MRKT 426 Exam 2 (ch. 6-8)

bucket theory of marketing

new customers AND increased purchases by some customers COME, but if there are holes in the bucket:
-decreased purchases by some customers
-lost customers

relationship marketing

strategic orientation that focuses on keeping and improving customer relationships with current customers rather than on acquiring new customers

evolution of customer relationships

Customers as strangers ->
Customers as acquaintances ->
Customers as friends ->
Customers as partners

strangers

customers as ____:
(#1) customers are not aware or have not had any transactions yet
-goal= attraction,
-through: promotion, advertising, free trials

acquaintances

customers as ____:
(#2) awareness and trial have been achieves, familiarity is established
-goal= satisfaction

friends

customers as ____:
(#3) provision of a unique offering, creation of trust
-goal= retention

partners

customers as ____:
(#4) provision of a highly personalized and customized offering, creation of commitment
-goal= enhance relationship

customers as partners

this happens to a customer in the ___ ___ ___ stage: are personally offended when someone talks bad about the company you are in an enhanced relationship with

benefits of relationship marketing for customers

-confidence benefits: (feeling of trust and confidence in a provider)
-social benefits: (familiarity and social relationship with service provider who may become a part of social support system)
-special treatment: given a special deal/price, getting the benefit of the doubt

benefits of relationship marketing for firms

-economic benefits: (increased purchase over time, lower costs)
-customer behavior benefits: (free advertising thru word of mouth, customer voluntary performance/providing social benefits to other customers/be mentors)
-HR Mngt benefits: (makes employees' jobs easier, social benefits for employees)
-employee retention

relationship development model

relationship drivers -> strong customer relationship (loyalty) -> outcomes

switching barriers

in relationship development model:

relationship drivers:

-customer inertia: certain effort necessary to switch providers, and effort required to make customers switch to your firm
-switching costs: $ and non-monetary (think of switching cell phone providers, fees)

relationship drivers

in relationship development model:

1. switching barriers: customer inertia, switching costs
2. core service provision: satisfaction, perceived service quality/value
3. relationship bonds: levels 1-4

outcomes

relationship development model:

1. customer benefits: confidence/social/special treatment benefits
2. firm benefits: economic/customer behavior/human resource management benefits

financial, social

relationship drivers: BONDS
1. level 1- customer is tied to firm primarily thru financial incentives

2. level 2- customer is tied to firm thru social and interpersonal as well as financial bonds, customers become clients instead of nameless faces

customization, structural

relationship drivers: BONDS

1. level 3- level 1 and 2 strategies encompassed with customization strategy

2. level 4- created by providing services that are frequently designed right into the service delivery system for the client, most difficult to imitate

financial, social, customization, structural

name level 1-4 relationship bonds

relationship challenges

(between firm and customer)
-customer is NOT always right
-wrong segment targeting
-no profitable customer relationships (long term)
-difficult/dysfunctional customers

complaint to provider, negative word of mouth, third party action

types of complaint actions:
1. opportunity for company to respond, provider is given a 2nd chance to make things right

2. provider is given no second chance, cant fix immediately, more trustworthy than advertising

3. going to BBB or a licensing authority, risk of business being closed

service recovery paradox

an initially disappointed customer who has experienced good service recovery might be even more satisfied and loyal as a result
-should a firm consequently "screw up" on purpose?

solve the problem before it reaches the customer

the BEST service recovery way

customer

service recovery strategies: fixing the ____

1. act quickly
2. provide appropriate communication
3. treat customers fairly
4. cultivate relationship with customers

problem

service recovery strategies: fixing the ____

1. encourage and track complaints
2. learn from recovery experiences
3. learn from lost customers
4. fail-save the service

service guarantees

a pledge or assurance that a product offered by a firm will perform as promised and, if not, then some form of reparation will be undertaken by the firm

service guarantees

characteristics of __ __:

