【中国经济管理大学MBA讲义】科特勒《营销管理》第13版《Chapter11》

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Chapter 11 - Designing and Managing Services
I. Learning Objectives
After reading this chapter, students should:
q Know how services are defined and how they differ from goods
q Know how services are marketed
q Know how service quality can be improved
q Know how service marketers create strong brands
q Know how goods marketers improve customer-support services
II. Chapter Summary
A service is any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything. It may or may not be tied to a physical product.
Services are intangible, inseparable, variable, and perishable. Each characteristic poses challenges and requires certain strategies. Marketers must find ways to give tangibility to intangibles; to increase the productivity of service providers; to increase and standardize the quality of the service provided; and to match the supply of services with market demand.
In the past, service industries lagged behind manufacturing firms in adopting and using marketing concepts and tools, but this situation has now changed. Service marketing must be done holistically: it calls not only for external marketing but also for internal marketing to motivate employees, as well as interactive marketing to emphasize the importance of both “high-tech” and “high-touch”.
Customers’ expectations play a critical role in their service experiences and evaluations. By understanding the effects of each service encounter, companies can manage service quality better.
Top service companies excel at the following practices: a strategic concept, a history of top-management commitment to quality, high standards, self-service technologies, systems for monitoring service performance and customer complaints, and an emphasis on employee satisfaction.
To brand a service organization effectively, the company must differentiate its brand through primary and secondary service features and develop appropriate brand strategies. Effective branding programs for services often employ multiple brand elements. They also develop brand hierarchies and portfolios and establish image dimensions to reinforce or complement service offerings.
Even product-based companies must provide postpurchase service. To provide the best support, a manufacturer must identify the services customers value most and their relative importance. The service mix includes both presale services (facilitating and value-augmenting services) and postsale services (customer service departments, repair and maintenance services).
III. Chapter Outline
I. The Nature of Services
A. Definition of “Service” - any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything  
B. Link to a Physical Product - service may or may not be tied with this
C. Categories of Service Mix  
1. Pure tangible good
2. Tangible good with accompanying services
3. Hybrid
4. Major service with accompanying minor goods and services
5. Pure service (degree of people- and equipment-based service activity provides an important variable in the goods-to-service mix)
D. Distinctive Characteristics of Services
1. Intangibility - services cannot be seen, heard, touched, tasted or felt. A critical element here is the signs or evidence of service quality to transform intangible services into meaningful benefits
2. Inseparability - services are produced and consumed simultaneously, and the provider-client interaction is an important aspect in the outcome
3. Variability - the quality of a service depends on when, where, and by whom they are provided, with training a crucial differentiator
4. Perishability - services cannot be stored for later use.  There are several strategies that can be used for producing a better match between service demand and supply
II. Marketing Strategies for Service Firms
A. A Shifting Customer Relationship
1. Access to increasing amount of data allows organizations to devise service differentiation based upon customer profitability and value
2. Consumers are becoming increasingly smarter and demanding unbundling of services to compare prices and choose specific services
3. The Internet has provided consumers with a medium to convey positive or negative comments quickly to the mass consumer market
B. Holistic marketing for Srvices
1. Important due to complex interactions that are affected by multiple elements
2. Requires external, internal, and interactive marketing efforts
a) External marketing includes marketing mix activities
b) Internal marketing includes training and motivating employees
c) Interactive marketing describes employees’ skill in serving consumers
III. Managing Service Brands
A. Differentiating Services
1. The more a service is viewed by the consumer as being homogenous, the more the need for the organization to differentiate the service
2. Methods to differentiate may include:
a) Offering more than the primary service package
b) Adding secondary features to the primary service package
c) Leveraging human interaction by training and empowering employees to engage the consumer
d) Offering a very wide assortment of services including cross-selling efforts
3. Many services can be copied rather easily, which necessitates differentiation
B. Developing Brand Strategies for Services
1. Choosing brand elements
a) Brand decisions are usually made away from service location, which increases importance of brand recall
b) Intangibility of service necessitates creation of benefits that express tangibility
c) Physical surroundings or evidence supports the branding effort as not all aspects of a service process can be branded
2. Establishing Image Dimensions
a) Consumers’ perceptions of employees, organization reputation, and credibility form associations with the brand
b) Organizations must effectively communicate brand information in an effort to develop the proper brand personality
3. Devising Brand Strategy
a) Organizations should create brand hierarchies and portfolios to allow for different segment targets and positioning strategies
b) Classes of service can be branded vertically based on price and quality
c) Vertical extensions usually require sub-branding strategies (e.g. Marriott’s Fairfield Inn, Courtyard, Residence Inn, etc.)
