Services marketing 7e chapter1 1. Why Study Services? What are Services? What Are Services? Service Products vs. Summary Services dominate the economy in many Services? Unique Why Study Characteristics Services are often intangible, difficult to nations. The majority visualize and understand, of jobs are created in and customers may be the service sector.

They are performances that bring about a desired Extended Services? Physical Environment, Mix result. Total views 11, On Slideshare 0. From embeds 0. Number of embeds Downloads 1, Shares 0. Comments 0. Likes You just clipped your first slide! Predicted service is the level of service that the customer actually anticipates the firm will provide. The zone of tolerance is the extent of variation of service customers are willing to accept.

Adequate service falls at the bottom of the zone of tolerance, whereas predicted service is likely in the middle of the zone of tolerance. Describe the servuction system for a high-contact service like an upscale restaurant.

The servuction system includes a technical core food preparation and a service delivery system physical environment and wait staff.

In a restaurant, this would consist, in part, of the kitchen and cooks at its technical core that would be backstage. The interior and exterior of the facility, visible equipment, and wait staff are also part of the servuction system, but are visible to the customer. Other customers who would also patronize the restaurant at the same time might also have an impact on customer perceptions. Finally, other contact points that may impact the consumer include television commercials, word-of-mouth from friends, and driving by the exterior of the facility.

Challenging; p. Developed nations are seeing increased spending on which of the following services at the expense of physical goods? Extreme sports b. Financial advising c. Urban planning d. Medical e. Consulting a; Moderate; p. These items act as an advertisement that highlights important aspects of their company.

Progressive Auto reduces its costs primarily through a shortened response time, which decreases the likelihood of legal involvement. AOL uses free trials to create more search attributes to assist prospective customers.

Airlines are considered a low-contact service when compared to auto repair. A dental hygienist confirming needs and setting appointment dates with patients is part of the service script for teeth cleaning.

Despite the ease of information accessibility via the Internet, patients and parents of patients tend not to seek additional information prior to consulting with doctors. They simply trust that the doctor is always right. High-contact services differ greatly from low-contact services. Give two examples of each. High-contact service- nursing home, four-star hotel Low-contact service- online banking, cable tv Moderate, p. Restaurant—restaurant positioning type of food, location, parking availability.

Kitchen hygiene. The firm then implements software to help its clients to monitor employee performance. Employee responses to this approach can be negative. Interviews with cashiers of that large retailer suggest that the system has spurred many to hurry up and experience increased stress levels. Gunter, 22 years old, says he recently told a longtime customer that he could not chat with her anymore as he was being timed. They are not as friendly.

I know elderly people have a hard time making change because you lose your ability to feel. All too often, poor working environments translate into dreadful service, with employees treating customers the way their managers treat them.

Businesses with high employee turnover frequently are stuck in what has been termed the cycle of failure. However, if the working environment is managed well, there is potential for a virtuous cycle in service employment, the cycle of success.

One solution takes the form of simplifying work routines and hiring workers as cheaply as possible to perform repetitive work tasks that require little or no training. Among consumer services, department stores, fast-food restaurants, and call center operations often are cited as examples in which this problem abounds although there are notable exceptions.

The cycle of failure captures the implications of such a strategy, with its two concentric but interac- tive cycles: one involving failures with employees; the second, with customers Figure The employee cycle of failure begins with a narrow design of jobs to accommodate low skill levels, an emphasis on rules rather than service, and the use of technology to control quality.

A strategy of low wages is accompanied by minimal effort in selection or training. Consequences include bored employees who lack the ability to respond to customer problems, who become dissatisfied, and who develop a poor service attitude.

Outcomes for the firm are low service quality and high employee turnover. Because of weak profit margins, the cycle repeats itself with the hiring of more low-paid employees to work in this unrewarding atmosphere.

The customer cycle of failure begins with heavy organizational emphasis on attracting new customers who become dissatisfied with employee performance and the lack of continuity implicit in continually changing faces. These cus- tomers fail to develop any loyalty to the supplier and turn over as rapidly as the staff. This situation requires an ongoing search for new customers to main- tain sales volume.

The departure of discontented customers is especially disturbing in light of what we now know about the greater profitability of a loyal custo- mer base. Schlesinger and James L. All rights reserved. James Heskett, Earl Sasser, and Leonard Schlesigner argue that companies need to measure employee lifetime value, just as they seek to calculate cus- tomer lifetime value.

Three key cost variables often are omitted: 1 the cost of constant recruiting, hir- ing, and training as much a time cost for managers as a financial cost ; 2 the lower pro- ductivity of inexperienced new workers; and 3 the costs of constantly attracting new customers, which requires extensive advertising and promotional discounts.

Also ignored are two revenue variables: 1 future revenue streams that might have contin- ued for years but are lost when unhappy customers take their business elsewhere and 2 the potential income lost from prospective customers turned off by negative word of mouth.

