BEM 120 Notes PDF

lOMoARcPSD|42165161 BEM 120 - Summary Marketing Management Marketing Management (University of Pretoria) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Wayne Redmond ([email protected]...

lOMoARcPSD|42165161 BEM 120 - Summary Marketing Management Marketing Management (University of Pretoria) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Chapter 1: Service Marketing in Perspective SERVICE MARKETING AS AN EXCHANGE PROCESS Marketing exchange process: The complex process whereby the organisation identiÞes the expectations of their target market and Þnds innovative ways to satisfy the important needs of their customers. - Marketing is exchange To be successful in competitive markets, service organizations use "environmental scanning" to scrutinize the wider market environment before launching into a new business idea Micro-environment Includes org. Mission and vision statement, its competencies, and capabilities (SWOT analysis) Market environment Emphasis on org. Customers, competitors, suppliers, and intermediaries Macro environment Changes may result from shifts in the economic, political, legal, social, natural, technological and/or international environment. If sufÞcient info has been collected, the service marketer can proceed to the design of the service offering. - Has to be developed within the context Service marketing mix: set of tools available to the organization to help shape the service offering according to the needs of its targeted customers. THE 7 PÕS Product ¥ Technical outcome of the service. ¥ Service product: anything offered by the organization to potential customers (tangible/intangible) o DifÞcult to standardize services Physical Can use tangible evidence of the service such as brochures and documentation of the service offered to decrease the perceived risk of the evidence purchase People ¥ The staff of an org. Form an integral part of the process of service delivery o They all act as marketers ¥ The customer makes up the other half of people decisions in service delivery. Process ¥ Interaction can take place in any environment created ¥ Service process should be viewed as "how" the service is provided to satisfy customer needs. Place Depending on the nature of the service and what customers value, several distribution channels can be utilised to distribute a service to customers Pricing Designed to cover costs and generate proÞts for the org, and include strategic and tactical decisions about the average price to be charged, discount structure and terms of payment Promotion ¥ Communicated with target audience to inßuence knowledge, attitude, and behaviour. ¥ Must active communicate the beneÞts of their service to their target audience by using appropriate types of communication channels and media. SIX EÕS OF SUCCESFUL SERVICE MARKETING Ease of Expection Expectations Education Experience doing Equilibrium management business If all the elements of the service marketing mix are integrated and coordinated in a holistic marketing strategy, it is a powerful framework to create customer satisfaction. DEFINING SERVICES Service failure: Service performance that fails to meet a customerÕs expectations Services: An 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. ¥ The primary difference between physical goods and services is the element of intangibility Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 DEGREES OF TANGIBILITY PURE TANGIBILE GOODS Such as toothpaste and salt, where the addition of services cannot Enhance customer value HYBRID SERVICE OFFERS Equal parts tangible products and intangible services. Such as a meal at Mugg & Bean and Sterkinekor TANGIBLE GOODS WITH ACCOMPANYING SERVICES Tangible product that is supported by intangible services (products such as a car Sold with a maintenance plan) CORE SERVICES WITH ACCOMPANYING MINOR GOODS AND Airlines where customer purchases transport and gets meals and luggage services or SERVICES storage facilities PURE SERVICES Consists primarily of services and include medical/legal services example ADT. CLASSIFICATION OF SERVICES LEVEL 1: MEANS OF DELIVERY Equipment-based services: ¥ Automated services and services provided by either unskilled/skilled provider. ¥ Quality of equipment & ability of staff to use equipment = crucial in determining quality of org. Service o Automated (ATM) o Operated skilled providers (Airlines) o Monitored unskilled providers Cinemas) People-based services: ¥ Can be performed by unskilled/skilled/professional staff ¥ Quality = determined by the training, knowledge, motivation of staff. o Unskilled labour (Garden services) o Skilled labour (Computer services) o Professional (Lawyers) LEVEL 2: DEGREE OF DEPENDENCE ON CUSTOMER Such as medical surgery (very dependent on customer presence) PRESENCE ¥ Must be a pleasant experience to ensure customers will evaluate quality based on that. Car repairs (not dependent on customer presence) ¥ Services must best suit needs of its employees and operational process. LEVEL 3: PERSONAL VERSUS BUSINESS USE ¥ Hairdressing = personal use for own beneÞt ¥ Goods bought by an org. To produce something else of economic beneÞt = business use DISTINGUISING FEATURES OF SERVICES 1. INTANGIBILITY Services are intangible as they are impossible to taste, smell, feel, hear. PROBLEMS SOLUTIONS ¥ Cannot be stored ¥ Stressing tangible cues ¥ Cannot be patented ¥ Usage of personal sources of info by stimulating positive word of mouth ¥ Complicated the communication process ¥ Encouraging employees to communicate with customers ¥ No physical goods to determine cost from ¥ Creating a strong corporate image 2. INSEPARABILITY Services are often produced, delivered and consumed all at once Provided-customer interaction is crucial PROBLEMS SOLUTIONS ¥ Service providerÕs physical connection to the service offered ¥ Effective selection and training of contact staff ¥ Involvement of the customer ¥ Effective customer management ¥ Interaction amongst customers ¥ Mass production ¥ Challenge surrounding mass production ¥ Support for frontline staff Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 3. HETROGENEITY Often difÞcult, if not impossible, to completely standardize service delivery Main reason: Service is largely delivered and produced by a human being, not a machine PROBLEMS SOLUTIONS ¥ DifÞcult to achieve service standardization and quality control ¥ Customisation (happens when the service offering is adapted according to an individual customerÕs speciÞc needs/instructions) Trade-offs are always associated with this. ¥ Standardization (occurs by training staff to deliver the service in consistent, prescribed manner and by standardizing the service delivery process and procedures. 