Chapter 6

Dedications vAbout the Authors viAbout the Contributors of the Cases xiPreface xxiiiAcknowledgements xxxiii

Part I: Understanding Service Products, 2 Consumers and Markets Chapter 1 Introduction to Services Marketing 4Chapter 2 Consumer Behavior in a Services Context 32Chapter 3 Positioning Services in Competitive Markets 56

Part II: Applying the 4Ps to Services 82Chapter 4 Developing Service Products:

Core and Supplementary Elements 84Chapter 5 Distributing Service hrough Physical and

Electronic Channels 110Chapter 6 Setting Prices and Implementing Revenue Management 134Chapter 7 Promoting Services and Educating Customers 168

Part III: Managing the Customer Interface 196Chapter 8 Designing and Managing Service Processes 198Chapter 9 Balancing Demand Against Productive Capacity 228Chapter 10 Crafting the Service Environment 252Chapter 11 Managing People for Service Advantage 276

Part IV: Implementing Profitable Service Strategies 304Chapter 12 Managing Relationships and Building Loyalty 306Chapter 13 Complaint Handling and Service Recovery 338Chapter 14 Improving Service Quality and Productivity 365Chapter 15 Organizing for Change Management and

Service Leadership 408

Part V: Cases 430

Glossary 541Credits 549Name IndexSubject Index

Brief Contents

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168 Chapter 7 Promoting Services and Educating Customers

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LEARNING OBJECTIVESBy the end of this chapter, students should be able to:

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Discuss the role of marketing communications in services.

Understand the challenges of service communications.

Know the 5 Ws of marketing communications planning.

Describe the variety of marketing communication tools that can be used.

Identify the different sources of communications messages received by the target audience and the different communication tools related to the source of communications.

Understand the role of corporate design in communications.

promoting services and

EDUCATING CUSTOMERS

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Know the 5 Ws of marketing communications planning.

Describe the variety of marketing communication tools that can be used.

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THE WESTIN HOTELS AND RESORTS NEW MULTI-MILLION GLOBAL AD CAMPAIGN HELPS YOU TO EXPERIENCE THE BRAND It was an experiential campaign to make it seem as if people were actually undergoing the experience. Imagine this. After a long tiring day at work, you take that slow walk to the subway station. When you ride on the escalator, you suddenly feel as if you are in the middle of a rushing waterfall. This is because you are looking at the escalator wrap. Somehow, you feel less tired and a little more refreshed. When you step into the train, you are a little lost for a moment and wonder

OPENING VIGNETTE1


Figure 7.1 Spires of the Westin Bonaventure at sunrise, downtown Los Angeles.

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Applying the 4Ps to Services 169

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where you are. The car seems transformed into a sauna. Your mind tries hard to understand what has happened. Since all the seats are taken, you walk further along and instead of the wooden panels of the sauna, you step into a striking blue environment at the next car. Now, you feel as if you are in the Underwater World theme park! Curious, you decide to explore the other cars to see what you would be able to nd. You discover that you can be in the green rainforest, or the white snow covered mountains. It is almost like taking a holiday around the world! After your round the world trip, you decide to take a seat at Iceland. That is when something else catches your attention. When the train moves, you see the effects of a ower slowly bloom as the train passes by some portion of walls along the tunnel. As you journey further, you see waves crashing. By the time you leave the subway, you feel as if you have lived a lifetime of experiences that leave you feeling refreshed even though it is the end of a work day! You have just been through the Westin experience.

Westin Hotel spent $30 million on this campaign, called This is How it Should Feel. The campaign uses a range of traditional and non-traditional media like print, radio, online and multiplatform. There are more than 270 different visuals and 2,754 media placements. The different experiences in the train itself are part of the shuttle wrap. Apart from that, they also used escalator and column wraps. The blooming ower is part of the sub-media, which uses the motion of the train to have the images on the wall of the tunnel move like a giant ipbook. They also used image shifting lenticulars (ads that change as you move) that may change from an emergency exit door to a forest. Outdoors, there were larger-than-life three dimensional billboards spread over ve major cities in the United States. In Boston, for example, there are a few three-dimensional skydivers placed in front of a beautifully printed sky.

This very interesting campaign tells the guests what they will feel at a Westin. It will be a relaxing, renewing and personal experience. Starwood, the parent company, wanted to reposition and rede ne the brands of hotels in its group and embarked on this campaign to reinforce Westins new position as one of personal renewal.

promoting services and

EDUCATING CUSTOMERS

...Th e sleepy routine of

commuters across major

cities in America is given a bit

of pep by the Westin

Experience...

Figure 7.2 Chicagoans are transported to an exotic mountain side while using the escalator in Union Station.

Figure 7.3 Manhattanites explore the depths of the sea while transiting.


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THE ROLE OF MARKETING COMMUNICATIONS

There is a lot of confusion over the scope of marketing communi-cations. Some people still dene this element of the services marketing mix too narrowly. Communications is more than just advertising, public relations and professional salespeople. It is for good reason that we dene the marketing communication element of the 7 Ps as Promotion and Education. Through communication, marketers explain and promote the value proposition that their rm is oering. In the Westin campaign, they use experiential advertising to communicate an experience of renewal. It is a promise of what customers can expect if they stay at the Westin hotels. Marketing communication is very important for a companys success. Without eective communication, potential customers may never learn of a service rms existence. They may not know the oerings available and the value proposition of each of its products (Figure 7.4). Let us look at some specic roles performed by marketing communication.

Position and Differentiate the ServiceCompanies use marketing communications to persuade target customers that their service product oers the best solution to meet their needs, compared to the competing oerings (Figure 7.5). Communication eorts serve not only to attract new users but also to maintain contact with existing customers and build relationships with them. Marketing communications is used to convince target customers about the rms superior performance on determinant attributes (see Chapter 3).

Help Customers to Evaluate Service Offerings and Highlight Differences that MatterEven if customers understand what a service is supposed to do, they may nd it hard to tell the dierence between oerings from dierent suppliers. Companies may use concrete clues to communicate service performance. Examples include the quality of equipment and facilities, or employee qualications and professionalism. Some performance attributes are easier or more appropriate to communicate than others. Airlines do not advertise safety because even the suggestion that things might go wrong makes many passengers nervous. Instead, they approach this ongoing customer concern indirectly by advertising the expertise of their pilots, the newness of their aircraft, and the skills and training of their mechanics.

Figure 7.4 A sales agent for an insurance company explains the available offerings to a prospective client.

Figure 7.5 eBay brightly promotes the sheer value and range of their services.


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Promote the Contribution of Service Personnel and Backstage OperationsHigh quality front line sta and backstage operations can be important di erentiators for services. In high-contact services, front line personnel are the main source of service delivery. Th ey often help to make the service more concrete and personal. Advertising, brochures, and websites can show customers the work that goes on backstage to ensure good service delivery. For example, Starbucks has publicity materials and web pages showing customers what service personnel are doing behind the scenes. Starbucks shows how co ee beans are cultivated, harvested, and produced, highlighting its use of the nest and freshest. Emphasizing the expertise and commitment of employees whom customers normally never meet may increase trust in the organizations competence and commitment to service quality.

Advertising messages set customer expectations, so advertisers must show service personnel in realistic ways. Th ey should also inform employees about the content of new advertising campaigns or brochures that promise speci c attitudes and behavior. If a rms communications show friendly, smiling workers but most of them turn out to be glum or rude in practice, customers will be disappointed.

