MAR4841 Test 2 Mende FSU

Factors leading to gap 1 (listening gap)

Only first 2

1. inadequate market research orientation:

-not focused on service research

-inadequate use of market research

2. lack of upward communication

-lack of interaction between management/employees and customers

-too complex structure

Marketing research process

stage 1

stage 2

stage 3

stage 4

stage 5

stage 6

1. Define Problem and Research Objectives

2. Develop services measurement strategy

3. Implement research program

4. Collect and Tabulate Data

5. Interpret and Analyze Findings

6. Report findings

Services Research Program

the combination of research studies to address research objectives and execute an overall strategy

Market Research helps us to

1. Discover customer requirements/expectations

2. Assess gaps btwn customer expectations & perceptions

3. Monitor service performance

4. Identify dissatisfied customers

5. Compare to competition

6. Gage effectiveness of changes

7. Evaluate service employees

Innovation related objectives

1. Expectations for a new service

2. Monitor changing customer expectations

3. Forecast future customer expectations

Innovation may backfire due to...

changes in technology/ process

research objectives should be

- actionable

- realistic

- directly related to the problem to be solved or question to be answered

Criteria for an effective services research program

-should have qualitative and quantitative research

-includes perceptions and expectations

-measures importance/ priorities of customers

-measures loyalty (intentions vs. actual): will they really come back?

-should occur over time (appropriate frequency)

-statistics valid results

-provide good info at a reasonable cost

Qualitative Research

hypothesis generative work

Quantitative Research

marketing is designed to describe the nature, attitudes, or behaviors of customers empirically and test specific hypotheses that a service marketer wants to examine

"Relationship" / SERVQUAL survey (qual)

-Identifies strengths and weaknesses via gap between expectations and perceptions across service dimensions (quantifies gap)

-Service Dimensions SERVQUAL evaluates: reliability, assurance, tangibles, empathy, responsiveness

-For cost efficiency, companies only measure perceptions

Post Transaction Surveys (qual)

-short and focused

-surveys both satisfied and dissatisfied customers

-higher response rate

-better info because customer is surveyed right after

-signals to customers that employees care

-motivates employees

critical incident technique (qual)

-Goal: understanding actual events and behaviors that cause dis/satisfaction

-Data: stories

-Output: identification of underling themes

-the really good and the really bad

ADVANTAGES: verbatim insight, concrete on what to improve, easy to tell employees what to do, easy to apply

mystery shopping (gap 3) (qual)

People who pose as customers and shop at a company's own stores or those of its competitors to collect data about customer-employee interactions and to gather observational data. They might also compare prices, displays, and the like.

Customer Complaint Solicitation (qual)

-We must prepare for when things go wrong

-You want your customers to tell YOU

-Easy but bias

-Complaint Channels: employee (front-line), website, comment cards, 3rd party

Lost Customer Research (qual)

-exposes reasons for leaving

-Bucket theory

-helps quantify value and costs of lost customers

Market Ethnography (qual)

-study of human beings in their natural environment, involving the observation of what and how respondents accomplish different tasks

-more open and flexible bc its observing

-EX: Quantiview: in-house observations

Common means for answering research questions

- Ask customers directly

- observe customers

- Get information from employees and front line service providers

- database marketing research

Development and implementation of a research program (Gap 1: lack of upward communications) what makes an effective program?

Planning upward communication research:

-who gets the info? internal customer-branches, employees

-why do they need it?

-how will they use it? present easily digestible market research amongst internal customers

CHAPTER 6: Gap 1 (last 2)

3. Insufficient relationship focus

-lack of market segmentation

-focus on new customers rather than relationship

4. Inadequate service recovery

-lack of listening to complaints

-failure to recover

old vs. new marketing concept

old: make a sale

new: develop a customer relationship

relationship marketing

-a strategy that focuses on keeping and improving relationships with current customers

-not necessarily new customers

-cheaper to keep old

-less on attraction more on enhancement and retention

Transaction lens

done with relationship after purchase

Source of competitive advantage

strangers: attractiveness. Low sustainability for a ca

acquaintances: satisfaction. Low sustainability for a ca

friends: satisfaction+trust. Medium sustainability for a ca

partners: satisfaction+trust+commitment. High sustainability for a ca

Relationship marketing primary goals

-acquire: the customer's business

-retain: the customer's business

-satisfy: the customer's needs and wants

-enhance: the relationship with the customer

Benefits of relationship marketing for customers

Confidence benefits

-trust in provider

-reduced anxiety

Social benefits

-familiarity/bonds

Special treatment benefits

Benefits for firms

Economic benefits

-regular revenue stream

-reduced costs

Customer behavior benefits

-strong WOM endorsements

-voluntary customer performance (do employee jobs)

