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Solution Manual for Essentials of Services Marketing, 3rd Edition

Solution Manual for Essentials of Services Marketing, 3rd Edition makes solving textbook exercises easier with step-by-step solutions and helpful tips.

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    C HA P T E R 1 I N T R O D U C T I O N T O S E R V I C E S M A R K E T I N G L E A R N I N G O B JE C T I V E S By t h e e n d o f t h i s c h a p t e r , st u d e n t s s h o u l d be a b l e t o  (LO 1) Understand how services contribute to a country’s economy.  (LO 2) Know the principal industries of the service sector.  (LO 3) Identify the p owerful forces that are transforming service markets.  (LO 4) Understand how B2B services improve the productivity of individual firms and drive economic development.  (LO 5) Define services using the non - ownership framework.  (LO 6) Identify the four broad “processing” categories of services.  (LO 7) Be familiar with the characteristics of services and the distinctive marketing challenges they pose.  (LO 8) Understand the components of the traditional marketing mix applied to services.  (LO 9) Describe the com ponents of the extended marketing mix for managing the customer interface.  (LO 10) Appreciate that marketing, operations, and human resource management functions need to be closely integrated in service businesses.

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     (LO 11) Understand the implications of t he service – profit chain for service management.  (LO 12) Know the framework for developing effective services marketing strategies. C HA P T E R O U T L I N E ( L 01 ) U n d e r s t a n d h ow s e r v i c e s c o n t r i b u t e t o a c o un t r y ’ s e c o n o m y S e r v i c e s d o m i n a t e a l m o s t a l l t y p e s o f e c o n o m i e s t o d a y . T h e s e r v i c e s e c t o r a cc o un t s f o r a m a j o r i t y o f t h e g r o s s d o m e st i c p r o d u c t i n a l l i n d u st r i a liz e d c o un t r i e s a n d p r o v i d e s m o s t o f t h e n e w j o bs i n m a n y d e v e l o p i n g a n d h i g h l y d e v e l o p e d n a t i o n s w o r l d w i d e . (LO2) Know the principle industries of the service sector The s ervice sector is a very diverse sector with contributions from various industries that target individual and business customers. Key industries are: • Government services • Real Estate • Wholesale and Retail trade • Business and Professional se rvice • Finance and Insurance • Healthcare services • Transport, utilities and communication services • Accommodation and food services • Arts, entertainment and recreation services ( L 03 ) I d e n t i f y t h e p o we r f u l f o r c e s t h a t a re t r a n s f o r m i n g s e r v i c e m a r k e t s •  C h a n g e s i n g o v e r n m e n t p o li c i e s •  S o c i a l c h a n g e s •  B u s i n e s s t r e n ds li k e p r o d u c t i v i t y a n d c o s t s a v i n g s , f r a n c h i s i n g e t c . •  A d v a n c e s i n i n f o r m a t i o n t e c hn o l o gy •  I n t e r n a t i o n a liz a t i o n a n d g l o b a liz a t i o n C u st o m e r n ee ds a r e e v o l v i n g, m a r k e t s a n d c o m p e t i t i o n a r e c h a n g i n g r a p i d l y , a n d e ff e c t i v e st r a t e g i c l e a d e r s h i p i s v i t a l t o s u cc e ss . S t u d e n t s s h o u l d r e c o g n iz e t h a t un d e r st a n d i n g t h e t h r e a t s a n d o p p o r t un i t i e s

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    p o s e d by t h e s e c h a ll e n g e s i s a v i t a l f i r s t st e p i n d e v e l o p i n g e ff e c t i v e st r a t e g i e s . I n p a r t i c u l a r , t h e i n c r e a s i n g l y c o m p e t i t i v e n a t u r e o f m a n y s e r v i c e i n d u st r i e s p l a c e s a p r e m i u m o n e ff e c t i v e m a r k e t i n g st r a t e g y . (LO4) Understand how B2B services improve the productivity of individual firms and drive economic development Many manufacturing firms outsourc e their non - core support activities to independent service providers that focus on providing those activities in cost - efficient structures. This development leads to an increased specialisation with significant improvements in overall productivity and livi ng standards. ( L 05 ) D e f i n e s e r v i c e s u s i n g t h e n on - o w n e r s h i p of s e r v i c e f r a m e w o r k •  S e r v i c e s a r e d i st i n g u i s h e d a s b e n e f i t s w i t h o u t o wn e r s h i p. •  5 b r o a d c a t e g o r i e s w i t h i n t h e n o n - o wn e r s h i p f r a m e w o r k o R e n t e d g o o ds s e r v i c e s – p r o v i d e s c u st o m e r s w i t h t e m p o r a r y r i g h t t o e x c l u s i v e u s e o f p h y s i c a l g o o d o D e f i n e d s p a c e a n d p l a c e r e n t a l s – o b t a i n a d e f i n e d p o r t i o n o f a l a r g e r s p a c e a n d s h a r i n g i t s u s e w i t h o t h e r c u st o m e r s , un d e r v a r y i n g d e g r ee s o f p r i v a c y o L a b o r a n d e x p e r t i s e r e n t a l s – h i r e o t h e r s t o w o r k t h a t t h e y e i t h e r c h oo s e n o t t o d o , o r l a c k t h e n e c e ss a r y e x p e r t i s e a n d t oo l s t o d o o A cc e s s t o s h a r e d p h y s i c a l e n v i r o n m e n t s – m a y be l o c a t e d i n d o o r s o r o u t d o o r s o r a c o m b i n a t i o n o S y st e m s a n d n e t w o r k s : a cc e s s a n d u s a ge – r e n t t h e r i g h t t o p a r t i c i p a t e i n s p e c i f i e d n e t w o r k s li k e t e l e c o mm un i c a t i o n s , u t ili t i e s e t c . ( L 06 ) I d e n t i f y t h e f o u r b r o a d “ p r o c e ss i n g ” c a t e g o r i e s of s e r v i c e s F i g u r e 1 . 14 h i g h li g h t s t h e f o u r b r o a d c a t e g o r i e s o f s e r v i c e s , s u c h a s : 1 ) p e o p l e p r o c e ss i n g 2 ) p o ss e ss i o n p r o c e ss i n g 3 ) m e n t a l st i m u l u s p r o c e ss i n g 4 ) i n f o r m a t i o n p r o c e ss i n g ( L 07 ) B e f a m ili a r w i t h t h e ch a r a c t e r i s t i c s of s e r v i c e s a n d t h e d i s t i nc t i v e m a r k e t i n g ch a ll e n g e s t h e y p o s e The most common characteristics of services are often cited as intangibility, heterogeneity, inseparability and perishability. These can