4. PERISHABILITY Services can be described as perishable, since inventory-holding in the same manner as tangible goods, is near impossible. PROBLEMS SOLUTIONS ¥ Demand > supply DEMAND SIDE: SUPPLY SIDE: ¥ Demand < supply ¥ Differential pricing ¥ Hire part time employees to increase capacity ¥ Demand = supply ¥ Offering special promotions during lower demand periods ¥ Peak time efÞciency routines ¥ Develop complementary services during peak times ¥ Increased customer participation in service delivery ¥ Develop shared services ¥ Develop facilities for future expansion Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Chapter 2: Value: From Customer Service to Satisfaction 3 Key principles: Quality, service, value ELEMENTS IN CUSTOMER SATISFACTION AND LOYALTY Total perceived value =The Service Act + The Service Itself Customer satisfaction =Customer Perceptions Ð Customer Expectations BENEFITS OF PROVIDING BETTER SERVICE Problem: A number of organisations offer virtually identical services to the same market INCREASED MARKET SHARE Improved quality can entice customers of competitors to move over thereby increasing the org. Market share. IMPROVED VALUE PROPOSITION Adding superior customer service to a technically superior service increases customer's perceived value TO GAIN MARKETING BENEFITS Quality accreditation/awards are used by many service org to substantiate their marketing communication claims. FINANCIAL IMPACT Improved Þnancial performance is the outcome of higher sales income as well as lower costs due to improved efÞciency Value: The difference between the customer's perception of beneÞts received from purchasing and consuming the service, and the customer's perception of the costs incurred in exchange for the service ¥ VALUE = Service itself + customer service act > customer expectations ¥ Customers will buy a service when: o BeneÞts of exchange > costs of exchange o The service offers superior value compared to other alternatives in the market VALUE LEVELS Described on two levels: 1. Value customer derives from the service itself. 2. Value customer derives from the quality of the supporting service act. ¥ In some cases the technical components (actual service) is more important and in others the functional component (customer service) becomes more important Evaluation qualities: indicate the qualities present in the service that can be evaluated by the customer. SEARCH QUAITIES Attributes that customers can evaluate prior to purchasing a service (colour, price) EXPERIENCE QUALITIES Attributes that customers can only evaluate during and after consumption CREDENCE QUALITIES Attributes that customers Þnd difÞcult to evaluate after consumption (wonÕt know whether the service was of a good/poor quality) THE ROLE OF CUSTOMER SERVICE IN VALUE CREATION Organisations offering better customer services have a competitive advantage over others. ¥ Can use guidelines to develop a customer-centred culture amongst their employees CUSTOMER SERVICE SYSTEMS Most obvious difference between an org. With a customer-centred culture and others is their ability to design service delivery systems from the customer's point of view. CUSTOMER SERVICE COMANNDMENTS (not for exam purposes) All employees must Ask customers what they Have effective systems Under-promise and The awnser is always have the authority to want and give it to them in place over-deliver YES! handle complaints Encourage customers to Incentives staff communicate when Measure everything that Show respect to all Learn from other according to their service delivery goes influences customer times and be polite successful organisations performance wrong Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 ¥ All about attitude ¥ Treat customers and co-workers with respect ¥ Be hygienic ¥ Success lies in Þnding the right balance between providing the customer with the actual core service from a technical point of view and providing the service in a professional manner THREE CONSIDERATIONS Expectations Perceived about the quality of the characteristics of service delivered the service Perceptions of the actual service delivered INCREASING SATISFACTION Service quality: the ability of an organization to correctly assess customer expectations and to deliver the service at a quality level that will at least equal those expectations. Customer expectations: the pre-service encounter beliefs a customer has about the delivery of a service and are used as the standard against which the actual service performance is judged. Adequate level Zone of tolerance Ideal service (they wish (minimum service level (represnets range of for this, a scenario where Desired service that customer will tolerate service performances that everything works out (wants/hopes to receive) and accept without being customer will consider perfectly) dissatisfied) accetable) Predicted service (customer's actual service expectation) Factors that could inßuence customers' expectations levels: ¥ Personal needs ¥ Self-perceived service roles ¥ Implicit service promises ¥ Word-of-mouth communication ¥ Past experiences Keep these aspects in mind: ¥ Identify what is most important to customer ¥ Never raise expectation levels to unattainable levels ¥ Generate positive word-of-mouth Customer perceptions: customer's experience of the service offering that shapes his decision to repurchase from the same organisation. Perception: The process, by which an individual selects, organizes and interprets stimuli into a meaningful and coherent picture of the world Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 TECHNICAL QUALITY Whether or nor the core service was performed as expected FUNCTIONAL QUALITY How well the customer thinks the service was performed. (inßuenced by personal interaction) CORPORATE IMAGE Surroundings in which the service takes place and the overall image conveyed by service providers THE CUSTOMER SATISFACTION PROCESS ¥ Created by means of a combination of responses to the customer's views and needs, continuous improvement of the organization's offerings, as well as the overall customer relationship ¥ Depends on the ability of an org to implicitly deliver on those expectations by means of a service delivery process that has been designed to address customer needs. CUSTOMER EXPECTATIONS Future Expectations ÔObjectiveÕ Quality CUSTOMER ConÞrmation Satisfaction PERCETTIONS UNDERSTANDING CUSTOMER DISSATISFACTION ¥ Only 1 out of 26 unhappy customers complain, the other 25 will simply take their business elsewhere (switching behaviour) ¥ 1 unhappy customer tends to tell between 10 and 11 other customers/potential customers about their bad experience (negative word-of-mouth behaviour) ¥ Use the above to calculate the cost of dissatisfaction UNDERSTANDING CUSTOMER SATISFACTION Three future behaviours will occur if a customer is satisÞed: ¥ Repeat purchases as long as positive experience continues ¥ Loyalty towards the organisation ¥ Positive word-of-mouth communication Superior service quality more favourable behavioural intentions Inferior service quality unfavourable behavioural intentions CUSTOMER LOYALTY Loyalty: A commitment to repurchase from the same supplier (or use the service) in the future, and the likelihood to purchase an organisation's products or services at various price. BeneÞts of long-term customer relationships: ¥ Pay premium prices ¥ Try out new services from the org. ¥ Serve themselves and gives referrals Customers can be divided into four groups: Hard-core loyal: Split loyal: Customers buying the same brand all the time Customers who buy two or three brands Shifting loyal: Switchers: Customers who frequently shift from one brand to another Customers who show no loyalty to a brand RELATIONSHIP MARKETING Based on two premises: ¥ It costs more to recruit a new customer than to retain an existing customer. ¥ The longer the relationship between the organisation and a customer lasts, the more proÞtable that relationship becomes for both parties. LOYALTY PROGRAMMES ¥ Rewarding customers and they may be more likely to continue purchasing from the organisation in the future. ¥ Ideal mechanisms to obtain purchase info so that the org. Can tailor their products and services to customer needs. Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Mechanisms used by loyalty programmes to reward customers: Discount or cash backs: Rewards currency programme: Monetary rewards. (Pick & Pay) Not a reward, but a means to a reward (ebucks) Soft beneÞts: Hybrid rewards: Additional services or exclusive privileges (VIP invites) Offering a combination of all 3 above. (Clicks Clubcard) Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Chapter 3: Service Marketing Research Technology has had a signiÞcant impact on how modern service organisations are being managed, mainly because of the volume and speed at which information has become available to service organisations. The use of technology can enable the organisation to better understand their customers and to enhance the quality of its service delivery. Neuromarketing uses the tools of neuroscience to determine why consumers prefer certain products or services over others through the measurement of consumers' sensory, cognitive, and affective responses to marketing stimuli. OLD BUSINESS WAY NEW BUSINESS WAY ¥ Organising operations according to the product/ service units sold ¥ Organising operations according to customer segments served ¥ Focusing on proÞtable transactions ¥ Focusing on customer lifetime value ¥ Focusing on Þnancial information only ¥ Focusing on Þnancial and marketing information ¥ Focusing on customer acquisition ¥ Focusing on customer acquisition and retention ¥ Building brands through advertising ¥ Building brands through performance ¥ Marketing people are responsible for marketing ¥ Everyone and all business units are responsible for marketing ¥ Marketers create marketing activities ¥ Marketers and customers co-create marketing activities ¥ Hardly any customer satisfaction measurement ¥ In-depth measurement of customer satisfaction ¥ Over-promise and under-deliver ¥ Under-promise and over-deliver ¥ Theory-driven scientiÞc research ¥ Data-driven scientiÞc research Marketing research is the process followed to collect information about the market to aid managerial decision-making. Marketing research is used to: ¥ Identify and deÞne marketing opportunities and problems ¥ Generate, reÞne, and evaluate marketing actions or ideas ¥ Monitor marketing performance ¥ Enhance the quality of marketing decision-making CRITERIA USED TO ASSESS THE QUALITY OR VALUE OF THE INFORMATION The ACCURACY of the information in terms of its ability to reßect the realities of the situation. (realistic) The TIMELINESS of the information in terms of whether or not the information is available when needed. (Right time) The ADEQUACY of the