SM_2013_Lecture_3_3.pdf

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24306 Services Marketing��� Lecture 3: Applying the 4Ps — Product and Place Strategies

Autumn 2013

Anouche Newman

UTS Business: Marketing

(see ‘Program’ on pages 2-4 of the 24306 Subject Outline)

Weeks 1-4 Week 7

Chapter 1: Introduction to Services Marketing Chapter 2: Consumer Behaviour in a Services Context Chapter 3: Positioning Services in Competitive Markets Chapter 4: Developing Service Products, Core and��� Supplementary Elements Chapter 5: Developing Services through Physical and��� Electronic channels Chapter 6: Setting Prices and Implementing Revenue��� Management Chapter 7: Promoting Services and Educating Customers

Chapter 8: Designing and Managing Service Processes Chapter 9: Balancing Demand and Capacity

Chapter 10: Crafting the Service Environment Chapter 11: Managing People for Service Advantage Chapter 12: Managing Relationships and Building Loyalty Chapter 13: Complaint Handling and Service Recovery Chapter 14: Improving Service Quality and Productivity

MSE

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NOTE: Chapter 15 is not explicitly discussed in lectures

Where are we? Textbook Readings & Examinations

Weeks 9-13

Title: Essentials of Services Marketing

Authors: Jochen Wirtz, Patricia Chew, Christopher Lovelock

Publication Details:���2012, 2nd Edition, Pearson

Lecture 3: Applying the 4Ps — Product

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An Alternative View: Rental / Non-Ownership View (1) The Flower of Service

All elements of service performance, both tangible and intangible, that create value for customers §  Core Product Central component that supplies the principal, problem-solving benefits customers seek

§  Supplementary Services Augments the core product, facilitating its use and enhancing its value and appeal

§  Delivery Processes Used to deliver both the core product and each of the supplementary services

An Alternative View: Rental / Non-Ownership View (1) Facilitating Supplementary Services: Information

§  Direction to the service site

§  Schedules / service hours

§  Prices

§  Reminders

§  Warnings

§  Conditions of sale / service

§  Notification of changes

§  Documentation

§  Confirmation of reservations

§  Summaries of account activities

§  Receipts and tickets ���

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An Alternative View: Rental / Non-Ownership View (1) Facilitating Supplementary Services: Order Taking

§  Applications���(memberships in clubs/programs; subscription services; enrollment-based services)

§  Order Entry���(on-site order entry; mail/telephone/email/online order)���

§  Reservations or check-ins���(seats/tables/rooms; vehicles or equipment rental; professional appointment)

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An Alternative View: Rental / Non-Ownership View (1) Facilitating Supplementary Services: Billing

§  Periodic statements of account activity

§  Invoices for individual transactions

§  Verbal statements of amount due

§  Machine displays of amount due for self-payment transactions

An Alternative View: Rental / Non-Ownership View (1) Facilitating Supplementary Services: Payment

§  Self-service

§  Direct to payee or intermediary

§  Automatic deduction from

financial deposits

An Alternative View: Rental / Non-Ownership View (1) Enhancing Supplementary Services: Consultation

§  Customised advice

§  Personal counseling

§  Tutoring / training in product use

§  Management or technical consulting

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An Alternative View: Rental / Non-Ownership View (1) Enhancing Supplementary Services: Hospitality

§  Greetings

§  Food and beverages

§  Toilets and washrooms

§  Waiting facilities and amenities

§  Transport

An Alternative View: Rental / Non-Ownership View (1) Enhancing Supplementary Services: Safekeeping

§  Child care, pet care

§  Parking for vehicles

§  Coat rooms

§  Baggage handling

§  Storage space

§  Safe deposit boxes

§  Security personnel

An Alternative View: Rental / Non-Ownership View (1) Enhancing Supplementary Services: Exceptions

§  Special requests in advance of service delivery

§  Handling special communications

§  Problem solving

§  Restitution

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Flower of Service: Managerial Considerations

1  Not every core product is surrounded by supplementary elements from all eight clusters

2  Nature of product helps to determine:

²  which SSs must be offered ²  which might usefully be added to enhance value and ease of doing

business with the organisation

3  People-processing and high contact services tend to have more supplementary services

4  Firms that offer different levels of service often add extra supplementary services for each upgrade in service level

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Branding Service Products and Experiences (1)

§  A product implies a defined and consistent “bundle of output”

§  Firms can differentiate its bundle of output from competitors’

§  Providers of more intangible services also offer a ‘menu’ of products

²  Represent an assembly of elements that are built around the core product

²  May include certain value-added supplementary services

Most service organisations offer a line of products rather than just a single product

1  Single brand to cover all

products and services���

2  A separate, stand-alone brand for each offering���

3  Some combination of these two extremes

Branding Service Products and Experiences (2)

Corporate Brand §  Easily recognised

§  Holds meaning to customers

§  Stands for a particular way of doing business

Product Brand §  Helps firm establish mental

picture of service in consumers’ minds

§  Helps clarify value proposition

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New Service Development (1)