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    be translated further into eight common differ ences between products and services: • Most goods cannot be inventoried • Intangible elements dominate value creation • Services are often difficult to visualise • Customers may be involved in co - production • People may be part of the service experience • Operational inputs and outputs tend to vary more widely • The time factor often assumes great importance • Distribution may take place through non - physical channels. It is important to note that these differences are useful generalisations and do not apply equally to all services. Table 1.1 gives managerial implications and challenges these differences pose. ( L 08 ) U n d e r s t a n d t h e c o m p o n e n t s of t h e t r a d i t i o n a l m a r k e t i n g m i x a pp li e d t o s e r v i c e s S t r a t e g i e s t o m a r k e t m a nu f a c t u r e d g o o ds u s u a ll y a d d r e s s t h e t r a d i t i o n a l f o u r e l e m e n t s o f t h e m a r k e t i n g m i x — p r o d u c t , p r i c e , p l a c e , a n d p r o m o t i o n . T h e s e f o u r P s , wh e n a p p li e d t o s e r v i c e s , h a v e a d d i t i o n a l c o n s i d e r a t i o n s : 1 ) P r o d uc t e l e m e n t s : A l l c o m p o n e n t s o f t h e s e r v i c e p e r f o r m a n c e t h a t c r e a t e v a l u e f o r c u st o m e r s . 2 ) P l a c e a n d t i m e : W h e n , wh e r e , a n d h o w t o d e li v e r s e r v i c e s t o c u st o m e r s . 3 ) P r i c e a n d o t h e r u s e r o u t l a y s : A l l t he o u t l a y s i n c u rr e d by c u st o m e r s i n o b t a i n i n g b e n e f i t s f r o m t h e s e r v i c e p r o d u c t c o st s o f s e r v i c e , i n c l u d i n g m o n e y , t i m e e x p e n d i t u r e s , p h y s i c a l a n d m e n t a l e ff o r t , a n d e x p o s u r e t o n e g a t i v e s e n s o r y e x p e r i e n c e s . 4 ) P r o m o t i on a n d e d uc a t i o n : A l l c o mm un i c a t i o n s a c t i v i t i e s a n d i n c e n t i v e s d e s i g n e d t o i n f o r m a n d e d u c a t e c u st o m e r s , b u il d p r e f e r e n c e f o r a p a r t i c u l a r s e r v i c e , a n d e n c o u r a ge t h e m t o t a k e a c t i o n . ( L 09 ) D e s c r i b e t h e c o m p o n e n t s of t h e e x t e n d e d m a r k e t i n g m i x f or m a n a g i n g t h e cu s t o m e r i n t e r f a c e In addition to the traditional 4Ps, services include the following additional Ps in their marketing mix:

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    Processes: It is how a firm does things by designing and implementi ng processes for the creation and delivery of services. Since services are variable, the operational inputs and outputs can vary widely also and often customers are involved in co - production to design a suitable process. In services processes are often not a smooth flow because services cannot be inventoried, thus wait systems are built into the service process. Physical Environment: The “servicescape” of the service is its physical environment including building, vehicles, landscape, interior and all oth er visible cues. People : Services are often delivered through people therefore the selection, training and motivation of the service employees is essential . ( LO10 ) Appreciate that marketing, operations, and human resource management functions need to b e closely integrated in service business. The key deliverables and objectives of these various functions need to compatible and mutually reinforcing and tightly integrated. In service organisations, operations functions are actively involved in the design of products and processes to improve productivity and quality. HR provides quality front - line service providers to ensure the service experience and IT provides real - time information at every customer touch - point to create value with updated customer data . ( LO11 ) Understand the implications of the Service - Profit Chain for Service Management Figure 1.27 provides the Service - Profit chain and explains how internal operating strategies of workplace design, rewards and recognition, adequate employee training yield higher service quality and this in turn leads to revenue growth and profitability through customer loyalty and satisfaction. ( LO12 ) Know the framework for developing effective service marketing strategies The framework for services marketing strate gies is the same as the structure of this book. The 5 parts of this structure are provided on Pages 28 and 29 and involve understanding of services, applying 4Ps to services, using the additional 3Ps to design and manage customer interface, developing cust omer relationships and quality management in services using Gaps model to move to higher levels of performance.