IV. Managing Service Quality
A. Customer Expectations
1. Five gaps from service quality model created by Parasurman, Zeithaml, and Berry (refer to the related figure in text)
a) Gap between consumer expectation and management perception
b) Gap between management perception of consumer wants and needs,  and service-quality specifications
c) Gap between service-quality specifications and service delivery
d) Gap between service delivery and external communication to consumer
e) Gap between perceived (i.e. the experience) and expected service
2. Five determinants of service quality ensuing from service-quality model are reliability, responsiveness, assurance, empathy, and tangibility
3. Zone of tolerance – consumer’s range of acceptance bordered by what is deemed satisfactory and a minimal accepted level of satisfaction
B. Best practices of Service-Quality Management
1. Strategic concept – clear, distinct sense of targeted consumer needs matched by a strategy to satisfy them
2. Top-management commitment - financial as well as service-quality results are measured and evaluated
3. High standards - must be realistic
4. Self-service technologies (SSTs)
a) Increasing use of SSTs
b) Not all improve quality but may increase accuracy, provide more convenience, and save time
5. Monitoring systems
a) Regular auditing of company as well as competitor’s service performance
b) Measurement device examples - comparison shopping, “ghost (or mystery) shopping”, customer surveys, suggestions and complaint forms, service audit teams, and “letters to the president”  
6. Satisfying customer complaints
a) Studies show 25% dissatisfaction; but only 5% complain and of this figure, only half receive satisfactory resolution
b) Studies also show that a satisfied customer on average will tell three people about their experience while dissatisfied customers will tell 11 people and the effect is exponential
c) Speed of resolution affects loyalty
(1) 34% with a resolved major complaint and 52% with a resolved minor complaint will buy from the same organization again
(2) If the complaint is resolved quickly, 52% of those with a major complaint and 95% of those with a minor complaint will buy from the same organization again
(3) Organizations that encourage disappointed customers to complain while empowering employees to remedy the situation immediately achieve higher revenues and profits than organizations that do not address service failures systematically
7. Satisfying both employees and customers
a) Positive employee attitudes promote stronger customer loyalty
b) Requires training and empowerment
c) Can be stressful for employees
V. Managing Product-Support Services
Product-based industries must provide a service bundle to customers and respond to specific customer concerns related to reliability, service, dependability, and maintenance
A. Identifying and Satisfying Customer Needs
1. Customers worry about three things:
a) Reliability and failure frequency
b) Downtime duration (the longer the downtime the higher the cost, which leads to concerns over service dependability)
c) Out-of-pocket costs (maintenance and repair)
2. Customers evaluate all of the above and additionally attempt to estimate the life cycle cost, which is the product purchase cost plus discounted maintenance and repair less the salvage value
3. Buyers also look for additional services from certain vendors, such as warranties, extended warranties, guarantees, trade-in allowances, easy ordering, quality audits after installation, financing, and regular maintenance
B. Postsale Service Strategy
1. Maintenance, parts support, training, and operations supplies
2. Need for research to determine required services and importance of each
VI. Summary
IV. Opening Thought
The teaching of “services marketing” can pose a challenge to the instructor by the very nature of a service—its intangibility, inseparability, variability, and perishability. The key to teaching this course lies in connecting these concepts in ways students will relate to and understand. Students use services every day; they are in fact receiving a service in their current role—instruction. The instructor is encouraged to use the example of “instruction” or the university setting to demonstrate the four dimensions of a service that differentiates it from a physical product. Most students will understand that a service cannot be felt, touched, or inventoried; some students will not fully grasp the interconnectiveness between a service provider and a service receiver or consumer.
Students may experience some difficulty in conceptualizing reliability, responsiveness, assurance, empathy, and tangibles as part of the service marketing dimensions. The instructor is encouraged to use examples of excellent service companies and personal experiences, and to invite guest speakers to illustrate the challenges facing the marketing of services to the public.
