Service & Relationship Marketing Jane. K

Transcription

1 Lecture 1 Course Introduction - Demonstrate importance of services to economies - Appreciate challenges services present - Outline the 7Ps of service mix - Service-dominant logic vs. the market orientation logic Intro Service industry represents about 70% of Australia s GDP and employs 4/5 Australians Two crucial components of services - Relative attitude - Repeat purchase behavior Services are diverse - Consumer services i.e. Airplane, banking, hairdressing, hotels, restaurants etc. - Business-to-Business (B2B) i.e. Accountancy, architecture, engineering, legal etc. Service Service Marketing is the study and practice of building relationships with customers over time through valued exchange, process and performances - Service is an act, deed, performance or effort/ intangible goods (Berry, 1991) - Made up of a number of incidents called moments of truth/ touch points (leave critical impressions) - Service may be provided directly and/or indirectly via the provision of tangible goods *Should focus on value co-creation (facilitate and support) rather than value distribution -> Best way to co-create is to focus on customer experience; enjoyable & engaging experiences provide intrinsic value, where it offers a state that people try to maintain & repeat Definition of service as SD-Logic The application of specialized competences (skills and knowledge), through deeds, processes and performances for the benefit of another entity of the entity itself (self-service) (Vargo & Lusch, 2004) - Propose that all goods & services go through a basis of exchange, where value is cocreated with service employees and customers by deriving and realizing it the exchange (perception). The value of goods is less important than the true underlying value gained through experience. - Value is derived from the consumption experience (Vargo & Lusch, 2004) - Products are a means for reaching value states, such as happiness, security and accomplishment (experiential/ symbolic benefits > functional) - Firms often provide value propositions, however it is only through interactive cocreation process that customer is enabled to evaluate and access this value Forms of services encounters This chart allow you to look at service industries that share the same characteristics - Duration: Is the need ongoing? - Complexity: level of skills required for delivery Simple continuous i.e. electricity Simple episode i.e. fast food Complex continuous i.e. LT health care, education Complex episode i.e. mechanical service/ repair 1

2 4 Factors influencing evaluation of service encounter i) Role & Script Congruency (of customer and service provider) Role and Script Theory Role - A set of behavior patterns learned through experience and communication to be performed by an individual in a certain social interaction in order to attain maximum effectiveness in goal accomplishment (Grove and Fisk, 1998) Script A learned sequence of behavior patterns that consumers and service providers follow during service transaction; can be modified via training and experience (Hoffman and Bateson, 1997) - Service encounter can be seen as a theatrical drama, where both buyer and seller follow scripts on the stage of service location, and may wear costumes (Grove and Fisk, 1998) - One role s failure to follow the script may upset the other role, and may have a ripple effect to other roles ii) Behavior of other customers (roles) Drama Metaphor offers a useful way to look at service performances Selection of service personnel auditioning of actors Training of personnel rehearsing of roles Clearly defining the role scripting the performance Creation of the service environment setting the stage Deciding which service part should be performed to customer (onstage) and which should be performed in the back room (back stage) i.e. hide activities that might decrease value (dirty kitchens) Role Theory Each participant enacts certain roleplaying behaviors that contribute to achieving the goal of objective of the interaction. Satisfaction of both customer and service worker is dependent on role congruence how each party acts out their role (Solomon et al. 1985) Script changes - Service providers commonly change their service delivery process - Learning a new script takes effort, disrupts the flow of behavior and can make customers and service personnel feel nervous, uncomfortable and embarrassed iii) Perceived control The individual s belief that he/she has the means to control the outcomes of a situation Satisfaction of customer & service worker depends on their perceived control of the service encounter à Providing timely, relevant information, offering choices and the opportunity to participate in decision-making gives customers a sense of control Providing timely technical training or briefings and reliable equipment and systems give service workers a sense of control i.e. Pilot usually tells you that flight will be delayed, why and for how long to let customers have a sense of control - It is the perception of control, not the reality that is important. Make customers and employees believe that what is happening to them is predictable. - Forewarn customers and employees of changes to operation (script change) so that they do not perceive to be out of control and dissatisfied - Firms use perceived control a source of attribute to enhance quality (Grewal et al. 2007) i.e. FedEx uses technology for customers to access tracking info online 8