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    T E A C H I N G S UGG E S T I O N S C h a p t e r 1 p r o v i d e s st u d e n t s w i t h a n i n t r o d u c t i o n t o s o m e o f t h e b a s i c c o n c e p t s o f s e r v i c e m a r k e t i n g a n d m a n a g e m e n t . I t ’ s i m p o r t a n t t o s p e n d e n o u gh t i m e t o m a k e s u r e st u d e n t s r e a ll y c o m p r e h e n d t h i s m a t e r i a l , b e c a u s e c o n c e p t u a l f r a m e w o r k s a n d b a c k g r o un d i n f o r m a t i o n i n t r o d u c e d i n t h i s c h a p t e r w il l un d e r li e t o p i c s d i s c u ss e d i n l a t e r c h a p t e r s . F o r c e s f or ch a n g e . T h e r e a r e s e v e r a l i n t e r e st i n g w a y s t o a p p r o a c h t h i s t o p i c . Y o u c a n a s k st u d e n t s t o f i n d a p r i n t a d ill u st r a t i n g o n e o f t h e f o r c e s f o r c h a n ge i n s e r v i c e m a n a g e m e n t ( s e e F i g u r e 1 . 9 ) a n d t o w r i t e a o n e - p a ge p a p e r d i s c u ss i n g t h e a d a n d t h e a p p li c a b l e f o r c e ( s ) . I f st u d e n t s t u r n i n t h e i r a ds a n d p a p e r s i n a d v a n c e o f c l a ss , y o u c a n m a k e o v e r h e a ds o f t h e b e s t a ds a n d a s k t h e st u d e n t s wh o s u b m i tt e d t h e m t o d e s c r i be wh y t h e y c h o s e t h e a ds . N o n - o w n e r s h i p of s e r v i c e s . T h i s i s a f r e s h p e r s p e c t i v e o n s e r v i c e s a n d a d v a n c e s o u r t h i n k i n g i n t h i s a r e a . T h i s s h o u l d be i m p r e ss e d u p o n st u d e n t s a n d t h e y c a n be e n c o u r a g e d t o c h a ll e n ge t h i s v i e w t o s e e i f t h e y c a n f i n d e x c e p t i o n s . D i ff e r e nc e s b e t w ee n g oo d s a n d s e r v i c e s . I t ’ s v e r y h e l p f u l t o u s e s e r v i c e s t h a t a r e f a m ili a r t o st u d e n t s t o ill u st r a t e t h e d i st i n g u i s h i n g c h a r a c t e r i st i c s o f s e r v i c e s . B a n k i n g, i n s u r a n c e , a i r li n e s , s e r v i c e g a r a g e s , h o t e l s , a n d b r o a d c a st i n g / c a b l e p r o v i de g o o d st a r t i n g p o i n ts . A s t h e c o u r s e p r o c ee d s , h o w e v e r , y o u s h o u l d st a r t i n t r o d u c i n g p r o f e ss i o n a l a n d b u s i n e s s - t o - b u s i n e s s s e r v i c e s . S e v e n P s . W h e n y o u i n t r o d u c e t h e 7 P s , y o u s h o u l d c l a r i f y h o w t h i s f r a m e w o r k d i ff e r s f r o m t h e 4 P s o f t h e t r a d i t i o n a l m a r k e t i n g m i x ( e s p e c i a ll y i f st u d e n t s h a v e p r e v i o u s l y t a k e n a n i n t r o d u c t o r y m a r k e t i n g m a n a g e m e n t c o u r s e ) . S t u d e n t s s h o u l d b e a d v i s e d t h a t t h e 7 P s f r a m e w o r k w il l be r e v i s i t e d i n s u b s e q u e n t c h a p t e r s . I n f a c t , e a c h c o m p o n e n t o f t h e 7 P s f o r m s t h e t o p i c o f a s e p a r a t e c h a p t e r . S t u d e n t s c a n be a ss i g n e d A p p li c a t i o n E x e r c i s e 3 , wh i c h a s k s t h e m t o s h o w h o w e a c h o f t h e 7 P s r e l a t e s t o a s p e c i f i c s e r v i c e . Service - Profit Chain . Service - profit chain is an important guiding philosophy of this book and it demonstrates the links in the managerial process that are essential for success in service business. Figure 1.27 describes these links t hat are both internal and external to the organization. Application Exercise 4 can be assigned to the students to discuss service quality improvements suggested through Service - Profit Chain.

