1. From a marketing services perspective it may be said that the best customers are not the ones that generate the most profit. Please describe the customer characteristics that may be more important than profitability.
Mostly, according to Sink (1985), customers of a service company seldom receive only one service from a particular company, as the traditional definition for productivity assumes. They can also directly influence the company's production process and outcomes. Several researchers have pointed out that customer participation in the service production process is strongly connected with service productivity (Fuchs, 1968, Lovelock and Young, 1979; Bateson, 1985; Gronroos, 1990, Ojasalo, 1999). Customers are often present and active participants in service production, so viewing them as input resources is clearly a primary difference from the way inputs are understood traditionally. Due to customers' increasing opportunities to participate in and influence the production of a service, they cannot be regarded as passive recipients of the provider's outputs, but should be seen as an integrated part of the organization (Storbacka, 1994).
An essential characteristic of service production is the complexity of relationships between service provider and customer (Gronroos and Ojasalo, 2000). Rather than specifying a single type of provider-customer relationship as the production input, four general types can be identified (Gummesson, 1993 and 1994): the provider may produce the service in isolation from the customer; the customer may self-serve; the provider and the customer may produce the service in interaction with each other; and the customers may produce the service between themselves. According to Devanna and Tichy (1990), in such a boundary-free organization, the traditional way of defining productivity is clearly no longer valid
Generally, business operates to gain profit in which in return drives operators to produce products and services that can satisfy their customers changing needs. Customers have four essential characteristics which business organization should know. Customers have a particular need and preferences. Customers have enough money to buy products and services. Customers also have the decision making power. Lastly, customers need to have easy access of your products and services. Having acknowledged these characteristics gives business organization the edge to be profitable.
However, there is such other characteristics of customers in which are more important than having profits. Loyalty, for example is an important characteristics of customers in which business organization should gain. Customer loyalty is the practice of finding, attracting, and retaining your customers who regularly purchase from you. Every business organization wants to develop loyal customers that buy consistently over time, generally at regular prices, commonly ignoring the pleas and platitudes of competitors. Everyone knows customer loyalty is good.
Keeping existing customers costs less than having new customers. Getting new customers need business organizations extensive promotion. However, having good personal relationship with loyal customers can also mean referrals in which customers recommend your services to their peers when they like your service. In addition, they could be a testimony on new customers. Moreover, they will be encouraged to use more of your services. There would be fewer expenses especially in promotions because loyal customers can do it for you.
According to McIlroy and Barnett (2000), “in a business context loyalty has come to describe a customer’s commitment to do business with a particular organisation, purchasing their goods and services repeatedly, and recommending the services.”
According to Bowen and Chen (2001), “It is commonly known that there is a positive relationship between customer loyalty and profitability. Today, marketers are seeking information on how to build customer loyalty. The increased profit comes from reduced marketing costs, increased sales and reduced operational costs. Finally, loyal customers cost less to serve, in part because they know the product and require less information. They even serve as part-time employees. Therefore loyal customers not only require less information themselves, they also serve as an information source for other customers”.
2. A friend of yours is setting up a math tutoring service. She asks, "Do all services need to offer guarantees?" Please provide a detailed answer to the question and explain why your friend should or should not offer a guarantee.
There have been various definitions of service guarantees can be found in the literature. Hart, Schlesinger, and Maher (1992) define a service guarantee as "a statement explaining the service customers can expect (the promise) and what the company will do if it fails to deliver (the payout)." Evans, Clark, and Knutson (1996) define a service guarantee as “a policy, express or implied, advertised or unadvertised, that commits the operation to making its guests happy." Callan and Moore (1998) state that, "a service guarantee can be represented as a promise to the customer and is often advertised as such."
From the definitions of guarantee, we can understand the importance of guarantee. Thus, all services must have guarantees to provide the best services whether explicit or implicit in order to gain customers. My friend should give a guarantee that after the tutor I can gain knowledge and be satisfied with what has being taught.