information in terms of whether the information is sufÞcient to assist management in making better decisions. (enough) The AVAILABILITY of the information at the point when and where it is needed. (access) The RELEVANCE of the information in terms of its suitability with regards to the decisions that must be taken. (suitable) Marketing research programs should be: ¥ Varied - a combination of qualitative and quantitative research techniques should be used ¥ Ongoing - due to the constantly changing nature of customer needs, expectations, and perceptions, service organisations need to measure these changes to be able to respond in a timely manner ¥ Undertaken with staff - staff are in direct contact with customers and may have insight into problems and situations that may not be apparent to mangers ¥ Driven by a research committee - involving employees in the research process may incentivise them to implement the changes that the research results call for ¥ Shared with employees - research results should be communicated with employees so that they understand what the customers expect of them and what has been identiÞed as possible problem areas RESEARCH USES IN SERVICE MARKETING 1 Research is used to capture customer data that can later be used to improve the organisation's service delivery performance from a customer's perspective. 2 Research is used to solicit feedback from customers and employees. The constant interaction between the customer and the provider must be evaluated to assess the degree of customer satisfaction. Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 RESEARCH FOCUS AREAS 1. CUSTOMER RESEARCH The purpose of customer research is to tailor the service offering to customer needs. Customer research options: (1) Researching customer needs - marketers Þnd information on consumer needs extremely valuable when planning new service offerings. (2) Researching customer expectations - understanding and knowing what customers expect is the Þrst step in actually meeting and exceeding those expectations. (3) Customer perception studies - this can be conducted during or after the service delivery process and attempt to measure the level of customer satisfaction (4) Customer surveys - customers tend to feel more involved in the design of the service offering when they are given the opportunity to make a contribution and express their opinions and share their customer-related experiences. (5) Key customer studies - certain customers are of particular importance to an organisation, so it is worthwhile to ensure that they are satisÞed with the service being offered. (6) Customer/ consumer panels - consist of individual customers who have agreed to regularly participate in a speciÞc organisation's research projects. (7) Observational monitoring of service delivery - measures the technical aspects of the service delivery process. (8) Mystery shoppers - investigators pose as customers to evaluate the performance of unsuspecting employees in the service encounter. (9) Analysis of complaints - complaints should be seen as a source of primary information and if used correctly can assist management and employees in preventing a repeat of these unfortunate incidents (10) Research among potential customers - can help uncover inhibitors or barriers and help identify ways of making the service more accessible 2. EMPLOYEE RESEARCH Employee research links closely with internal marketing programmes. The importance of employees in service organisations cannot be overestimated, as the interaction between the employee and the customer largely inßuences the ultimate success of the service delivery process 3. ORGANISATION RESEARCH Organisational research options: (1) Similar industry studies/ benchmarking - comparing and identifying best practices and widening their opportunities by studying related and even unrelated industries. (2) Researching service intermediaries - intermediaries are in direct contact with the end customer and provide insight into customer needs and wants. (3) Social media monitoring (SMM) - is a platform for 'listening' to social media users. The primary function of SMM is to track the number of times your brand, product or service has been mentioned, to track observations about competitors and monitor competitor actions, and to identify trends in what consumers are discussing. Proper management and measurement of social media activity allows marketers to be more pro-active, identify opportunities, enables them to leverage success, and deal appropriately and timely with potential threats. E.g. Socialmention.com - a tool that indicates different social media scores of the brand a) Strength - likelihood that the brand is being discussed on social media b) Sentiment - ratio of positive vs negative comments about the brand c) The reach of the brand - quantiÞes the number of people referencing the brand dividend by the total number of times the brand was mentioned d) Passion - likelihood that the people mentioning the brand will do so repeatedly E.g. Howsociable.com - a tool that provides a magnitude score for a brand, which indicates the degree of brand visibility. This score is useful in that brand managers can see which social media platform is used most often by consumers for the discussion of the brand at a given time and marketers are able to join the conversation about their brands or respond quickly to comments if necessary. E.g. Google analytics - a tool used to measure trafÞc to a company website or blog. SERVQUAL is an instrument used to evaluate and measure service quality perceptions of service customers. SERVQUAL offers organisations a fairly simple way of focusing their employees' attention on whatever is important to the customer. This focus on what is important to customers should improve the competitiveness of the service organisation and improve its ability to retain its customers. Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 SERVQUALÕS DIMENSIONS OF SERVICE QUALITY DIMENSIONS DEFINITION QUESTIONS THAT CUSTOMERS MAY RAISE Tangibility Appearance of physical facilities, equipment, ¥ Does the organisation offer tangible evidence of the quality of the personnel, and communication material service provided? ¥ Does the organisation make use of modern equipment? ¥ Are the organisationÕs facilities, personnel, and communication materials attractive to the customer? Reliability The ability to deliver the promised service ¥ How dependable is the organisation? (most important service dependably and accurately ¥ Does the organisation preform its services right the Þrst time? quality) ¥ Does the organisation deliver on time? ¥ Does the organisation maintain accurate records pertaining to its transactions with customers? Responsiveness Willingness to help customers and provide prompt ¥ How responsive is the organisation to customerÕs service requests? service ¥ Does the organisation inform the customer exactly when the service will be performed? ¥ How willing are employees to assist customers? Assurance Knowledge and politeness of employees and their ¥ Does the organisation instil a feeling of conÞdence and security in ability to convey trust and conÞdence customers? ¥ Are the organisationÕs employees courteous, and are they knowledgeable as to the organisationÕs offerings and possible problems? Empathy Caring, individualised attention provided by the ¥ Can the organisation be regarded as sensitive towards the unique organisation to its customers needs of its customers? ¥ Does the organisation service its customerÕs best interests? SERVQUAL MEASURMENT MODEL TANGIBLES 1. The technical equipment is completely up to date 2. The physical facilities are visually appealing 3. The employees are well dressed and appear neat 4. Tools and instruments used to provide the service are attractive RELIABILITY 5. Promises to perform the service within a certain time are always kept 6. Complaints and problems are solved with great concern and sympathy 7. The service is delivered correctly the Þrst-time round 8. The service is delivered at the time agreed upon 9. Record keeping such as orders and accounts are accurate RESPONSIVENESS 10. One cannot expect employees to inform customers as to the exact time of delivery 11. It is not realistic to expect prompt service from the employees 12. Employees are not always willing to help customers 13. It is acceptable that employees are too busy to help customers immediately ASSURANCE 14. The employees can be trusted 15. Feeling safe in transactions with the employees 16. Friendly and courteous employees 17. Employees have the knowledge to answer the customer's questions EMPATHY 18. Employees pay attention to each customer individually 19. Employees pay personal attention to each customer 20. Employees understand the speciÞc needs of the customer 21. Employees have the customer's best interests at heart 22. The organisation has convenient shopping hours The Þrst part of the SERVQUAL questionnaire focusses on the level of service the customer will expect from an ideal service organisation within a speciÞc industry (expectations). The second part of the SERVQUAL questionnaire focusses on the customer's evaluation of the actual service performed by the organisation under evaluation (perceptions) FORMULA ¥ expectations > perception = poor perceived service quality leading to customer dissatisfaction ¥expectations < perception = excellent perceived service quality leading to customer satisfaction and delight ¥expectations = perception = good perceived service quality leading to technical satistaction Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 The SERVQUAL method of measuring service quality is also called 'gaps model' of perceived service quality. To improve the organisation's performance, management can either attempt to improve performance on particular dimension, or they can actually lower the customer's expectation level on this dimension. The organisation should, however, keep in mind that too low customer expectations may be a risky option as it may convince the customer to rather make use of a competitor's services. CRITICISM AGAINST THE SERVQUAL INSTRUMENT ¥ The length of the questionnaire - answering 22 statements can be quite tiring and frustrating to the respondent ¥ The validity of the service quality dimensions - there are many service quality dimensions that are not captured by the SERVQUAL instrument ¥ The predictive power of SERVQUAL - some researchers believe that one only needs to consider the perceptions evaluations of customers and ignore the expectations part Sacsi (South African Customer Satisfaction Index) enables us to measure customer satisfaction of South African consumers by ranking South African household- consumers' satisfaction with products and services provided by South African companies with those of other countries that use the same methodology. The national customer satisfaction score is calculated using the ACSI (American Customer Satisfaction Index) methodology. DRIVERS OF CUSTOMER SATISFACTION CUSTOMER Customer expectations can be deÞned as the pre-service encounter beliefs a customer has about the delivery of a service and are EXPECTATIONS used as the standard or reference against which the actual service performance is judged. Expectations represent both prior consumption experience and some non-experiential information like advertising, word-of-mouth, and the expectation that an organisation will make mistakes in the future PERCEIVED VALUE Perceived value is a measure of quality relative to price paid. Value can be deÞned as the difference between the customer's perception of beneÞts received from purchasing and consuming the service, and the customer's perception