Human resource management benefits

-happy customers=happy employees

Customer Relationship Management (CRM)

a business philosophy and set of strategies, programs, and systems that focus on identifying and building loyalty among the firm's most valued customers

service profit chain

RELATIONSHIP DEVELOPMENT MODEL

Relationship drivers codys reign sucks

-Switching barriers: customer inertia, switching costs, search costs

-Core service provision: satisfaction, perceived service quality and value

- Relationship bonds: social, fiancial

RELATIONSHIP DEVELOPMENT MODEL

Strong customer relationship (loyalty) outcome

-Customer benefits: confidence, social, and special treatment benefits

-Firm benefits: economic, customer behavior, HR benefits

customer inertia

situation in which a consumer tends to continue a pattern of behavior until some stronger force motivates him or her to change

LEVELS OF RELATIONSHIP STRATEGIES

Financial Bonds

- volume and frequency rewards

- stable pricing

- bundling and cross selling

-Differentiation potential of just financial is low. You need social bonds too

LEVELS OF RELATIONSHIP STRATEGIES

social bonds

-continuous relationships

-personal relationships

-social bonds among customers (harley club)

-important in B2B settings

LEVELS OF RELATIONSHIP STRATEGIES

Customization Bonds

- customer intimacy (knowing all needs and preferences of customers)

- mass customization (ex: Netflix recommendations). Cost efficient and drives->

- anticipation/innovation

LEVELS OF RELATIONSHIP STRATEGIES

structural bonds

- shared processes and equipment

- joint investments

- integrated information systems

-ex: applies to B2B. Cardinal health integrating into hospital segments. ADT Security: you may not own some of their equipment in your house

TYPES OF CRM TECHNOLOGY

Operational CRM

"front office" CRM that involves direct customer contact.

-contact center automation

-enterprise marketing automation

-salesforce automation

-partner relationship management

TYPES OF CRM TECHNOLOGY

Analytical CRM

"back office" or "strategic" CRM that involves capturing, storing, extracting, processing, and interpreting data to better understand customer activities that occurred in the front office

-data mining

-customer pyramid

Customer Pyramid

Platinum: most profitable customers, heavy users, not price sensitive

Gold: profitable, want price discounts, may be working with multiple vendors

Iron: essential, profits are not substantial enough for special treatment

Lead tier: customers costing the firm money, demand attention, problem customers

Loyalty and Profitability

loyal customers---> new findings

-cost less to serve but they desire premium service and discounts

-pay more than other customers so they believe they deserve lower prices

-attract more via WOM ->act and feel loyal to spread word

Acquisition Cost

investment made to attract and qualify customers

development costs

expenditures made to increase and maintain the value of existing relationships

Customer Lifetime Value (CLV)

cash flows from customer minus outflows necessary to maintain the relationship

ADR: acquisition, development, retention costs

Intrinsic value-ADR Costs

Majority of complaints

50% encounter a problem but do not complain

Service Recovery

restoring customer satisfaction to strongly dissatisfied customers

Complaining tip of the iceberg

1-5% complain to management

45% complain to a front line

50% don't complain

factors affecting service switching behavior

-pricing: too high, increase, unfair deceptive

-inconvenience: poor hours, long wait

-core service failure: mistakes, billing errors

-service encounter failure: double deviation: failed service recovery effort (impolite)

-response to service failure: rude, no response

-competition: better service elsewhere

-ethical problems: cheat, unsafe

-involuntary switching: customer moved

Types of complainers

passives, voicers, irates, activists

Passives

least likely to complain

Voicers

actively complain to the provider, not likely to spread negative WOM; believe in the positive consequences of complaining - the service provider's best friends!

Irates

negative WOM to friends and relatives and to switch providers; average in complaints to provider; unlikely to complain to third parties; more angry, less likely to give provider a second chance

Activists

complain on all levels; more likely to complain to a third party; feel most alienated from the marketplace compared to other groups; in extreme cases can become "terrorists"

Loyalty-Satisfaction Relationship

What factors impact complaining?

Behavior Model

Ability:

-knowledge of channels

-access to channels

-communication skills

Motivation:

-cultural norms

-complaining identity

-willingness to confront

-threat of intimidation

*customers more likely to complain if they have high involvement*

What factors impact complaining?

Economic Model

-perceived costs: time, effort

-perceived benefits: refund, exchange

-probability of success

service recovery paradox

Highly effective service recovery can result in higher levels of customer satisfaction than in cases where a service failure did not exist

HOWEVER:

-only small amt complain

-expensive

-doesn't increase purchase intentions or perceptions

service recovery paradox is likely to occur when...

-failure is not considered severe.

-not experienced prior failures

-cause was unstable

-company had little control over the cause

EXCELLENT SERVICE RECOVERY

1. fix the customer

-respond quickly

-provide appropriate communication

-treat customers fairly and compensate

-cultivate relationships with customers

What happens when customers take time to complain?