The interaction or role that the customer plays in the delivery of a service may pose a barrier because many students (and consumers) do not fully understand their part or maximize their participation in the service process. This topic is suited for an in-class discussion or out-of-class assignment. Service stories, whether positive or negative, can effectively illustrate good and bad service marketing.
V. Teaching Strategy and Class Organization
PROJECTS
1. At this point in the semester-long marketing plan project, students who have selected a service idea must submit their offering. Students whose project has a product-based component do not have anything to submit for this chapter.
2. Using the information on marketing research covered in this text, ask students to prepare a teaching SERQUAL® form to be administered in all the classes taught in your department. This SERQUAL survey should focus on evaluating students’ understanding of their role in the service delivery process of teaching. If your college or university has a standardized form for evaluating students’ perceptions of learning, ask the students to compare and contrast these two measures. Why is there a difference and where are they similar?
ASSIGNMENTS
Small Group Assignments
1. In small groups, students should undertake to provide three examples of Chinese service companies (e.g. Bumrungrad) that have made their mark through superior marketing of services. Analyses of all aspects (e.g. people, processes) of their services marketing mix should be carried out to identify specific areas of competitive advantage.
2. Search and experience qualities are two characteristics of service providers. Yet each provides consumers with differing “clues” as to the service provider’s competency. In this assignment, students are to identify two different service providers— one that scores high in search qualities and another that is high in experience qualities. Using the consumer expectancy-value model and noncompensatory models of consumer choice covered in Chapter 6 of this text, students should outline their under standing of how consumers select a service high in search and in credence qualities.
Individual Assignments
Additional readings may be necessary for students to fully understand the scope and the importance of marketers providing excellent service to their customers. After reading the articles selected, they should prepare a paper detailing the information found which pertain to the marketing of services.
Think-Pair-Share
We all have “service failure” stories to tell. In fact, most people love to tell about the times when certain firms provided subpar service to us as consumers. Sometimes these stories are humorous and other times they are unpleasant. Ask students to think of such stories and prepare to tell them in class. These stories can be either their own or those of friends or family. When recounting the story line, students should first analyze the incident in terms of the concepts and tenets presented in this chapter. For example, the restaurant that did not address a customer’s “cold food” is a service failure. However, was that service failure due to insufficient training, inadequate hiring practices, or the restaurant’s inability to monitor customer expectations? Students should come prepared to identify (as closely as possible) the causes of the service failure.
END-OF-CHAPTER SUPPORT
MARKETING DEBATE
Is Service Marketing Different from Product Marketing?
VI. Case Study
1. Marketing in China: Customer Service in Vanke
1) Chinese consumers bear a lot of complaints toward the real estate industry, but how does Vanke manage to win good word of mouth? What are the major improvements of its customer service when Vanke changed its “property management office” into a “property service center”?
2) It is said that “customer satisfaction is a vanity while sales yields revenues” and “it is self-destructive to set up the customer complaint website”. Do you agree with these views, and why?
2. Marketing in China: Haier’s Five-Star Consumer Service
1) Elaborate on the contribution that consumer service has made to the branding of Haier.
2) How does Haier conduct and strengthen its service strategies within China’s unique context?
3. Chapter Case: HSBC
1) What are the success factors for HSBC’s service marketing?
2) Discuss the strategies to build and strengthen a service brand using the example of HSBC.
4. To prepare case studies based on the following materials from Chapter 11 and to present these:
Innovative Marketing: Southwest Airlines – JetBlue - Singapore Airlines (SIA)
VII. Main Topic(s)
A. “Services Marketing Takes a Turn”
This discussion focuses on the changing role of strategy in the important services marketing setting and the broader value of effective services marketing.
Teaching Objectives
· Stimulate students to think about the differences between service and product marketing.
· Develop an understanding of some of the areas where service marketing has changed and become effectively marketing-oriented.
· Recognize the role of service strategies and policies in helping the firm achieve a better market position.
Discussion
There are many areas of service marketing that have long been recognized and others that are just beginning to emerge more prominently for future attention. The latter includes tourism (excluding airlines, hotels, and travel agencies), childcare, and business services. This discussion will consider developments in one or more of these areas.  
