Exam Notes - Fundamentals of Service Marketing

Rødt: skriv om til eksamen og viktig Gult teorier/frameworks Fundamentals of Service Marketing ================================= **Distinction between products and services**: Any act or performance that one party can offer to another that is essentially intangible and does not result in the owne...

Rødt: skriv om til eksamen og viktig Gult teorier/frameworks Fundamentals of Service Marketing ================================= **Distinction between products and services**: Any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. A service is experiences or actions, use or benefit, no ownership. - Pure goods: food product, chemical, book - Core Goods: Appliance, Data storage system and vehicle - Core Services: Airline, Hotel - Pure services: teaching, medical advice **IHIP**: - Intangibility: services can't be touched, seen or stored like a physical product. - Heterogeneity: Every service experience can be different because it depends on people (The quality-of-service experience might vary depending on the server). - Inseparability: services are created and consumed at the same time and customers often play a role in the service (a gym trainer and client work together during the session, both affect the outcome). - Perishability: Services cant be stored or saved for later (a hotel room that isn't booked has a lost revenue forever as it cant be sold the next day). Example: A Haircut (service) cannot be separated from the barber (inseparable) and it varies with each barber (heterogeneous). The Haircut cannot be stored for later use (perishable) Criticism: Vargo And Lusch argue that IHIP are outdated because IHIP do not 1. Distuingish services from goods, 2. Only meaning from a manufacturer perspective and 3. Imply inappropriate normative strategies. Blurred lines between products and services as some products integrate service components, like software updates for purchased electronics. **Goods-Services Continuum**: most firms provide a mix of goods and services rather than purely one. This makes differences in characteristics and implications for marketing. **Customer Centricity** ======================= Focusing on creating **dual value** for firms and customers= Long Term Customer loyalty, competitive advantage and profitability **How?** 1. Selecting target group, 2. understand and address customer needs (say no when it is appropriate to say no) and 3. optimize touchpoints and alternative approaches to meet the needs. **Value Creation Spheres (Gonroos and Voima):** 1. Provider sphere: value through service design and delivery. 2. Joint sphere: value is cocreated during direct interactions between customers and providers. 3. The customer sphere represents where value is realized independently by the customer through their experience. These spheres influence service delivery by encouraging teamwork between the provider (from the service) and the customer during their interaction while also allowing customers to have their own unique experience and decide what the service mean to them. Example: A fitness coach (provider) helps during sessions (joint), but the client must stay consistent at home (customer). Boulding et al, shah et al **Challenges to customer centricity**: 1. Organizational resistance 2. Organizational **silos:** focusing on goals instead of customer needs 3. **Metrics not aligned with customer outcomes**: measuring success with internal goals instead of customer satisfaction 4. Resource allocation 5. **Resistance to change** 6. **Difficulty in combining online and offline customer data** **Seven Steps to Customer Centricity (Rust et al., 2004):** 1. Make brand decisions subservient to customer relationships. 2. Build brands around customer segments, not the other way around. 3. Narrow brands to meet specific customer needs (customize \> standardize). 4. Plan brand extensions based on customer needs. 5. Move customers between brands strategically within the company. 6. Scrap ineffective or outdated brands. 7. Use customer-based brand equity as the key performance measure. 3.Customer Co-Creation & Participation ====================================== Customers as active participants in creating value during service delivery. "What can you do for us?" "The extent to which customers contribute effort, knowledge or inputs during various stages of a services" (Dong and Sivakumar). Dabholkar (1990): The degree to which the customer is involved in producing and delivering the service. Different ways to participate 1. Mandatotory: they must participate (patient during surgery) 2. Replaceable: can substitute employees in the process (self-checkout) 3. Voluntary: choose to participate (traveler providing feedback about a hotel) Psychological Implication of customer participation: - The IKEA Effect (Norton et al): people value products more when they have contributed to creating them as they feel more pride and attachment. If the outcome is **SUCCESSFUL.** - The Self-Serving Bias (Bendapudi and Leone): People attribute success to themselves and blame others for failures (a project going well, and if not they blame on others). Benefits about participating: - Companies: Increases productivity and reduce labor costs, strengthen customer loyalty and engagement. - Customers have increased satisfaction when participation is enjoyable and enhances the perceived value of the service. Downsides about participating: - Customer participation can create role stress and negative feelings due to overload and role ambiguity. - Dissatisfaction risks if they fail, therefore providing **a choice** to participate mitigate these risks. Complaint Management & Service Recovery ======================================= Service failure: Mismatch between what the customer expects, and the service delivered. Why do customers complain: 1. To obtain compensation or recover costs. 