You might just become the unknowing victim of a malicious case of service sabotage, such as having something unhygienic added to your food. There actually is a fairly high incidence of service sabotage by frontline employees. Lloyd Harris and Emmanuel Ogbonna found that 90 percent of them accepted that frontline behavior with malicious intent to reduce or spoil the service—service sabotage is an everyday occurrence in their organizations.

Harris and Ogbonna classify service sabotage along two dimensions: covert-overt and rou- tinized-intermittent behaviors. Covert behaviors are concealed from customers, whereas overt actions are purposefully displayed often to coworkers as well as customers. Routinized behaviors are ingrained into the culture, whereas intermittent actions are sporadic and less common. Some true examples of service sabotage classified along these two dimensions appear in Figure You know—if the guest is you or I.

Getting your own back evens the score. There are in a hurry, you slow it right down and drag it right out and if lots of things that you do that no one but you will ever know they want to chat, you can do the monosyllabic stuff. And —smaller portions, dodgy wine, a bad beer—all that and you all the time you know that your mates are round the corner serve with a smile! Sweet revenge! I mean, really putting them down is really nothing new in that. They are always complaining. So to get back at the apologies.

Intermittent —Front-of-House Supervisor Before you know it, managers and all have cottoned on and this poor chap is being met and greeted every two steps! Used with permission. The Cycle of Mediocrity The cycle of mediocrity is another potentially vicious employment cycle see Figure You are most likely to find it in large, bureaucratic organizations.

Glynn and J. In such environments, service delivery standards tend to be prescribed by rigid rule- books and oriented toward standardized service, operational efficiencies, and prevention of both employee fraud and favoritism toward specific customers. Job responsibilities tend to be narrowly and unimaginatively defined, tightly categorized by grade and scope of respon- sibilities, and further rigidified by union work rules.

Salary increases and promotions are largely based on longevity. Successful performance in a job often is measured by absence of mistakes, rather than by high productivity or outstanding customer service.

Training focuses on learning the rules and the technical aspects of the job, not on improving human inter- actions with customers and coworkers. Because there are minimal allowances for flexibility or employee initiative, jobs tend to be boring and repetitive. However, in contrast to the cy- cle of failure, most positions provide adequate pay and often good benefits combined with high security. Thus, employees are reluctant to leave. This lack of mobility is compounded by an absence of marketable skills that would be valued by organizations in other fields.

Customers find such organizations frustrating to deal with. Faced with bureaucratic hassles, lack of service flexibility, and unwillingness of employees to make an effort to serve them well, customers can become resentful. Employees may then protect themselves through such mechanisms as with- drawal into indifference, playing overtly by the rulebook, or countering rudeness with rudeness.

The Cycle of Success Some firms reject the assumptions underlying the cycles of failure or mediocrity. Instead, they take a longer term view of financial performance, seeking to prosper by investing in their people in order to create a cycle of success Figure As with failure or mediocrity, success applies to both employees and customers.

Attractive compensation packages are used to attract good quality staff. Broadened job designs are accompanied by training and empowerment practices that allow frontline staff to control quality. With more focused recruitment, intensive training, and better wages, employees are likely to be happier in their work and to provide higher quality, customer-pleasing service.

Regular customers also appreciate the continuity in service relationships resulting from lower turnover and so are more likely to remain loyal. Profit margins tend to be higher, and the organization is free to focus its marketing efforts on reinforcing customer loyalty through customer retention strategies.

These strategies usually are much more profitable than strategies for attracting new customers. A powerful demonstration of a frontline employee working in the cycle of success is waitress Cora Griffin featured in the opening vignette of this chapter.

Even public service organizations in many countries are increasingly working toward creating their cycles of success, too, and offer their users good quality service at a lower cost to the public. Figure Motivate and Energize Your People 1. We will then discuss the recommended practices one by one in this section.

Employee satisfaction should be seen as necessary but not sufficient for having high performing staff. For in- stance, a recent study showed that employee effort was a strong driver of customer sat- isfaction over and above employee satisfaction.

The right people are your most impor- tant asset. Hiring the right people includes competing for applications from the best em- ployees in the labor market, then selecting from this pool the best candidates for the specific jobs to be filled. To be able to select and hire the best people, they first have to apply for a job with you and then accept your job offer over others the best people tend to be selected by several firms. Furthermore, the compensation package cannot be below average—top people ex- pect above average packages.

In our experience, it takes a salary in the range of the 60th to 80th percentile of the market to attract top performers to top companies.

However, a firm does not have to be a top paymaster, if other important aspects of the value propo- sition are attractive. In short, understand the needs of your target-employees and get your value proposition right. For example, The Walt Disney Company assesses prospective em- ployees in terms of their potential for on-stage or backstage work. On-stage workers, known as cast members, are assigned to those roles for which their appearance, personalities, and skills provide the best match.

What makes outstanding service performers so special? Often it is things that cannot be taught. It is the qualities intrinsic to the people and qualities they would bring with them to any employer. As one study of high performers observed: Energy. The same is true for charm, for detail orienta- tion, for work ethic, for neatness. Tools to Identify the Best Candidates Excellent service firms use a number of approaches to identify the best candidates in their applicant pool.

