SERVICES MARKETING
SUMMARY OF ALL LECTURES
,1 SERVICE CONCEPTUALISATION
WHAT IS SERVICE MARKETING?
Always consider two things:
1. What market am I in?
2. Who is my customer?
There are no clear-cut answers that hold for every industry, just tools that you can adopt. You have to
decide each time what tools you will use for your specific market.
FIVE GAPS TO PERCEIVED SERVICE QUALITY
Gap 5 is the most important one and is always in place. Expectations are (almost) never the same as
the perceptions. How can we try to close this gap?
Key factors leading to Gap 5:
• Gap 1 not knowing what customers expect
• Gap 2 not selecting the right service designs and standards
• Gap 3 not delivering to service standards
• Gap 4 Not matching performance to promises
Key factors leading to Gap 1:
• Inadequate Marketing Research Orientation
▪ Insufficient marketing research
▪ Research not focused on service quality
▪ Inadequate use of market research
You need to get to know what the customer expects through research to be able to deliver it.
• Lack of upward communication
▪ Lack of interaction between management and customers
▪ Insufficient communication between contact employees and managers
▪ Too many layers between contact personnel and top management
Complains and questions come in at contact personnel, but without registration these do not
reach the top personnel, and nothing is done with them.
,• Insufficient relationship focus
▪ Lack of market segmentation
▪ Focus on transactions rather than relationships
▪ Focus on new customers rather than relationship customers
Many companies focus on acquisition instead of keeping existing customers happy.
• Inadequate service recovery
Key factors leading to Gap 2:
• Poor service design
▪ Unsystematic new service development process
▪ Vague, undefined designs
▪ Failure to connect service designs to service positioning
• Absence of customer-driven standards
- Lack of customer-driven service standards
- Absence of process management to focus on customer requirements
- Absence of formal process for setting service quality goals
• Inappropriate physical evidence and servicescape
Key factors leading to Gap 3:
• Deficiencies in Human Resource Policies
- Ineffective recruitment
- Role ambiguity and role conflict
- Poor employee-technology job fit
- Inappropriate evaluation and compensation systems
- Lack of empowerment, perceived control and teamwork
• Failure to match supply and demand
- Failure to smooth peaks and valleys of demand
- Inappropriate customer mix
- Over-reliance on price to smooth demand
• Customers not fulfilling roles
- Customers lack knowledge of their roles and responsibilities
- Customers negatively impact each other.
• Problems with service intermediaries
- Channel conflict over objectives and performance
- Channel conflict over costs and rewards
- Difficulty controlling quality and consistency
- Tension between empowerment and control
Key factors leading to Gap 4:
• Lack of integrated services marketing communications
▪ Tendency to view each external communication as independent
▪ Not including interactive marketing in communications plan
▪ Absence of strong internal marketing program
, • Ineffective management of customer expectations
▪ Not managing customer expectation through all forms of communication
▪ Not adequately educating customers
• Overpromising
▪ Overpromising in advertising, personal selling and through physical evidence cues
• Inadequate horizontal communications
▪ Insufficient communication between sales and operations
▪ Insufficient communication between advertising and operations
▪ Differences in policies and procedures across branches or units
Services are the largest part of the GDP in a lot of countries. More than 70% of all jobs are in the
service industry.
When it comes to services, there is very likely to be a gap between customers’ expectations and their
perceptions. This is because expectations are not really clear, we don’t exactly know what to expect.
When it comes to products not so much. This is because when you buy a product, you most of the
time know what you are buying. Therefore your expectations and perceptions are really close
together.
DEFINITIONS OF A SERVICE
A service is a change in the condition of a person or of a good belonging to some economic unit which
is brought about as a result of the activity of some other economic unit, with the prior agreement of
the former person or economic unit (Hill, 1977).
Service are deeds, processes and performances (Book).
Note: difference between the core service of a company and the customer services that they deliver.
For example, the core service of an insurance company is the insurance that they deliver, but they
might offer alternative extra customer services like phone calls, etc. The customer services supports
the core service and might even be more important than it.
SERVICES PROCESS MATRIX
Service Factory Service Shop
Airlines Hospitals
Low Trucking Auto repair
Hotel
Degree of labor intensity Mass service Professional Service
(ratio between cost of
Retailing Doctors
capital and cost of labor)
High Wholesaling Lawyers
University Accountants
Low High
Degree of Interaction and Customization
(how to go in judging each individual customer)
SUMMARY OF ALL LECTURES
,1 SERVICE CONCEPTUALISATION
WHAT IS SERVICE MARKETING?