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    Q U E S T I O N S A N D E X E R C IS E S R e v i e w Q u e s t i o n s 1 . W h a t a re t h e m a i n r e a s o n s f or t h e g r o w i n g s h a re of t h e s e r v i c e s e c t or i n t h e m a j or e c o n o m i e s of t h e w o r l d ? I n c r e a s e d p r o d u c t i v i t y a n d a u t o m a t i o n i n a g r i c u l t u r e a n d i n d u st r y , c o m b i n e d w i t h g r o w i n g d e m a n d f o r b o t h n e w a n d t r a d i t i o n a l s e r v i c e s , h a v e j o i n t l y r e s u l t e d i n a c o n t i nu i n g i n c r e a s e o v e r t i m e i n t h e p e r c e n t a ge o f t h e l a b o r f o r c e t h a t i s e m p l o y e d i n s e r v i c e s . I n c r e a s e d i n t e r n a t i o n a l t r a de a n d t o u r i s m d r i v e s d e m a n d f o r f r e i g h t a n d p a ss e n g e r t r a n s p o r t a t i o n , i n t e r n a t i o n a l f i n a n c e , c o mm un i c a t i o n s , a n d h o t e l e n t e r t a i n m e n t , a n d f oo d s e r v i c e s . I n c r e a s e d s p e n d i n g o n s e r v i c e s by i n d i v i d u a l s i s o f t e n a ss o c i a t e d w i t h h i g h e r st a n d a r ds o f li v i n g. P e o p l e e a t o u t m o r e , t a k e m o r e v a c a t i o n s , s p e n d m o r e o n e n t e r t a i n m e n t , a n d e m p l o y o t h e r p e o p l e t o un d e r t a k e h o u s e h o l d c h o r e s t h e y u s e d t o un d e r t a k e f o r t h e m s e l v e s . S i m il a r l y , a s c o m p a n i e s b e c o m e l a r g e r a n d m o r e s o p h i s t i c a t e d, t h e y m a y c h oo s e t o o u ts o u r c e s o - c a ll e d i n t e r n a l s e r v i c e s s u c h a s r e c r u i t m e n t , l e g a l a n d a cc o un t i n g s e r v i c e s , p a y r o l l a d m i n i st r a t i o n , o ff i c e c l e a n i n g, l a n d s c a pe m a i n t e n a n c e , s u p p l y - c h a i n m a n a g e m e n t , a d v e r t i s i n g, e t c . t o s p e c i a li s t s u b c o n t r a c t o r s . W h e n s u c h t a s k s a r e o u ts o u r c e d, t h e y b e c o m e p a r t o f t h e c o m p e t i t i v e m a r k e t p l a c e a n d a r e t h e r e f o r e m o r e e a s il y i d e n t i f i a b l e a s c o n t r i b u t i n g t o t h e s e r v i c e s c o m p o n e n t o f t h e e c o n o m y . T e c hn o l o gy h a s r e s u l t e d i n t h e c r e a t i o n o f e n t i r e n e w s e r v i c e i n d u st r i e s . 2 . W h a t a re t h e f i v e p o we r f u l f o r c e s t r a n s f o r m i n g t h e s e r v i c e l a n d s c a p e a n d w h a t i m p a c t d o t h e y h a v e on t h e s e r v i c e e c o n o m y ? T h e f i v e p o w e r f u l f o r c e s a r e : • G o v e r n m e n t p o li c i e s • S o c i a l c h a n g e s • B u s i n e s s t r e n ds • A d v a n c e s i n i n f o r m a t i o n t e c hn o l o gy • G l o b a liz a t i o n R e f e r t o F i g u r e 1 . 6 a n d T a b l e 1 . 1 f o r m o r e d e t a il e d e x p l a n a t i o n s .

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    3 . Why would growth in business services help individual firms and entire economies become more productive? A key driver of successful economies is their ecosystem of advanced, competitive and innovative business services. Many manufacturing firms have recognised the importance of outsourcing their non - core support activities to other specialised se rvice providers that have more cost - efficient structures. This development results in the growth of B2B service sector and helps these specialised firms run successful businesses and in the broader perspective, better economic productivity creates more job s and improves the overall standard of living. 4 . D e s c r i b e t h e f o u r b r o a d “ p r o c e ss i n g ” c a t e g o r i e s of s e r v i c e s , a n d p r o v i d e e x a m p l e s f or e a c h of t h e m . F i g u r e 1 . 9 h i g h li g h t s t h e f o u r b r o a d c a t e g o r i e s o f s e r v i c e s , s u c h a s : • P e o p l e p r o c e ss i n g ( d i r e c t e d a t p e o p l e ’ s b o d i e s ) : h a i r st y li sts , h e a l t h c a r e • P o ss e ss i o n p r o c e ss i n g ( d i r e c t e d a t p h y s i c a l p o ss e ss i o n s ) : r e f u e li n g, r e c y c li n g • M e n t a l st i m u l u s p r o c e ss i n g ( d i r e c t e d a t p e o p l e ’ s m i n d s ) : e d u c a t i o n , t r a i n i n g, a d v e r t i s i n g/ P R c o n s u l t a n c y • I n f o r m a t i o n p r o c e ss i n g ( d i r e c t e d a t i n t a n g i b l e a ss e t s ) : a cc o un t i n g, f i n a n c i a l 5 . W h a t i s s o s p e c i a l a b o u t s e r v i c e s m a r k e t i n g t h a t i t n ee d s a s p e c i a l a pp r o a ch ? E a c h o f t h e e i g h t d i st i n c t i v e c h a r a c t e r i st i c s o f s e r v i c e s li st e d i n T a b l e 1 . 2 h a s i m p o r t a n t i m p li c a t i o n s f o r m a r k e t i n g st r a t e g y . •  N o o w n e r s h i p o C u st o m e r s o b t a i n t e m p o r a r y r e n t a l s , h i r i n g o f p e r s o nn e l , o r a cc e s s t o f a c ili t i e s a n d s y st e m s . o P r i c i n g o f t e n b a s e d o n t i m e . o C u st o m e r c h o i c e c r i t e r i a m a y d i ff e r f o r r e n t i n g v e r s u s p u r c h a s e — m a y i n c l u de c o n v e n i e n c e , q u a li t y o f p e r s o nn e l . o C a n ’ t o wn p e o p l e ( n o s l a v e r y ! ) b u t c a n h i r e e x p e r t i s e a n d l a b o r . •  S e r v i c e s c a nn ot b e i nv e n t o r i e d a f t e r p r o d uc t i on o S e r v i c e p e r f o r m a n c e s a r e e p h e m e r a l — t r a n s i t o r y , p e r i s h a b l e . o E x c e p t i o n — s o m e i n f o r m a t i o n - b a s e d o u t p u t c a n be

