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Extensive summery ALL lectures Service Marketing
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Extensive summery of ALL the lectures (1 t/m 12) from Hans Haans 2020.
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Summary Services Marketing - Integrating customer focus across the firm
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CSI EXAM 1, 5, 8, 9, 10
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CSI EXAM chapters 1, 5, 8, 9, 10 (5 same as chapter 2 in the fourth edition)
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Service marketingLecture 1 service conceptualisation
Two key things to keep in mind
> What market am I in?
> Who is my customer?
Five gaps to perceived service Quality
Gap 5 is the main gap that we want to
solve. Gap 5 is about the difference
between the expected and the perceived
value of the service. It’s very difficult for
expectations to be the same as the
perceived value, so there will probably
always be a gap, but the goals is to close
the gap as much as possible. The 4 other
gaps are the key factors that lead to gap
5, to close gap 5 you first need to focus
on closing the other 4 gaps:
• Provider Gap 1: not knowing what the customer expects
• Provider Gap 2: not selecting the right service designs and standards
• Provider Gap 3: not delivering to service standards
• Provider Gap 4: not matching performance to promises
The key factors leading to Gap 1: not knowing what the customer expects
Gap 1 is about the difference between what the customer expects of the service and how well the company is aware
of these expectations and how well they understand them. A few factors that can lead to Gap 1 are:
> Inadequate marketing Orientation: in other words, insufficient marketing research, research isn’t focused
on service quality or inadequate use of information from market research.
> Lack of upward communication: lack of interaction between management and customers. Insufficient
communication between contact employees and managers or too many layers between contact personnel
and top management. The complaints or questions will come in at the contact personal, but if there is no
process or registration of these complaints, it will never reach the management and it will not be improved.
> Insufficient relationship focus: lack of marketing segmentation, focus on transaction rather than
relationships, and focus on new customers rather than relationship customers. Many companies focus more
on obtaining new customers than on keeping existing customers happy.
> Inadequate service recovery: not listening to customer complaints, not giving into own mistakes, no good
recovery system, for the recovery of mistakes.
The key factors leading to Gap 2: not selecting the right service design standards
Inefficient translation of customer expectations in a process, product or service specification. When there is a Gap 2
the management has a clear vision on what the customers expect, but they can’t or won’t translate this knowledge
into clear specifications. There are a few factors that lead to gap 2:
> Poor service design: unsystematic new service development process, vague, undefined service design,
failure to connect service design to service positioning
> Absence of customer-driven standards: lack of customer-driven service standards, absence of process
management to focus on customer requirements, absence of formal process for setting service quality
goals.
> Inappropriate physical evidence and servicescape
The key factors leading to gap 3: not delivering to service standards
When gap 2 is closed and the service design and standards are developed, you would think that the company is well
on its way to offering a high-quality service. This statement is true, but it is not enough to provide a perfect service.
The company must have systems, processes and employees in the right place to ensure that the service actually
matches the developed service designs and standards. Factors that can lead to gap 3 are:
1
, > Deficiencies in human resource policies: ineffective recruitment, role ambiguity and role conflict, poor
employee-technology job fit, inappropriate evaluation and compensation systems, lack of empowerment,
perceived control and teamwork.
> Failure to match supply and demand: failure to smooth peaks and valleys of demand, inappropriate
customer mix, over-reliance on price to smooth demand.
> Customers not fulfilling roles: customers lack knowledge of their roles and responsibilities, customers
negatively impact each other.
> Problems with service intermediaries: channel conflict over objective and performance, channel conflict
over costs and rewards, difficulty controlling quality and consistency, tension between empowerment and
control.
The key factors leading to gap 4: not matching performance to promises
This is more of a communication gap. It’s about the difference between what is delivered and what is communicated
to the customer. There often is overpromising. Factors that can lead to gap 4 are:
> Lack of integrated services and marketing communications: tendency to view each external communication
as independent, not including interactive marketing in communications plan, absence of strong internal
marketing program.
> Ineffective management of customer expectations: not managing customer expectations through all forms
of communications, not adequately educating customers.
> Overpromising: overpromising in advertising, personal selling and through physical evidence cues.
> Inadequate horizontal communication: insufficient communication between sales and operations,
insufficient communication between advertising and operations, differences in policies and procedures
across branches or units
Services
> Services are the largest part of the GDP in many companies, also about 70% of all jobs are in the service
industry.
> For services there is quite a large possibility that there is a gap between the expectations and perceptions,
way larger than with products. That’s why there are way more possibilities in marketing for services.
Definitions of service:
• “A change in the condition of a person or of a good belonging to some economic unit which is brought
about as a result of the activity of some other economic unit, with the prior agreement of the former
person or economic unit.” (Hill, 1997)
• “Deeds, processes and performances.” (Book)
Service versus product
There is a difference between a product and a service, but there is a large grey area where they are intertwined.
There is also a difference between a service and a customer service. You always have to look at the company’s core
service, for an insurance company that means the insurance is their service. That doesn’t mean they don’t offer
additional service, customer service for example. Sometimes the additional service can be even more important than
the core service.
Service process matrix
The degree of labour intensity is the ratio between the cost of capital and the cost of labour. So, in this case airlines
have higher capital costs and retailers have high labour costs. The second axe is the degree of interaction and
customization, in this case hospitals and auto repair is more customized, where airlines and hotels are more
standardized.
