monday serma

midterm flashcards

Business to consumer level

On campus you may find a bookstore, a bank, a post office, a photocopying shop, cafés, a grocery store, entertainment, and more. Your use of these services is an example of service consumption at the individual.

Business to Business level

Nowadays, organizations outsource more and more tasks to external service providers in order to focus on their core business.

happy

consumers aren’t always __________

complain

Many owners and managers ____________ about how difficult it is to find skilled and motivated employees, to keep costs down and make a profit,

service

it is a form of rental rather

than ownership.

service customers

obtain the rights to hire the labor, skills, and expertise of personnel; use a physical object or space; or access shared facilities, networks, and systems.

services

are performances that bring about the desired results or experience for the customer.

business services

allow manufacturing firms and other service organizations to outsource noncore activities, processes, and assets.

4 benefits of business services

1. economies of scale

2. tight cost and quality control

3. process improvements and R&D

4. increasing specialization of advanced economies

4 types of service

1. consumer services

2. business (producer) services

3. public services

4. professional services

consumer services

Services provided directly to end-users for personal use

business (producer) services

Services that support the operations of other businesses.

public services

services provided by the government to meet public needs

professional services

specialized services provided by trained and certified professionals

4 categories of service by type of processing

1. people processing

2. possession processing

3. mental stimulus processing

4. information processing

people processing

the customer is a direct recipient of the service, and the production and consumption of the service are simultaneous.

possession processing

service is directed toward the customer ’s physical possessions. In other words, production and consumption are separate. Your only involvement is dropping off the item that requires service or repair and explaining the problem.

mental stimulus processing

services interact with your mind rather than your body.in

information processing

is the most intangible form of service, it deals with data or information

information-based services

Mental stimulus and information processing can be combined into what is called

4 pillars of service research

1. intangibility

2. heterogeneity

3. inseparability

4. perishability

intangibility

services are cannot be touched

heterogeneity

It is impossible to provide similar service every time. You’ll experience some change every time you buy a particular service from a particular service provider.

inseparability

In case of services the production, distribution, and consumption takes place simultaneously. These three functions cannot be separated.

3 functions of inseparability

1. production

2. distribution

3. consumption

perishability

service simply means that it's short- lived. Ideally, such a service is consumed as soon as it is produced. Unlike products, the service cannot be stored for later use.

service-profit chain

establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity.

3 main stages of service consumption

1. pre-purchase stage

2. service encounter stage

3. post encounter stage

pre-purchase stage

begins with need-awareness and continues through to information search and evaluation of alternatives to deciding whether or not to buy a particular service

service encounter stage

is when the customer interacts directly with the service firm.

post encounter stage

which involves consumers’ attitudinal and behavioral responses to the service experience. Important consumer responses are customer satisfaction, service quality perceptions, repeat purchase, and customer loyalty.

evoked set

shortlist in a customer’s mind — the options they recall without having to search too much.

consideration set

consumer unlikely use all consideration in evoked set, they likely to narrow it down to few alternatives

multi attribute model

Once the consideration set and key attributes are understood, the consumer typically makes a purchase decision. This model is used to simulate consumer decision-making.

service attributes

The multi-attribute model assumes that consumers can evaluate all important attributes before purchase. However, this is often not the case as some attributes are harder to evaluate than others.

3 types of attributes

1. search attributes

2. experience attributes

3. credence attributes

search attributes

are tangible characteristics that customers can evaluate before purchase.

experience attributes

cannot be evaluated before purchase. Customers must “experience” the service before they can assess attributes such as reliability, ease-of-use, and customer support.

credence attributes

characteristics that customers find hard to evaluate even after consumption.

perceived risk

usually greater for services that are high in experience and credence attributes, and first-time users are likely to face greater uncertainty.

7 types of risk

1. functional

2. financial

3. temporal

4. physical

5. psychological

6. social

7. sensory

risk-averse

Customers are____________ and, all else being equal, will choose the service with the lower perceived risk. Therefore, firms need to proactively work on reducing customer risk perceptions.

evidence management

an organized approach where customers are presented with coherent evidence of company’s targeted image and its value proposition. This includes the appearance of furnishings, equipment and facilities, and employees’ dress and behavior.

expectations

are formed during the search and decision-making process, through a customer’s search and evaluation of information and alternatives.

3 factors influencing different levels of customer expectations

1. desired service

2. adequate service

3. predicted service

desired service

The type of service customers hope to receive is termed as desired service. It is a “wished for” level

adequate service

The minimum level of service customers will accept without being dissatisfied.

predicted service

This is the level of service that customers actually anticipate to receive.

zone of tolerance

This is the level of service that customers actually anticipate to receive.