-limited restrictions and exclusions
-meaningful
-easy to understand and communicate for all
-easy to invoke and collect

service guarantees

types of ___ ____:

-unconditional satisfaction vs service attribute guarantees
-particular aspect vs overall satisfaction

service guarantees

when to not use ___ ___:

-poor service quality existing
-guarantee does not fit company's image
-service quality is truly uncontrollable
-potential for customer abuse of guarantee
-little perceived risk involved

new service development

a ___ ___ __ system should:
-be fact driven, not opinion driven
-involve employees
-involve customers

major or radical innovations

type of new services:
-entirely new service for undefined markets
-ex: FedEx, eBay, UBER

new service for existing market

type of new services:
-new service for a market that is already served by existing products
-ex: barnes and noble adding coffee, online banking, airport shuttles

service improvements or service line extensions

type of new services:
-augmentation of an existing service line
-ex: restaurant adding new menu items, airline adding routes

style changes

type of new services:
-most modest service innovation
-often highly visible
-ex: logo change, color change in a restaurant

front end planning

new service development process requires two things:
1. ___ ___ ___:
-business strategy development or review
-new service strategy development
-idea generation
-concept development and evaluation
-business analysis

implementation

new service development process requires two things:
2. ___ ___:
-service development and testing
-market testing
-commercialization
-post introduction evaluation

share building, service development

new service strategy matrix:

1. market: CURRENT customers, offerings: EXISTING services

2. market: CURRENT customers, offerings: NEW services

market development, diversification

new service strategy matrix:

1. market: NEW customers, offerings: EXISTING services

2. market: NEW customers, offerings: NEW services

business analysis, business strategy development or review

(part of front-end planning of the new service development process)-

1. estimation of economic feasibility and potential profit implications

2. idea must fit within the larger strategic mission and vision of the organization

empathic design

(happens in idea generation in the new service development process)

observation in situations in which customers may not be able to recognize or verbalize their needs

commercialization

(happens in the implementation of the new service development process)

-service is introduced to the market, objectives are to build and maintain acceptance of the new service, and monitor all aspects during introduction

service blueprinting

A tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer's point of view.

service blueprinting

components of WHAT:
-physical evidence
-customer actions
-line of interaction (visible contact employee actions)
-line of visibility (invisible contact employee actions)
-line of internal interaction (support processes)

service blueprinting

process of WHAT:

1. ID process to be blue-printed
2. ID customer/segment
3. map process from customer's POV
4. map contact employee actions, onstage and back-stage, and/or technology actions
5. link contact activities to needed support functions
6. add evidence of service at each customer action step

service blueprinting

interpretation of __ ___:
-read horizontally IF... purpose is to understand the customer experience, and contact employees' roles
-vertically IF... purpose is to understand the integration of the various elements of the service process
-as a whole IF... the purpose is to redesign the service, assess the complexity of the service

a

Which of the following is one of the ways an organization benefits from maintaining and developing a loyal customer base?

A) employee retention
B) customers' increasing expectations of more personalized service
C) a reactive market-growth strategy
D) the ability to engage in guerilla marketing
E) competitor entrenchment

e

Kate has recently learned to play golf. She tries to play at least once every week. Last week, she decided to try a new golf course. She signed in to play and was given the keys to an electric golf cart without any instructions on how to operate it. After she drove the cart into a lake, she swore never to play golf again. According to Kate, "There was just too many things you had to know before you could become a real golfer." Two months later, the golf course manager called Kate and asked why she had not returned to play another game. Which service recovery strategy is being used in this example?

A) make the service fail safe
B) act quickly
C) treat customers proactively
D) use procedural fairness
E) learn from lost customers

c

Simone called the Puppy Heaven Kennel to reserve a kennel for her German shepherd while she went on vacation. In terms of the service blueprint for Puppy Heaven Kennel, the employee she communicated with by phone is an example of a(n) _____.

A) customer action
B) onstage contact employee action
C) backstage contact employee action
D) support process
E) audience action