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    r e c o r d e d i n e l e c t r o n i c / p r i n t e d f o r m a n d r e u s e d m a n y t i m e s . o B a l a n c i n g d e m a n d a n d s u p p l y m a y be v i t a l m a r k e t i n g st r a t e g y . o T a r g e t i n g r i g h t s e g m e n t s a t r i g h t t i m e s a t r i g h t p r i c e i s o f t e n k e y t o p r o f i t a b il i t y . o M a r k e t e r s m u s t d e t e r m i n e wh e t h e r b e n e f i t s a r e p e r i s h a b l e ( e . g . , m e a l , e n t e r t a i n m e n t , h o t e l n ig h t ) o r d u r a b l e ( e . g . , m a n y s u r g e r i e s , e d u c a t i o n ) . •  C u s t o m e rs m a y b e i nv o l v e d i n p r o d uc t i on p r o c e s s o C u st o m e r i n v o l v e m e n t i n c l u d e s s e l f - s e r v i c e a n d c oo p e r a t i o n w i t h s e r v i c e p e r s o nn e l . o T h i n k o f c u st o m e r s i n t h e s e s e tt i n gs a s “ p a r t i a l e m p l o y ee s . ” o C u st o m e r b e h a v i o r a n d c o m p e t e n c e c a n h e l p o r h i n d e r p r o d u c t i v i t y , s o m a r k e t e r s n ee d t o e d u c a t e , t r a i n c u st o m e r s . o C h a n g i n g n a t u r e o f s e r v i c e d e li v e r y p r o c e s s m a y a ff e c t r o l e p l a y e d by c u st o m e r s i n t h a t p r o c e ss . o D e s i gn s e r v i c e f a c ili t i e s , e q u i p m e n t , a n d s y st e m s w i t h c u s t o m e r s i n m i n d: u s e r - f r i e n d l y , c o n v e n i e n t l o c a t i o n s / s c h e d u l e s . •  I n t a n g i b l e e l e m e n t s d o m i n a t e v a l u e c r e a t i on o U n d e r st a n d v a l u e a d d e d by l a b o r a n d e x p e r t i s e o f s e r v i c e p e r s o nn e l . o E ff e c t i v e HR m a n a g e m e n t i s c r i t i c a l t o a c h i e v e s e r v i c e q u a li t y . o T r y t o m a k e h i g h l y i n t a n g i b l e s e r v i c e s m o r e “c o n c r e t e ” by c r e a t i n g a n d c o mm un i c a t i n g p h y s i c a l i m a g e s o r m e t a p h o r s a n d t a n g i b l e c l u e s . •  O t h e r p e o p l e a re o f t e n p a rt of t h e s e r v i c e p r o d uc t o A c h i e v e c o m p e t i t i v e e d g e t h r o u gh p e r c e i v e d q u a li t y o f e m p l o y ee s . o En s u r e j o b s p e c s a n d st a n d a r ds f o r f r o n t - li n e s e r v i c e p e r s o nn e l r e f l e c t b o t h m a r k e t i n g a n d o p e r a t i o n a l c r i t e r i a . o R e c o g n iz e t h a t a p p e a r a n c e a n d b e h a v i o r o f o t h e r c u st o m e r s c a n i n f l u e n c e s e r v i c e e x p e r i e n c e p o s i t i v e l y o r n e g a t i v e l y . o A v o i d i n a p p r o p r i a t e m i x o f c u st o m e r s e g m e n t s a t s a m e t i m e .

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    o M a n a ge c u st o m e r b e h a v i o r ( t h e c u st o m e r i s n o t a l w a y s r i g h t !) . •  G r e a t e r v a r i a b il i t y i n o p e r a t i o n a l i n p u t s a n d o u t p u t s o M u s t w o r k h a r d t o c o n t r o l q u a li t y a n d a c h i e v e c o n s i st e n c y . o S ee k t o i m p r o v e p r o d u c t i v i t y t h r o u gh st a n d a r d iz a t i o n , a n d by t r a i n i ng b o t h e m p l o y ee s a n d c u st o m e r s . o N ee d t o h a v e e ff e c t i v e s e r v i c e r e c o v e r y p o li c i e s i n p l a c e b e c a u s e i t i s m o r e d i ff i c u l t t o s h i e l d c u st o m e r s f r o m s e r v i c e f a il u r e s . •  O f t e n d i ff i cu l t f or cu s t o m e rs t o e v a l u a t e s e r v i c e s o E d u c a t e c u st o m e r s t o h e l p t h e m m a k e g o o d c h o i c e s , a v o i d r i s k . o T e l l c u st o m e r s wh a t t o e x p e c t , wh a t t o l oo k f o r . o C r e a t e t r u st e d b r a n d w i t h r e p u t a t i o n f o r c o n s i d e r a t e , e t h i c a l b e h a v i o r . o En c o u r a ge p o s i t i v e w o r d - o f - m o u t h f r o m s a t i s f i e d c u st o m e r s . •  T i m e f a c t or a ss u m e s g r e a t i m p o r t a nc e o O ff e r c o n v e n i e n c e o f e x t e n d e d s e r v i c e h o u r s , e v e n 24 / 7 . o U n d e r st a n d c u st o m e r s ’ t i m e c o n st r a i n t s a n d p r i o r i t i e s . o M i n i m iz e w a i t i n g t i m e . o L oo k f o r w a y s t o c o m p e t e o n s p ee d. •  D i s t r i b u t i o n ch a nn e l s t a k e d i ff e r e n t f o r m s o T a n g i b l e a c t i v i t i e s m u s t be d e li v e r e d t h r o u gh p h y s i c a l c h a nn e l s . o U s e e l e c t r o n i c c h a nn e l s ( e . g . , t h e I n t e r n e t , t e l e p h o n e ) t o d e li v e r i n t a n g i b l e , i n f o r m a t i o n - b a s e d a c t i v i t i e s , e x p a n d g e o g r a p h i c r e a c h , a n d a c h i e v e i n st a n t a n e o u s d e li v e r y , a n y wh e r e . 6 . “ T h e 4 P s a re a l l a m a r k e t i n g m a n a g e r n ee d s t o c r e a t e a m a r k e t i n g s t r a t e g y f or a s e r v i c e b u s i n e ss . ” P r e p a re a r e s p o n s e t h a t a r g u e s a g a i n s t t h i s a n d s u pp o r t i t w i t h e x a m p l e s . T h e t r a d i t i o n a l 4 P s p r o v i d e s a st a r t i n g p o i n t f o r m a r k e t i n g s e r v i c e s b u t f a ll s s h o r t o f p r o v i d i n g t h e f u l l a rr a y o f t oo l s a n d st r a t e g i c e l e m e n t s n ee d e d. W e h a v e t o r e c a s t t h e e x i st i n g 4 P s ( f o r i n st a n c e , s p e a k i n g o f t i m e a s w e l l a s p l a c e ) a n d i n t r o d u c e n e w e l e m e n t s t h a t a d d r e s s m a n a g e m e n t o f t h e p h y s i c a l e n v i r o n m e n t t o c r e a t e d i ff e r e n t i a t i o n a n d s h a pe s e r v i c e e x p e r i e n c e s , p e o p l e m a n a g e m e n t t o a cc o un t f o r t h e i m p o r t a n t r o l e o f b o t h s e r v i c e p r o v i d e r s a n d o t h e r

