Customer expectation through Marketing Research

CUSTOMER EXPECTATIONS AND

PERCEPTIONS THROUGH MARKETING RESEARCH

WHY RESEARCH FOR SERVICES?

To discover requirement or expectation for services To monitor and track service performance To identify dissatisfied customers and need of service

recovery To forecast future expectations of customers To determine customers expectation for a new service

CRITERIA FOR EFFECTIVE RESEARCH PROGRAM

Includes both qualitative and quantitative research Includes both expectation and perception of

customers. Includes statistical validity when necessary. Includes measurement of loyalty, behavioral

intensions or actual behavior. Balance cost of research and value of information

CRITERIA FOR AN EFFECTIVE SERVICES RESEARCH PROGRAM

ResearchObjectives

Includes

Qualitativ

e

Research

IncludesQuantitative

Research IncludesPerceptions

and Expectations

of Customers

IncludesMeasures

ofLoyalty orBehavioralIntentions

Balances Cost

and Value of

InformationIncludesStatisticalValidity

When Necessary

Measures Priorities

or Importance

Occurswith

AppropriateFrequency

ELEMENTS IN SERVICE MARKETING RESEARCH PROGRAM

Complaint solicitation Critical incident studies Reuirement research Relationship and SERVQUAL survey

PORTFOLIO OF SERVICES RESEARCH

Customer Complaint Solicitation

“Relationship” Surveys

Post-Transaction Surveys

Customer Focus Groups

“Mystery Shopping” of Service Providers

Employee Surveys

Lost Customer Research

Identify dissatisfied customers to attempt recovery; identify most common categories of service failure for remedial action

Obtain customer feedback while service experience is still fresh; act on feedback quickly if negative patterns develop

Use as input for quantitative surveys; provide a forum for customers to suggest service-improvement ideas

Assess company’s service performance compared to competitors; identify service-improvement priorities; track service improvement over time

Measure individual employee service behaviors for use in coaching, training, performance evaluation, recognition and rewards; identify systemic strengths and weaknesses in service

Measure internal service quality; identify employee-perceived obstacles to improve service; track employee morale and attitudes

Determine the reasons why customers defect

Research Objective Type of Research

Future Expectations ResearchTo forecast future expectations of customersTo develop and test new service ideas

STAGES IN THE RESEARCH PROCESS

Stage 1 : Define Problem Stage 2 : Develop Measurement Strategy Stage 3 : Implement Research Program Stage 4 : Collect and Tabulate Data Stage 5 : Interpret and Analyze Findings Stage 6 : Report Findings

FIGURE 5-6

IMPORTANCE/PERFORMANCE MATRIX

HIGH

HIGHLOW

Performance

Impo

rtan

ce

Attributes to Improve Attributes to Maintain

HighLeverage

Attributes to De-emphasizeAttributes to Maintain

LowLeverage

DELIVERING AND PERFORMING SERVICE

DELIVERING AND PERFORMING SERVICE

SERVICE CULTURE

“A culture where an appreciation for good service exists, and where giving good service to internal as well as ultimate, external customers, is considered a natural way of life and one of the most important norms by everyone in the organization.”

- Christian Gronroos (1990)

THE CRITICAL IMPORTANCE OF SERVICE EMPLOYEES

They are the service.They are the organization in the customer’s eyes.They are the brand.They are marketers.Their importance is evident in:

the services marketing mix (people)the service-profit chainthe services triangle

THE SERVICES MARKETING TRIANGLE

Internal Marketing

Interactive Marketing

External Marketing

Company(Management)

CustomersEmployees

“Enabling the promise”

“Delivering the promise”

“Making the promise”

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

THE SERVICE PROFIT CHAIN

Source: An exhibit from J. L. Heskett, T. O. Jones, W. E. Sasser, Jr., and L. A. Schlesinger, “Putting the Service-Profit Chain to Work,” Harvard Business Review, March-April 1994, p. 166.

SERVICE EMPLOYEES

Who are they?“boundary spanners”