2. To express frustration or anger. 3. To provide feedback to improve services. 4. To prevent other customers from experiencing the same failure. Proactively manage service failures to retain customer trust and use root cause analysis and train employees for recovery. Barriers to complaint: 1. Fear of confrontation with staff 2. Lack of complaint channels and how to lodge complaints 3. Belief that the complaints wont be addressed. 4. Presence of other customer may discourage complaints. Example: Poor experience at restaurants may go unreported if customers think management don't care and are rude. What do customers expect? Justice Theory 1. Procedural Justice: Clear and convenient procedures for filing complaints and seeking resolution. 2. Interactional Justice: Polite and empathetic interactions from employees handling complaints. 3. Outcome Justice: Fair compensation for the inconvenience caused. Service Recovery Journey Framework **Pre-Recovery Stage**: Awareness of the service failure and customer emotional responses (e.g., anger, anxiety). Customers may seek support from networks or vent frustrations. **Recovery Stage**: Interaction between the firm and the customer to resolve the issue. Customers expect explanations, resolutions, and emotional acknowledgment. **Post-Recovery Stage**: Customers evaluate the resolution and decide whether to continue their relationship with the company. [Unresolved issues] may lead to [negative long-term perceptions]. - **The Service Recovery Paradox:** Customers who experience a well-managed recovery after a failure may become more loyal than those who never faced a failure. However, this loyalty diminishes if failures happen repeatedly or recovery is overcompensated (leading customers to question why it wasn't right initially). Effective service recovery **Strategies**: 1. Be proactive: Identify and address failures before complaints arise. 2. Conduct root-cause analyses to prevent recurring issues, service blueprint to anticipate. 3. Train and empower employees to make quick recovery decisions and handle complaints emphatically. 4. Use service guarantees to build trust (e.g., refunds, replacements) Summary on complaint management and service recovery **5. Service Culture** ====================== An organization shared values and behaviors, both internal and external, that prioritize service excellence. Service climate: Environment fostering customer-oriented employee behavior. Building a customer centric service culture: 1. **Coordination**: Harmonize activities and share information across departments (reduce silos). 2. **Cooperation**: Encourage employees and departments to prioritize customer needs. 3. **Capability**: Train employees to develop the skills needed for customer-focused solutions. 4. **Connection**: Foster relationships with external partners to deliver better value at lower costs. Why Service Climate Matters: 1. **Service Infusion**: Encourages a shift toward services in traditionally product-oriented industries. 2. **Co-Creation of Value**: Service climate supports collaboration between employees and customers to create value. 3. **Sustainable Competitive Advantage**: Hard to replicate due to its reliance on social complexity and organizational uniqueness. Adaptive Service Behavior: Employees' ability to adjust behavior and service offerings to meet customers\' individual needs and acceptance of service robots as part of the culture. - **Interpersonal Behavior**: Adjusting communication and behavior to suit different customer interactions. *Example*: Using a polite tone with an upset customer. - **Service Offering**: Adapting the actual service provided based on unique customer needs. *Example*: Customizing a solution for a specific client's request. Examples of Excellent Service Culture **The Ritz-Carlton**: Known for empowering employees to make decisions that enhance customer experiences. Emphasizes customer segmentation, targeted recruitment, and extensive training. Starbucks baristas remembering regular customers orders. 6. Customer Service Experience ============================== What is customer experience: not just what the company delivers but how the customer perceives and interprets every interaction. No interaction = no experience. **Key Characteristics of Customer Experience** 1. **Interactional**: **Direct interactions**: Controlled by the firm (e.g., customer service). **Indirect interactions**: External touchpoints, such as social media reviews. *Example*: Emirates' customer service (direct) vs. online reviews about Emirates (indirect). 2. **Multidimensional**: Includes physical (service environment), emotional (feelings), cognitive (thoughts), and social (interactions with others) aspects. *Example*: A hotel stay combines comfort (physical), relaxation (emotional), and customer interactions (social). 3. **Perception-Based**: The experience is shaped by the customer's individual **perceptions** of the interaction, not the firm's intention. *Example*: A polite but slow response may still feel unsatisfactory if the customer expected faster service. How do we manage the customer experience? is the collection of processes a company uses to track, oversee and organize every interaction between a customer and the organization throughout the cycle. The Goal is to **optimize interactions** from the customers perspective and as a result, foster customer loyalty. - Challenges: Multiple touch points and channels, many interactions, technology, you have no control of how your customers chose to approach you= **Firms are losing control**. 