  12. Page 12
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    c u st o m e r s i n t h e s e r v i c e e x p e r i e n c e , a n d p r o c e s s t o h e l p u s un d e r st a n d a n d m a n a ge t h e c u st o m e r ’ s i n v o l v e m e n t i n s e r v i c e d e li v e r y . M a n a g e m e n t m u s t l oo k i n t o t h e o t h e r 3 P s a s w e ll : p r o c e s s a n d p r o d u c t i v i t y , p e o p l e a n d p h y s i c a l e n v i r o n m e n t i n o r d e r t o st a y a h e a d o f t h e c o m p e t i t i o n . S t u d e n t s n ee d t o e l a b o r a t e o n t h e a d v a n t a g e s / st r e n g t h s o f c o n c e n t r a t i n g o n t h e o t h e r 3 P s i n t h e i r a r g u m e n t . 7 . W h a t t y p e s of s e r v i c e s d o y ou t h i n k a re ( a ) m o s t a ff e c t e d a n d ( b ) l e a s t a ff e c t e d b y t h e p r o b l e m of v a r i a b l e i n p u t s a n d o u t p u t s ? W hy ? S e r v i c e s t h a t r e q u i r e h i gh c o n t a c t i n wh i c h c u st o m e r s e x p e r i e n c e t h e t a n g i b l e a c t i o n s o f t h e s e r v i c e p r o v i d e r s w o u l d be m o s t a ff e c t e d. C u st o m e r s a r e d i r e c t l y i n c o n t a c t w i t h s e r v i c e p r o v i d e r s m o s t o f t h e t i m e t o r e c e i v e t h e s e r v i c e . T h e e v a l u a t i o n o f t h e o v e r a l l e x p e r i e n c e w o u l d d e p e n d o n t h e m oo d a n d p e r s o n a l b e li e f s o f t h e c u st o m e r , a s w e l l a s t h e s k ill s o f t h e s e r v i c e p r o v i d e r . H o w e v e r , s e r v i c e e x e c u t i o n o f t e n d i ff e r s a m o n g e m p l o y ee s , b e t w ee n t h e s a m e e m p l o y e e a n d d i ff e r e n t c u st o m e r s , a n d e v e n f r o m o n e t i m e o f d a y t o a n o t h e r . A tt i t u d e s , t r a n s a c t i o n s p ee d, a n d q u a li t y o f p e r f o r m a n c e c a n v a r y w i d e l y . T h i s w i de v a r i a b ili t y a cc o un t s f o r t h e d i ff i c u l t i e s i n p e o p l e p r o c e ss i n g s e r v i c e s . O n t h e c o n t r a r y , s e r v i c e s t h a t p r o c e s s p e o p l e ’ s p o ss e ss i o n s a n d w h i c h o cc u r s a t a n a r m ’ s l e n g t h a r e l e a s t a ff e c t e d by t h e v a r i a b ili t y . F o r e x a m p l e , s e r v i c e s t h a t i n v o l v e u t ili t i e s , t e l e c o mm un i c a t i o n a n d i n t e r n e t - b a s e d t r a n s a c t i o n s . T h i s m a y be a c h i e v e d by a d o p t i n g st a n d a r d iz e d p r o c e d u r e s , i m p l e m e n t i n g r i g o r o u s m a n a g e m e n t o f s e r v i c e q u a li t y , t r a i n i n g e m p l o y ee s , a n d a u t o m a t i n g t a s k s p r e v i o u s l y p e r f o r m e d by hu m a n b e i n g s . S e r v i c e s t h a t i n v o l v e i n t a n g i b l e a c t i o n s m a y be a b l e t o m a k e m o r e e x t e n s i v e u s e o f i n f o r m a t i o n t e c hn o l o gy a n d t o d e li v e r t h e c o r e s e r v i c e t h r o u gh t h e I n t e r n e t o r o t h e r t e l e c o mm un i c a t i o n s . C u st o m e r s r e c e i v e m o r e st a n d a r d iz e d s e r v i c e s , wh i c h m a y r e f l e c t p e r c e i v e d f a i r n e ss . H o w e v e r , u s i n g t o o m u c h t e c hn o l o gy m a k e s t h e s e r v i c e m o r e i m p e r s o n a l . 8. Why do the marketing, ope rations, human resource management and IT functions need to be closely coordinated in service organi z ations? The integrated model of service marketing in Figure 1.28 requires a close coordination between operations, human resource management and IT for it to be fully productive. Figure 1.26 presents the interdependency of these functions to meet customer needs. In service organisations, operations functions are actively involved in the design of products and processes to improve productivity and quality. HR provides quality front - line service providers to ensure the service experience and IT provides