They have higher expectations

-expect the company to respond quickly and to be accountable

-they expect to be compensated for their grief and for the hassle of being inconvenienced

-they expect to be treated nicely in the process

Treat Customers Fairly

-Outcome fairness/distributive justice: outcome (compensation) should match the customer's level of dissatisfaction; equality with what other customers receive; choices

-Procedural fairness/justice: Fairness in terms of policies, rules, timeliness of the complaint process; clarity, speed, no hassles; also choices: "What can we do to compensate you...?"

-Interactional fairness/justice: Politeness, care, and honesty on the part of the company and its employees; rude behavior due to lack of training and empowerment

Customers want:

non-monetary remedies explanation, insurance, apology, chance to vent

EXCELLENT SERVICE RECOVERY

2. fix the problem

-encourage and track complaints

-learn from recovery experiences

-learn from lost customers

-make the service fail-safe

direct complaint management process

- stimulating complaints: get them to complain

- receiving complaints

- handling complaints: 3 justices

- reacting to complaints

indirect complaint management process

-analyzing complaints

-complaint management controlling

-reporting results

-using complaint intelligence

Gap 2: Service Design and Standards Gap

Poor service design

Absence of customer driven standards

Inappropriate physical evidence and servicescape

service design and standards gap

the difference between company understanding of customer expectations and development of customer-driven service designs and standards

Types of service innovations

1. Major or radical innovations: ebay, netflix

2. Start-up businesses

3. New services for the currently served market: petsmart->pethotel

4. Service line extensions: new route for airline

5. Service improvements

6. Style changes: new logo

Ansoff Matrix Definition

An analytical tool to devise various product and market growth strategies, depending on whether businesses want to market new or existing products in either new or existing markets.

Ansoff Matrix

Share building: increase market share by making people use product more or taking competitors

Service Development: creating new services

Market Development: entering new areas/markets

Diversification: ex PNG Mr. Clean Car wash-risky

New Service Development Process

Front End Planning (hard)

1. Business strategy Development or review

2. New service strategy development: Ansoff

3. Idea Generation: screen ideas against new service strat.

4. Concept development and evaluation: test w/ employees

Implementation

5. Business analysis: test for profitability and feasibility

6. Service development and testing: test prototype

7. Market Testing: real life testing

8. Commercialization

9. Post-introduction evaluation

service design thinking principles

1. User-centered

2. Cocreative

3. Sequencing

4.Evidencing

5. Holistic

Co-creative

All stakeholders should be included in the service design process

Sequencing

A service should be visualized as a sequence of interrelated actions

Evidencing

Intangible services should be visualized in terms of physical artifacts

Holistic

the entire environment of a service should be considered

front-end planning

1. Business Strategy Development or Review

2. New Service Strategy Development

3. Idea Generation

4. Concept Development and Evaluation

5. Business Analysis

Implementation

1. Service development and testing

2. Market testing

3. Commercialization

4. Post-introduction evaluation

Benefits of Service Blueprinting

-Provides a platform for innovation.

-Recognizes roles and interdependencies among functions, people, and organizations.

-Designs moments of truth from the customer's point of view.

-Suggests critical points for measurement and feedback in the service process.

-Provides understanding of the ideal customer experience.

Services are....

-processes

-performances

-experiences

-intangible

-difficult to describe in specific, concrete terms (words can oversimplify, be subjective or incomplete, bias)

-unlike manufactured products in many significant ways

IDEO

service design in the real world

Service Blueprinting

A technique for simultaneously depicting the service process, the points of customer contact and the evidence of service from the customers point of view

portrays the service system so it can be understood from different points of view and aspects of the service process

makes it tangible

Blueprinting components

physical evidence

customer actions

----line of interaction------- links customers to employees

Employee actions (visible/onstage)

----line of visibility------------

Employee actions (backstage/invisible)

----line of internal interaction--------

Support processes- supports employees-HR, IT

Ways to read bluprints

-view as a perspective of customer/employee

-view as a focus on one aspect of service system (check out)

Blueprints can be used by

Service marketers: creating realistic customer expectations

HRM: empowering human element

Operations management

System technology

Benefits of Service Blueprinting

-Platform for innovation.

-Recognizes roles and interdependencies among functions, people, and organizations.

-Facilitates both strategic and tactical innovations.

-Transfers and stores innovation and service knowledge.

-Customer's point of view.

-Suggests critical points for measurement and feedback in the service process.

-Clarifies competitive positioning.

-Provides understanding of the ideal customer experience.

General uses for service blueprinting

-provides common point of discussion

-illuminates the customer's role and demonstrates where the customer experiences quality

-clarifies competitive positioning

-Stimulates strategic discussions

-provides a basis for identifying and assessing cost, revenue, and capital requirements

service gap

The difference between customers' expectations and perceptions of customer service to improve customers' satisfaction with their service.

communication gap

the difference between the actual service provided to customers and the service that the firm's promotion program promises