Tourism and related areas of service marketing in the United States traditionally have operated in a relatively fragmented and disjointed manner. Despite the vast amount of attention given to tourism in the U.S., there has been little effort to market it properly. In fact, many competitors for the international tourism dollar place far more creativity and raw spending on tourism than the U.S. The latter ranks 33rd in the world in marketing dollars spent on tourism, coming just after Tunisia.
The main concern of many professionals in the tourism industry is that the industry must focus much more on pleasing customers and keeping them happy and secure. Otherwise, as we saw following September 11, 2001, tourists and other visitors will defect to competitors who provide a better solution for their needs.  
Fortunately, there were signs even before 9/11 that the process had begun to change. As the U.S. economy became more mature and service-oriented during the late 1990s, many American cities, states, and firms jumped on the tourism bandwagon. They recognized that even though tourism was the second-largest industry in the U.S., the lack of a unified marketing approach worked against establishing coherent marketing plans and programs.  
States and cities traditionally conducted most public sector tourism marketing, and while the federal government did some tourism marketing, the focus on other special interest programs resulted in cuts from the meager sums of the past. The private sector, hotel, motel, chains, etc., have done and continue to do the majority of the tourism marketing in the U.S.
Mainstream marketers, who avoided direct involvement in tourism in the past, are beginning to take a position on the matter. Further, the importance of marketing in the process is becoming even more evident in discussions throughout the country. Concerns are rising as we look at our infrastructure in terms of whether it provides a pleasing situation for visitors. Unfortunately, even before the recent security concerns, customs officials and others at airports were chided for slow and sometimes ungracious behavior. This is a prime cause of tourism dissatisfaction. Perceived feelings of danger are also often mentioned as a catalyst for a spoiled trip, and there are efforts in many states and cities to correct the problem and the perception even though the security pressure increased markedly after 9/11.  But there are other issues. For example, a substantial number of tourists arrive at our borders with no provision available to exchange currency. This would not happen in any other major developed nation.
There is, however, an effort in many areas to spotlight cultural resources that attract tourists. Many top proponents of American culture are developing very marketing-oriented stances, portraying the vital role of America’s cultural heritage as a major treasure that deserves to be carefully marketed. Increasingly, there is also an interest in the development of a national strategic marketing analysis.
There is recognition given to well-marketed attractions that are the wave of the future, such as the “New Orleans Delta Blues Festival”. The view is that it is nice to have excellent transportation and smiling customs officials, but tourists will stay away if there’s nothing of interest to experience.
Garrison Keillor, of “Prairie Home Companion” fame and one of the most important figures in American culture today, points out that while infrastructure, an educated workforce, and superior technology are important to the health of travel and tourism, in the final analysis most people travel to America to experience and celebrate its diverse cultural heritage.
We have to be careful, however, that we do not overmarket our culture. Keillor notes that although New Orleans recently built fine hotels and a convention center, the strategic planners seemingly forgot to nurture young jazz players. Thus, the city has extraordinary tourism facilities and a reputation for excellent music, but the best examples of the American jazz culture are found in small, obscure towns outside of New Orleans.
We should recognize the impact of marketing in tourism. Considering the traditional four P’s of marketing to be only the tip of the iceberg, we need to take a macro-approach in tourism marketing by planning and developing optimum, long-term marketing strategies for the tourism industry, focusing on the best in our culture rather than some of the less savory sides of American life.  
Optional student engagements and discussion points
1. With organizations increasingly outsourcing noncore competencies in an effort to reduce cost, they must also ensure that their service strategy is adopted and executed by their respective outsourcing partner(s). An example could be the situation where a major retailer subcontracts an appliance installation to an organization that has poor customer relationship skills and is not empowered to make decisions for quick resolution of issues.
2. Students can identify with the concepts of service marketing if they relate it to their own experience. Have them discuss a recent service encounter and identify what the organization did right or wrong relative to the concepts in this chapter such as problem resolution, misleading advertising, and exceeding of expectations.
3. Expand on the importance of physical evidence. Use the evidence found in a restaurant setting such as waiting area, type and volume of music, children area, cleanliness, noise level, lighting, and ambiance. Or discuss the physical evidence sought when sitting in a physician’s office for the first time such as cleanliness, academic qualifications (where and when earned, number of), and friendliness of staff (anxiety reduction, empathy, assurance).