of the costs incurred in exchange for the service. PERCEIVED QUALITY Perceived quality is determined by measuring the customer's evaluation of a recent consumption experience of the quality of an organisation's products or services. Quality is measured in terms of both customisation and reliability. Customisation is the degree to which a product or service meets the customer's individual needs. Reliability is the frequency with which things go wrong with the product or service OUTCOMES OF CUSTOMER SATISFACTION CUSTOMER Customer complaints are the percentage of respondents who indicate they have complained to an organisation directly about a COMPLAINTS product or service within a speciÞed time frame CUSTOMER Customer loyalty is a combination of the customer's commitment to repurchase from the same supplier or use the service in the future, LOYALTY and the likelihood to purchase an organisation's products or services at various price points. Customer Relationship Management (CRM) can be deÞned as the process behind the identiÞcation and selection of target customers by utilising information technologies to better deliver and extract customer value. The purpose of a CSM programme is to collect information about customers and use the information in innovative ways to best serve the needs of those customers. BENEFITS OF CRM TECHNOLOGIES ¥ Improved proÞts owing to the better utilisation of resources based on real-time market information ¥ Reduced costs owing to decreases in wastage based on better targeted strategies ¥ Access to new customers based on the continuous collection of information and insights on current customers ¥ Development of new business ideas and strategies based on inefÞciencies uncovered in systems or based on new market information that may reveal new business opportunities ¥ Improved customer satisfaction and retention by having a better understanding of individual customer needs and tailoring the customer experience to a larger extent than was possible in the past ¥ Improved employee satisfaction and retention owing to a closer link to employees and better support systems helping employees to realise their own goals as well as those o the organisation Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 TYPES OF CRM TECHNOLOGIES ANALYTICAL CRM Analytical CRM involves collecting information and analysing it to understand all aspects regarding the past, current, and future customer. TOOLS ¥ Data mining and analysis - are a series of tools developed to extract, categorise, link, and analyse information from a broad spectrum of data sources ¥ Data warehousing - enables organisations to not only do data mining, but also to store this information in a 'warehouse' where users can easily access and retrieve the information in a format that is easy to use ¥ Performance measurement systems - enable an organisation to deÞne expected levels of performance and then notify the appropriate parties should performance falls below the speciÞed level ¥ Customer intelligence systems/ expert systems - monitor a broad spectrum of customer information ¥ Competitor intelligence tools - enable the user to collect, analyse, and monitor the competitive horizon. STRATEGIC CRM Strategic CRM is the process of identifying new business opportunities, possible risks, and ways of increasing proÞts, reduce costs, or improve customer satisfaction TOOLS ¥ Modelling and simulation - are expect systems which enable organisations to virtually stimulate real-world situations ¥ Decision support systems - are systems dedicated to enable users to play out 'what if' scenarios when formulating strategies ¥ Customer proÞtability systems - help organisations decide which customers to target and which to retain OPERATIONAL CRM Operational CRM covers a broad spectrum of technologies to secure the company's competitive edge by providing the customer with a differentiated experience. TOOLS ¥ Help-desk systems - are knowledge bases where the contact person can easily Þnd the required information to assist a customer either directly, telephonically, or electronically ¥ Call centres - can be seem as elaborate helpdesks which will not only provide assistance, but also enable customers to place orders, inquire about their account status, or decide for service delivery ¥ Caller identiÞcation technology - a tool that recognises the telephone number from which a customer has dialled and links that number to the customer's information in the database ¥ System integration technologies - enable the organisation to integrate business systems for purposes of validation and seamless information provision ¥ Web casting - is a technology through which millions of customers can be cost-effectively reached to ensure continuous contact and relationship- building ¥ Short messaging services (SMS) - via cellular phone networks can be used to provide customers with information ¥ Mobi-sites - are web sites designed for the small screens of mobile phones Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Chapter 4: Product THE NATURE OF THE SERVICE PRODUCT: A product can be deÞned as anything that can be offered to a market for attention. Acquisition. Use or consumption and that may satisfy a want or need. It includes physical objects, services, persons. Places, organisations, and ideas. A service product usually forms the heart of the organizations effort to satisfy the needs of its customers - although most of them are usually a combination of both products and services. Service products speciÞcally are bought and used for beneÞts offered and the total satisfaction provided. Besides the beneÞts consumers expect from a service, they also expect a certain service level. SERVICE PRODUCT LEVELS: THE DIFFERENT SERVICE PRODUCT LEVELS ARE INTEGRATED TO FORM ONE TOTAL SERVICE PRODUCT. CORE SERVICE Related to the basic (core) beneÞt