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Lecture 7

MKT 723 Lecture 7: MKT723- Test 2 Chapters 8-15

13 Pages

Course Code
MKT 723
Julie Kellershohn

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Week 6: The 7 P’s- Process - The service encounter is the “Moment of Truth” - Each time customer interacts with firm is critical in determining customer loyalty - opportunity to: build trust, reinforce quality, build brand identity, increase loyalty Flowcharting: displaying the sequence of steps when customer flows through the service process, should be able to map the process but not all steps are as important - a flowchart maps the customer journey Types of Service Encounters: 1. Remote Encounters- websites, ATM, direct mail 2. Technology-mediated encounters- phone calls, live chats 3. Face-to-face encounters- verbal and non-verbal Blueprinting: a blueprint maps the customer, employee and service system interactions from service initiation to final delivery, show key customer interactions, show employee roles Step 1: Identify process to be blueprinted, eg. Mail delivery Step 2: Identify customer/ customer segment Step 3: Map the process from customer’s point of view Step 4: Map contact employee actions/ technology actions Step 5: Link contact activities to the needed support functions Step 6: Add evidence of service at each customer step 1 Benefits of Service Blueprinting: Provides platform for innovation, recognizes roles and interdependencies, transfers and knowledge, designs moments of truths from the customer’s point of view, suggests critical points for measurement, clarifies competitive positioning, provides understanding of the ideal customer experience GOAL: To set service standards that set customer expectations Factors necessary for appropriate service standards: 1. Standardization of service behaviors – GOAL: produce a consistent service product from one transaction to the next HOW: substitution of technology for personal contact/human effort and/or improvement in work methods 2. Formal service targets and goals- GOAL: setting specific targets for individual behaviors and actions ASK: What is critical to our customers? What does high quality service look like? As a company, how can we measure ourselves to that standard? Standards are based on the most important customer expectations and reflect the customer’s view of these expectations (customer-based standards), never company- based! Sources are: customer expectations, customer process blueprint, customer experience observation Standards Types: 1. Hard standards and measures: things that can be counted, timed, or observed through audits (time, number of events) 2. Soft standards and measures: opinion-based measures that can’t be observed and must be collected by talking to customers (perceptions, beliefs) Process for setting customer-defined standards: 1. Identify existing or desired service encounter sequence 2. Translate customer expectations into behaviours/actions 3. Determine appropriate standards 4. Develop measurements for standards 5. Establish target levels for standards 6. Track measures against standards 7. Provide feedback about performance to employees 8. Update target levels and measures Customer has an important role- Levels of Customer participation: a. High participation level- Customer works actively with the provider to co-produce the service, eg. Marriage counseling b. Moderate participation level- customer’s inputs are required to assist the firm c. Low participation level- employees and systems do all the work, eg. Theater Customers can positively and negatively influence the service experience 2 Customer roles in service delivery: 1. Customers as productive resources- “partial employees”, contributing effort, time and other resources 2. Customers as contributors to service quality and satisfaction- can contribute to their own satisfaction by performing their role effectively and working with service provider, can also contribute to service quality they receive by taking responsibility and complaining when there is a service failure 3. Customers as competitors- customers may “compete” with service provider by doing things themselves, eg. Changing car headlights, internal vs. external exchange based on available time, expertise, resources, trust, control, etc. Self-Service Technologies (SST): - advances in tech have expanded self-service technologies, eg. Self check-ins, ATMs, automated car rentals - if cost savings for the company is the only benefit and no benefits for customer, SST will fail - Barriers to adoption of SSTs- frustration with poor design, lack of efficient service recovery systems, frustrated with themselves for making mistakes Strategies for Enhancing Customer Participation: 1. Define customer roles 2. Recruit, Educate and reward customers 3. Manage the customer mix Demand is often variable with services, such as Winterlicious in restaurants, cruise ships, etc. We need to understand Capacity Constraints and Demand Patterns Capacity Constraints: Time, labour, equipment, facilities – optimal vs. maximum use of capacity Demand Patterns: predictable cycles, random demand fluctuations, demand patterns by market segment Strategies for shifting demand: Shift Demand or Shift Capacity if one is too low or too high to meet expectations or to create more Waiting Line Strategies: - multiple queue - single queue - take a number - establish a reservation process, make waiting more pleasurable, differentiate customers Week 7- The 7 P’s- Physical environment and people Physical evidence from the customer’s point of view- (Photo) the servicescape of the company is communicating something about their brand, service, customer