4. Elaborate on the importance of a zone of tolerance. Use an example of a restaurant where same time and same level of activity with respect to number of customers and staff produces different seating times by a wide margin over multiple visits. Leads to lesser degree of reliability.  
VIII.  Background Article(s)  
Issue: International Applications of Service Marketing  
Source:  “Building the Brand,” Computers Today (India), July, 2002, p. 16.

Unlike Microsoft or Oracle, TCS, Infosys, Wipro, and HCL hardly have “tangible” packages to build their brand upon. Yet, Indian software services companies achieve ample mindshare among enterprise information technology (IT) users worldwide. Did they achieve global brand names by showing their technical competence, or through customer reference, quality certifications, or low price tags? Did the IT slowdown bring drastic changes in customer expectations from bidding IT services companies? This is a behind-the-facade look into how software services firms in India market themselves to bag plum projects.
Names like Tata Consultancy Services, Infosys, HCL, Wipro, and Satyam are all big brands in the world IT marketplace today. Of course, they are not like Microsoft or Oracle, which has software products that are used by virtually every person associated with IT. But these companies have created a name for themselves in a different space altogether—IT services.
Achieving the status of a global brand in the services segment is not easy. The fundamental difference in IT services marketing versus product marketing is lack of a product. While you have something that you can readily exhibit to your customers in the product space, in the services segment you have to sell the concept based on your experiences. It is in some ways similar to the business of architects and interior decorators. There are some who sell prefabricated residential apartments and then there are those who “listen” to you, understand your needs, translate those into a visual creation and, at the same time, ensure that they build a technically-correct, reliable, robust, and scaleable home.
Marketing an “intangible” thus is a big challenge. The second challenge for IT services companies is that the user of the product is very rarely the buyer himself. For example, the entire utility and scalability of a complex credit card switcher software program comes under scrutiny when a million customers swipe their card within a span of two hours on a pre-Diwali shopping spree. That moment of truth actually determines the quality of the software solution delivered. The third challenge, therefore, is the inability of the solutions provider to provide a coherent and accurate benefit and payoff definition of the solution delivered, thus leaving a vacuum in the articulation of any compelling positioning.
How does an IT services company sell itself in the global market? Various factors are involved that finally lead to service market success and the development of a brand for the company. These include:
Technological Competence
Bundling technical competencies and selling them to customers are the main trump cards that Indian software services companies are using to bag projects. For example, both TCS and Wipro call themselves one-stop shops for all the IT needs of their clients. From hosting clients’ websites to Web-enabling their legacy systems, these firms promise to deliver everything and this, according to them, helps position themselves better in the market. On the other hand, Infosys, Polaris and i-Flex Solutions call themselves specialists. Polaris works around the banking, insurance, and financial services industry and targets only these segments. However, it promises to do everything for its customers in that particular area.
Indian software companies are known to understand technological changes very fast and are ready to undertake projects in newer areas without any hesitation. For fast change and being able to prove that they have the skilled manpower for new segments, they claim to reserve “buffer” employees (also called employees on bench). The chairman and managing director of Polaris Software says, “We have around 12% to 20% staff as buffer. They are used as a cushion and are constantly trained in new technologies. As and when demand arises, we use them in executing projects. By having highly-qualified redundant staff, we manage to get more projects.” This is a typical Indian advantage; companies in the United States cannot afford such a luxury.
Most services giants have also gone in for joint ventures with leading multinational companies. Infosys has tie-ups with various companies, including Cisco Systems; and Satyam has a joint venture with General Electric, apart from others. Such partnerships help establish specific competency centers within the company. These denote that IT services companies can easily execute projects in related areas. According to an officer from one of the firms, these tie-ups have helped Indian firms to strategically position themselves in the market and build relationships with their customers.
Customer References
Success breeds success. Indian IT services companies are using customer reference sites to bid for newer projects. Observes Ranga Dorai, a Bangalore-based IT consultant, Indian firms first look for a breakthrough based on the price and manpower factors. Once they execute it properly, they make it the customer reference point and ask for better prices and more time to do the next project. This practice seems to be working fine.