4 Recommendations by De Keyser, Lemon, Klaus and Keiningham: 1. "Be centered on the individual customer applying a "jobs-to-be-done" perspective" 2. Embrace a "service ecosystem perspective" 3. Look at the interactions in relation to one another 4. Measure customer experience using multiple methods Managing all touchpoints in the customer journey. 1. Customer experience is interactional where the interaction can be: real, imaginary, past, present, future, direct and indirect. 2. Customer experience is multidimensional 3. Customer experience is the customers perception of the interaction: is cocreated as it is the reflection, judgement, eyes, heart and mind of the customer. 3 recommendations by Lemon and Verhoef: 1. Design a seamless experience across pre-core, core and post core services. 2. Embrace a service ecosystem perspective 3. Arrange internally the facilitation of customer experience management. The Dynamic process of Customer experience (Lemon and Verhoef 2016) 7. Service Development & Innovation =================================== Developing services through innovation or improving existing ones. Framework for innovation 1. **Phase Review Process**: Originally developed by NASA in the 1960s. Sequential model: Each phase is completed before the next begins. Focus: Measurement and control to ensure the project proceeds as planned. 2. **Stage-Gate Process**: A more flexible and iterative process. Stages involve multiple parallel activities (e.g., idea generation, concept development). Go/Kill Gates: Decision points to continue or terminate the project based on criteria. 3. **Service Maintenance, Development, Innovation**: Service Maintenance: Fixing what went wrong (e.g., complaint management, service recovery). Service Development: Improving \"things that went right\" (e.g., enhancing customer experience). **Gap Model**: Focus on identifying and closing these gaps **Gap 1: Listening gap**: not knowing what customers expect **Gap 2: The design and standard gap**: not having the right service designs and standards **Gap 3: The service performance gap**: Not delivering to service standards. **Gap 4: The communication gap**: not matching performance to promises. - What shapes expected service? WOM communication, personal needs and past experience. Customer journey Mapping Visualizing the steps from start where it begins when a customer enters a service and it ends when they exists, and it includes everything in between. **Benefits**: Highlights pain points, identifies areas for efficiency improvements and helps shape strategies for better customer satisfaction. Service Blueprint allows organizations to map out processes to ensure a seamless service delivery by identifyinf touchpoints and potential failures. Levels: - Physical evidence - Customer actions - Employee onstage actions - Employee backstage actions - Support processes. Mystery Shopping: identify hidden service gaps by simulating the customer experience. 5 ways to use mystery shopping: 1. Analyse competitors 2. Brand perception 3. Sales points/establishment analysis 4. Review processes and procedures 5. Evaluate staff performance **Approaches**: Digitalization by leveraging technology for better services or mystery shopping evaluation. Technology in service development can also help close provider gaps by improving communication, tracking service performance and enhancing customer interactions. Invention vs. innovation: Invention is the creation of new ideas or products without immediate economic value and innovation is turning the invention to something commercially viable Important observations Innovations vs. Innovativeness: 1. Nations are not innovative, firms are! And 2. Firms are not the judge of innovations, customers are! - Innovativeness: refers to the capability of a firm to be open to new ideas and work on new solution and an enduring characteristics and not to success an one point in time. Example of innovation: A restaurant could innovate by introducing online reservation systems that rack wait times and offering interactive menus that allow customers to customize meads based on their preferences or allergies. **8. The Outside in Perspective** Outside-in view -- understand how customers perceive and experience the offering to view it through the lens of the customer. Design strategies based on customer rather than internal processes. Measurement- how to evaluate service organizations? Service quality: How good a service is, based on what the customer expected versus what they received. Customer satisfaction: A customer's overall feeling of happiness or disappointment after using a product or service. Customer loyalty: A customer's strong commitment to keep using or buying a product or service, even if alternatives are available. Strategic Implications - Shifting from **expectations** to **reputation** as a key factor. - Recognizing the role of **price**, **value**, and **satisfaction** in building loyalty. - Connecting **complaint handling** directly to satisfaction and loyalty outcomes. - Emphasizing **affective (emotional)** and **calculative (rational)** commitment in driving customer behavior. **Research Findings on Satisfaction and Performance (Otto et al., 2020)** A meta-analysis confirms: - [Customer satisfaction] positively impacts [firm performance], particularly stock prices and profitability. - [Satisfaction] plays a stronger role [in service-driven businesses] compared to product-driven businesses. **Implications**: Satisfaction is a partial mediator, meaning it enhances performance but depends on other factors like market conditions. Service quality can be measured using customer feedback through surveys or interviews, focusing on the dimensions of SERVQUAL. SERVQUAL: Service quality is the perception of how well a service meets customer expectations. Its five dimensions are: - Tangibles: physical appearance of facilities and staff, equipment, appearance - Empathy: Individual, caring attention from firm to customer - Reliability: consistency in service delivery and performing promised service. - Responsiveness: speed of addressing needs and willingness to help. - Assurance: employees knowledge and courtesy to inspire trust. The **American Innovation Index (Aii)** measures the innovativeness of U.S. companies based on customer perceptions rather than expert opinions, evaluating over 30,000 customer touchpoints across 186 firms in 20 industries. Companies that innovate to meet customer expectations---delivering convenience and enhancing experiences---are rewarded with stronger loyalty and industry leadership. The index also includes the **Social Innovation Index (Sii)**, which focuses on companies' societal and environmental impact, emphasizing how social responsibility drives differentiation and customer loyalty. Top performers like Toyota, Apple, and IKEA demonstrate how innovation can disrupt industries and strengthen customer relationships. The findings highlight the strategic importance of aligning innovation with customer needs while integrating societal value to sustain growth and competitive advantage. Methods: Surveys Interviews SERVQUAL 9. Enhancing the Customer Experience trough Social Media ======================================================== **Digital customer experience**: The overall experience customers have with a brand through digital touchpoints, such as websites, social media, and apps. This is a multidimensional nature that influence experiences. The quality of the t**ouchpoints; website, third party platform, social media or reviews**, shapes the customer satisfaction and loyalty. **Cultural and economic factors** like preferences are shown to impact digital customer journeys. Leveraging platforms for better engagement. Like an airline updating flight status on Twitter to inform passengers. Framework for digital marketing (Gupta and Davin): illustrates that a balance of active outreach, consumer driven discovery and social engagement to meet and guide customers through their digital journeys. **Inbound Marketing**: attracting customers by creating content to draw consumers by Blogs, podcasts, or SEO-driven content. **Outbound Marketing**: Brands initiate conversations and attention by pushing content with search engine ads, banner ads, or social media campaigns. **Influencer Marketing**: Focuses on using opinion leaders to influence purchasing behavior. Influencers build trust through perceived originality, creativity, and relatability, often surpassing brand recognition. Digital Transformations in Marketing 1. **Technological Innovations**: Use of **AI-powered technologies**, **blockchain (NFTs)**, and **IoT** to create personalized, efficient customer experiences. Example: AI chatbots offering 24/7 support or personalized recommendations. 2. **Mixed Reality**: Integrates virtual and physical environments to provide immersive experiences. Example: Virtual try-ons for fashion or augmented reality in furniture placement (e.g., IKEA Place). 3. **Storytelling and Community Building**: Platforms like Instagram or TikTok foster deeper emotional connections through shared experiences and interactive content. 4. Co-creation: collaborate with customers for content. Challenges and Ethical Considerations 1. **Ethical Concerns**: - Privacy and data security in digital interactions. - Issues of universal vs. exclusive access to advanced technologies. - Predictability and controllability of automated systems. 2. **Customer Trust**: - Success hinges on maintaining transparency and ethical practices in using customer data. Defensive: Address complaints Offensive: Engage with promotions Opinion Leaders influencers, who have a great amount of influence on the decision making of other people and on their attitudes and behaviors, guiding customer decisions by being relatable and trustworthy. - **Creativity/one of a kind** is how to be an influencer in the fashion industry. - **Perceived originality and uniqueness** is how to be perceived as an opinion leader. Opinion leadership is related to what extent an individual is perceived to be a model for others, the degree to which the information provided is considered interesting and their persuasiveness. - Influences consumer behavioral intensions, they bond with the influencer differently than with the brand, it increases the consumers **intention to interact** in the Instagram account and **recommend it to others**. - The influencer can become bigger than the brand. Omnichannel Approach: seamless customer experience across platforms so the customer has a consistent experience regardless of place of interaction. Firms can enhance the customer journey on social media by sharing customer reviews to build credibility and using live chat features to provide real-time personalized support. **1. What is Social Media Marketing Strategy (SMMS)? How is it different from \"normal\" marketing strategy?