Add Value through Communication Content Information and consultation are important ways to add value to a product. Potential customers may need information and advice about the kind of services available to them, the place and time of availability and the cost of these services, and the speci c features, functions and service bene ts that come with these services.

Facilitate Customer Involvement in ProductionWhen customers are actively involved in service production, they need training to help them perform well. Th is bene ts the company because it helps to improve productivity. One approach to training customers, recommended by advertising experts, is to show service delivery in action. Video is a good medium where viewers can see the sequence of events. Some dentists show their patients videos of surgical procedures before the surgery takes place so that customers know what to expect.

Marketers often use sales promotions as incentives to encourage customers to make the necessary changes in their behavior. For example, giving price discounts is one way to encourage self-service. Other incentives to change customer behavior include promotions that o er a chance to win a reward.


Stimulate or Dampen Demand to Match Capacity Many live service performances, like a seat at the theater for a performance, or a haircut at Jean-Louis David, Europes largest hairdresser chain, are time-specic and cannot be stored for resale at a later date. Advertising and sales promotions can help to change the timing of customer use. Low demand outside peak periods is a serious problem for service industries with high xed costs, like hotels. One strategy is to run promotions that oer extra value, such as a room upgrade and a free breakfast, to stimulate demand without decreasing price. When demand increases and during peak periods, the number of promotions can be reduced or even eliminated.

CHALLENGES OF SERVICE COMMUNICATIONS

After having discussed the role of market communications, let us explore some of the challenges service rms face. Since services are performances rather than objects, it can be dicult to communicate their benets to customers. This is especially true when the service does not involve any tangible actions to customers, or their possessions.2

Problems of IntangibilityIntangibility creates four problems for marketers: generality, non-searchability, abstractness, and mental impalpability. Table 7.1 presents the implications of each problem and proposes specic communications strategies for dealing with them.

Generality refers to items that make up a class of objects, persons, or events. For the airline industry, we would refer to airline seats, ight attendants, and cabin service. Most consumers of the service know what they are. However, a key task for marketers is to communicate what makes a specic oering distinctly dierent from (and better than) competing oerings.

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Table 7.1 Advertising strategies for overcoming intangibility.

Intangibility ProblemIncorporeal Existence

Advertising StrategyPhysical Representation

DescriptionShow Physical Components of Service

Generality:

For objective claims System documentationPerformance documentation

Objectively document physical system capacityDocument and cite past performance statistics

For subjective claims Service performance episode Present an actual service delivery incident

Non-searchability Consumption documentationReputation documentation

Obtain and present customer testimonialsCite independently audited performance

Abstractness Service consumption episode Capture and display typical customers benefiting from the service

Impalpability Service process episodeCase history episode

Service consumption episode

Present a vivid documentary on the step-by-step service processPresent an actual case history of what the firm did for a specific client An articulate narration or depiction of a customers subjective experience

Banwari Mittal and Julie Baker, Advertising strategies for hospitality services. Cornell Hotel and Restaurant Administration Quarterly, 43 (April 2002): 53. Copyright Cornell University. All rights reserved. Used by permission.

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Non-searchability refers to the fact that intangibles cannot be searched for or inspected before they are purchased. Physical service attributes, such as theappearance of a health club and the type of equipment installed, can be checked in advance. However, the experience of working with the trainers can only be known through experience. And as noted in Chapter 2, credence attributes are those that one must trust, such as a surgeons skill.

Abstractness refers to the lack of one-to-one connection with physical objects. Financial security or investment related matters (Figure 7.6), expert advice such as legal or medical advice are examples of such abstract concepts.

Mental impalpability. Many services are su ciently complex, multi-dimensional, or new such that it is di cult for consumers to understand what the experience of using them will be like and what bene ts will result. An example of such a service would be plastic surgery.

Overcoming the Problems of IntangibilityTangible cues and metaphors can be e ective in overcoming the challenge of intangibility.

Tangible CuesUsing tangible cues is one strategy commonly used in advertising. It is helpful to include information that catches the audiences attention and will produce a strong, clear impression on the senses, especially for services that are complex and highly intangible.3 For example, many business schools feature successful alumni to make the bene ts of its education tangible and communicate what its education could do for prospective students.

Use MetaphorsA metaphor is a symbol representing something else. Some companies have created metaphors to help communicate the bene ts of their service o erings. Insurance companies often use this approach to market their highly intangible products. Th us, Allstate advertises that Youre in Good Hands and Prudential uses the Rock of Gibraltar as a symbol of corporate strength. Professional service rms sometimes use metaphors to communicate their value propositions more dramatically. To bring to life the abstract idea of helping clients achieve high performance, Accenture, an international consulting rm, features the champion golfer, Tiger Woods, in eye-catching situations (Figure 7.7).

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Figure 7.6 Julius Br, a Swiss private bank shows how the intangibility of providing excellent private banking services can be communicated.

Figure 7.7 Tiger Woods spearheads Accentures image of high-performance businesses.


The Merrill Lynch bull has been a steadfast symbol for the investment banks business philosophy, which suggests both the market bull run and a strong commitment towards investment (Figure 7.8).

Reaching the top is the metaphor employed by MasterCard to appeal to the hearts and minds of customers. The indication is that with MasterCard on your side the skys the limit (Figure 7.9).

MARKETING COMMUNICATIONS PLANNING

After having discussed the role of market communications and how to overcome the challenge of intangibility of service oerings, we now turn our discussion to how to plan and design an eective communications strategy. Planning a marketing communications campaign requires a good understanding of the service product. It is also necessary to understand target market segments and to research such factors as:

the dierent media through which they can be reached

their awareness of the product

their attitudes toward it.

Decisions include deciding on the content, structure, and style of the message to be communicated, its manner of presentation, and the media most suited to reaching the intended audience. Additional considerations include: the budget available, time frames for the campaign, and methods of measuring and evaluating performance.

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Figure 7.8 imposing gure on the Brooklyn-Battery Tunnel toll road.

LO 3 Know the 5 Ws of marketing communications planning.

Figure7.9 MasterCard puts no price on scaling the heights.

The Merrill Lynch bull is a


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Th e 5Ws model provides useful checklist for marketing communications planning:

Who is our target audience?

What do we need to communicate and achieve?

How should we communicate this?

Where should we communicate this?

When do the communications need to take place?

We will rst consider the issues of de ning the target audience and specifying communication objectives. Th en we will review the wide variety of communication tools available to service marketers. Issues relating to the location and scheduling of communication activities tend to be situation-speci c, so we will not address them here.

Target AudienceProspects, users, and employees represent three broad target audiences for any services communications strategy.

ProspectsMarketers do not know them. Hence, they need to use traditional communications mix, like media advertising, public relations, and use of purchased address lists.

UsersTh ey can be reached by cost e ective channels, including selling e orts by customer contact personnel, point-of-sale promotions, and other information distributed during service encounters. If the rm has a membership relationship with its customers and a database containing contact information, it can distribute highly targeted information through e-mail, direct mail, or telephone.

EmployeesEmployees serve as a secondary audience for communication campaigns through public media. Advertising can help to shape employees behavior, as employee behavior shown in the ads can serve as a role model and benchmark. Communications can also be directed speci cally at sta . Th ese are part of an internal marketing campaign, using company-speci c channels, and so are not accessible to customers. We will discuss internal marketing in Chapter 11.

