Service Marketing: Essential Concepts and Strategies

What is the Service Marketing Mix?

All elements within the control of the firm that communicate the firm's capabilities and image to customers or that influence customer satisfaction with the firm's product and services: product, price, place, and promotion.

• People: All human actors who play a part in service delivery and thus influence the buyer's perceptions: namely, the firm's personnel, the customer, and other customers in the service environment.
• Physical Evidence: The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
• Process: The actual procedures, mechanisms, and flow of activities by which the service is delivered — the service delivery and operating systems.

The S-T-P Model

1. Segmenting: Dividing the market into distinctive groups.
2. Targeting: Selecting a segment to target.
3. Positioning: Developing a marketing strategy that positions the product in relation to rivals in order to appeal to target segments.

Characteristics of Services Compared to Goods

Intangible vs. Tangible

• Services cannot be inventoried.
• Services cannot be easily patented.
• Pricing is difficult.

Heterogeneous vs. Standardized

• Service quality depends on many uncontrollable factors.
• Service delivery and customer satisfaction depend on employee and customer actions.

Simultaneous Production and Consumption vs. Production Separate from Consumption

• Employees affect the service outcome.
• Customers affect each other.
• Decentralization may be essential.

Perishable vs. Nonperishable

• Services cannot be returned or resold.

It is difficult to synchronize supply and demand with services.

The Service Profit Chain

The service profit chain demonstrates that a direct relationship exists between profit, growth, customer loyalty, customer satisfaction, value delivered, employee capability, loyalty, and productivity. It links internal service and employee satisfaction to customer value and ultimately to corporate profit.

Transactional Marketing vs. Relationship Marketing

Transactional Marketing

• Orientation: Single sales
• Discontinuous customer contact
• Focus: Product features
• Short time horizon
• Little customer service emphasis
• Limited commitment to meeting expectations
• Quality is a concern of production

Relationship Marketing

• Orientation: Customer retention
• Continuous customer contact
• Focus: Customer value
• Long time horizon
• Emphasis on customer service
• Commitment to meeting customer expectations
• Quality is a concern of all

Sources of Customer Expectations

• The meaning and types of expected service.
• Customer expectations vary.
• Service marketers must understand customer expectations.
• Factors that influence customer expectations of service.
• Some factors in service expectations are uncontrolled by the marketer (e.g., personal service philosophy, derived service expectations).
• Issues involving customer service expectations.
• Educate customers to provide better service in the near future.

The reality check: buying a house, buying a car.

Differences Between Soft Standards and Hard Standards

• Soft Standards: Opinion-based measures that cannot be directly observed.
• Hard Standards: Things that can be counted, timed, or observed through audits.

Applying Maslow's Hierarchy of Needs to Employee Motivation

1. Basic Physical Needs: Food, drink, oxygen, warmth, sensory pleasure, maternal behavior, sexual desire. If people are denied any of these needs, they may spend long periods of time looking for them.
2. Safety and Security Needs: Safety and security, freedom from pain, protection from danger.
3. Love and Social Needs: A sense of belonging, the need for social activities, friendships, and the giving and receiving of love.
4. Esteem Needs: Self-respect (involves the desire to have strength, confidence, independence, freedom, and achievement); esteem of others (involves having prestige, status, attention, recognition, reputation, and appreciation from other people).
5. Self-Actualization Needs: This is the development and realization of a person's full potential; all the other needs in the pyramid have to be achieved before a person can reach this stage.