** An SMMS focuses specifically on leveraging social media platforms (e.g., Facebook, Instagram, LinkedIn) to build brand awareness, engage audiences, and drive conversions. Unlike traditional marketing strategies, which rely on one-way communication (e.g., TV ads, billboards), SMMS emphasizes two-way interaction, real-time feedback, and personalized content tailored to social media users. Companies should combine social media with their marketing strategy to engage customers in order to build valuable and long-term relationships with them. **2. What is the process of developing an SMMS?** Developing an SMMS involves: 1. Defining clear goals (e.g., brand awareness, lead generation). 2. Identifying target audiences and platforms. 3. Creating engaging and relevant content for those audiences. 4. Scheduling and publishing posts consistently. 5. Monitoring performance and adapting strategies using analytics. **Explain the different Strategies and the roles of the company vs. the customer:** 1. Social commerce strategy: Using social media to directly sell or promote products/services. Companies push content to encourage quick sales. **Goal**: Attract customers and drive sales. **Example**: An Instagram ad showing a product with a \"Buy Now\" button. 2. Social content strategy: Engaging customers by creating and sharing valuable, interesting content, customers engage by sharing or reacting. **Goal**: Build brand awareness, foster customer relationships, and generate positive word-of-mouth. **Example**: A brand sharing how-to videos or fun challenges on TikTok to engage audiences. 3. Social monitoring strategy: Companies listen and respond to customer feedback; customers provide input through reviews or comments. **Goal**: Improve customer satisfaction and gain insights into market trends. **Example**: A brand monitoring tweets for customer complaints and quickly replying to resolve issues. 4. Social CRM Strategy: Engaging and collaborating with customers to **co-create** value and build strong relationships. **Goal**: Foster long-term relationships and empower customers to contribute to innovation. **Example**: A company working with loyal customers to develop new products or features, like beta testing software. **What are the major risks to consider in each strategy?** 1. **Social Commerce**: Over-commercialization can lead to customer distrust. 2. **Social Content**: Poor or irrelevant content may fail to engage or damage the brand image. 3. **Social Monitoring**: Delayed or inappropriate responses can escalate customer dissatisfaction. 4. **Social CRM**: Customers may feel overburdened by participation or lack trust in co-creation efforts. **When should we use what?** - Use **Social Commerce** when the goal is driving immediate sales. - Use **Social Content** to build long-term relationships and brand awareness. - Use **Social Monitoring** when addressing customer complaints or gathering feedback. - Use **Social CRM** to involve loyal customers in co-creating or improving services/products. **10. Sustainability in Services** ================================== **What is sustainability in services?** Sustainability in services involves environmental practices like reducing waste and energy use, social practices such as engaging communities and ensuring employee well-being, and financial aspects like cost-efficient operations that also generate revenue through sustainable services. Example of sustainable practices: offering organic and locally sourced dining options in hotels and implementing energy saving systems like solar panels for operations. Importance of sustainability: 1. Risk reduction 2. Stakeholders value sustainable practices 3. Competitive advantage as it foster trust, brand loyalty and innovation. **Core Questions**: How does it impact performance? CSR can enhance 1. Firms reputation, 2. Reducing risks and 3. Encouraging innovation and stakeholder engagement. Not all CSR activities lead to positive financial outcomes, but the activities that strengthen stakeholders relationships are more likely to have positive influence on financial performance. Stakeholders can positively influence a firms CSR performance: consumers preferring the products, shareholders/investors care when making decisions, employees want to be associated with responsible work. Research indicates CSR has mixed results on financial performance due to varying measures and contexts. CSR Dimensions Stakeholder theory: suggests that businesses are not solely focused on maximizing profits but must also address the needs and expectations of their stakeholders. Stakeholders include customers, employees, suppliers, communities, and shareholders. This theory emphasizes the importance of **corporate social responsibility (CSR)** by encouraging firms to balance economic goals with social and environmental responsibilities. Signaling theory explains how companies use observable actions or attributes (signals) to communicate quality and credibility to the market. Higher-quality companies invest in costly signals, such as certifications, warranties, or high-end marketing, which are difficult for low-quality competitors to replicate. By showcasing unique or superior qualities, firms aim to establish a distinct position in consumers' minds. Effective signaling shapes stakeholder expectations, builds trust, and fosters customer loyalty, ultimately leading to a competitive