Communication ObjectivesAfter we are clear about our target audience, we need to now specify what exactly we want to achieve with this target audience. Marketers need to be clear about their goals, otherwise it will be di cult to formulate speci c communications objectives and select the most appropriate messages and communication tools to achieve them. Communication objectives answer the question of what we need to communicate and achieve. Common educational and promotional objectives for service organizations include:

Create memorable images of companies and their brands.

Build awareness of and interest in an unfamiliar service or brand.

Compare a service favorably with competitors o erings.

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Build preference by communicating the strengths and bene ts of a speci c brand.

Reposition a service relative to competing o erings (see Service Insights 7.1).

Reduce uncertainty and perceived risk by providing useful information and advice.

Provide reassurance, such as by promoting service guarantees.

Encourage trial by o ering promotional incentives.

Familiarize customers with service processes in advance of use.

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SERVICE INSIGHTS 7.1

UPS Repositions itself To Deliver

Founded as a messenger company in the United States in 1907, UPS has become one of the worlds top service brands developing new services and expanding into new markets around the globe. In recent years, the company has had to develop communication strategies to change the perceptions of both current and potential customers. Although recognized as a leader in the ground shipping business, the company wanted wider awareness of its other services like supply chain management, multi-modal transportation, and nancial services. So it started a rebranding and repositioning exercise to make sure that all UPS services were closely identi ed with the UPS name.

Research showed that UPS was strongly associated with the color brown, used for the paintwork on its trucks and the design of its employee uniforms. Th is color also gave UPS an image of being trustworthy and reliable. Seeking to clarify that UPS could do more for customers than just deliver packages, UPS adopted the tag line What Can Brown Do For You? and combined it with a new slogan, Synchronizing the world of commerce.

Th e company understood that changing the perception of a brand had to start with the employees rst. Although it can be di cult to change peoples mindsets about a companys vision, UPS succeeded. Employees accepted the new brand positioning strategy and learned to work with each other across business units. Working together, they were able to serve customers better.

Today, the company operates in more than 200 countries and territories worldwide. In 2007, it served 7.9 million customers daily and had operating revenues of close to $50 billion. UPS has a very strong retail presence, with over 4,500 retail stores, 1,300 mail boxes, 1,000 customer centers, 17,000 authorized outlets and 40,000 drop boxes. Th eir website has an average of 15 million tracking requests daily. Th e UPS jet aircraft eet is the eighth largest in the world.

Vivian Manning-Schaffel. UPS Competes to Deliver, http://www.brandchannel.com/features_effect.asp?pf_id=210, 17 May 2004, accessed on 18 May 2007; http://www.ups.com/content/sg/en/about/facts/worldwide.html, accessed February 2008. Source for picture: http://www.ups.com/content/us/en/about/history/2007.html, accessed February 2008.

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Figure 7.10a The marketing communications mix for services.

Web sites

Manuals

Brochures

Video- audiocassettes

SoftwareCD-ROM

Voice mail

Signage

Interior Decor

Vehicles

Equipment

Stationery

Uniforms

Personal Communications

Selling

Key: * Denotes communications originating from outside the organization

Advertising Sales Promotion

Publicity &Public Relations

InstructionalMaterials

Corporate Design

Customer Service

Training

Telemarketing

Word of mouth

Broadcast

Print

Internet

Outdoor

Direct Mail

Sampling

Coupon

Sign-uprebates

Gifts

Prize promotions

Pressreleases/kits

Pressconferences

Special events

Sponsorship

Trade shows,Exhibitions

Media-initiated coverage

*

LO 4 Describe the variety of marketing communications tools that can be used.

Teach customers how to use a service to their own best advantage.

Stimulate demand in low-demand periods and shift demand during peak periods to low-demand periods.

Recognize and reward valued customers and employees.

THE MARKETING COMMUNICATIONS MIX

After understanding our target audience and our speci c communications objectives, we now need to select a mix of cost e ective communications channels. Th ere are a number of forms of communication referred to collectively as the marketing communications mix. Th ese show us the various ways we can communicate. As shown in Figure 7.10a, the mix includes personal contact, advertising, publicity and public relations, sales promotion, instructional materials, and corporate design.

Communications Sources As shown in Figure 7.10b, the traditional communications mix shown in Figure 7.10a can also be categorized into two main channelsthose that are controlled by the organization, and those that are not. Not all communications messages originate from the service provider. Rather, some messages originate from outside the organization. Furthermore, Figure 7.10b shows that messages from an internal source can be further divided into those transmitted through marketing channels (traditional media and the Internet), and those transmitted through the service rms own service delivery channels. Let us look at the communications mix within each of these originating sources.

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Figure 7.10b Sources of messages received by a target audience.

Front line staffService outletsSelf-Service delivering points

AdvertisingPublic relationsDirect marketingSales promotionsPersonal sellingTrade showsInternet

Word of mouthBlogsMedia coverage

Messages originating within the organization

Messages originating outside the organization

AUDIENCE

Production

Channels

Marketing Channels

Messages Transmitted through Traditional Marketing ChannelsAs shown in Figure 7.10b, service marketers have a wide variety of communication tools that they can use. We briey review the principal elements.

AdvertisingAs the most dominant form of communication in consumer marketing, advertising is often the rst point of contact between service marketers and their customers. Advertising serves to build awareness, inform, persuade, and remind. It plays a vital role in providing factual information about services and educating customers about product features and capabilities.

One of the challenges facing advertisers is how to get their messages noticed. In general, people are tired of ads in all forms. A recent study by Yankelovich Partners, an American marketing-services consultancy rm, found that 65 percent of people feel constantly bombarded by ad messages and that 59 percent feel that ads have very little relevance to them.4 Robert Shaw of Craneld School of Management runs a forum in which large companies try to monitor the marketing payback from advertising. According to Shaw, the results were never terribly good, with less than half of the ads generating a positive return on their investment.5

Adapted from a diagram by Adrian Palmer, Principles of Services Marketing, London: McGraw-Hill, 4th ed., 2005, p. 397.

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LO 5 Identify the different sources of communications messages received by the target audience and the different communication tools related to the source of communications.


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Marketers are trying to be more creative with their advertising to allow their messages to be more e ective. Th ey are now putting advertisements in the video games. Th ese can even be dynamic advertisements if the games consoles are connected to the Internet.6 (Figure 7.11)

Public RelationsPR involves e orts to generate positive interest in an organization and its products. A basic element in public relations strategy is the preparation and distribution of press releases (including photos and/or videos) that feature stories about the company, its products, and its employees. Corporate PR specialists at many service organizations also teach senior managers how to present themselves well at news conferences, or in radio and television interviews. Other widely used PR techniques include recognition and reward programs, getting testimonials from public gures, community involvement and support, fundraising, and obtaining favorable publicity for the organization through special events. Firms can also win wide exposure through sponsorship of sporting events and other high-pro le activities, like the World Cup for soccer.

Unusual activities can present an opportunity to promote a company. FedEx gained a lot of positive publicity when it safely transported two giant pandas from Chengdu, China, to the National Zoo in Washington, DC. Th e pandas ew in specially designed containers aboard a FedEx aircraft renamed FedEx PandaOne. In addition to press releases, the company also featured information about the unusual shipment on a special page in its web site (Figure 7.12).

Direct MarketingTh is category includes tools like e-mails, direct mailers, and telemarketing. Th ese channels allow personalized messages to be sent to highly targeted micro-segments. Tesco is an example of a company that has used direct marketing to great success (see Service Insights 7.2).