  13. Page 13
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    real - time information at every customer touch - point to create value with updated customer data. 9. What are the implications of the service - profit chain for se rvice management? One of the biggest implications of the service - profit chain is how the leadership role from top management underlies the chain’s success. This leadership role will be the driver for internal quality delivered by operations, IT and other d epartments to improve employee satisfaction which can lead to employee loyalty and can drive the quality and productivity of service upwards resulting in higher customer satisfaction and loyalty that will eventually result in growth and profitability. A PP L I C A T I O N E X E R C I S E S 1. V i s i t t h e w e b s i t e s of t h e f o ll o w i n g n a t i o n a l s t a t i s t i c a l b u r e a u s : U. S . B u r e a u of E c o n o m i c An a l y s i s ( www . b e a . g o v ) ; S t a t i s t i c s C a n a d a ( www . s t a t c a n . c a ) ; N a t i o n a l B u r e a u of S t a t i s t i c s of C h i n a ( www . s t a t s . g o v . cn / e n g li s h / ) ; E u r o s t a t ( h tt p : / / e u r o p a . e u . i n t / e n / c o mm / e u r o s t a t / ) ; J a p a n e s e S t a t i s t i c s B u r e a u ( www . s t a t . g o . j p ) ; Ce n t r a l B u r e a u of S t a t i s t i c s ( I n d o n e s i a ) ( www . bp s . g o . i d ) ; S t a t i s t i c s S o u t h A f r i c a ( www . s t a t ss a . g o v . z a ) a n d t h e r e s p e c t i v e w e b s i t e s f or y o u r h o m e c o un t ry i f i t i s n ot c o v e r e d h e r e . I n e a c h i n s t a nc e , o b t a i n d a t a on t h e l a t e s t t r e n d s i n s e r v i c e s a s ( a ) p e r c e n t a g e of g r o s s d o m e s t i c p r o d uc t ; ( b ) t h e p e r c e n t a g e of e m p l o y m e n t a cc o un t e d f or b y s e r v i c e s ; ( c ) b r e a k d o w n s of t h e s e t w o s t a t i s t i c s b y t y p e of i n d u s t r y ; a n d ( d ) s e r v i c e e x p o r t s a n d i m p o r t s . L o o k i n g a t t h e s e t r e n d s , w h a t a re y o u r m a i n c o nc l u s i o n s f or t h e m a i n s e c t o r s of t h e s e e c o n o m i e s , a n d w i t h i n s e r v i c e s , f or s p e c i f i c s e r v i c e s e c t o r s . T h i s e x e r c i s e w il l h e l p st u d e n t s l e a r n h o w t o a cc e s s a n d a n a l y z e d a t a f r o m d i ff e r e n t n a t i o n a l st a t i st i c a l a g e n c i e s . N o t e t h a t a s o f l a t e 2003 , t h e U n i t e d S t a t e s h a d n o t y e t c o n v e r t e d i t s i n d u st r i a l st a t i st i c s t o t h e n e w N A I C S f o r m a t , b u t p r o g r e s s i s b e i n g m a de t o w a r d t h i s g o a l . C a n a d a ’ s st a t i st i c s a r e f u r t h e r a l o n g i n t h i s c o n v e r s i o n p r o c e ss . C a n a d i a n d a t a t e n d t o be m o r e r e c e n t t h a n t h o s e i n t h e U n i t e d S t a t e s ( t h i s p r o b a b l y r e f l e c t s t h e c o un t r y ’ s m u c h s m a ll e r e c o n o m y a n d p o p u l a t i o n ) . C o m p a r i s o n o f s e r v i c e st a t i st i c s a c r o s s t h e s e t h r e e c o un t r i e s c a n p r o v i de t h e b a s i s f o r in - c l a s s d i s c u ss i o n a n d d e b a t e y o u

