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Seminar of Services

Marketing
Class overview
Professor Walter Vizarreta

Table of Contents

Definition of services
2 key concepts
Four categories of services
The 8 Ps of services marketing
Integrated marketing
Developing a services marketing strategy

Definition of services
Services are economic activities offered by
one party to another, most commonly
employing time-based performances to
bring about desired results in recipients
themselves or in objects or other assets for
which purchasers have responsibility.

Definition of services
In exchange for their money, time, and
effort, service customers expect to obtain
value from access to goods, labor,
professional skills, facilities, networks, and
systems; but they do not normally take
ownership of any of the physical elements
involved.

2 key concepts

Service product
The main product is the
service.
Customer service
Services that assist the
customer. These are
complementary services.

Four categories of services


People processing
Possession processing
Mental stimulus processing
Information processing

The 8 Ps of services
marketing

Product elements
Place and time
Price and other user outlay
Promotion and education
Process
Physical environment
People
Productivity and quality

Product elements

It is the creation of a service concept that will


offer value to target customers and satisfy their
needs better than competing alternatives.

Designing the service


concept
Core Product
Central component that supplies the principal,
problem-solving benefits customers seek.
Supplementary Services
Augment the core product, facilitating its use and
enhancing its value and appeal.

Designing the service


concept
Delivery Process
It must address:

How the various service components are delivered to the


customer.
The nature of the customer's role in those processes.
How long delivery lasts.
The prescribed level and style of service to be offered

The Flower of Service


Information

Facilitating elements

Information
Order taking
Billing
Payment

Enhancing elements

Consultation
Hospitality
Safekeeping
Exceptions

Consultation

Payment

Billing

Core
product

Order
taking

Hospitality

Exceptions

Safekeeping

The Flower of Service


Information
Customers often require information about how to
obtain and use a product or service.
Order taking
Process of accepting applications, orders, and
reservations. The process should be fast and
smooth.

The Flower of Service

Billing
Common element to all services. Inaccurate,
illegible, or incomplete bills risk disappointing
customers.
Payment
Increasingly, customers expect ease and
convenience of payment, including credit,
when they make purchases.

The Flower of Service


Consultation
Involves a dialogue to probe
customer requirements and then to develop a
tailored solution.
Key point in customer relations: What do you
suggest?
Advise the client.

The Flower of Service


Hospitality
Should reflect pleasure at meeting new
customers and greeting old ones when
they return.
Courtesy and consideration for customers'
needs apply to both face-to-face
encounters and telephone interactions .

The Flower of Service


Safekeeping
Customers often want assistance with their
personal possessions.
Unless certain safekeeping services are provided,
such as safe and convenient parking for their
cars, closets, safes, luggage storage, etc., some
customers may never return.

The Flower of Service


Exceptions
Involve supplementary services that fall outside the
routine of normal service delivery.
Special requests
Problem solving
Handling complaints, compliments, and
suggestions
Restitution

Place and time

Implies decisions on how and where the service


should be delivered and channels to be used.
Service delivery can be accomplished through
physical and electronic means.

Price and other user outlays

The value customers pay to obtain the desired


benefits.
It is not just about money, but also other user
costs, primarily concerning time and effort.

Revenue management

Reserving capacity for high-yield customers:

A well-designed revenue management system can predict with


reasonable accuracy how many customers will use a given
service at a specific time at each of several different price levels.
Afterwards, block the relevant amount of capacity at each level
(known as a price bucket).

Revenue management

Price elasticity
Percentage change in demand

Price elasticity
Price per
unit of
service

D1

Percentage change in price


D2

Quantity of units demanded

Setting hotel room sales targets by segment and time period


Capacity
(% rooms)

Week 7
(low season)

Week 36
(high season)

100%
Loyalty program members

Out of commission for renovation

Loyalty program
members
Transient guests
Weekend
package
50%

Weekend
package

Transient guests
Groups and conventions
Groups (no conventions)

Airline contracts

Nights:

Tu

Airline contracts

Th

Sn

M
Time

Tu

Th

Sn

Promotion and education

Seeks to provide information and needed


advice, to persuade target customers of the
merits of a brand or service product, and to spur
them to act at specific times.

Process

The way in which a company goes about its job.


It is just as important as what it does.
Customers frequently take part.

Blueprinting a restaurant
experience

Blueprinting a restaurant
experience

Dysfunctional customer behavior


disrupts service processes

Six types of jaycustomers:


The

thief
The rule breaker
The belligerent
The family feuders
The vandal
The deadbeat

Consequences of
dysfunctional behavior

Employess are victims of abuse.


Customers are exposed to
unpleasant incidents. Can spoil
their consumption experience.
Companies may suffer significant
economic losses.

Physical environment

It may have a strong impact on customers


impressions.
It offers tangible evidence of the quality of a
companys service.

People

Interactions between customers and contact


personnel strongly influence customer
perceptions of service quality.
Key elements: recruiting, training, and
motivating.

Productivity and quality

Both aspects must work together


simultaneously.
Productivity reduces costs.
Quality, perceived by the customer, increases
differentiation from the competition (competitive
advantage) and loyalty.

Integrating marketing with


other key areas
Operations
Managemenet

Human
Resources
Management

Marketing
Management

Frame of reference:
Developing a services
marketing strategy
Understanding the customer
Building a service model
Managing the inter-relationship with the
customer
Implementing a profitable services strategy

UNDERSTANDING CUSTOMER NEEDS, DECISION MAKING, AND BEHAVIOR IN SERVICES ENCOUNTERS

BUILDING THE SERVICE MODEL

Develop service concept: core and


supplementary elements

Select physical and electronic channels


for service delivery

Value exchange
Set prices with reference to cost, competition, and
value

The business model


Educate customers and promote the value
proposition

Position the value proposition against competing


alternatives

MANAGING THE CUSTOMER INTERFACE


Design and manage service processes

Balance demand against productivity capacity

Plan the service environment

Manage service employees for competitive advantage

IMPLEMENTING PROFITABLE SERVICES STRATEGIES


Create customer relationship and build loyalty

Plan for service recovery and create customer


feedback systems

Continuously improve service quality and productivity

Organize for change management and service leadership

Thank you very


much.

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