PowerPoint to accompany
SERVICES
MARKETING
3
Christopher Lovelock
Paul Patterson
Rhett Walker
FINAL EXAM
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Date: 17th December, 2010
Time: 180 minutes
Exam format: 03 sections
 Section 1: 40 MCQs (one mark each)
 Section 2: 10 True/ false (two marks each)
 Section 3: 4 Written answers (10 marks each)
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Chapters to be examined
 2, 3, 4, 9, 11, 12
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 2
Customer involvement in
service processes-managing
the service encounter
The Services System

Flowcharting
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Moments of Truth

Critical Incidents
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Flowcharting the Service
Experience
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A Flowchart is a ‘map’ of the service
experience which shows the total process
step by step.
Flowcharting is useful as a management tool
to identify problems in stages of the delivery.
Flowcharting is also known as ‘Blueprinting’
and ‘Service Mapping’.
Flowcharting includes the Front-stage and
Back-stage components of the service.
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Moments of Truth
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The Moment of Truth is when the
customer and the service personnel
meet.
The point when the skill, motivation and
the tools employed by the service
personnel and, the expectations and
behaviour of the customer create the
service experience.
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Critical Incidents
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Unsatisfactory encounters are likely to
be more influential on the customer’s
future behaviour than satisfactory ones.
Critical Incidents can occur preconsumption and post-consumption as
well as during.
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 3
Customer Behaviour
in Service Settings
Types of Risk
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Functional: this is a concern about
performance outcomes e.g. ‘How can I be sure
my car will be properly serviced?’
Financial: this reflects financial risks and
unexpected costs e.g. ‘Will I incur extra
expenses?’
Temporal: this is about wasting time or
unexpected delays e.g. ‘Will the service be too
slow?’
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Types of Risk
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Psychological: personal fears and
other ‘negative’ emotions e.g. ‘Will the
service make me feel good?’
Social: how others think and react e.g.
‘Will my friends approve or admire me?’
Sensory: these are unwanted impacts
on the five senses e.g. ‘Will the
restaurant be too noisy?’
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Strategies for Risk Reduction
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Provide information
Firm’s reputation
Provide guarantees/warrantees
Standardise the service
Internet search
Seek tangible cues
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Factors Influencing the Consumer’s
Service Evaluation
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Mood states
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Role theory
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Script theory
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Control theory
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Behavioural control
Cognitive control
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 4
Customer
Satisfaction and
Service Quality
Figure 4.3 Benefits of Customer
Satisfaction and Service Quality
Insulates
customers from
competition
Encourages
repeat patronage
& loyalty
Customer
satisfaction
(& service
quality)
Can create
sustainable
advantage
Reduces failure costs
Enhances/promot
es positive WOM
Lowers costs of
attracting new
customers
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Figure 4.4 The Disconfirmation
of Expectations Model
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Service Quality and
Satisfaction
Service quality:
“..........consumer’s judgement (across
multiple service encounters) about an
entity’s overall excellence or superiority
..... it is a form of attitude, related but
not equivalent to satisfaction.”
(Source: Parasuraman et al (1998), see page 100)
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Dimensions of Perceived
Service Quality
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Tangibles: appearance of physical
elements
Reliability: dependable, accurate
performance
Responsiveness: promptness and
helpfulness
Source: Zeithaml, et al., Delivering Quality Service: Balancing Customer
Perceptions and Expectations (New York: The Free Press, 1990).
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Dimensions of Perceived
Service Quality
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Assurance: competence, courtesy,
credibility and security
Empathy: easy access, good
communications and customer
understanding
Source: Zeithaml, et al., Delivering Quality Service: Balancing Customer
Perceptions and Expectations (New York: The Free Press, 1990).
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Building a Service Satisfaction
Information System
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Analysis of customers’ complaints
Post transaction surveys
Ongoing surveys of account holders
Employee Surveys
Focus Groups
‘Mystery shopping’ research
Competitive market surveys
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Service Guarantees
Guarantees need to be:
 unconditional
 easy to understand
 meaningful
 easy to invoke
 easy to collect when any compensation
is due
(Source: Christopher W. L. Hart, see page 107 for full reference)
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 9
Service Delivery and
Servicescape Strategies
Chapter 9 Objectives
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The role of physical environment
The process of service delivery
The role of customer service
personnel
The role of intermediaries
The role of emerging technologies
Devising means of productivity
enhancement
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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The Effect of Physical Evidence and
Atmosphere on Buyer Behaviour
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As an attention creating medium: the use
of colour, noise, smell and so on (sensory
impacts)
As a message creating medium: the use of
symbolic cues to communicate with the
intended audience
As an effect creating medium: using
colours, sounds, spatial design and so on to
heighten the buyer’s desire
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Figure 9.1
A framework for understanding the impact
of the physical environment
Customers,
employees
Environmental
stimuli
Thoughts
and feelings
Ambience
Cognitive
Space
Emotional
Signs,
symbols
Physiological
Behavioural
responses
Customers
Approach
Avoid
Employees
Productivity
Job Satisfaction
Service quality
Staff turnover
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Environmental Stimuli in
Service Delivery
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Ambience: temperature, air quality, noise,
colour, music, odour
Space: design, layout, furnishings
Signs, symbols and artefacts: style of
décor, signage, personal objects
Cognition: beliefs and thoughts
Emotions: mood, feelings, likes/dislikes
Physiology: discomfort, ease of movement
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Other Behavioural Responses
to Servicescape
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Approach: propensity to stay, explore,
engage in interactions, make
purchases, and return
Avoid: disinclination to make purchases
or stay, desire to leave, little incentive to
return
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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The Process and Manner of
Service Delivery