Service promises can foster and strengthen customer-firm relationships (Bitner, 1995; Gwinner, Gremler, and Bitner, 1998) due to their attention to specific attributes such as price or delivery time (New York Times, 2001), or because of unconditional assurances aimed at increasing customer satisfaction (Broadcasting and Cable, 1996). Ostrom and Iacobucci (1998) suggest that service guarantees serve as external cues just like price or brand reputation that are used by customers to evaluate service quality and reduce risk. Service guarantees improved customer evaluations only in the absence of other quality information. Perceptions of risk were lower when a guarantee was offered. Service guarantees had a greater impact on customer evaluations when quality variation was perceived to be high among service providers. In addition, the uniqueness of a guarantee has been found to amplify its effect on customer evaluations (Wirtz 1998). Wirtz (1998) notes that in general, service guarantees favorably influence customer attitudes and beliefs, thereby increasing purchase intention.
3. Please comment on the following statement: "The development of new services is best pursued as a linear process."
Competition in rapidly changing service markets often requires the ability to quickly develop and deploy new service offerings. Firms pursuing a strategy reliant upon innovation are under constant pressure to develop more effective new service development methods, make better use of their resources, and beat their competitors to market with the next great idea. Related research has previously demonstrated that certain organizational, technological, and process design choices have significant strategic influence on the firm's ability to rapidly and effectively develop new services (Froehle et al. 2000).
Services marketing is built on carefully understanding the deeper needs of your customers, and then providing services that will help to make them more successful. In developing a new service it should follow a service development cycle. It should not be in a linear process.
Source: Pacific Horizon Group (2004)
The starting point is the market research phase of Identifying the Customer Pain Point. During this phase the customer pain points and requirements are captured. The next phase, Developing the Service Definition, takes these needs and casts them into a set of service components that form the heart and soul of the customer engagement. The third phase, Marketing & Selling, develops the customer-facing portfolio used to communicate and sell the service product to a customer. Once the service is purchased by a customer, the fourth phase, Delivering & Supporting, is used to implement the service. Insight gained during this implementation phase is used as input into the identification of new customer pain points, leading to the development of additional services.
Edvardsson and Olsson (1996) focused on design quality in which they posit that the goal of any new service development effort should be "to create the prerequisites for services which the customer perceives have an attractive added value." Johnson et al. (2000) add non-linear elements to the new service development model, emphasizing the interdependence on design and development as well as the cyclical aspects of the new service creation process. Their work is among the first to critically examine the non-linear nature of the new service design process. A non-linear model has also been developed by considering the organizational learning that can occur during the development of new services (Stevens and Dimitriadis 2004).
4. The manager of an electrical contracting company that does repair work, remodeling and new construction for homeowners understands the need to set customer-defined standards in order to close the gap between customer expectations and what the company currently delivers. List and define the two major types of customer-defined standards presented in our text and give three examples of each.
Customer-defined standards are operational standards based on pivotal customer requirements that are visible to and measured by customers.
Major Types of Customer-Defined Standards
1. Hard customer-defined standards are standards that can be counted, timed or observed through audits.
Examples:
· On time delivery
· Reliability
· Compliance with Commitment
2. Soft Customer-defined standards are standards that are opinion-based measures that can not be directly observed.
Examples:
· Responsiveness in which human voice on the line during report of problem
· Resolve problem at first contact no transfers, other calls or multiple contacts
· Treat Me with Respect
5. The owner/manager of an independent video rental store wants to develop new tactics to get customers into his store and induce them to browse store offerings when they get there. He is thinking of specializing in science fiction and horror movies. Please explain how the servicescape may be used to increase store traffic using the four different strategic roles mentioned in our text. Provide at least one specific example of a servicescape design appropriate for each strategic role.