benefits etc. Servicescape: in medical clinics: building exterior, parking, sign, waiting areas, etc. 3 How does physical evidence affect the customer experience? Whether the experience is mundane or spectacular, the servicescape can have a profound effect on the customer experience→ flow, meaning, satisfaction, emotional connections Expanding the servicescape through technology- NASCAR is a very different environment, if you sit near the front levels to view the race, bits of car pieces might hit you if they crash, thrilling and dangerous compared to a clinic Strategic role of the Servicescape:  Package: conveys expectations and influences perceptions  Facilitator: facilitates the flow of the service delivery process  Socializer: facilitates interactions between customers and employees, customers and fellow customers  Differentiator: sets provider apart from competition in the mind of the consumer When you get the servicescape right you can drive positive behaviours and also how employees feel about the organization  Can also give visible cues for customers and employees for how to behave and what to expect Aromatherapy and the servicescape  How you can use smells to change what people do  Can influence positive moods  Can impact alertness, anxiety and computational skills Guidelines for physical evidence strategy:  Recognize the strategic impact of physical evidence  Blueprint the physical evidence of service  Clarify strategic roles of the servicescape  Assess and identify physical evidence opportunities  Update and modernize the evidence Service Culture: a culture where an appreciation for good service exists, and where giving good service to internal as well as ultimate, external customers, is considered a natural way of life and one of the most important norms by organizations… The critical importance of service employees:  They are the service  They are the organization in the customer’s eyes  They are the brand  They are marketers Services marketing is all about promises:  Promises made to customers and promises kept to customers  All 5 dimensions of service quality can be impacted by the service employees (RATER): reliability, assurance, tangibles, empathy, responsiveness 4 Boundary Spanning:  Employees at the very frontline of company and actually talking to customers  Provide a critical link between the external customer environment and the internal operations of the organization  Serve a critical function in understanding, filtering, interpreting information and resources to and from the organization and its external constituencies  Often very stressful for our employees  Emotional labour is not physical or mental, but emotionally exhausting to deal with other humans, often requires suppression of true feelings  Many sources of potential conflict from person/role, organization/client, interclient (in physical line ups clients can clash)  quality/productivity tradeoffs HR Strategies for delivering service quality through people:  Hire the right people: compete for the best people, hire for service competencies and service inclination, be the preferred employer  Develop people to deliver service quality: train for technical skills and interactive skills, empower employees, promote teamwork  Provide the needed support systems: empowered employees benefits include quicker responses, happier employees, better customer interaction, great source of service ideas, costs are greater investment to train, higher labor costs, potentially slower or inconsistent service, may violate customers’ sense of what’s fair, employees may give away the store, measure internal service quality, provide supportive technology and equipment, develop service-oriented internal processes  Retain the best people: measure and reward strong service performers, treat employees as customers, include employees in the company’s vision Zappos critical points of contact- such good customer service they’re almost like therapists (longest customer phone call was 8 hours!!)  Very careful about who they hire for personal fit with the company Week 8- Benefits of Relationship Marketing Chapter 12 The Search for Customer Loyalty: Targeting, acquiring and retaining the right customers is at the core of many successful service firms. Why do we care about loyalty? Customers are profitable over time! - profit derived from increased purchases - profit from reduced customer service costs - profit from referrals to other customers - profit from lower price sensitivity that allow a price premium - acquisition costs can be amortized over a longer period It’s 6-7x more expensive to acquire a new customer than it is to keep an old one! On average loyal customers are worth 10x as much as their first purchase! 5 Caution on Assessing value of loyal customers! - Can’t assume loyal customers are always more profitable than one-time customers - profits don’t necessarily increase over time with for all types of customers - lifecycle matters! Why are customers loyal? - service firms need to create value for customers in order for them to become and remain loyal - GOAL: Build a relationship with the customers Benefits for Customers: - receipt of greater value - confidence benefits (confidence in provider, reduced anxiety) - social benefits (social support, personal relationships) - special treatment benefits Benefits for Firms: Economic benefits: - increased revenues - reduced marketing and administrative costs - regular revenue stream Customer Behaviour benefits:  Strong WOM endorsements  Customer voluntary performance  Social benefits to other customers  Mentors to other customers Human resource management benefits:  Easier
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