What are these jobs like?emotional labormany sources of potential conflict

person/roleorganization/client interclient

quality/productivity tradeoffs

BOUNDARY SPANNERS INTERACT WITH BOTH INTERNAL AND EXTERNAL CONSTITUENTS

Internal Environment

External Environment

BOUNDARY-SPANNING WORKERS JUGGLE MANY ISSUESPerson versus role

Organization versus client

Client versus client

HUMAN RESOURCE STRATEGIES FOR DELIVERING SERVICE QUALITY THROUGH PEOPLE

Provideneeded support

systems

Hire theright people

Retain thebest

people

Developpeople to

deliverservicequality

Hire for servicecompetencies and

serviceinclinationCompete for

the bestpeople

Measure andreward strong

serviceperformers

Treatemployees

ascustomers

Includeemployees in

the company’s

visionDevelop

service-orientedinternal

processes

Providesupportivetechnology

andequipment

Measureinternal service

quality

Promoteteamwork

Empower employees

Train fortechnical and

interactiveskills

Be the preferredemployer

Customer-OrientedServiceDelivery

EMPOWERMENT

Benefits:quicker responses to

customer needs during service delivery

quicker responses to dissatisfied customers during service recovery

employees feel better about their jobs and themselves

employees tend to interact with warmth/enthusiasm

empowered employees are a great source of ideas

great word-of-mouth advertising from customers

Drawbacks:potentially greater dollar

investment in selection and training

higher labor costspotentially slower or

inconsistent service delivery

may violate customers’ perceptions of fair play

employees may “give away the store” or make bad decisions

TRADITIONAL ORGANIZATIONAL CHART

Manager

Supervisor

Front-lineEmployee

Customers

Front-lineEmployee

Front-lineEmployee

Front-lineEmployee

Supervisor

Front-lineEmployee

Front-lineEmployee

Front-lineEmployee

Front-lineEmployee

CUSTOMER-FOCUSED ORGANIZATIONAL CHART

Manager

Supervisor

Front-lineEmployee

Customers

Front-lineEmployee

Front-lineEmployee

Front-lineEmployee

Supervisor

Front-lineEmployee

Front-lineEmployee

Front-lineEmployee

Front-lineEmployee

TABLE 13.1

LEVELS OF CUSTOMER PARTICIPATION ACROSS DIFFERENT SERVICES

Source: Adapted from A. R. Hubbert, “Customer Co-Creation of Service Outcomes: Effects of Locus of Causality Attributions,” doctoral dissertation, Arizona State University, Tempe, Arizona, 1995.

HOW CUSTOMERS WIDEN THESERVICE PERFORMANCE GAPLack of understanding of their roles

Not being willing or able to perform their roles

No rewards for “good performance”

Interfering with other customers

Incompatible market segments

IMPORTANCE OF OTHER (“FELLOW”) CUSTOMERSIN SERVICE DELIVERYOther customers can detract from satisfaction:

disruptive behaviorsoverly demanding behaviorsexcessive crowdingincompatible needs

Other customers can enhance satisfaction:mere presencesocialization/friendshipsroles: assistants, teachers, supporters, mentors

CUSTOMER ROLES IN SERVICE DELIVERY

Productive Resources

Contributors to Service Quality and Satisfaction

Competitors

SERVICES PRODUCTION CONTINUUM

1 2 3 4 5 6

Gas Station Illustration1. Customer pumps gas and pays at the pump with automation2. Customer pumps gas and goes inside to pay attendant3. Customer pumps gas and attendant takes payment at the pump4. Attendant pumps gas and customer pays at the pump with automation5. Attendant pumps gas and customer goes inside to pay attendant6. Attendant pumps gas and attendant takes payment at the pump

Customer Production Joint Production Firm Production

CUSTOMERS AS PRODUCTIVE RESOURCES

customers can be thought of as “partial employees”contributing effort, time, or other resources to the

production process

customer inputs can affect organization’s productivity

key issue:should customers’ roles be expanded? reduced?

CUSTOMERS AS COMPETITORScustomers may “compete” with the service

provider“internal exchange” vs. “external exchange”internal/external decision often based on:

expertise capacityresources capacitytime capacityeconomic rewardspsychic rewardstrustcontrol

STRATEGIES FOR ENHANCING CUSTOMER PARTICIPATION

STRATEGIES FOR ENHANCINGCUSTOMER PARTICIPATIONDefine customers’ jobs

helping oneselfhelping otherspromoting the company

Recruit, educate, and reward customersrecruit the right customerseducate and train customers to perform effectivelyreward customers for their contributionsavoid negative outcomes of inappropriate customer

participationManage the customer mix

CHARACTERISTICS OF SERVICE THAT INCREASE THE IMPORTANCE OF COMPATIBLE SEGMENTS

Source: Adapted from C. I. Martin and C. A. Pranter, “Compatibility Management: Customer-to-Customer Relationships in Service Environments,” Journal of Services Marketing, 3, no. 3 (Summer 1989), pp. 5–15.

MANAGING CAPACITY AND DEMANDWeek 10

DEMAND PATTERN

Predictable cycles Random Demand fluctuations Demand pattern by market segment

TABLE 14.2 CONSTRAINTS ON CAPACITY

Nature of the constraint Type of serviceTime Legal

ConsultingAccountingMedical

Labor Law firmAccounting firmConsulting firmHealth clinic

Equipment Delivery servicesTelecommunicationUtilitiesHealth club

Facilities HotelsRestaurantsHospitalsAirlinesSchoolsTheatersChurches

MANAGING DEMAND AND CAPACITY

Strategies for matching supply and demand through

(a) shifting demand to match capacity or (b) adjusting capacity to meet demand.

