level
• Exceptional service will build strong customer loyalty
• Constantly monitor customer expectations
• Understand factors driving customer expectations
• Continuously strive for service superiority
Manager’s Action Checklist
• Do we strive to present a realistic picture of our service to customers?
• Is performing the service right the first time a top priority in our company?
• Do we communicate effectively with customers?• Do we surprise customers during the service
process?• Do our employees regard service problems as
opportunities to impress customers?• Do we continuously evaluate & improve our
performance against customers’ expectations?
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