Advances in on-demand technologies like e-mail spam lters, TiVo, and podcasting allow consumers to decide how and when they prefer to be reached and by whom. Th is led permission marketing to become more widely used. In the permission marketing model, the goal is to persuade consumers to volunteer their attention. By reaching out only to individuals who have previously expressed interest in receiving a certain type of message, permission marketing enables service rms to build stronger relationships with their customers. E-mail, in combination with websites, can be integrated into a one-to-one permission-based medium.7

Sales PromotionA useful way of looking at sales promotions is as a communication that comes with an incentive. Sales promotions are usually speci c to a time period, price, or customer groupsometimes all three. Typically, the objective is to get customers

Figure 7.12 FedEx donated the use of its extensive global network, granting the logistical resources to move the animals, which were previously housed at the Beijing Zoo and the

Figure 7.11 Avatars crowd in front of Sony BMGs media island. Virtual video game worlds like Second Life lead the new wave of dynamic in-game advertising.

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ZooShanghai .


to make a purchase decision faster or encourage customers to use a speci c service sooner, in greater volume with each purchase, or more frequently. Sales promotions for service rms may take such forms as samples, coupons and other discounts, gifts, and competitions with prizes. Sales promotions need to be used with care because

research shows that customers acquired through sales promotions may have lower repurchase rates and lower life time values. 8

Some years ago, SAS International Hotels devised an interesting sales promotion targeted at older customers. If a hotel had vacant rooms, guests over 65 years of age could get a discount equivalent to their age (e.g. a75-year old could save 75 percent of the normal room price). All went well until a Swedish guest checked into one of the SAS chains hotels in Vienna, announced his age as 102, and asked to be paid 2 percent of the room rate in return for staying the night. Th is request was granted, and the energetic centenarian challenged the general manager to a game of tennisand got that, too. (Th e results of the game, however, were not disclosed!) In this case, a clever promotion led to a humorous, widely reported story that placed the hotel chain in a positive light.

Personal SellingPersonal selling is the interpersonal encounter where e orts are made to educate customers and promote preference for a particular brand or product (Figure 7.13). Many rms, especially those marketing business-to-business services, have dedicated sales forces, or use agents and distributors to do the personal selling e orts on their


Tescos Success With Direct Marketing

Tesco is a UK-based food retailer and the worlds largest online grocery store. Tesco has built on the complex analysis of existing customer data to launch successful products that are unrelated to its core products. For example, before the company launched a credit card, it used detailed analysis of data from its loyalty card. Th is allowed the company to construct pro les of target customers for the service. Within months of the launch, Tesco became one of the UKs leading credit card issuers by volume. Taking advantage of customer intelligence technology, Tesco could build on the strength of

direct marketing by focusing on customers and giving them discounts on things that they buy routinely. Each cardholder gets a letter at the end of each quarter containing vouchers worth1 percent of what they have spent. At the same time, cardholders also get coupons that allow them to have discounts on products in Tescos database. In the last quarter of 2006, the store sent out six million versions of this letter, each o ering slightly di erent discounts, customizing to cardholders purchase patterns and buying preference.

Cover Story: Customer-driven Innovation: The Next Frontier, AT&T : Enterprise Business: Issue 3, 2006. Downloaded from http://www.business.att.com/newsletter.jsp?slotnum=1&rtype=Article&rvalue=nv_customer_driven_innovation, in August 2007

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Figure 7.13 To persuade customers of the superiority of ones brand, body language is also important.

and competitions with prizes. Sales promotions need to be used with care because


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behalf. For services that are bought less often like property, insurance and funeral services, the rms representative may act as a consultant to help buyers make their selections. For industrial and professional rms that sell relatively complex services, customers may have an account manager they can turn to for advice, education and consultation.

However, face-to-face selling to new prospects is expensive. A lower-cost alternative is telemarketing. Telemarketing involves the use of the telephone to reach prospective customers. At the consumer level, there is growing frustration with telemarketing because it is often timed to reach people when they are home in the evening or at weekends (Figure 7.14).

Trade ShowsTrade shows are a popular form of publicity, especially for business-to-business services and include important personal selling opportunities (Figure 7.15). In many industries, shows receive extensive media coverage. Th ey o er business customers an opportunity to learn about the latest o erings from a wide variety of suppliers and are one of the few occasions when large numbers of potential buyers come to the marketer rather than the other way around. A sales representative who usually reaches four to ve potential customers per day may be able to get ve quali ed leads per hour at a show.

Messages transmitted through the InternetMessages transmitted through the Internet can come from the companys own web site, or from advertisements it places on a variety of other sites. Internet advertising has become an important part of the communications mix for most service rms but should be part of an integrated, well-designed communications strategy.9

Companys Web SiteMarketers use the Internet for a variety of communications tasks:

Creating consumer awareness and interest

Providing information and consultation

Allowing two-way communications with customers through e-mail and chat rooms

Encouraging product trial

Allowing customers to place orders

Measuring the e ectiveness of speci c advertising or promotional campaigns.

Innovative companies are continually looking for ways to improve the appeal and usefulness of their sites. Th e appropriate communication content varies widely from one type of service to another. A B2B site may o er visitors access to a

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Figure 7.14 Telemarketers call in the evenings.

Figure 7.15 Trade shows are a good way to showcase a companys offerings.

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library of technical information (e.g. Siebel or SAP both provide quite a lot of information on their customer relationship management solutions at their respective websites at www.siebel.com and www.sap.com.) By contrast, the website for a universitys executive MBA program may include attractive photographs featuring the location, the facilities and past students, and short videos showing the university, its professors and facilities, student testimonials and even the graduation ceremony. (See, for example, the dual degree Executive MBA program oered by UCLA and the National University of Singapore at www.ucla.nus.edu.)

Online AdvertisingThere are two main types of online advertising, namely banner advertising and search engine advertising. In each instance, advertisers can include moving images and create links to more extended video presentations. The use of online advertising as part of an integrated communications strategy can bring success to a rm.

Banner AdvertisingMany rms pay to place advertising banners and buttons on portals like Google, Yahoo or Netscape, as well as on other rms web sites (Figure 7.16). The usual goal is to draw online trac to the advertisers own site. Advertisements are often placed from other websites that oer services that are related but do not compete directly with the rms own services. For example, Yahoos stock quotes page features a sequence of advertisements for various nancial service providers.

Simply obtaining a large number of exposures (eyeballs) to a banner (a thin horizontal ad running across all or part of a web page), a skyscraper (a long skinny ad running vertically down one side of a website), or a button does not necessarily lead to increases in awareness, preference, or sales for the advertiser. As a result, there is now more emphasis on advertising contracts that tie fees to marketing-relevant behavior by these visitors. These include providing the advertiser with some information about themselves or making a purchase. Internet advertisers increasingly pay only if a visitor to the host site clicks through on the link to the advertisers site. This is similar to paying for the delivery of junk mail only to households that read it.

Search Engine AdvertisingSearch engines are a form of a reverse broadcast network. Instead of advertisers broadcasting their messages to consumers, search engines let advertisers know exactly what consumers want through their key word search. Advertisers can then target relevant marketing communications directly at these consumers. Advertisers have several options. They can:

pay for the placement of ads to keyword searches that are related to their rm

sponsor a short text message with a click-through link, located parallel to the search results

buy top rankings in the display of search results through a pay-for-placement option. Pricing for these ads and placements can be based on either number of impressions (i.e., eyeballs) or click-throughs, both of which are achieved by placing sponsored links at the top of search results. One company that built a successful business model around highly targeted Internet advertising is Pinstorm (see Service Insights 7.3).