Challenges for managers
> Low interaction/customization: there is not much contact with the customer, this means that marketing is
really important. Also, the physical surroundings become important (e.g the website). Since there is no
2
, personnel you can make a judgement on you will probably judge the process, so this means the
standardization of operations becomes really important.
> Low labour intensity: when there is a low labour intensity, it means the cost of capital will be very high
which leads to capital decisions. You might be in need of technological advantage. It also means you have to
work with peaks in demand (e.g. winter Efteling, this was started because there where less visitors in the
winter).
> High labour intensity: when labour becomes more important, personnel becomes more important. This
means hiring and training of personnel also becomes more important. You also want to pay more attention
to employee welfare, because you want to keep your employees in the company. It is
> High interaction/customization: fighting costs, maintaining quality, reacting to customer intervention.
Difference between goods and services
there are quite a few differences between goods and services, the 4 most important ones are:
intangibility, heterogeneity, simultaneous production and consumption and perishability.
These 4 things make service marketing way more complex than the marketing of goods.
Intangibility Perishable Heterogeneity Simultaneous production and consumption
Problems
• Not possible to keep in • Not possible to • Difficult to • Employees play an important role
stock keep in stock standardize and • Customer takes part in production
• No patents • Restricted in quality control process
• Not visible time and place • Communication is • Other customers are co-producers
• Pricing is difficult difficult • Not possible to keep in stock
Solutions
• Focus on “tangible cues” • Demand • Industrialize • Training and selection
• Use personal sources management service • Manage consumers (with COVID
(word of mouth) • Supply • Customize service customers have to be trained to keep
• Create company image management distance)
• Communicate after sale • Multi-site strategy, this means you
have to be available to the customers
in more places
The Service marketing mix
The marketing mix can be defined as the elements an organization controls that can be used to satisfy or
communicate with customers. The traditional marketing mix is composed of the first 4 P’s, but with services there
are 3 additional P’s: process, physical evidence and people.
> Product > Physical Evidence, because of the
> Places intangibility people will try to find tangible
> Promotion cues to judge a company on.
> Price > People, with the intangibility and also the
> Process, when something is intangible combination of production and
people will focus more on the process. consumption the role of personnel
becomes more important.
Service marketing
Lecture 2 service customer
Service framework 2
1. People processing:
• Involvement customer, there is a high customer involvement because
the customer is part of the process.
• Investment in time and effort, because of this customer involvement,
the customer has to put time an effort in to gain the benefit from the
service (e.g. you have to go to the hairdresser).
• Process/output à advantages, with a service it isn’t just the output
advantages that are important, but the process advantages/disadvantages.
• Non-financial cost (time, mentally/ physically, fear/ pain), next to financial costs there are also non-
financial cost like time. The customer has to put in effort/time/etc. to gain the benefit of the
service (e.g., public transport or a fitness club).
3
, • Examples, public transport, health service (e.g., dentist), sports club
2. Possession processing: here customers are less involved than with people processing, since the
customers doesn’t personally undergo the service. It’s more about the output, so this is already going a
bit more into the direction of a product.
• Separate consumption/ production
• There is less customer involvement, since the consumption and production are separated.
• Examples: freight transport, repair service, storage, cleaning service.
3. Mental stimulus processing: in this process the customer has to be mentally/physically present to get
the benefits of the service.
• Thoughts/memory/attitudes, in this process the customer wants to learn something, so their
thoughts, memory or attitude will change
• Involvement customer is high
• Active vs. passive presence, for instance when you are in school you have to actively present in the
classes.
• Information transformation, information is transferred to the customer.
• Examples: education services, information services, psychotherapy, art and entertainment services
(e.g., concerts)
4. Information processing: his is an intangible process which is purely about the transferring information.
This is usually done by professionals. Examples: Accountant (You receive a report, but you have no
insight into what he has done about it).
• Highly intangibility
• Involvement customer is often quite high, but it doesn’t have to. It’s often more a habit that the
customer involvement is in place, but it’s often not necessary.
• Examples: accountants, research, consultancy, lawyer
Types of attributes
The attributes the services and goods are created upon
1. Search attributes: attributes that are easily accessible or can be judged easily
before you buy the product/service. These are usually tangible goods like
clothing for example.
2. Experience attributes: these are attributes of a service/good that you can only
judge after you buy or consume it. When you go to a restaurant for example
you can only judge after you have consumed the food.
3. Credence attributes: These are attributes of which the consumer still finds it difficult to give a good
judgment after purchase or consumption. In most cases, the knowledge for a good assessment is
lacking. Examples of this are medical diagnose.
Affectivities/script vs. output
Affectivities and script process become more important for services that score high on credence, because if you
can’t judge on output you will probably look for process and the script and how they are executed. And if you
can’t judge on if the process is executed well, you’ll probably judge on something that you trust upon (e.g., a
person/brand that you like or word-of-mouth).
Stages in service consumption
Service customer Service provider
1. Orientation 1. Attraction
2. Choice 2. Conversion
3. Consumption 3. Delivery
I. Specification 4. Retention
II. Operation
III. complementation
4. Post-consumption evaluation
1. Orientation
When consumers experience more uncertainty and risk they will trust more upon the opinion of others (WOM)
and will try to get as much information before the purchase as possible to take away some of the uncertainty.
> Heterogeneity brings a high risk with it
4
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