Servicescape is defined as the environment in which the service is delivered and where the firm and the customer interact (Baker and Cameron 1996). The servicescape has received renewed attention in the services marketing literature (Bitner, 2000); social-servicescape (Tombs & McColl-Kennedy, 2003); servicescape failures (Hoffman, Kelley, & Chung, 2003); the physical environment and hedonic consumption at sporting events and leisure settings (Hightower, Brady, & Baker, 2002; Wakefield & Blodgett, 1999); and hedonic motivations and aesthetic appeal in the retail servicescape (Arnold & Reynolds, 2003). Furthermore, the servicescape has been identified as an important factor in shaping the consumer’s experience in a retail setting (Bitner 1992; Hoffman, Kelley & Chung 2003; Jones 1999; Wakefield & Baker 1998). From a practical perspective, millions of dollars are invested each year in an effort to make these retail environments appealing to customers.
Service environments are specifically designed to influence shoppers’ emotional responses aimed at enhancing the buying experience and increasing purchase probability (Darden & Babin, 1994). It is acknowledged that for many consumers their first level of response to their environment is affective, in that it guides the kinds of experiences a person expects and seeks in their environment (Ittelson, 1973). Further, Russell and Pratt (1980) proposed that an environment has affective quality defined as its emotion-inducing quality that persons attribute to that place.
Successful retailers have learned to structure their internal environments to create a positive customer experience through a variety of strategies that include decor, displays, customer amenities, and customer services. These organizations know that customers also expect an environment that anticipates and fulfills their other basic desires for comfort, convenience, safety, entertainment, and information. These environmental factors, termed "atmospherics," were defined by Kotler (1973) and describe the physical and controllable environmental components that can affect the buyer's "purchasing propensity" to consummate a marketing exchange.
Other researchers have proposed and found that atmospherics lead to consumer satisfaction, patronage, word-of-mouth advertising, and an improved image for the organization (Bitner 1990; 1992; Grossbart 1990). These researchers have noted that the physical environment is the least studied but perhaps one of the most important and controllable dimensions of customer satisfaction.
There are four strategic roles of servicescape. These are packaging, facilitator, socializer and differentiator. Servicescape act as a packaging in a way that it is the outward appearance of the organization that forms the initial impression. It is the visualization of the intangible service product. It initially wraps the service product and projects an image of what is inside the wrapping waiting to satisfy the consumers. For example, Malaysian Maritime Institute offers inspection of ship as one of the services we provide for ship owners. Their servicescape includes a display of individual ship file, a core fleet list of ships on display with last inspection date, an-online computer system of the list of ships and their status and the inspection guidelines in use and the ship inspection charges. Thus, the servicescape of the organization packages the inspection services product that they offer to the customers.
Also, servicescape as a facilitator can make the service a pleasure to experience from the customer’s point of view and a pleasure to perform from the employee’s point of view. For example, in a maritime institute, they have a trading house with complete office facility for effective communication through e-mail, facsimile machine and desk telephones. They also have a long cum operation room in which customers could come and interact to get shipping and marine operations services. Both customers and the team were well facilitated by the servicescape to perform for customer’s satisfaction.
In addition, the design of the servicescape helps to socialize the employees and the customers in the sense that it conveys the expected roles, behavior and relationship between them. For example, designing a facility to house service product in a servicescape that can reflect to customers what their role is in relation to the organization, what parts of the facility are for employees only, how they should behave while inside the facility and what type of interactions are encouraged to produce high level of performance in service for the customers.
Lastly, as a differentiator, servicescape can also be used to position an organization to attract new market segments. Variation in the physical facility of the organization could signal price differentiation. For example, a large shipping company would have an established corporate headquarters with ample parking bays and shipshape landscaping of a nautical look with life size ship propeller inserted amongst the water fountains. While a small shipping company with a couple of operational small ships would be having a small office situated amongst the shop lots of a shopping centre. The servicescape of the large shipping company differentiates it from the small shipping company. It goes on to differentiate the market segments, service quality, after-sale service and service pricing.
0 comments:
Post a Comment