3 Model 2* - Disconfirmation of - Matching perceptions of performance & interactions with - Past experiences, prices form Model 3* - The Gaps (PZB) Model and SERVQUAL measure service quality A diagnostic tool for evaluating the causes of service quality problems (disconfirmation) through identifying 5 gaps Gap 1-4 = results of management s action Gap 5 = occurs at client level, similar to disconfirmation of model Gap 1 Knowledge gap Mismatch between client s & management perceptions of client s Ø Key contributing factors: i) Lack of marketing research orientation research, use of findings, interactions with customers etc. ii) Inadequate upward communication from frontline personnel to upper levels iii) Too many levels of management higher levels tend to be more distant from customers Solution: learn what the customers expect 11

4 - Performance perception scores score to find the relative importance of dimension of quality in different customer groups - 22 pairs are largely similar except the wording tense is changed, normally takes 50 minutes, surveys would be statistically valid, may add personal info (age, usage, demographics etc) 5 Dimensions of service quality RATER Reliability The ability to perform the promised service dependably and accurately Assurance The knowledge and courtesy of employees and their ability to convey trust and confidence Tangibles The appearance of physical facilities, equipment, personnel and communications materials; impact customer experiences Empathy The provision of caring, individualized attention to clients (critical for cocreation and human interaction) Responsiveness The willingness to help clients and provide prompt service Criticism of SERVQUAL - 5 dimensions may be irrelevant to all service contexts - Expectations and perceived performance typically assessed at one time (bias) - Measuring provides no additional information beyond what is obtained from measuring perceived performance alone. See SERVPERF - Does not explicitly include any customer inputs in its measurement (unprepared, unrealistic ) - Respondent fatigue data may not be reliable due to interviewee s boredom - Time consuming SERVPERF only use perception component and believes that there s a strong correlation to measuring service quality, less costly, reduce respondent fatigue, faster version, 22 items only, people prefer this. Week 3 - Reading summary and insight Reading #4: Chapter 10 Defining and Measuring Customer Satisfaction Hoffman et al., 2010 Benefits of customer satisfaction - Positive word of mouth & credibility generated from existing customers - Repeat purchase & more frequently - Willing to pay more and stay with a company that meets their needs (avoid risk of lower priced service offering) - Firms that value customer satisfaction generally provide better working environment and organizational culture, which motivate and reward employees for their efforts - Lots of businesses rely on word of mouth and referrals for satisfied customers and clients 13

5 Non-linear effects of satisfaction levels on customer loyalty Customer Delight positive disconfirmation J - Unexpected, random, extraordinary, positive surprise, joy, unforgettable, memorable - Expectations exceeded to a surprising degree - Services that do not fit into the customer s expectation set yields delight Examples: 1.Human interaction: (already expected, but will be delighted if received) -Courtesy (politeness, respect, friendliness and consideration) -Willingness to genuinely help -Efforts to understand customer needs 2.Tangibles: - Finding right product & Price/bargain i.e. gifts Delight is useful if: - Satisfaction influences behavior - Future profits are important - The firm is able to capitalize on competitor s dissatisfied customers (i.e. Bendigo Bank) - Delight = LT strategy Best if satisfaction-enhancing innovations are not easily imitated! Drawbacks of Customer Delight - Can make it more difficult to please the customer in the future - Difficulties in delivering delight for low involvement products - Potential high costs associated with delivering delight - Developing a delight package that is difficult for competitors to copy Value Proposition - Consists of the whole bunch of benefits the firm promises to deliver - It is a statement about the total experience clients can expect - Expectations Goal is not to create value for customers but rather to mobilize customers to create value with you (co-creation) Equity Theory or Perceived Fairness Ratio of buyer s value derived from exchange relative to service provider s value - Value is experiential, hence difficult to control Perceived value = Sum of benefits/sum of costs - I feel I was ripped off by that plumber! - Perceived value is a client s overall assessment of the utility of a service based upon perceptions of what is received & what is given. - The get components (i.e., what the client gets - benefit) are compared with the give components (i.e. what the client gives up - cost) 16