MKT B365F Autumn 2024 Services Marketing Lecture Notes PDF

Photo by Usen Parmanov on Unsplash Services Marketing Presented by Andres Ruiz Autumn, 2024 Managing people for service advantage Photo by Museums Victoria on Unsplash Service...

Photo by Usen Parmanov on Unsplash Services Marketing Presented by Andres Ruiz Autumn, 2024 Managing people for service advantage Photo by Museums Victoria on Unsplash Service Image generated artificially with DeepAI personnel It is all about people, people and people. Human interaction will be always the heart of services. Emotions, reflections, identification. Highly capable and motivated people are at the center of service excellence and productivity. © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023) 3 Service Image generated artificially with DeepAI personnel From the customer’s perspective, the encounter with service staff is probably the most important aspect of a service. From the firm’s perspective, employees and the way service is delivered by frontline personnel represent a source of differentiation as well as competitive advantage. © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023) 4 Service Image generated artificially with DeepAI personnel Service personnel are: A core part of the service product. The service firm. The brand. Their performance, emotional situation, training and knowledge affect sales. They are a key driver of customer loyalty. They determine productivity. © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023) 5  The stress of frontline work Service personnel Boundary spanners link the inside of the organization to the outside world. Because of their position, their role frequently pulls them in opposite directions, bringing them role stress. Company Costumer Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 6 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The stress of frontline work Service personnel Three (3) main causes of role stress: 1. Organization vs. client: To meet both marketing and operational goals: ✓ To please customers and, at the same time, to be fast, productive and efficient at operational levels. Creates a dilemma whether to follow the company rules or to satisfy customer demands. This conflict is especially acute in organizations that are not customer- oriented. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 7 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The stress of frontline work Service personnel Three (3) main causes of role stress: 2. Person vs. role: Conflicts arise between what the job requires and what employee believe in, or what their personality demands. Cognitive dissonance. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 8 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The stress of frontline work Service personnel Three (3) main causes of role stress: 3. Client vs. client: Conflicts between customers that demand service staff intervention: ✓ When customers jump the queue. Requesting customers to behave is a stressful and unpleasant task. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 9 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The stress of frontline work Service personnel Emotional labour Expressing socially desired emotions when engaged in service transactions: ✓ Cashiers are expected to show support and friendliness to clients despite the high-stress workload. Occurs when there is a gap between what employees feel inside, and the emotions that managers require them to display to customers. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 10 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The stress of frontline work Service personnel Emotional labour Service personnel have to perform emotional labour by expressing socially desired emotions during service transactions. ✓ Smiling while greeting, having a low voice tone, showing tranquillity. Although service firms attempt to recruit employees with such characteristics, there will be situations when employees do not have positive emotions. We are all humans. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 11 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The employee cycle of failure In some industries, the search for productivity leads to simplifying work processes and paying the lowest wage: 1. Narrow job design for low-skill levels. 2. Emphasis on rules rather than service and training. 3. Use of technology to control quality. 4. Low wages, little investment in employee selection and training. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 12 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The employee cycle of failure 5. Bored employees who lack the ability to respond to customer problems. 6. Dissatisfied with poor service attitude. 7. Low service quality. 8. High employee turnover. Because of low profit margins, the cycle repeats itself by hiring more low-paid employees to work in the same unrewarding manner. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 13 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The customer cycle of failure 1. Repeated emphasis on attracting new customers. 2. Customers dissatisfied with employee performance. 3. Customers are always served by new faces. 4. Fast customer turnover. 5. Ongoing search for new customers to maintain sales volume. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 14 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel Costs of short-sighted policies 1. Constant expenses of recruiting, hiring and training. 2. Lower productivity of inexperienced new workers. 3. Higher costs of winning new customers to replace those lost: More efforts on advertising and promotional discounts. 4. Loss of revenue stream from dissatisfied customers who go elsewhere. 5. Loss of potential customers who are turned off by negative word-of- mouth. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 15 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The employee cycle of mediocrity Most commonly found in large, bureaucratic organisations: Service delivery is oriented towards: 1. Standardized service. 2. Operational efficiencies. 3. Promotions based on long service. 