advantage. **CSR in B2C:** - Customers: increases brand loyalty and emotional attachment. - Employees: Increases employee moral and commitment leading to productivity. - Investors: strengthen investment confidence **CSR in B2B:** - Customers/ Corporate buyers: Increases long term partnerships - Employees: Less impact than in B2C but some culture alignment and talent retention. - Investors: Long term gains through ethical supply chain practices. **Manufacturing sector:** - **Environmental CSR**: Critical for maintaining legitimacy and meeting regulatory standards. *Example*: A car manufacturer reducing carbon emissions to meet government regulations. - **Governance and Supply Chain Ethics**: Stakeholders and investors prioritize ethical sourcing and compliance in the supply chain. *Example*: Apparel brands ensuring fair labor practices in factories. - **Employee Engagement**: Strong focus on ethical labor practices and workplace safety. *Example*: Factories investing in safety measures to protect workers and comply with standards. **Service sector:** - **Customer Interaction**: CSR efforts (social and governance aspects) more visible and impactful. *Example*: A hotel implementing sustainability initiatives is directly judged by guests. - **Customer Trust**: Trust is crucial because services are intangible; customers rely on ethical behavior and transparency. *Example*: Financial advisors maintaining ethical practices to retain trust. - **Employee Relations**: Better alignment with corporate values leads to higher satisfaction. *Example*: A healthcare organization fostering a positive workplace culture can improve employee loyalty and care quality. 11. Servitization ================= **Definition:** The innovation of capabilities and processes so it can create mutual value through a shift from selling products to integrated product-service solutions. - Digitalization paradox is a hinder because many companies fail to see revenue growth because they struggle to align digital efforts with customer needs or internal capabilities. - Service infusion: Increase in importance of services. A Servitized organization design, builds and delivers one or more integrated product and service offerings that deliver value in use. Why do they go into services? Opportunities: - Higher profit margins and stable income - **Differentiating from competitors** - Improving customer engagement and relationship over the product lifecycle - Dealing with changing needs - Complex hardware - Challenges: - Lack of experience or infrastructure - Lack of organizational readiness (capacity to handle shifts) - Resistance to change from consumers - Services are costly - No economic potential Does it pay off and under which circumstances? if its managed well, revenue increases, but also relies on organizational readiness and strong customer trust. The circumstances of aligned customer needs and resources such as skilled employees and infrastructure are required. **Case Examples** **Volvo**: Transitioned 23% of revenue to services (e.g., financing, spare parts, uptime management). **Tesla**: Generates 9% of its revenue from services (e.g., over-the-air software updates, battery repairs). **Apple**: Diversified into services like app subscriptions and iCloud storage, which now account for 25% of revenue. Models to transition:.... SSP, Services supporting the product: These are services that help the customer use and maintain the supplier\'s product effectively. **Examples**: Product installation, Equipment repairs and Regular maintenance or inspections. This is to Ensure the product is functioning properly and supports its intended use. **Example**: A company that sells printers also offers repair and maintenance services SSC, Services supporting the customer: These services help the customer improve processes or achieve outcomes, often unrelated to the direct functioning of the product. **Examples**: Business consultancy, Process optimization and Outsourcing entire operations on behalf of the customer. This is to Focus on supporting the customer's actions or goals beyond the product itself. **Example**: A software company providing consultancy to improve a client\'s workflow efficiency. Strategies for Successful Servitization **Entering the Installed Base (IB)**: Targeting existing users for service opportunities. Benefits: - Lower marketing and sales expenses since there are information on customers from past sales. - Easier and cost effective since already knowledge on the product. - Reducing investments costs since infrastructure and tools are already in place. **Path to overcome digitalization paradox:** 1. Commercializing digital solutions 2. Utilizing product connectivity 3. Establishing an IoT platform based application business Strategies to integrate services into manufacturing include offering maintenance contracts for products, analyzing product usage to suggest improvements, and introducing subscription-based models for added value like extended warranties or upgrades. Articles Transition model (Olivia and Kallenberg): 1. Gather all existing services under one unit 2. Focus on IB services 3. Create a separate service business. Framework SSP vs. SSC (Eggert et al.): **SSPs** Focus on ensuring the product functions effectively (e.g., maintenance, repair). Indirectly impacts financial performance. **SSCs** Directly assist customers in their processes (e.g., consulting, process optimization). Strong direct impact on revenue and profit. **Key Findings**: - SSCs enhance revenue growth but require higher upfront investments and decentralization to succeed. - SSPs are easier to implement but offer limited competitive differentiation. Overcoming the Digitalization paradox (Gauber et al) **Growth Paths**: 1. **Commercializing Digital Solutions**: Combine digital tools (e.g., sensors, AI) to create solutions that meet customer needs. 