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Figure 7.16 Web banners function similarly to traditional banners:Turning consumers attention to the product or service and selling a pitch, though service-provider and consumer interaction is more realized with the click through of online advertisement.


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IMoving from Impersonal to Personal CommunicationsCommunication experts divide personal communications, like personal selling, telemarketing, and word of mouth, and impersonal communications, where messages move in only one direction and are generally targeted at a large group of customers and prospects rather than at a single individual. However, technology has created a gray area between personal and impersonal communications. Th ink about the direct mail and e-mail messages that you have received, containing perhaps some reference to your speci c situation or past use of a particular product.


PinstormThe Company that Takes the Advertising World by Storm

In 2005, when it was only 15 months old, Pinstorm was picked as among Asias 100 hottest companies, by Red Herring, a weekly magazine that covers high-tech businesses. Pinstorm is a search engine marketing company based in India. How does a company like Pinstorm allow you to set up a marketing campaign in Google or Yahoo and achieve better results for the same amount of dollars spent?

Th e main income for search engines like Google or Yahoo is through the Sponsored Links. In order for companies to appear on the rst page of a Google search, they have to pay for the keywords that they think their potential customers will search for. However, the price for these keywords is not xed. A company has to outbid other advertisers on phrases that they want to be on. As a result, common search terms are typically expensive.

Pinstorm applies the Long Tail phenomenon to keyword searches. Th is phenomenon is one where search terms that are low in demand or infrequently used can together make up a signi cant share of search terms. Pinstorm has the technology (BroadWords technology) to look for the long tail of low-priced keywords that are relevant to their clients o ering.

Pinstorm has a business model that guarantees results. Clients do not have to pay if there are no results. Results by their de nition could be

measured by visits, unique visitors, online actions, leads or even sales. Hence, the company does everything to make sure that it gets results. Apart from picking e ective words that are low-priced, they also develop e ective online ads for their clients. Th ese are tested again and again during a campaign until they nd one that performs best. Pinstorm tracks millions of searches and understands demand for a particular product category and even geographical region. As a result, they are able to micro-target and micro-market. Th e leads they deliver to their clients are therefore self-selected and of high quality. Clients will be able to know where the leads came from, the time they visited, and the search terms used. All these kinds of information provide the clients with a lot more understanding about their customers.

Among Pinstorms clients are famous companies like eBay, HP, National Geographic, Dell, Qantas, and Swissotel Hotels and Resorts. Th ey also have many clients who are not as well known yet, but Pinstorm hopes that with their help, their clients will become famous.

http://www.pinstorm.com, accessed June 2008; The Long Tail. Wikipedia, http://en.wikipedia.org/wiki/The_Long_Tail, accessed 13 August 2007.

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Another way of personalized communications are electronic recommendation agents that are increasingly used by online retailers. Interactive software, voice recognition technology, and computer-generated voice prompts and responses can be like a two-way conversation. Recommendation agents are virtual salespeople who help customers make their selections from among a large number of o erings. Th is can be done by generating alternative lists ranked based on customers preferences.10 As customers become more technology savvy, more companies are beginning to experiment with web-based agents that move, speak, and even change expression.

With the advances of on-demand technologies, consumers are increasingly empowered to decide how and when they like to be reached. Th is development is transforming marketing communications on radio, television, the Internet and even mobile phones (see Service Insights 7.4).


New Media and Its Implications for Marketing Communications

Technology has created some exciting new communication channels o ering important opportunities for targeting. Among the key developments are TiVo, podcasting and YouTube.

TiVo (also known as Digital Video Recorder (DVR) or Personal Video) TiVo can record programs digitally on its hard disk, very much like a VCR. However, unlike a VCR, TiVo is always on and continuously stores up to some 30 minutes of TV programming. Th is means that TiVo users can pause or rewind live TV. In fact, many users begin watching a TV program after the broadcast has started so that they can fast-forward and skip the commercials. Th is is worrying for advertisers. Interestingly, while customers liked TiVo because it can be commercial free, TiVo is attracting marketers and advertisers as well.

Charles Schwab & Co. became the rst nancial-services company in June 2004 to use TiVos new interactive technology, employing a 30-second spot featuring golfer Phil Mickelson. Th e spot allowed viewers to move from the commercial into a four-minute video to watch three segments hosted by the golf pro. Viewers could also order information on Schwabs golf-rewards program at the same time. Th e e ectiveness of ads can be immediately measured based on viewer responses. Schwab began

testing large billboards and small logos that pop up as an alternative way to generate revenue. When users fast-forward, they will also see a static image ad, which is more suitable than a broken video stream.

Podcasting. Th is term comes from the words iPod and broadcasting. It refers to a group of technologies for distributing audio or video programs over the Internet using a publisher/subscriber model. Podcasting gives broadcast radio or television programs a new method of distribution. Once someone has subscribed to a certain feed, they will automatically receive new episodes that become available. Podcasting is so popular that it has several variations now, including video podcasting for delivery of video clips, mobilecast for downloads onto a cell phone, and blogcast for attachment of an audio or video le to a blog. It is bene cial to include podcasting as part of a rms marketing communications program because once a listener has subscribed to a speci c show, this means the listener is interested in the topic. Hence, podcasts can reach a wide audience of listeners that have a narrow focus, more like narrowcasting than broadcasting. When the advertising message is more targeted, this leads to a higher return on investment for the advertising dollars spent.


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YouTube. YouTube was founded in mid February 2005, and the company was bought over by Google in late 2006. YouTube is a trendy video sharing website where registered users can upload videos, and unregistered users can watch most videos and also post responses to those videos. Already in 2006, some 100 million YouTube video clips were viewed daily, and 65,000 new videos were uploaded every 24 hours. Advertisers were quick to see the advantages of using YouTube as a marketing communications channel.

Th e CEO of Red Hat, Matthew Szulik, used a video called Truth Happens to open a keynote address four years ago. Th at video has been viewed more than 50,000 times on YouTube. Today, the company uses YouTube, blogs and its own magazine as marketing communications tools.

Mobile advertising. Mobile advertising is a form of advertising through cell phones and other mobile wireless devices, but currently mainly targeted at cell phones. Mobile advertising is quite complex as it can involve the Internet, video, text, gaming music and much more. For example, advertisements can come in the form of an SMS, MMS, advertisements in mobile games, or videos or even some music

before a voicemail recording. Th rough mobile advertising and the use of a global positioning system, customers can walk into shopping malls and receive advertisements from those malls where they can activate coupons, or get discounts if they visited a particular store within the mall. What will this mean for the consumer? It might be greater convenience, more targeted advertising, or does it mean the invasion of privacy?

Web 2.0. Web 2.0 technology facilities the rise of user-generated content. Th is uses the power of peer to peer communication. Wikipedia and Flickr are examples of web sites that ride on the technologies o ered by Web 2.0, where content is generated by multiple users and shared. Marketers cannot control what is being said. Th erefore, they need to understand Web 2.0, carefully integrate it into its marketing mix, and sometimes even participate in conversations.