§  Style Changes���Visible changes in service design or scripts

§  Service Improvements Modest changes in the performance of current products

§  Supplementary Service Innovations Addition of new or improved facilitating or enhancing elements

§  Process-Line Extensions

Alternative delivery procedures

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New Service Development (2)

§  Product-Line Extensions Additions to current product lines

§  Major Process Innovations

Using new processes to deliver existing products with added benefits

§  Major Service Innovations

New core products for previously undefined markets

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Success Factors in New Service Development

Market Synergy

§  Good fit between new product and firm’s image/resources

§  Advantage over competition in meeting customers’ needs

§  Strong support from firm during/after launch

§  Firm understands customer purchase decision behavior

Market Research Factors

§  Scientific studies conducted early in development process

§  Product concept well defined before undertaking field studies

Organisational Factors

§  Strong interfunctional cooperation and coordination

§  Internal marketing to educate staff on new product and���its competition

§  Employees understand���importance of new���services to firm

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Lecture 3: Applying the 4Ps — Place

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What is being distributed?

§  Information and promotion flow §  Negotiation flow

§  Product flow

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Distribution Options

1  Customers visit service site §  Convenience of service factory

locations and operational schedules important when customer has to be physically present

2  Service providers go to customers

§  Unavoidable when object of

service is immovable §  Needed for remote areas §  Greater likelihood of visiting

corporate customers than individuals

3  Service transaction is conducted remotely

§  Achieved with help of logistics

and telecommunications

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Distribution Channels Vary Among Consumers

§  For complex and high-perceived risk services, people tend to rely on personal channels

§  Individuals with greater confidence and knowledge about a service or channel tend to use impersonal and self-service channels

§  Customers with social

motives tend to use personal channels

§  Customers who are more technology savvy

§  Convenience is a key driver of channel choice

Options for Service Delivery

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Place and Time Decisions

Where should service be delivered in a bricks-and-mortar context? 1  Ministores §  Creating many small service

factories to maximise geographic coverage

§  Separating front and back stages of operation

§  Purchasing space from another provider in complementary field

2  Locating in Multipurpose Facilities §  Positioning services in buildings

that serve more than one purpose

3  Cost, productivity, and access to labour are key determinants to locating a service facility

§  Locational constraints §  Operational requirements §  Geographic factors §  Need for economies of scale

When should service be delivered?���

§  Schedules used to be restricted (limited to day, 40-50 hrs/week)

§  Today: 24/7 service – 24 hours a day, 7 days a week, around the world

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Why are electronic channels often preferred by consumers?

§  Convenience §  Ease of search §  Broader selection §  Potential for better prices §  24-hour service with prompt

delivery

Integrating mobile devices into the service delivery infrastructure can be used as means to: §  Access services §  Alert customers to

opportunities/problems §  Update information in real

time

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Intermediaries: Splitting Responsibilities for Service Delivery (1)

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

Franchisees

§  Service outlets licensed by a principal to deliver a unique service concept it has created���

Agents and Brokers

§  Representatives who distribute and sell the services of one or more service suppliers

Intermediaries: Splitting Responsibilities for Service Delivery (2)

Challenges for the Service Principal §  Act as guardian of overall service process §  Ensure that each element offered by service deliverers fits overall service concept

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Benefits and Challenges of Franchising

Benefits for Franchisers

§  Leveraged business format for greater expansion and revenues

§  Consistency in outlets

§  Knowledge of local markets

§  Shared financial risk and more working capital

Benefits for Franchisees

§  An established business format

§  National or regional brand marketing

§  Minimised risk of starting a business

Challenges for Franchisers

§  Difficulty in maintaining and motivating franchisees

§  Highly publicised disputes and conflict

§  Inconsistent quality

§  Control of customer relationship by intermediary

Challenges for Franchisees

§  Encroachment

§  Disappointing profits and revenues

§  Lack of perceived control over operations

§  High fees

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Benefits and Challenges of Distribution Through Agents and Brokers

Benefits

§  Reduced selling and distribution costs

§  Intermediary’s possession of special skills and knowledge

§  Wide representation

§  Knowledge of local markets

§  Customer choice

Challenges §  Loss of control over pricing

§  Representation of multiple service principals

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Challenges and Solutions for Management of Intermediaries

Challenges §  Conflict over objectives and

performance

§  Difficulty controlling quality and consistency across outlets

§  Tension between empowerment and control

§  Channel ambiguity

Control Strategies §  Measurement §  Review

Partnering Strategies §  Alignment of goals §  Consultation and cooperation

Empowerment Strategies §  Help the intermediary develop

customer-oriented service processes

§  Provide needed support systems §  Change to a cooperative

management structure

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Entering International Markets

Applying the 4Ps: Price & Promotion Textbook readings: Chapters 6 and 7

NOTE: Don’t forget to download and familiarise yourself with the eReading for Tutorial 3 (Week 4)

Next Lecture: Friday 22 March 2013