Planning and configuring

The Role of Blueprinting &
Flowcharting
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Important HRM issues
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The role of IT
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Marketspace vs Marketplace
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Requirements for Blueprinting
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Blueprinting must show time dimensions
in diagrammatic form (see Figure 3)
The blueprint must identify and handle
errors, bottlenecks, reiterations and so
forth
The blueprint, based on research and
experience must precisely define how
much variation from standards can be
allowed
Source: G. Lynn Shostack, 1984. (See page 246)
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Developing a Blueprint
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Identify all the key activities involved in
the service
Specify the linkage between the activities
Define the ‘big’ picture
‘Drill down’ to obtain greater detail
Distinguish between ‘front-stage’ and
‘back-stage’ activities
Clarify the interactions between
customers and employees and how these
are supported by ‘back-stage’ processes
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 11
Managing Capacity
and Demand
Creating Flexible Capacity
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Provide for additional capacity : some
capacity has an elastic ability to absorb
extra demand
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Increase the number of casual and parttime employees: hire extra staff during
busy seasons such as Christmas

Outsource facilities: rent facilities &
equipment
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Managing Capacity
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Create flexibility in what is offered:
review what is offered at different times
and consider what might be gained by
offering more or less at those times

Review the hours of business: consider
extending or shortening hours
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Managing Capacity

Schedule downtime in periods of low
demand: carry out data-processing,
repair and maintenance activities when
demand is expected to be low

Cross-train employees: employees who
can perform several functions can be
moved to bottle neck points when
needed
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Demand Conditions
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Demand exceeds maximum available capacity so
that potential business may be lost
Demand exceeds the optimum capacity level, no
one is turned away but there is a reduction in
perceived service quality
Demand and supply are balanced at the level of
optimum capacity
Demand is below optimum capacity and
productive resources are underused posing a risk
of customer disappoint or doubt about viability
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Using the Marketing Mix Elements to
Shape Demand Patterns
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1.
2.
3.
Product variations: offering varying
‘packages’ or ‘bundles’ of product benefits
at different times
Modifying the timing and location of
delivery involving three basic options:
No change
Varying the times when the service is
available
Offering the service to customers at a new
location
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Using the Marketing Mix Elements to
Shape Demand Patterns
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Pricing strategies: effective pricing
depends on the marketing manager
having an understanding of how the
demand responds to increases or
decreases in the price per unit
Communication efforts: advertising,
signage, publicity and sales messages
to encourage increased use in off-peak
times
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 12
Integrated Marketing Communications
for Services
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Learning Objectives
5.
6.
7.
8.
Examine the advertising of services
Explore sales promotions for services
Present the role of personal selling in
services
Discuss the role of public relations and
viral (word-of-mouth) marketing for
services
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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The Promotional Mix for
Services
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The services promotional mix consists
of:
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Advertising
Sales promotions
Personal selling
Publicity and public relations
Direct mail
Internal personnel branding
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Advertising the Service
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Advertising objectives
Guidelines for advertising services
Enhancing the vividness of services
advertising
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Guidelines for advertising
services
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Provide tangible cues
Capitalise on word-of-mouth
communication
Make the service understood
Establish advertising continuity
Advertise to employees
Promise what is possible
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Enhancing the vividness of
services advertising

A vividness strategy is an advertising
approach for service offerings that uses
concrete language, tangible objects,
and dramatisation techniques to
tangibilise the intangible
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Enhancing the vividness of
services advertising (cont’d)
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Interactive imagery uses pictorial
representations, verbal associations
and letter accentuations that combine
an organisation's name and its service
to establish a strong link between
service name and performance in
customers’ minds
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Sales Promotions and
Services

Sales promotions
 Attract customers
 Accommodate cyclical demand (change
promotions to suit all climates and trends)
 Enhance customers’ perception of the
service
 Add tangibility — try to tangiblise the
intangibles, giving customers something
to hold on to
Lovelock, Patterson, Walker: Services Marketing 3e © 2004 Pearson Education Australia
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Chapter 1 Understanding Services