Social networks and communities. Internet-based virtual worlds like Second Life and social networks like Facebook o er communication and learning opportunities for marketers. In Second Life are virtual advertising rms and virtual advertising campaigns in the di erent communities, with business functions just like in the real world. As social networks gain popularity, marketers have begun to use applications to analyze the networks within the communities to enable them to identify those people who may be more in uential in spreading the word about speci c services for example. Marketers who want to take advantage of these rich networks need to remember though, that they are in a community where people would not welcome the intrusion of marketers. Hence, marketers have to come up with creative ways to engage the participants in these networks.

Silverthorne, S.(2004) .TiVo ready to fast forward? HBS Working Knowledge, (November)15; TiVo. http://www.en.wikipedia.org/wiki/TiVo, accessed June 2008; Podcast http://en.wikipedia.org/wiki/Podcast, accessed June 2008; Rumford, R.. (2005) What you dont know about podcasting could hurt your business: How to leverage & bene t from this New Media technology. Podcasting White Paper, The Info Guru LLC, (June); YouTube serves up 1000 million videos a day online. USA Today, Gannett Co. Inc, 16 July 2006; Daniels, C. (2007). Animated Conversation. PRweek, New Your: 25 June, 10 (25): 15; Fichter, D. (2007). Seven strategies for marketing in a Web 2.0 World. Marketing Library Services, 21 no. 2, (Mar/Apr) in http://www.infotoday.com/mls/mar07/Fichter.shtml, accessed June 2008; Jesdanun, A. (2007). Mobile advertising still at tryout stage. USA Today, 29 December, http://new.yahoo.com/s/ap/20071229/ap_on_hi_te/advertising_on_the_go, accessed December 2007; Smith, B. (2008). Mobile advertising reaches for the sky. Wireless Week, 15 August, http://www.wirelessweek.com/Mobile-Advertising.aspx, accessed June 2008; Mobile Advertising http://en.wikipedia.org/wiki/Mobile_advertising, accessed June 2008.

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Messages Transmitted through Service Delivery ChannelsThis category comprises communications developed within the organization and transmitted through the channels that deliver the service itself, mainly front line sta, service outlets, and self-service delivery points.

Customer Service EmployeesEmployees in front line positions may serve customers face-to-face or by telephone. Communication from front line sta takes the form of the core service and a variety of supplementary services, including providing information, taking reservations, receiving payments, and solving problems. New customers, in particular, often rely on customer service personnel for help in learning to use a service eectively and to solve problems. When several dierent products are available from the same supplier, rms encourage their customer service sta to cross-sell additional services, or to upsell to higher value services.

Service OutletsMessages can be communicated in the form of banners, posters, signage, brochures, video screens, and audio. We will discuss in Chapter 10 the physical design of the service outletwhat we call the servicescape11 (Figure 7.17).

Self-service Delivery PointsATMs, vending machines and web sites are all examples of self-service delivery points. Promoting self-service delivery requires clear signage, step-by-step instructions (perhaps through diagrams) on how to operate the equipment, and user-friendly design.

Messages Originating from Outside the OrganizationSome of the most powerful messages about a company and its products come from outside the organization and are not controlled by the marketer. They include word of mouth, blogs and media coverage.

Word of Mouth (WOM)Word of mouth has a powerful inuence on peoples decisions to use (or avoid using) a service. This is because it is viewed as more believable than promotional activities of rms. In fact, the greater the risk that customers perceive in purchasing a service, the more actively they will seek and rely on WOM to guide their decision making.12 In addition, whether or not customers are willing to give positive WOM for a rm is the single most important predictor of top-line growth.13

Since WOM is so powerful, some marketers use a variety of strategies to encourage existing customer to provide positive and persuasive comments.14 These include:

Figure 7.17 The Salentein Winery in Argentina exudes a distinctive servicescape.


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Having satis ed customers providing comments that will encourage WOM.

Using other purchasers and knowledgeable individuals as a reference. For instance: We have done a great job for ABC Corp., and if you wish, feel free to talk to Mr. Cabral, their MIS manager, who oversaw the implementation of our project.).

Creating exciting promotions that get people talking about the great service that the rm provides.

O ering promotions that encourage customers to persuade others to join them in using the service, such as bring two friends, and the third eats for free or subscribe to two mobile service plans, and well waive the monthly subscription fee for all subsequent family members.

Developing referral incentive schemes, such as o ering an existing customer some units of free or discounted service in return for introducing new customers to the rm (Figure 7.18).

In addition to WOM, we also have word of mouse. Viral marketing has spread so fast, that rms cannot ignore it.15 One of the early success stories of viral marketing was the Hotmail free e-mail service. Th e service grew from zero to 12 million users in 18 months on a very small advertising budget, thanks mostly to the inclusion of a promotional message with Hotmails URL in every e-mail sent by its users. eBay and other electronic auction rms rely on users to rate sellers and buyers in order to build trust in the items o ered on their websites.

BlogsA New Type of Online WOM16

Web logs, commonly referred to a blogs, are becoming increasingly popular. Th ey can be best described as online journals, diaries or news listings, where people can post anything, about whatever they like. Th eir authors, known as bloggers, usually focus on narrow topics. Blogs can be about anything, ranging from baseball and sex, to karate and nancial engineering. Th ere are a growing number of travel-oriented sites, ranging from Hotel.chatter.com (focused on boutique hotels), to CruiseDiva.com (reporting on the cruise industry), and pestiside.hu (the daily dish of cosmopolitan Budapest). Some sites, such as the travel-focused Tripadvisor.com, allow users to post their own reviews or ask questions that more experienced travelers may be able to answer.17

Marketers are interested in the way blogs have evolved into a new form of social interaction on the web. Communications include consumers experiences with service rms and their recommendations on avoiding or buying from certain rms. In the exchange of dialog, owners of weblogs add hyperlinks into their weblogs, which allow readers to click on these hyperlinks and access information that they want to share. Th e additional information also in uences opinions of a brand or product. Some service rms have started to monitor blogs, viewing them as a

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Figure 7.18 Word of mouth can be an effective promotional tool.


form of immediate market research and feedback. Some service companies have even started their own blogs, see for example Googles blog at http://googleblog.blogspot.com (Figure 7.19).

Media CoverageA signicant amount of media coverage of rms and their services is done by rms public relations activities which inform the media about the latest news services and exciting company news. Media coverage can also take several other forms. For example, journalists responsible for consumer aairs often contrast and compare service oerings from competing organizations, identifying their strong and weak points, and oering advice on best buys. In a more specialized context, Consumer Reports, the monthly publication of US-based Consumers Union, periodically evaluates services that are oered on

a national basis, including nancial services and telecommunications. Furthermore, investigative reporters may conduct an in-depth study of a company, especially if they believe it is putting customers at risk, cheating them, using deceptive advertising, damaging the environment, or exploiting poor workers in developing countries.

Ethical and Consumer Privacy Issues in CommunicationsWe have been focusing on the various communications tools and channels of communication where customers receive information about the rm. Firms, however, also need to consider the ethical and privacy issues associated with communications. It is very easy to misuse or even abuse advertising, selling, and sales promotion. Since customers often nd it hard to evaluate services, they rely on marketing communication for information and advice. Communication messages often include promises about the benets that customers will receive and the quality of service delivery. When promises are made and then broken, customers are disappointed because their expectations have not been met. Their disappointment and even anger will be even greater if they have wasted money, time, and eort and have no benets to show in return or have actually suered a negative impact.

Some unrealistic service promises result from poor internal communications between operations and marketing personnel concerning the level of service performance that customers can reasonably expect. In other instances, unethical advertisers and salespeople overpromise in order to get sales. Finally, there are promotions that lead people to think that they have a much higher chance of winning prizes or awards than there really is. Fortunately, there are many consumer watchdogs on the lookout for these unethical marketing practices.