4. Successful performance is measured by the absence of mistakes, rather than outstanding services. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 16 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The employee cycle of mediocrity Most commonly found in large, bureaucratic organisations: Service delivery is oriented towards: 5. Job responsibilities are narrowly defined and categorized by grade and scope of responsibilities. 6. Rule-based training: Emphasis on rules rather than service. 7. Little freedom in narrow and repetitive jobs. 8. These organisations usually provide adequate pay and good benefits, combined with high job security. This makes employees reluctant to leave. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 17 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The customer cycle of mediocrity Customers find organisations frustrating to deal with. There is a lack of service flexibility and employees are generally unwilling to make an effort to serve customers well: 1. Few incentives for customers to cooperate with organisations to improve the service process and co-produce. 2. Complaints are often made to already unhappy employees. 3. Customers often stay because they do not have another alternative. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 18 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The employee cycle of success Some companies prioritize long-term financial performance by investing in their employees to ensure their prosperity: 1. Expanded and multidisciplinary job designs. 2. Broadened job descriptions and tasks with empowerment practices enable front-line staff to control quality, which facilitates service recovery. 3. Attractive pay and benefits draw high-quality talent. 4. Intensified selection and recruitment efforts. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 19 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The cycles of failure, mediocrity and success Service personnel The employee cycle of success 5. Extensive and up-to-date training. 6. Higher employee satisfaction = more positive service attitude = higher service quality. 7. Lower turnover translates into customers valuing the continuity in service relationships making them more likely to remain loyal. 8. With customer loyalty, profits tend to increase. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 20 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson. Service personnel The service talent cycle Source: Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson. Page 47 21 Hiring the right personnel Attract, select and recruit Be the preferred employer Photo by Clem Onojeghuo on Unsplash Build a positive image in the community as a great place to work. Deliver high-quality services, hence employees feel proud to be part of the team. Develop a good social status for the company. Offer above-average packages and benefits. It is not always a matter of money, but a working environment. Hiring the right personnel Attract, select and recruit Select the right people Photo by Clem Onojeghuo on Unsplash There is no perfect employee. Different roles are best suited for individuals with different skills, styles and personalities. Seek candidates that are aligned with the mission, core values, principles and culture of the company. Focus on recruiting naturally warm personalities for customer- contact jobs.  Hiring the right personnel Service personnel Tools to identify suitable candidates 1. Apply multiple, structured interviews: ✓ Use structured interviews based on job designs and requirements. ✓ Use more than one interviewer to reduce “similar to me” biases. 2. Observe candidate behavior: ✓ Evaluate based on observed behaviour, not words. ✓ A good predictor of future behaviour is past behaviour. ✓ Prioritize those with service excellence awards and complimentary letters. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 24 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  Hiring the right personnel Service personnel Tools to identify suitable candidates 3. Conduct personality tests: ✓ Used to identify measurable traits and characteristics that are needed to perform a particular job. ✓ 16PF Questionnaire (The Big Five model). ✓ Myers-Briggs Type Indicator (MBTI). Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 25 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  Hiring the right personnel Service personnel Tools to identify suitable candidates 4. Give applicants a realistic preview of the job: ✓ Opportunity for candidates to “try on the job”. ✓ Assess how candidates respond to job realities and scenarios. ✓ Allow candidates to self-select themselves for the job. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 26 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson. Training personnel Why training? Photo by Markus Spiske on Unsplash When a company has exceptional human talent, investing in training yields outstanding results. Keep employees updated with the latest techniques, methods and knowledge. Training gives employees the feeling of being valued, and thus, they will perform better and will look after the company. Training personnel What to learn? Photo by Markus Spiske on Unsplash 1. Organizational culture, purpose and strategy: ✓ Get emotional commitment to core strategy and core values. ✓ Get managers to teach the “why”, “what” and “how” of the job. Training personnel What to learn? Photo by Markus Spiske on Unsplash 1. Interpersonal and technical skills: ✓ Both are necessary, however, neither alone is enough for performing a job well. Training personnel What to learn? Photo by Markus Spiske on Unsplash 1. Product and service knowledge: ✓ In order to achieve high quality, employees must understand how to deliver the service and what is the core product. ✓ Staff must explain product features and service processes to assist consumers in making the right choice.  The importance of empowerment Service personnel Empowerment is to provide employees with the authority, tools and legal permission to make decisions based on their own judgments, rather than adhering to rules, in the best interests of the customers. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 31 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The importance of empowerment Service personnel Empowerment is most appropriate when: 1. The overall business strategy is based on personalized, customized service and competitive differentiation. 2. The commercial objective of the firm is on extended relationships rather than short-term transactions. 3. The technology or processes are complex and non-routine. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 32 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The importance of empowerment Service personnel Empowerment is most appropriate when: 4. Service failures are non-routine and cannot be designed out of the system. 5. The business environment is unpredictable. 6. Managers are comfortable letting employees work independently for the benefit of the firm and customers. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 33 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The importance of empowerment Service personnel Levels of involvement: 1. Suggestions involvement: ✓ Employees make recommendations through formalized programs or channels. 2. Job involvement: ✓ Jobs redesigned based on staff characteristics or motivations. ✓ Supervisors are reoriented to facilitate flexibility, freedom of choice and allocation of resources. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 34 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson.  The importance of empowerment Service personnel Levels of involvement: 3. High involvement: ✓ Information is shared and is transparent to everyone. ✓ Employees are highly skilled in teamwork and problem-solving. ✓ Employees participate in management decisions. ✓ Profits sharing and stock ownership for employees. Source: © Andy Lai, 2023. HKMU Lecturer. Based on Wirtz (2023). 35 Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson. Effective leadership Qualities of effective leaders Photo by Hansjörg Keller on Unsplash Leaders should love their business. Leaders should love their people, their employees. Leaders should be driven by core values. Leaders must recognize the role played by employees in delivering service. Effective leadership Qualities of effective leaders Photo by Hansjörg Keller on Unsplash Leaders should have integrity, self-awareness, courage, respect, compassion and resilience. Leaders should show gratitude and collaborate effectively. Effective leaders should involve the team in decision-making processes rather than dominating the process. Leaders have a talent for communicating with others in a way that is accessible. Motivate your people Rewards, recognition and accomplishment Job content Photo by Clem Onojeghuo on Unsplash Inform and clarify the main functions or key performance areas of the position. When staff know exactly what they must achieve and why they are doing what they do, they tend to be more motivated. People are satisfied knowing they are doing a good job, based on the specific requirements of the job. Motivate your people Rewards, recognition and accomplishment Feedback and recognition Photo by Clem Onojeghuo on Unsplash People derive a sense of identity and belonging to an organization from the positive feedback they receive and the recognition of their peers. Clear, fast and accessible communication channels to provide feedback. Motivate your people Rewards, recognition and accomplishment Goals achievement Photo by Clem Onojeghuo on Unsplash The more specific the goals, the clearer the mission and sense of purpose people will have. They must be relatively challenging, yet attainable. Accepted goals are strong motivators. Motivate your people Rewards, recognition and accomplishment Rewards and perks Photo by Clem Onojeghuo on Unsplash Use the full range of available rewards effectively. Tangible, financial rewards: ✓ Bonuses. ✓ Paid vacation. ✓ Profit-sharing. ✓ Token gifts (presents). Motivate your people Rewards, recognition and accomplishment Rewards and perks Photo by Clem Onojeghuo on Unsplash Intangible, non-financial rewards: ✓ Professional development opportunities. ✓ Annual retreats and getaways. ✓ Team or peer recognition programs. ✓ Flexible schedule (Friday free).  References Armstrong, G., Kotler, P., & Opresnik, M. O. (2019). Marketing: An introduction (14th Ed.). New York: Pearson Education. Bitner, M. J. (1992). Servicescapes: The Impact of Physical Surroundings on Customers and Employees. Journal of Marketing, 56(2), 57–71. Blodgett, J. G., Granbois, D. H., & Walters, R. G. (1993). The effects of perceived justice on complainants' negative word-of- mouth behavior and repatronage intentions. Journal of Retailing, 69(4), 399-428. Dick, A. S., & Basu, K. (1994). Customer Loyalty: Toward an Integrated Conceptual Framework. Journal of the Academy of Marketing Science, 22(2), 99–113. Edström, A., Nylander, B., Molin, J., Ahmadi, Z., & Sörqvist, P. (2022). Where service recovery meets its paradox: implications for avoiding overcompensation. Journal of Service Theory and Practice, 32(7), 1-13. Khan, M. T. (2014). The concept of ‘Marketing Mix’ and its elements. International Journal of Information, Business and Management, 6(2), 95-107. Lee, C., & Kahle, L. (2024). Services as emulation marketing: Conceptualization and concerns. Journal of Services Marketing, 38(1), 103-112. Lovelock, C. H., & Wirtz, J. (2011). Services marketing : People, technology, strategy (7th Ed.). Prentice Hall. Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service quality and its implications for future Photo by Gülfer ERGİN on Unsplash research. Journal of Marketing, 49(4), 41-50. Shostack, G. L. (1977). Breaking Free from Product Marketing. Journal of Marketing, 41(2), 73–80. Wirtz, J. (2023). Essentials of Services Marketing (4th Edition). Pearson. Wells, V. K., & Foxall, G. (2012). Handbook of Developments in Consumer Behaviour. Cheltenham: Edward Elgar Publishing. Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2018). Services Marketing: Integrating Customer Focus Across the Firm (7th Edition). McGraw-Hill Education. Thank you Andres Ruiz Serrano [email protected] 27 68 61 84 Photo by Carlos Torres on Unsplash