FIGURE 14.1VARIATIONS IN DEMANDRELATIVE TO CAPACITY

STRATEGIES FOR SHIFTING DEMAND TO MATCH CAPACITY

Use signage to communicate busy days and times.

Offer incentives to customers for usage during non-peak times.

Take care of loyal or “regular” customers first.

Advertise peak usage times and benefits of non-peak use.

Charge full price for the service--no discounts.

• Use sales and advertising to increase business from current market segments.

• Modify the service offering to appeal to new market segments.

• Offer discounts or price reductions.

• Modify hours of operation.• Bring the service to the

customer.

Demand Too High Demand Too LowShift Demand

SHIFTING DEMAND TO MATCH CAPACITY

Vary service offering Communicat with customers Modify timing and location of service offering Differentiate on price

STRATEGIES FOR ADJUSTING CAPACITY TO MATCH DEMAND

Stretch time, labor, facilities and equipment.

Cross-train employees. Hire part-time employees. Request overtime work from employees. Rent or share facilities. Rent or share equipment. Subcontract or outsource activities. Outsource.

• Perform maintenance, renovations.

• Schedule vacations.

• Schedule employee training.

• Lay off employees.

Demand Too High Demand Too LowFlex Capacity

ADJUSTING CAPACITY TO MATCH DEMAND

Stretch existing capacity Stretch time Stretch labour Stretch facilities Stretch equipments

AIGNING CAPACITY WITH DEMAND FLUCTUATIONS Use part time employees Outsourcing Rent or share facilities or equipments Cross train employees Modify or move facilities and equipment

WAITING ISSUES (MAISTER, 1986) unoccupied time feels longer preprocess waits feel longer anxiety makes waits seem longer uncertain waits seem longer than finite waits unexplained waits seem longer unfair waits feel longer longer waits are more acceptable for “valuable”

services solo waits feel longer

WAITING LINE STRATEGIESEmploy operational logic

modify operationsadjust queuing system

Establish a reservation process

Differentiate waiting customersImportant customerurgency of the jobduration of the service transactionpayment of a premium price

FIGURE 14.6WAITING LINE CONFIGURATIONS

SERVICE PROVIDER PARTICIPANTS

service principal (originator)creates the service concept

(like a manufacturer)

service deliverer (intermediary)entity that interacts with the customer in the execution

of the service

(like a distributor/wholesaler)

SERVICES INTERMEDIARIESFranchisees

service outlets licensed by a principal to deliver a unique service concept it has created e.g., Jiffy Lube, Blockbuster, McDonald’s

Agents and Brokersrepresentatives who distribute and sell the services of

one or more service suppliers e.g., travel agents, independent insurance agents

Electronic Channelsall forms of service provision through electronic means

e.g., ATMs, university video courses, TaxCut software

BENEFITS AND CHALLENGES FORFRANCHISEES OF SERVICEBenefits:

An established business format

National or regional brand marketing

Minimized risk of starting a business

Challenges:EncroachmentDisappointing profits

and revenuesLack of perceived

control over operationsHigh fees

BENEFITS AND CHALLENGES IN DISTRIBUTING SERVICES THROUGH AGENTS AND BROKERSBenefits:

Reduced selling and distribution costs

Intermediary’s possession of special skills and knowledge

Wide representationKnowledge of local

marketsCustomer choice

Challenges:Loss of control over

pricingRepresentation of

multiple service principals

BENEFITS AND CHALLENGES IN ELECTRONIC DISTRIBUTION OF SERVICESBenefits:

Consistent delivery for standardized services

Low costCustomer convenienceWide distributionCustomer choice and

ability to customizeQuick customer

feedback

Challenges:Price competitionInability to customize

with highly standardized services

Lack of consistency due to customer involvement

Changes in consumer behavior

Security concernsCompetition from

widening geographies

COMMON ISSUES INVOLVING INTERMEDIARIESconflict over objectives and performance

difficulty controlling quality and consistency across outlets

tension between empowerment and control

channel ambiguity

STRATEGIES FOR EFFECTIVE SERVICE DELIVERY THROUGH

INTERMEDIARIESControl Strategies:

MeasurementReview

Partnering Strategies:Alignment of goalsConsultation and

cooperation

Empowerment Strategies:Help the intermediary

develop customer-oriented service processes

Provide needed support systems

Develop intermediaries to deliver service quality

Change to a cooperative management structure