Figure 7.19 Google has come on board the social and marketing phenomenon of blogging.


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A di erent type of ethical issue concerns privacy. Th e increase in telemarketing, direct mail and e-mail is frustrating for those who receive unwanted sales communications. How do you feel if your evening meal at home is interrupted by a telephone call from a stranger trying to interest you in buying services in which you have no interest? Even if you are interested, you may feel, as many do, that your privacy has been violated (see Service Insights 7.5). Trade associations like the Direct Marketing Association o er ways for consumers to remove their names from telemarketing and direct mail lists to try to decrease the growing anger towards these types of direct marketing techniques. Governments are coming up anti-spam laws to stop this intrusion into consumers private lives. In the US, Federal Communications Commission regulations do not allow telemarketers to use equipment that automatically dials cell phone numbers to make cold calls.


Consumer Concerns about Online Privacy

Technology advances have made the Internet a very powerful threat to user privacy. Information is being collected on not just people who register and shop, or use e-mail, but also on those who are just sur ng the Internet! Individuals are increasingly fearful of databases and concerned about their online privacy. Hence, they use several ways to protect themselves including.

Providing false information about themselves.

Using technology like anti-spam lters, e-mail shredders, and cookie-busters to hide the identity of their computers from websites.

Refusing to provide information and avoid websites that require personal information to be disclosed.

Such consumer responses will make information collected in CRM systems inaccurate and incomplete, and even drive potential customers away from a rms website. Th e result will be reduced e ectiveness of a rms customer relationship marketing and its e orts to provide customized

service. Th ere are several steps that rms can take to reduce privacy concerns.

Firms should have a good privacy policy in place. Th is privacy policy should be easily noticed on the websites. It should be in a language that is easy to understand, and comprehensive enough to be e ective.

If the information being requested is highly sensitive, the information asked for should be perceived to be related to the transaction. Th erefore, rms should clearly communicate why the information is needed, and how such information will bene t the consumer through more convenience, more customization, and improved o ers.

Firms should have high ethical standards of data protection. Th ey can use third party endorsements like TRUSTe or Better Business Bureau, and have the recognizable privacy seals displayed clearly on their website.

Lwin, M., Wirtz, J. & Williams, J.D. (2007). Consumer online privacy concerns and responses: A power-reponsibility equilibrium perspective. Journal of the Academy of Marketing Science, 35.pp. 572-585; Wirtz, J., Lwin, M., & Williams, J.D. (2007). Causes and consequences of consumer online privacy concern, International Journal of Service Industry Management, 18(4), pp. 326-348.

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THE ROLE OF CORPORATE DESIGN

So far, we have focused on communications media and content, but not much on design. Corporate design is key to ensure a consistent style and message is communicated through all a rms communications mix channels. Have you noticed how some rms stick in your mind because of the colors that they use, their logos, the uniforms worn by their personnel, and the design of their physical facilities? If you were to be asked, you would probably be able to identify the corporate colors of DHL as red and yellow. These colors are on their packages, their uniforms, and their vehicles. If you ask children worldwide to identify the McDonalds Golden Arches, it is unlikely that any of them will get it wrong (Figure 7.20).

Many service rms use one distinctive visual appearance for all their tangible elements. The objective is to help recognition and strengthen a desired brand image. Corporate design strategies are usually created by external consulting rms and cover stationery and promotional literature, retail signage, uniforms, and color schemes for vehicles, equipment, and building interiors. Corporate design is particularly important for companies operating in competitive markets where it is necessary to stand out from the crowd and to be instantly recognizable in dierent locations. Companies can do that in several ways:

Use of colors in corporate designs. If we look at gasoline retailing, we see BPs bright green and yellow service stations, Texacos red, black and white, and Sunocos blue, maroon, and yellow.

Companies in the highly competitive express delivery industry tend to use their names as a central element in their corporate designs. When Federal Express changed its trading name to the more modern FedEx, it also changed its logo to feature the new name in a distinctive logo.

Many companies use a trademarked symbol, rather than a name, as their primary logo, Shell displays a yellow scallop shell on a red background. This has the advantage of making its vehicles and service stations instantly recognizable (Figure 7.21).

Some companies have succeeded in creating tangible, recognizable symbols to connect with their corporate brand names. Animal motifs are common physical symbols for services. Examples include the eagles of the US Postal Service (AeroMexico and Eagle Star Insurance also feature an eagle), the lions of ING Bank and the Royal Bank of Canada, the ram of the investment rm T. Rowe Price, the Chinese dragon of Hong Kongs Dragonair and the kangaroo on Qantas Airlines. Merrill Lynch, the global nancial services company, used its famous slogan, Were Bullish on America as the basis for its corporate symbola bull. Easily recognizable corporate symbols are especially important

when services are oered in markets where the local language is not written in Roman script or where a signicant proportion of the population is are unable to read (Figure 7.22).

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Figure 7.21 The Shell brand is one of the most instantly-recognizable global commercial symbols.

Figure 7.22 Qantas Airlines is living up to its ying kangaroo

billing.

Figure 7.20 The Golden Arches prominently displayed on the exterior of the Times Square McDonalds restaurant.

LO 6 Understand the role of corporate design in communications.

CHAPTER SUMMARY

The role of service marketing communication is to position and differentiate the service, help customers to evaluate service offerings, promote the contribution of service personnel, add value through communication content, facilitate customer involvement in production, and stimulate or dampen demand to match capacity.

The intangibility of services presents challenges for communications. To overcome the problem of intangibility, service marketers can emphasize tangible clues like its facilities, certi cates and awards, or its customers. Another way of doing so is through using metaphors to communicate the value proposition, like Accenture and Julius Br.

After understanding the challenges of service communications, service marketers need to plan and design an effective communications strategy. They can use the 5 Ws model to guide service communications planning. The 5 Ws are:

o Who is our target audience?

o What do we need to communicate and achieve?

o How should we communicate this?

o Where should we communicate this?

o When do the communications need to take place?

After understanding the target audience and knowing the communication objectives, we can use a variety of communication tools and channels for communication. Messages come from a variety of sources and the services communications is discussed within each of these originating sources:

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o Messages from traditional marketing channels. These are advertising, public relations, direct marketing, sales promotions, personal selling and tradeshows. There are also messages transmitted through the Internet using company websites, and online advertising like banner advertising and search engine advertising.

o Messages can also come from within the organization through its service delivery channels like customer servivce employees, service outlets, and self-service delivery points.

o Communicating messages originating from outside the organization include word of mouth, blogs, and media coverage.

o When designing their communication strategy, rms need to bear in mind the ethical and privacy issues in communication.

Besides the communication tools, corporate design can also help rms to achieve a uni ed image in the minds of customers. Good corporate design uses a uni ed and distinctive visual appearance for all tangible elements, including stationery, promotional literature, retail signage, uniforms, vehicles, equipment, and building interiors.