2. **Utilizing Product Connectivity**: Leverage IoT for remote monitoring, pay-per-use models, and enhanced product performance. 3. **Establishing IoT Platforms**: Build ecosystems for data-driven services. Exam 2023 QUESTIONS Define and elaborate on the fundamental differences between products and services. Discuss how the traditional distinction between products and services is becoming increasingly irrelevant in today\'s markets. Provide illustrative examples to improve your discussion (15 p). **Services are** experiences or offerings that doesn't provide an ownership like a product does. The difference goes from pure products which can be food items or a book, core products like data storage system, core services like airlines and pure services which can be teacher or doctor. \- include why products and services differ in marketing Services are identificated with the **IHIP framework**: 1. Intangible: they cannot be touched or stored like a product 2. Heteregoenity: they distiungish because it depends on people 3:inseperability: The service is being created and given at the same time. 4. Perishability: Services cant be stored and saved for later. An example could be that a haircut cannot be owned or stored, it cannot be separated from the hairdresser and the result will vary with each hairdresser **IHIP is outdated by Vargo and Lusch** Because IHIP doesn't differentiate products from services and only show it from the firms view. The difference between products are services are becoming more and more inseparable because products often involve a service offering. For example, a computer often comes with a program service to defend it from virus. \- include the good services Continuum 2\. Tech Haven is a prominent tech support service provider that has been in the industry for over a decade. Known for its expertise in troubleshooting and resolving technical issues, the company has faced a recent decrease in customer satisfaction and loyalty. The management team is concerned about declining service quality, increased customer complaints, and a notable decrease in customer loyalty. Current Situation: The company has experienced challenges in adapting to the rapidly evolving tech landscape. Customers complain about long wait times, inconsistent service quality, and a perceived lack of empathy from the support staff. At the same time, there is also a high turnover among employees. Management is worried because Tech Haven\'s competitors are gaining market share by offering more personalized and efficient service experiences. a\) Given the pressing challenges faced by Tech Haven, provide comprehensive advice to the management team on fixing the immediate situation. Consider the identified issues in the case description. Your response should include practical and actionable recommendations aimed at addressing these issues (15 p). the outside in perspective is understanding how customers perceive and experience the offerings through the lens of the customers. in this way you can create strategies based on the findings, hence a recommendation for tech. Decrease in customer satisfaction and loyalty is a big worry because these are factors that contribute to repeatedly purchases, positive word of mouth and reputation. The firm should focus on creating dual value for firms and customers because it gives long term loyalty, competitive advantages and profitability. This can be done by selecting target group, understand the needs and optimize touchpoints and approaches to meet the needs. Tech should focus on customer needs instead of internal goals. Rust et al. highlight seven steps to customer centricity, which Tech can use. The company should train employees to be able to handle customer complaints in an efficiently and emphatically way to make the customers feel seen. Effective service recovery strategies is to be proactive and to address failure before the complaint. Training and empowering of employees is important to handle the complaints professionally and emphatically. Another strategy is to use guarantees to build trust. The firm should also focus on service climate where they focus on an environment where the firms external and internals are aligned with the core values of the firm and the envirment foster a customer orientated employee behavior. This can be done through shared information across entities, encoruing to prioritize customer needs, train employees and foster relationship to delibver better value at lower costs. Its important to take good care about employees to reduce employee turnover, as well as they are the face of the firm and determine the experience for the customer. Better employees that know how and utilize firm citizenship creates better relationships, loyalty and brand love. There are different ways to evaluate and enhance the customer experience, they need to look the firm through the lenses of the customers. the challenge for tech is that there are so many interactions, so firms looses control. Lemon and Verhoef gives 3 recommondations tat tech could exhibit. They have to design a seamless experience across al lcore services, look at the ecosystem perspective for the customer, as there are several factors that affect their