Marketing Series: Services Marketing, Is It Different?

 SERVICE CULTURE

A service culture focuses on serving the customer and satisfying their needs. The service culture must begin with top management and flow down. Present to your class different hospitality companies that exemplify a service culture (Four Seasons, Ritz Carlton, etc.) 

Mini Case: Are you happy with the customer service?

FOUR SERVICE CHARACTERISTICS

Service marketers must understand the four characteristics of services: intangibility, inseparability, variability, and perishability.

Intangibility

• Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are purchased

• Problem: more difficult for customers to evaluate 

• Solution: providing physical cues to reassure the buyer

• Examples: Decoration of the store, the appearance of its employees, logo&image, advertisements

Inseparability

•  It’s impossible to separate the production of the service from the consumption of the service. 
  

• Explanation: the expertise, skill and personality of a service provider, the quality of company employees, facilities and equipment, cannot be detached from the service offering itself.

• “Service encounter”: the actual interaction between the customer and the service provider. To minimise the potentially negative effects of bad service encounters, and save on labour costs, customers are encouraged to use self-service technology.

• Solutions: 1. staff training 2. self-‐‐service (minimise the potentially negative effects of bad service encounters) 3. offering guarantees or warranties for lowering the risk

  
  

Variability

• It’s hard to maintain the same level of service as you’re having different staff dealing with different customers.

• Explanation: Because the quality of services depends on who provides them, when and where, and to whom, services are highly variable

• Solution: Total quality management

  
  

  
  

Perishability

• Services cannot be stored. It’s impossible to store a service for later sale or use

• Problem: It’s more sensitive to the change in demand compared to tangible products.

• Example: A 100-room hotel that sells only 60 rooms on a particular night cannot inventory the 40 unused rooms and then sell 140 rooms the next night Revenue lost from not selling those 40 rooms is gone forever

• Solution: capacity management, the process by which organizations adjust their offerings in an attempt to match demand. Example: Discount flight ticket for off-‐‐season.
  

THE SERVICE PROFIT CHAIN

The service profit chain links service firm profits with employee and customer satisfaction

1. Internal service quality (Internal Marketing) - Superior employee selection and training, a quality work environment, and strong support for those dealing with customers, which results in…

2. Satisfied and productive service employees - More satisfied, loyal, and hardworking employees, which results in…

3. Greater service value - More effective and efficient customer value creation and service delivery, which results in…

4. Satisfied and loyal customers - Satisfied customers who remain loyal, repeat purchase, and refer other customers, which results in…

5. Healthy service profits and growth: superior service firm performance.

MARKETING STRATEGIES FOR BUSINESSES

Today as competition and costs increase and as productivity and quality decrease, more marketing sophistication is needed. The seven services marketing strategies include: 

1. Managing Service Differentiation: Service companies can differentiate their service delivery through the people that work for them, their physical environment and their service delivery process. Example: British Airways 

2. Managing Service Quality: Once customer expectations are determined, managers need to develop a service delivery system that will deliver a service that meets the guest’s expectations. Example: Ritz-Carlton

3. Managing Service Productivity: In attempting to improve service productivity, companies must be mindful of how they create and deliver customer value. Example: McDonald’s

4. Resolving Customer Complaints: A company cannot always prevent service problems, but it can learn from them. Good service recovery can turn angry customers into loyal ones. To have an effective complaint resolution, managers must empower frontline service employees. Example: Marriott. 

5. Managing Employees As Part Of The Product: The manager must hire friendly and capable employees and formulate policies that support positive relations between employees and guests. The job of the marketing department includes encouraging everyone in the organization to practice customer-oriented thinking. Example: Four Seasons. 

6. Managing Perceived Risk: Customers who buy hospitality products experience some anxiety because they cannot experience the product beforehand. 

7. Managing Capacity and Demand: Corporate management is responsible for matching capacity with demand on a long-term basis; unit managers are responsible for matching capacity with fluctuations in short-term demand. Example: Mother’s Day and New Year’s Eve

Marketing Series: A Brief Explanation of Marketing Plan and Strategy

 Overview

In this topic, we look at designing customer-driven marketing strategies and constructing marketing programs. First, we look at the organisation's overall strategic planning, which guides marketing strategy and planning. Next, we discuss how marketing partners closely with others inside and outside the firm to create value for customers. We then examine marketing strategy and planning—how marketers choose target markets, position their market offerings, develop a marketing mix, and manage their marketing programs. 

 

COMPANY-WIDE STRATEGIC PLANNING: DEFINING MARKETING’S ROLE

Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing market opportunities. Strategic planning sets the stage for the rest of the planning in the firm. Companies typically prepare annual plans, long-range plans, and strategic plans.

At the corporate level, the company starts the strategic planning process by defining its overall purpose and mission.  It then creates detailed supporting objectives that guide the entire company. Next, the headquarters reviews the portfolio of businesses and products that is best for the company and how much support to give each one. In turn, each business and product develop detailed marketing and other departmental plans that support the company-wide plan. Thus, marketing planning occurs at the business unit, product, and market levels. 

• Defining a Market-Oriented Mission 

  Many organisations develop formal mission statements. A mission statement is a statement of the organisation’s purpose—what it wants to accomplish in the larger environment. A clear mission statement acts as an “invisible hand” that guides people in the organisation. A market-oriented mission statement defines the business in terms of satisfying basic customer needs. Management should avoid making its mission too narrow or too broad. Missions should be realistic, specific, fit the market environment, based on the company’s distinctive competencies, and motivating. Setting Company Objectives and Goals 

• The company’s mission needs to be turned into detailed supporting objectives for each level of management. The mission leads to a hierarchy of objectives, including business objectives and marketing objectives. Marketing strategies and programs must be developed to support these marketing objectives. 

 

MARKETING STRATEGY AND THE MARKETING MIX

Marketing strategy is the marketing logic by which the company hopes to achieve these profitable relationships. Companies know that they cannot profitably serve all consumers in a given market—at least not all consumers in the same way. Hence, a customer-driven marketing strategy is needed.

Lesson: Overview of Marketing Strategy (Duration: 5.11)

 

Developing an Integrated Marketing Mix

The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. Product means the goods-and-services combination the company offers to the target market.

• Price is the number of money customers must pay to obtain the product.

• Place includes company activities that make the product available to target consumers.

• Promotion means activities that communicate the merits of the product and persuade target customers to buy it.

An effective marketing program blends all of the marketing mix elements into a coordinated program designed to achieve the company’s marketing objectives by delivering value to consumers. Some critics feel that the four Ps may omit or under-emphasize certain important activities. From the buyer’s viewpoint, in this age of customer relationships, the four Ps might be better described as the four Cs:

• Customer solution 

• Customer cost 

• Convenience 

• Communication

MANAGING THE MARKETING EFFORTManaging the marketing process requires four marketing management functions:

• Analysis

• Planning

• Implementation

• Control

 

The Nature and Contents of Marketing Plans

Working within the plans set by the levels above them, product managers come up with a marketing plan for individual products, lines, brands, channels, or customer groups. 

Each product level (product line, brand) must develop a marketing plan for achieving its goals. A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. 

Marketing plans are becoming more customer and competitor orientated. The plan draws more input from all the business functions and is team-developed.

1. Contents of the marketing plan:
   1. 1. Executive summary and table of contents.
      2. Situation analysis.
      3. Marketing strategy.
      4. Financial projections.
      5. Implementation controls.