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LO 1

LO 2

LO 3

LO 4

LO 5

LO 6


UNLOCK YOUR LEARNING

1. Marketing communications

2. Promotion and education

3. Abstractness

4. Challenges of service communications

5. Generality

6. Intangibility

7. Non-searchability

8. Mental impalpability

9. Metaphor

10. Symbol

11. Tangible cues

12. 5Ws model

13. Communication objectives

14. Employees

15. Marketing communications planning

16. Prospects

17. Target audience

18. Users

19. Marketing communications mix

20. Advertising

21. Banner advertising

22. Blogs

23. Communication sources

24. Customer service employees

25. Direct marketing

26. Ethical issue

27. Eyeballs

28. Facebook

29. Google

30. Impersonal communications

31. Media coverage

32. Mobile advertising

33. Online advertising

34. Permission marketing

35. Personal communications

36. Personal selling

37. Podcasting

38. Privacy

39. Public relations

40. Sales promotion

41. Search engine advertising

42. Second Life

43. Employees

44. Service outlets

45. Servicescape

46. Self-service delivery points

These keywords are found within the sections of each Learning Objective (LO). They are integral in understanding the services marketing concepts taught in each section. Having a rm grasp of these keywords and how they are used is essential in helping you do well for your course, and in the real and very competitive marketing scene out there.


LO 1

LO 3

LO 2

LO 4

LO 5

SCORE 0 9 Services Marketing is done a great disservice. 10 20 The midnight oil needs to be lit, pronto.21 30 I know what you didnt do all semester.31 41 A close shave with success.42 51 Now, go forth and market.52 59 There should be a marketing concept named after you.

47. Skyscraper

48. Social networks

49. Telemarketing

50. TiVo

51. Trade shows

52. Website

53. Yahoo

54. YouTube

55. Word of mouth

56. Word of mouse

57. Viral marketing

58. Corporate design

59. Logo

LO 6

SCORE0 9 Services Marketing is done a great disservice.

10 20 The midnight oil needs to be lit, pronto.21 30 I know what you didnt do all semester.didnt do all semester.didnt31 41 A close shave with success.42 51 Now, go forth and market.52 59 There should be a marketing concept named after you.


194 Chapter 7 Promoting Services and Educating Customers194 Chapter 7 Promoting Services and Educating Customers

1. What role does marketing communications play in services?

2. What are some challenges in service communications and how can they be overcome?

3. Which elements of the marketing communications mix would you use for each of the following scenarios? Explain your answers.

A newly established hair salon in a suburban shopping center

An established restaurant facing declining patronage because of new competitors

A large, single-ofce accounting rm in a major city that serves primarily business clients.

1. What tangible cues could a scuba diving school or a dentist ofce use to position itself as something attractive to wealthy customers?

2. Describe and evaluate recent public relations efforts made by service organizations in connection with three or more of the following: (a) launching a new offering; (b) opening a new facility; (c) promoting an expansion of an existing service; (d) announcing an upcoming event; or (e) responding to a negative situation that has happened. (Pick a different organization for each category).

3. If you were exploring the institution that you are now studying in, or research the program

Review Questions

Application Exercises

KNOW YOUR ESM

WORK YOUR ESM

4. What roles do personal selling, advertising, and public relations play in (a) attracting new customers to visit a service outlet, (b) retaining existing customers?

5. Discuss the relative effectiveness of brochures and web sites for promoting (a) a ski resort, (b) a business school, (c) a tness centre, and (d) an online broker.

6. Why is word of mouth considered so important for the marketing of services? How can a service rm that is the quality leader in its industry encourage and manage word of mouth?

7. How can companies use corporate design to differentiate themselves?

you are now in, what could you learn from blogs and any other online word of mouth? How would that information inuence the decision of a potential new applicant to your institution? Since you are a student in the institution, how accurate do you think is the information that you found online?

4. Register at Amazon.com and Hallmark.com, and analyze their permission-based communications strategy. What are their marketing objectives? Evaluate their permission-based marketing for a specic customer segment of your choicewhat is excellent, what is good, and what could be further improved?

ENDNOTES

1 Westin Turns Traditional Hotel Advertising on its Head, http://www.hotelmarketing.com/index.php/content/print/070802_westin_turns_traditional_hotel_advertising_on_its_head, 6 August 2007 (article downloaded on 13 August 2007). Source for photos: http://www.westinadvertising.com/, accessed March 2008.

2. Devlin J.F., & Azhar, S. (2004). Life would be a lot easier if we were a Kit Kat: Practitioners views on the challenges of branding nancial services successfully. Brand Management, 12(1), pp. 1230.

3. Hill, D.J., Blodgett, J., Baer, R. & Wake eld, K. (2004). An investigation of visualization and documentation strategies in service advertising. Journal of Service Research, 7 (November), pp. 155166; Grace, D. & OCass, A. (2005). Service branding: Consumer verdicts on service brands. Journal of Retailing and Consumer Services, 12, pp. 125139.

4. The future of advertisingThe harder hard sell. (2004, June 24). The Economist.

5. The Economist, op. cit.

6. Got game: Inserting advertisements into video games holds much promise. (2007, June 9). The Economist, p. 69.

7. Godin, S. & Peppers, D. (1999). Permission marketing: Turning strangers into friends and friends into customers. New York, Simon & Schuster.

8. Lewis, M. (2006). Customer acquisition promotions and customer asset value. Journal of Marketing Research, XLIII (May), pp. 195203.

9. Lagrosen, S. (2005). Effects of the Internet on the marketing communication of service companies. Journal of Services Marketing, 19(2), pp. 6369.

10. Aksoy, L., Bloom, P.N., Nicholas, H.L., & Cooil, B. (2006). Should recommendation agents think like people? Journal of Service Research, 8(May), pp. 297315.

11. Bitner, M.J. (1992). Servicescapes: The impact of physical surroundings on customers and employees. Journal of Marketing, 56(April), pp. 5771.

12. Bansal, H.S., & Voyer, P.A. (2000). Word-of-mouth processes within a service purchase decision context. Journal of Service Research, 3(2), (November 2000), pp. 166177.

13. Reichheld, F.F. (2003). The one number you need to grow. Harvard Business Review, 81(12), pp. 4655. Malcom Gladwell explains how different types of epidemics, including word-of-mouth epidemics, develop. Gladwell, M. (2000). The Tipping Point, N.Y.: Little Brown and Company, p.32.

14. Wirtz, J. & Chew, P. (2002). The effects of incentives, deal proneness, satisfaction and tie strength on word-of-mouth behaviour. International Journal of Service Industry Management, 13(2), pp. 141162. Hogan, J.E., Lemon, K.N., Libai, B. (2004). Quantifying the ripple: Word-of-mouth and advertising effectiveness. Journal of Advertising Research, (September), pp 271280.

15. Phelps, J.E., Lewis, R., Mobilio, L., Perry, D. & Raman, N. (2004). Viral marketing or electronic word-of-mouth advertising: Examining consumer responses and motivations to pass along emails. Journal of Advertising Research, (December), pp. 333348; Datta, P.R., Chowdhury, D.N. & Chakraborty, B.R. (2005). Viral marketing: New form of word-of-mouth through Internet, The Business Review, 3(2), (Summer), pp. 6975.

16. Thielst, C.B. (2007). Weblogs: A communication tool. Journal of Healthcare Management, 52, (September/October), pp. 297289; Yates, J., Orlikowski, W.J. & Jackson, A. (2008). The six key dimensions of understanding media. MIT Sloan Management Review, 49(2), (Winter), pp. 6269.

17. Kurutz, K. (2005).For travelers, blogs level the playing eld. New York Times, (2005, August 7) pp. TR-3.


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Chapter 6

Documents

markets chapter

pm168 chapter

services marketing

service recovery

service environment

service leadership

service advantage

service quality