Today, more than anything else, understanding customers’ requirements has become the most vital thing for IT services companies. A relatively unknown Hyderabad-based company, Sark Systems, managed to land an Israeli bank contract against several larger firms. This, the company claims, was because it could understand its client’s requirements better. Also, it did not try to impose its ideas over its client’s.
By focusing on customers’ needs, successful firms have created a unique brand experiences for clients, some of which have led to clinching crucial deals. For example, we have a no-commitment event called “explore India, explore entity”, where the firm provides customers a hands-on experience of the Indian IT services industry, while showcasing its own capabilities and experiences. “Through this event, the rate of conversion of prospects into customers has been exceptionally high,” says an official from the company.
IT Infrastructure
Having proved that they have the technical expertise and the ability to meet their clients’ needs, IT services companies realized the need to ramp-up their IT infrastructure. Unless they exhibit that the best of infrastructure is available with them, no customer will take them seriously, was the common refrain. Thus, all major players have built their own state-of-the-art equipment and connectivity facilities.
Also, for services companies, it is not just the facility, hardware, and connectivity that matter. They need to also prove their software development track records. This basically means that these companies should have developed and are developing intellectual properties.
Take, for example, the case of Mumbai-based Geometric Software Solutions Co. Ltd. It created an intellectual property a long time back, and today it claims to be generating a large chunk of revenues by licensing its intellectual property to other companies. This is one of the ways for a firm to market itself successfully.
Intellectual property is clearly a valuable asset in a knowledge-driven industry and can prove to be a competitive advantage for any company. However, mere innovation in an industry, which is as dynamic as the IT services sector (with an average life span of technology of 18 months) itself, can be very difficult to render and sustain.
Another way of using intellectual property by IT services firms is to identify a “winning” person within their premises, help him present papers at global conferences and forums, and write articles for various journals. Most Indian firms are into using intellectual property in this fashion to market themselves. But the vice president of strategic marketing at Wipro Technologies says, “We display our reusable templates and intellectual properties that can be plugged into a project, leading to a time-to-market advantage.”
Quality Processes
A tool used often by services firms in India to market themselves as competent enough to handle complex projects is to flaunt their ISO (International Organization for Standardization) or SEI-CMM (the Software Engineering Institute Capability Maturity Model) quality certifications. Today, India claims to have the highest number of SEI-CMM Level 5-certified IT firms in the world. And all these happened because of customers’ demands, says an official from Intelligroup. Firms wanted to assure their clients that they would follow certain standards in executing projects. But with a large number of firms obtaining the certifications, their importance seems to have eroded.
Certificates do help in creating a level of comfort in the minds of our prospective customers, especially those who are considering offshore projects for the first time. For us, it has turned out to be doubly beneficial, as we have now started offering quality consulting to external clients, thus directly contributing to our bottom lines.
Quality initiatives like ISO, CMM, and Six Sigma have helped create benchmarks for the industry to follow. Through a combination of all of these and processes like DMADV (defines, measure, analyze, design, verify) and DMAIC (defines, measure, analyze, improve, control), we have been able to show measurable cost benefits to clients. These have improved client profitability. That is the biggest measurement of success.
The final word appears to be: “Certificates play different roles in different places”. It clearly exhibits the ability to do quality work. But now everyone has got it and it virtually doesn’t make much difference. Adaptability and responsiveness to the customer needs play a more crucial role in winning the job.
Managing Costs
Since the beginning of the IT services era, the argument about marketing of Indian companies started and ended at the price factor. Today, however, with countries like China, the Philippines, Ireland, and Israel posing to be equally cost-competitive, pricing is no longer the predominant factor. Industry analysts now term customer focus, proven track record of executing projects, ability to grab new technology and quality of services as main factors for Indian software developers to make a global impact.
The cost factor, however, hasn’t totally lost its relevance. The offshore and onsite combination model has proved to be a major advantage for Indian companies. And as the global economic recession brings the billing rates down drastically, the price factor plays a bigger role in getting projects. Indian firms are talking about factors like customer focus and quality, but costs remain the biggest differentiator.
Tough Times
IT companies in India have started looking at branding today when there’s an economic downturn. But the time to build a brand is when the going is good. Companies that spend money, time, and resources to build a brand when the going is good are the ones to weather the storm smoothly. Those firms that failed to build brands for themselves are facing rough weather now.