the customer expects from the speciÞc service. The core Service is thus the basic service product and is the essential function of a service. The core Service should always be developed with the customers basic needs in mind EXPECTED Consists of the core service altogether with the minimum expectation that needs to be met SERVICE: And involves a combination of tangible and intangible elements DESIRED The expected service plus the additional services and beneÞts. It is the nice to have and it includes elements that the service organisation can SERVICE use to distinguish itself from competitors SEGMENTATION AND TARGETING Market segments are groups of buyers who share common characteristics within the segment but difter between the segments. This approach attempts to bridge the gap between diverse customer needs and limited organisational resources. By encouraging distinct service offerings to be developed to suit the requirements of different customer segments Segmentation can lead to more satisÞed customers because it offers certain beneÞts such as ¥ Deeper understanding of customer needs ¥ Effective resource allocation ¥ Clearer identiÞcation of market opportunities ¥ Products created and priced for the target audience ¥ Easier choice of distribution and communication channels ¥ Better-positioned marketing programmes Once the marketer has segmented the total market. A target segment can be selected. A target market consists of customers who will be satisÞed by the service offering and will be proÞtable to the organization. It is important for all service organizations to consider the following criteria before making a Þnal target market decision. ¥ Sales- and proÞt potential ¥ Growth potential ¥ Organisation's ability to service the segment ¥ Organisation's ability to compete with other organisations' offerings in the same segment Once service organizations have identiÞed their target segments, they should determine how they would prefer customers to perceive their organization and its service products, know as positioning. Positioning is of particular signiÞcance in services sector as it places an intangible service within a more tangible frame of reference. SERVICE POSITIONING Positioning is an activity concerned with the identiÞcation, development, and communication of a differentiated advantage. Which gives the perception of the organisation's products and services as superior to and distinct from those of its competitors in the mind of its target IMPORTANCE OF POSTIONING: Competition is intensifying in the service sector and as a result it is becoming more important for service organizations to differentiate their service products in meaning ways BeneÞts of positioning ¥ Provides an organization target segment with a reason for buying their services ¥ It makes it easier for all customers to see why an organization position by identifying where it wants to be and by specifying what actions are needed to attain such position ¥ It identities market opportunities not addressed by competitors ¥ A clearly deÞned positioning strategy can make market penetration possible ¥ Offers guidelines for the development of a marketing mix, structuring each element of the mix to be consistent with the positioning strategy) Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Positioning criteria: ¥ It should be meaningful and desirable to the target segment ¥ It must be believable and not make unattainable claims ¥ It must be uniquely differentiated from the competitions ¥ It must be uniquely differentiated from the competition, in a way that is important to customers ¥ It must be sustainable and proÞtable over the long term SERVICE PRODUCT STRATEGIES Most organizations offer not only one service but rather a mix of services know as the service product mix. To understand the nature of the service product mix, the following terms must be clariÞed: ¥ Service item: the individual service item offered to customers ¥ Service line: a group of related service items ¥ Service mix: All of the above and is the combination of service lines service depth: The number different service items in a service line ¥ Service width: The number of service lines in a service mix Sometimes an organization needs to widen or contract the service mix to remain competitive. These decisions are made continuously to provide more effective and efÞcient services. The service life cycle is a strategic tool to indicate changing patterns of services within the organizations service product mix. SERVICE LIFE CYCLE: Services have life cycles that graphically depict the changing patterns of demand for services within the organizations service product mix. The Lifecyle denotes the sales of a service during the lifetime of that service. It further indicates now these sales ßuctuate according to some pattern during the services life. INTRODUCTION During this initial phase of development, sales tend to be slow, and proÞts are either limited or non-existent. This is because the PHASE introduction of new services is costly, especially in terms of the promotional costs involved in raising awareness about the new service. The intangible Nature of a service may cause customer resistance due to the creation of a primary demand for the service. The organization should focus on attracting customers who are prepared to take risks (the innovators). With low initial prices and special offers. GROWTH PHASE During this phase more, customers follow the lead of innovators and sales start increasing rapidly. This sales growth is then seen as an opportunity by others, and it encourages competitors to enter the market. ProÞt margins start to increase as problems are resolved, increasing the production of a service, which in turn leads to reduced unit costs. Promotional expenditures are also spread over larger sales volumes which lower unit costs