experience like suppliers interactions on social media, and lastly is to align all their management aspects to ensure consistency. b\) Looking ahead, outline strategic actions for Tech Haven to maintain competitiveness and offer better service experiences. Emphasize the long-term consequences of these actions to ensure sustained success in the market (10 p). Mystery shopping is a tool to evaluate their competitors which are crucial as they need to adapt to changes to maintain competitive. In this way, they can find where they perfom badly and then develop approaches and strategies to improve. Also to maintain competitiveness, they need to continue with service development and innovation. The gap model has 4 gaps that can be used. =????????????????????? Consider a high-end boutique hotel famous for its commitment to sustainability and excellent service experiences. a\) Give examples of three strategies for actively involving guests in the hotel\'s sustainability efforts and overall guest experience. Also discuss the important tradeoffs the hotel needs to consider when encouraging customer participation. (15 p) Co creation is a way to involve the customers a There are three levels of involvement: 1. Mandatory where they must participate 2. Replacable where you can be substituted by an employee 3. Voluntary where you can choose. Voluntary for the hotel is for example when the guest choose to provide feedback about their experience or not. replaceable could be that they ??? The hotel should actively involve participating because it streghtne customer loyalty and engagement. If they enjoy it, it will also increase satisfaction. However, the hotel must look at the downsides. These could be roles stress and negative feelings due to overload and role ambiguity. Also if they don't like it or fail there is a chance of dissatisfaction. Therefore to mitigate the risk, the choice of participating is important. Also the factors such as convenience, difficulty of task and product liking should be considered. b\) Discuss how the boutique hotel can include sustainable practices into its luxury service offerings. Please discuss environmental, social, and financial aspects of sustainability (10 p). CSR are important for firms as stakeholders often care about this aspect of the firm and make choices based on it which affects the firm. It also foster trust, loyalty and reputation. The environmental aspect is linked to how the hotel handle everything from food waste to recycled material on their products. The hotel can for example focus on food waste in their buffet, and have partnerships where the food can be buyed using for example the toogoodtogo app. The social aspect refer to how they are socially responsible like taking action in the community they are based in,... The hotel can for example also offer to employ people who have difficult finding work and train them well to continue with their excellent service. A social aspect is to take care of the employees, so making sure they have a good work environment is important. The financial aspect is sustainability is to focus on cost efficient operation that at the same time generate revenue. This could for example be to use a system that optimize the water pressure in showers, sinks. There are severel toilets that have the option to have an energy saving button that the customers could choose. \- there is a possibility of conflict between the aspects c\) Propose key performance indicators (KPIs) and metrics to measure the success and impact of the boutique hotel\'s sustainable luxury initiatives and customer-centric practices. Please motivate your choices (10 p). to measure.... They could use satisfaction, loyaty, service quality, service experience, innovativeness.. they could use employee satisfaction surveys to measure the social aspects and how well the work envirment is. 4\. An automotive parts manufacturing company is facing financial challenges related to its core product line. They are thinking about expanding their services as a potential solution to their problems. a\) Define and explain the concept of servitization. Discuss the opportunities associated with this approach, considering how it might offer advantages to the struggling automotive parts manufacturer. Additionally, identify and analyze potential downsides or challenges that the company should consider (10 p). Servizisation is the process and shift from products to services. The opportunities for the manufacturer is \- stable income \- better customer relationship and improvement of customer engagement \- they could differentiate themselves from competitors and \- deal with changing needs There are also downsides, which could be \- lack of infrastructure and resources \- Lack of expertise and knowledge \- the services are too costly If they manage the transition well, with the circumstances of aligned customer needs and skilled employees and the required infrastructure, then the company could gain increases income that can help to address the financial challenges. \- remember to clearly state why, not just listing them b\) Propose three strategic approaches through which the automotive parts company can integrate services with its products, providing motivation for the selection of each strategy (15 p). the firm can use the transition model that is how hey should do the transition which says that they need to gather all the existing services under one unit, focus on the installed base services which are the existing products in use, and lastly create a separate service business.