  14. Page 14
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    w i s h . A d d i t i o n a l n a t i o n a l st a t i st i c a l a g e n c i e s c a n be a d d e d a s d e s i r e d, b u t y o u s h o u l d f i r s t c h e c k o u t t h e e x t e n t o f t h e d a t a b e i n g p r e s e n t e d o n t h e W e b s i t e i n q u e st i o n . 2 . L e g a l a n d a cc o un t i n g f i r m s n ow a d v e r t i s e t h e i r s e r v i c e s i n m a n y c o un t r i e s . S e a r c h f or a f e w a d v e r t i s e m e n t s a n d r e v i e w t h e f o ll o w i n g : W h a t d o t h e s e f i r m s d o t o c o p e w i t h t h e i n t a n g i b ili t y of t h e i r s e r v i c e s ? W h a t c o u l d t h e y d o b e tt e r? H ow d o t h e y d e a l w i t h c o n s u m e r q u a li t y a n d r i s k p e r c e p t i o n s , a n d h ow c o u l d t h e y i m p r o v e t h a t a s p e c t of t h e i r m a r k e t i n g ? L e g a l a n d a cc o u n t i n g f i r m s f o r m p a r t o f t h e I n f o r m a t i o n P r o c e ss i n g c a t e g o r y . I n f o r m a t i o n i s t h e m o s t i n t a n g i b l e f o r m o f s e r v i c e o u t p u t . H o w e v e r , i t c a n be t r a n s f o r m e d i n t o m o r e p e r m a n e n t a n d t a n g i b l e f o r m s li k e l e tt e r s , r e p o r ts , b o o k s , C D - R O M s , o r D V D s . S o m e o f t h e s e r v i c e s t h a t a r e m o s t h i g h l y d e p e n d e n t o n t h e e ff e c t i v e c o ll e c t i o n a n d p r o c e ss i n g o f i n f o r m a t i o n a r e f i n a n c i a l a n d p r o f e ss i o n a l s e r v i c e s li k e a cc o u n t i n g, l a w , m a r k e t i n g r e s e a r c h , m a n a g e m e n t c o n s u l t i n g a n d m e d i c a l d i a g n o s i s . T o d e a l w i t h c o n s u m e r q u a li t y a n d r i s k p e r c e p t i o n s , s u c h f i r m s m u s t t r y a n d p r o v i de c o n s i st e n t q u a li t y o f s e r v i c e , a g o o d un d e r st a n d i n g o f t h e i r p r o d u c t k n o w l e d g e a n d wh a t t h e i r c li e n t s n ee d a n d w a n t . I t i s i m p o r t a n t t o k ee p t h e s e c li e n t s i n f o r m e d a n d e d u c a t e d a b o u t wh a t t h e s e l e g a l a n d a c c o un t i n g f i r m s c a n do f o r t h e m . 3 . G i v e e x a m p l e s of h ow I n t e r n e t a n d t e l e c o mm un i c a t i o n s t e chn o l o g i e s ( e . g . , I n t e r a c t i v e V o i c e R e s p o n s e S y s t e m s [ I V R s ] a n d m o b il e c o mm e r c e [ M - c o mm e r c e ] ) h a v e ch a n g e d s o m e of t h e s e r v i c e s t h a t y ou u s e . S t u d e n t s s h o u l d be a b l e t o p r o v i de m a n y i n t e r e st i n g e x a m p l e s , i n c l u d i n g: t h e p r o li f e r a t i o n o f W e b - b a s e d s e r v i c e s ( s u c h a s r e s e r v a t i o n s , e n t e r t a i n m e n t , a n d m e d i c a l h e l p ) ; t h e u s e o f e m a i l t o i n t e r a c t w i t h c u st o m e r s a n d b u il d l o n g - t e r m r e l a t i o n s h i p s ; s a t e lli t e T V a n d d i g i t a l c a b l e ; s p e c i a l e ff e c t s i n m o v i e s ; t h e i n c r e a s e d e a s e o f c o mm un i c a t i o n t h r o u gh c e ll u l a r p h o n e s , e t c . 4 . Explain how the concepts in Chapter 1 ar e relevant to the marketing of a religious institution, or a non - profit organization such as World Wildlife Fund.

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    Students can relate Service - Profit chain to explain unique marketing of religious institution or non - profit organisations such as WWF by expl aining how these services do not measure their success by the profitability rather they view growth of their ideology as the main measure of success. Students can also discuss the additional 3Ps of service • People : T he imam of a mosque and pastor of a church are critical to the delivery of service. • Processes : Although for non - profit firms like WWF, or an adoption centre, profit is not the main aim, nevertheless, poorly designed service process will lead to wasted time and ineffective service delivery. This ca n reduce the social support and funds that are so essential for such businesses. • Physical Environment : A s in any service, physical features like building of a church and office of the non - profit firm will reflect its values and beliefs. Religious symbolog y, or ideological depictions like pictures of animals or WWF projects to save wildlife will be the key feature of physical environment.

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    C HA P T E R 2 CO N S U M E R B E HA V I O R I N A S E R V I C E S C O N T E X T T h i s ch a p t e r e m p h a s i z e s t h e p o i n t m a d e i n C h a p t e r 1 t h a t s e r v i c e s ucc e s s r e q u i r e s a f o cu s on b o t h cu s t o m e rs a n d c o m p e t i t i v e m a r k e t s . Acc o r d i n g l y , C h a p t e r 2 e s t a b li s h e s a t h e m e t h a t r u n s t h r o u g h o u t t h e b o o k : t h e n ee d f or s e r v i c e f i r m s t o b e cu s t o m e r f o cu s e d , t o un d e r s t a n d cu s t o m e r c o nc e r n s a n d e x p e c t a t i o n s , a n d t o r e c o g n i z e t h e cu s t o m e r ’ s o f t e n d yn a m i c r o l e i n s e r v i c e o p e r a t i o n s . L E A R N I N G O B JE C T I V E S By t h e e n d o f t h i s c h a p t e r , st u d e n t s s h o u l d be a b l e t o :  (LO 1) Understand the three - stage model of service consumption.  (LO 2) Use the multi - attribute model to understa nd how consumers evaluate and choose between alternative service offerings.  (LO 3) Learn why consumers often have difficulty evaluating services, especially those with many experience and credence attributes.  (LO 4) Know the perceived risks customers face in purchasing services and the strategies firms can use to reduce consumer risk perceptions.  (LO 5) Understand how customers form service expectations and the components of these expectations.  (LO 6) Know the “moment of truth” metaphor.  (LO 7) Contrast how customers experience and evaluate high - versus low - contact services.  (LO 8) Be familiar with the servuction model and understand the interactions that together create the service experience.

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