These approaches include interviewing applicants, observing behavior, conducting personality tests, and providing applicants with a realistic job preview. To improve hiring decisions, successful re- cruiters like to employ structured interviews built around job requirements and to use more than one interviewer.

People tend to be more careful in their judgments when they know that another individual is also evaluating the same applicant. The hiring decision should be based on the behavior that recruiters observe, not just the words they hear.

Too often, the big talkers are the little doers. Also, past behavior is the best pre- dictor of future behavior: Hire the person who has won service excellence awards, received many complimentary letters, and has great references from past employers.

Personality tests help to identify traits relevant for a particular job. For example, willingness to treat customers and colleagues with cour- tesy, consideration, and tact; perceptiveness of customer needs; and ability to commu- nicate accurately and pleasantly are measurable traits. Hiring decisions based on such tests tend to be accurate.

For example, the Ritz-Carlton Hotels Group uses personality profiles on all job applicants. Employees are selected for their natural predisposition for working in a service context. Inherent traits such as a ready smile, a willingness to help others, and an affinity for multitasking enable them to go beyond learned skills.

An appli- cant to Ritz-Carlton shared about her experience of going through the personality test for a job as a junior-level concierge at the Ritz-Carlton Millenia Singapore. But I had to support it with real life examples.

This, at times, felt rather in- trusive. To answer the first question for instance, I had to say a bit about the person I had helped—why she needed help, for example. The test forced me to recall even insignificant things I had done, like learning how to say hello in different languages which helped to get a fix on my character.

Here, applicants enter their test responses to a Web-based questionnaire, and the prospective employer receives the analysis, the suitability of the candidate, and a hiring recommendation. Developing and administering such tests has become a sig- nificant service industry in its own right. A leading global supplier of such assess- ment products, the SHL Group, serves some 15, organizations in 30 languages in over 50 countries. Have a look at its website at www. This approach allows some candidates to withdraw if they determine the job is not suitable for them.

Many service companies adopt this approach. Here, managers can observe candi- dates in action, and candidates can assess whether they like the job and the work environment. Train Service Employees Actively If a firm has good people, investments in training can yield outstanding results.

Service champions show a strong commitment to training in words, dollars, and ac- tion. Humor is the key. Southwest looks for people with other-oriented, outgoing personalities, individuals who become part of an extended family of people who work hard and have fun at the same time. It is perhaps at its most innovative in the selection of flight attendants. A day-long visit to the company usually begins with applicants gathered in a group.

Recruiters watch how well they interact with each other another chance for such observation will come at lunchtime. Then comes a series of personal interviews. Based on input from supervisors and peers in a given job category, interviewers target 8 to 10 dimensions for each position. For a flight attendant, these might include a willingness to take initiative, compassion, flexibility, sensitivity, sincerity, a customer service orientation, and a predisposition to be a team player.

Tell me how you have used humor to defuse a difficult situation. To help select people with the right attitude, Southwest invites supervisors and peers with whom future candidates will be working to participate in the in-depth interviewing and selec- tion process. More unusually, it in- vites its own frequent flyers to participate in the initial interviews for flight attendants and to tell the candidates what they, the passengers, value.

The interviewing team asks a group of potential employees to prepare a five-minute presentation about themselves and gives them plenty of time to prepare. They watch the audience to see which applicants are using their time to work on their own presentations and which are enthusi- astically cheering on and supporting their potential coworkers.

By hiring the right attitude, the company is able to foster the so-called Southwest spirit— an intangible quality in people that causes them to want to do whatever it takes and to want to go that extra mile whenever they need to. Southwest itself goes the extra mile for its employees and has never laid anyone off, even after it decided to close reservations centers in three cities in to cut costs. Sources: Kevin and Jackie Freiberg, Nuts! Interpersonal skills tend to be generic across service jobs and include visual communications skills such as making eye contact, attentive listening, body language, and even facial expressions.

Technical skills encompass all the required knowledge related to processes e. Both technical and interpersonal skills are necessary but neither alone is sufficient for optimal job performance.

Knowledgeable staff are a key aspect of service quality. They must be able to explain product features effectively and position the product correctly. For instance, in Best Practice in Action Of course, training has to result in tangible changes in behavior. Present topics for classroom discussion: Core and Supplementary Elements Chapter 5: Best Practice in Action—demonstrations the application of best practices.

This text addresses new applications of technology that cover topics like Internet-based strategies and biometrics, search-engine optimization, Twitter, and M-commerce. This edition features an exceptional selection of up-to-date, classroom-tested cases of varying lengths and levels of mrketing majority of which were written by the authors.

The three types of boxed inserts found throughout the chapters of this text, lend themselves well to in-class discussions: To use the test banks below, you must download the TestGen software from the TestGen website. People, Technology, Strategy, 7th Edition. New iwrtz This Edition. Username Password Forgot your username or password? The opportunities and challenges that new social media poses for customers and service marketers are woven throughout this edition.

New and Revised Cases. The work is protected by local and international copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Description For undergraduate and graduate services marketing courses.