3 models and frameworks under service encounter stage

1. moments of truth

2. servuction model

3. perceived control

moment of truth

means that every interaction between a customer and a service provider is a critical point where the customer forms an impression of the service

jan carlzon

The term “Moment of Truth” was popularized by _____________, former CEO of Scandinavian Airlines in 1980,

servuction system

combining the terms “service” and “production” , which is part of the service organization’s physical environment visible to and experienced by customers.

engineer

Firms have to “______” all interactions to make sure their customers get the service experience they came for.

technical core

where inputs are processed and the elements of the service product are created. This technical core is typically backstage and invisible to the customer

service delivery system

where the final “assembly” takes place and the product is delivered to the customer. This sub-system includes the visible part of the service operations

perceived control

which holds that customers have a need for control during the service encounter, and that control is a major driving force of their behavior and satisfaction.

3 different types of perception of control

1. behavioral control

2. decisional control

3. cognitive control

post-encounter stage

which involves consumers’ attitudinal and behavioral responses to the service experience.

4 important consumer responses

1. customer satisfaction

2. service quality perceptions

3. repeat purchase

4. customer loyalty

valerie zeithaml and her colleagues

developed a survey instrument

SERVQUAL model

survey instrument

5 dimensions of SERVQUAL

1. tangible

2. reliability

3. responsiveness

4. assurance

5. empathy

tangible

Physical appearance of facilities, equipment, personnel, and communication materials.

reliability

Ability to perform the promised service dependably and accurately.

responsiveness

Willingness to help customers and provide prompt service.

assurance

Employees’ knowledge, courtesy, and ability to inspire trust and confidence.

empathy

Caring, individualized attention given to customers.

repurchase intentions

are influenced by their general beliefs about the service quality of the firm at the time of their next purchase decision, consumers try to predict how good the next service transaction will be

loyalty

customer’s willingness to continue patronizing a firm over the long-term, preferably on an exclusive basis, and recommending the firm’s products to friends and associates.

defection

The opposite of loyalty is _______, which is used to describe customers who drop off a company’s radar screen and transfer their loyalty to another supplier.

market segment

composed of a group of buyers who share common characteristics, needs, purchasing behavior, and/or consumption patterns.

4 segments

1. demographic segmentation

2. psychographic segmentation

3. behavioral segmentation

4. needs-based segmentation

demographic segmentation

age, gender, and income.

psychographic segmentation

lifestyle, attitudes, aspirations

behavioral segmentation

shortcoming, observable behaviors such as people being non-users, light users, or heavy users

needs-based segmentation

focuses on what customers truly want

target segment

each company ideally focuses its efforts on those customers it can serve best

4 basic focus strategies for services

1. market-focused

2. service-focused

3. fully-focused

4. unfocused

market-focused

a company offers a wide range of services to a narrowly defined target segment.

firm can sell multiple services to a single buyer.

sample: rentokil

service-focused

narrow range of service, broader sales effort

sample: starbucks and LASIK

fully-focused

limited range of services, single core product

sample: private jet charter and hospitals

unfocused

serve broad markets and provide wide range of services

jack of all trades and masters of none

sample: department stores

positioning strategy

concerned with creating, communicating, and maintaining distinctive differences that will be noticed and valued by those customers the firm would most like to develop a long-term relationship with.

price and product

most commonly associated with positioning strategy

positioning maps

great tools to visualize competitive positioning along key aspects of its services marketing strategy, to map developments over time, and to develop scenarios of potential competitor responses.

3 types of direct networks

1. direct network effects

2. indirect network effects

3. no network effect

direct network effects

value to users increases as more users join

indirect network effects

value for users increases as a new user of a different group joins

no network effect

users doesn’t pay attention

service product

bundle of output that comprises all the elements of the service performance

3 components of a service product

1. core products

2. supplementary services

3. delivery processes

core product

delivers the principal benefits and solutions customers seek

supplementary services

facilitate and enhance the core product

delivery processes

determine how the core and supplementary services are delivered to the customer

4 facilitating supplementary services

1. information

2. order-taking

3. billing

4. payment

4 enhancing supplementary services

1. consultation

2. hospitality

3. safekeeping

4. exceptions

flower of service

core product surrounded by a cluster of supplementary services

information

the elements such as physical directions, schedules, prices, instructions, warnings, reminders, confirmations, and conditions of services are listed. These elements interact to ensure that the quality of services meets the information provided to guarantee successful marketing.

consultation

technical, customized services