SERVICE MARKETING AND MANAGEMENT
Robert Owen, Ph.D.
Associate Professor of Marketing
College of Business, Texas A&M University-Texarkana
(903) 223-3010
robert.owen@tamut.edu
http://www.tamut.edu/~bowen
II. Managing the Service Encounter (7 AUG)
1. Recall: Characteristics that tend to distinguish services from goods:
intangibility
less tangible than tangible; can't see, taste, touch, smell, or hear prior to purchase
inseparability
simultaneous production and consumption; instantly consumed; service cannot be
separated from provider
heterogeneity (variability)
less standardized and uniform than tangibles; variability in end result
perishability
cannot be stored for future use; what isn't used is gone forever
Recall: our Benefits-Attributes chart.
Recall the notion of peripheral clues.
Recall the notion of tangible evidence.
2. Recall: Customer Evaluation of Products:
search qualities
tangible attributes that can be judged before the purchase of a product
experience qualities
attributes assessable only during purchase and consumption of a service
credence qualities
attributes that consumers might be unable to evaluate even after purchasing and
consuming a service
3. Recall: Value, Satisfaction, Quality
customer value
what the customer gains from owning and using a product
-minusthe costs of obtaining the product
customer satisfaction
perceived product performance
-minusexpectations for performance
quality
the ability of a product to perform its functions as expected by the buyer
4. Recall: Controllable Factors, Uncontrollable Factors
Internal resources – uncontrollable
External influences – uncontrollable
Marketing Mix – controllable
Strategy is the manipulation of the marketing mix (product design, promotion,
distribution/delivery, price) to meet an organization’s objectives given the constraints of
internal resources and external influences.
5. Customer Contact
Boundary Spanning Employee (BSE)
A person who is the point of contact between an organization and a customer. The BSE
is the organization in the eyes of the customer.
Attribution Theory
People tend to assign causes to the actions of others. If you receive a good grade on a
college course assignment, you tend to take credit for a job well done. If you receive a
low grade on the assignment, you tend to blame the professor for poor instruction or
guidance.
Co-production
Often, the consumer must be an active participant in the satisfactory production of a
service. Sometimes we deliberately ask the customer to assist in service production so
that s/he feels some sense of responsibility toward the outcome. E.g., customers
complete a deposit slip and do the math before the bank teller completes a transaction. If
the customer’s instructions or intentions aren’t clear and a mistake is made, the customer
is obliged to share in blame.
Jaycustomer
A customer who causes problems for the organization, its employees, or other customers
by being thoughtless or abusive. Some customers break rules, are belligerent, cause
facility damage, or consume things or services with no intention of paying.
The ideal that all customers must be served at any cost or that all customers must be
satisfied at any cost shows no respect for the majority of customers who don’t want to be
forced to endure belligerence, who don’t want to wait longer in line behind such a
customer, who don’t want to pay higher prices to subsidize the disproportionate costs that
are created by jaycustomers, etc.
80-20 Rule
The general concept that 20 percent of an organization’s customers generate 80 percent
of its revenues or profits, that 20 percent of its customers generate 80 percent of its costs,
etc. Whatever the proportion, the idea is that not all customers are always equally
profitable.
Lifetime Value of a Customer
The present value of a lifetime revenue stream from a customer. Compare the cost of
servicing a customer to the future revenue stream that the customer generates:
LTV = (purchase size) x (frequency) x (duration)
6. Service Guarantees
It has become popular in recent years to offer unconditional service guarantees – e.g.,
satisfaction guaranteed or your stay in the hotel is free. This can be a gamble with
jaycustomers. Note that guarantees tend to offer money back for dis-satisfaction and that
satisfaction is determined by the consumer. Such guarantees of satisfaction tend to be
limited to low price physical products, whereas service providers such as hotels have
lately been offering them on products that can be worth hundreds of dollars.
A warranty that comes with many physical products that are priced at more than a few
dollars specifies the obligations of the consumer and the obligations of the manufacturer
(or seller); the remedy tends toward fixing shortcomings in the product rather than
bringing the consumer back to a pre-purchase state (refund of money).
7. Gap Analysis
Consumers compare the service they received with the service they expected.
1. knowledge gap
The difference between a consumer’s actual needs and expectations and what
management believes consumers expect
2. standards gap
the difference between management’s perception of consumer expectations of a
service and the service quality specifications
3. delivery gap
the difference between service quality specifications and what was actually
delivered
4. internal communications gap
the difference between what the organization is actually able to deliver and what
the organization is advertising the product’s qualities to be
5. service gap
the sum of the above gaps
8. Customer Comment Analysis
Maybe next week . . .
9. Flow Charting
From a consumer perspective, script the series of steps in a service encounter.
Next week, we’ll carry this idea further into blueprinting. For now, map out the series of
steps in the production of a service from the consumer’s perspective. Begin to take note
of places in the process that can cause unsatisfactory service outcomes.
10. Fishbone Diagram
A.K.A. cause-and-effect chart. A tool to assist in discovering potential causes of
satisfactory or unsatisfactory service outcomes.