Always consider two things:
1. What market am I in?
2. Who is my customer?
There are no clear-cut answers that hold for every industry, just tools that you can adopt. You have to
decide each time what tools you will use for your specific market.
FIVE GAPS TO PERCEIVED SERVICE QUALITY
Gap 5 is the most important one and is always in place. Expectations are (almost) never the same as
the perceptions. How can we try to close this gap?
Key factors leading to Gap 5:
• Gap 1 not knowing what customers expect
• Gap 2 not selecting the right service designs and standards
• Gap 3 not delivering to service standards
• Gap 4 Not matching performance to promises
Key factors leading to Gap 1:
• Inadequate Marketing Research Orientation
▪ Insufficient marketing research
▪ Research not focused on service quality
▪ Inadequate use of market research
You need to get to know what the customer expects through research to be able to deliver it.
• Lack of upward communication
▪ Lack of interaction between management and customers
▪ Insufficient communication between contact employees and managers
▪ Too many layers between contact personnel and top management
Complains and questions come in at contact personnel, but without registration these do not
reach the top personnel, and nothing is done with them.
,• Insufficient relationship focus
▪ Lack of market segmentation
▪ Focus on transactions rather than relationships
▪ Focus on new customers rather than relationship customers
Many companies focus on acquisition instead of keeping existing customers happy.
• Inadequate service recovery
Key factors leading to Gap 2:
• Poor service design
▪ Unsystematic new service development process
▪ Vague, undefined designs
▪ Failure to connect service designs to service positioning
• Absence of customer-driven standards
- Lack of customer-driven service standards
- Absence of process management to focus on customer requirements
- Absence of formal process for setting service quality goals
• Inappropriate physical evidence and servicescape
Key factors leading to Gap 3:
• Deficiencies in Human Resource Policies
- Ineffective recruitment
- Role ambiguity and role conflict
- Poor employee-technology job fit
- Inappropriate evaluation and compensation systems
- Lack of empowerment, perceived control and teamwork
• Failure to match supply and demand
- Failure to smooth peaks and valleys of demand
- Inappropriate customer mix
- Over-reliance on price to smooth demand
• Customers not fulfilling roles
- Customers lack knowledge of their roles and responsibilities
- Customers negatively impact each other.
• Problems with service intermediaries
- Channel conflict over objectives and performance
- Channel conflict over costs and rewards
- Difficulty controlling quality and consistency
- Tension between empowerment and control
Key factors leading to Gap 4:
• Lack of integrated services marketing communications
▪ Tendency to view each external communication as independent
▪ Not including interactive marketing in communications plan
▪ Absence of strong internal marketing program
, • Ineffective management of customer expectations
▪ Not managing customer expectation through all forms of communication
▪ Not adequately educating customers
• Overpromising
▪ Overpromising in advertising, personal selling and through physical evidence cues
• Inadequate horizontal communications
▪ Insufficient communication between sales and operations
▪ Insufficient communication between advertising and operations
▪ Differences in policies and procedures across branches or units
Services are the largest part of the GDP in a lot of countries. More than 70% of all jobs are in the
service industry.
When it comes to services, there is very likely to be a gap between customers’ expectations and their
perceptions. This is because expectations are not really clear, we don’t exactly know what to expect.
When it comes to products not so much. This is because when you buy a product, you most of the
time know what you are buying. Therefore your expectations and perceptions are really close
together.
DEFINITIONS OF A SERVICE
A service is a change in the condition of a person or of a good belonging to some economic unit which
is brought about as a result of the activity of some other economic unit, with the prior agreement of
the former person or economic unit (Hill, 1977).
Service are deeds, processes and performances (Book).
Note: difference between the core service of a company and the customer services that they deliver.
For example, the core service of an insurance company is the insurance that they deliver, but they
might offer alternative extra customer services like phone calls, etc. The customer services supports
the core service and might even be more important than it.
SERVICES PROCESS MATRIX
Service Factory Service Shop
Airlines Hospitals
Low Trucking Auto repair
Hotel
Degree of labor intensity Mass service Professional Service
(ratio between cost of
Retailing Doctors
capital and cost of labor)
High Wholesaling Lawyers
University Accountants
Low High
Degree of Interaction and Customization
(how to go in judging each individual customer)