even further. MATURITY PHASE Most customers at this phase have used the service, and sales growth starts to slow down. ProÞts decline mainly due to increased competition and lower levels of net income due to expenditure such as sales promotion incentives. Owing to the large numbers of Competitors in the market during this phase severely restricts further sales growth. Some organizations stretch the lifecycle by entering new market segments, increased consumption rates due to effective marketing and service innovations DECLINE PHASE Some competitors drop out of the market due to a declining demand, accompanied by technologically advanced substitute services. Declining sales lead to reduced proÞt margins and price cutting becomes the norm. Too many competitors Þght for the remaining market while marginal competitors continue to drop out of the market. Some organizations modify the service to initiate a new life cycle. NEW SERVICE PRODUCT DEVELOPMENT: Includes: ¥ Major service innovation: a new core service product with new service characteristics and processes for the markets that have not been previously targeted ¥ Major process innovation: This change consists of delivering existing core service products in new was and with new processes ¥ Product line extensions: this 1s when an existing organization adds a new service product to its current product service product line. This is to offer a wider variety of services ¥ Process line extensions: Represent a new way to deliver existing service products. The objective can be to offer customers greater convenience, a different experience or to attract new customers ¥ Supplementary service innovations: new facilitating or enhancing service elements are added to existing core services. This innovation can also be when existing supplementary services are signiÞcantly improved ¥ Service improvements: this is the most common type of innovation and often takes the form of modest changes in the performance of current products. This can include improvement to the core service product or the supplementary service. ¥ Style changes: These changes represent the most basic types of innovation and typically involve no changes in either processes or performance. However. The changes are very often visible, create excitement and may serve to motivate employees SERVICE ELIMNATION: When a particular service product is no longer proÞtable, the service should be eliminated. The following can be signs of a service in need of elimination: ¥ Irregular demand for the service and decreased proÞtability ¥ A disproportionate amount or management time spent or the service ¥ When frequent price adjustments are needed Downloaded by Wayne Redmond ([email protected])  lOMoARcPSD|42165161 Options to eliminate a service: ¥ Immediate eliminator ¥ Price increase ¥ Reduce promotion ¥ Inform customers ¥ Reassign resources ¥ Legal implications SERVICE PRODUCT/MARKET STRATEGIES MARKET The purpose of this strategy is to increase sales from existing customer segments with their existing services. This penetration can be PENETRATION: achieved by an increased consumption rate amongst existing customers. An increased consumption late is often made possible by encouraging customers to use available services more frequently. MARKET A service organization can extend its market attracting new types of customers for its current services. The market has thus widened to EXTENSION: include other customers together with current customers. This strategy may require in-depth market research to ensure that the needs of new customers are understood and meet completely SERVICE The organization develops new or modiÞed service products for the current market. This strategy is risky as the organization dealing with DEVELOPMENT: a new service product may lack the capabilities or resources to produce this new service product DIVERSIFICATION: With this strategy new markets are catered for by offering new service products. This strategy holds the greatest risk since the new organization becomes involved with new services and new markets simultaneously and there may be no existing resources available to execute such a strategy. The strategy is most typically adopted within a mature service industry where growth cannot be realised in any other way BRANDING STRATEGIES: Choosing a speciÞc brand is a strategic matter. The purpose of branding is to identify services as belonging to a particular organization. DIFFERENT APPROACHES ARE AVAILABLE TO VALUE A BRAND: ¥ Market comparative approach is used when the value estimate is based on prices from market transactions involving the sale of similar or comparable assets ¥ A cost approach is used when the value estimate is based on reproduction/replacement cost of the brand - adjusted for depreciation and obsolescence ¥ An economic income approach is used when anticipated economic beneÞts are converted into a present single amount FUNCTIONS OF BRANDING COMMUNICATION Brands have a communication function for the service provider FUNCTION REDUCTION FUNCTION Customers often prefer well-known brands to reduce search costs and to reduce the risk of buying an ineffective service. Brands are frequently used by organizations to provide evidence of consistent service standards. FACILITATION FUNCTION Service providers also use branding to facilitate new service introductions, promotions. Segmentation and premium pricing. Familiarity with a well-Known brand name diminishes the risk customers may associate with services and makes it easier for the organization to introduce new services DIFFERENTIATION Branding can differentiate a speciÞc service from other similar services. Branding can thus assist the organization in avoiding FUNCTION price competition and even enable them to charge premium prices in particular market segments EXPRESSIVE OR SOCIAL- When a customer makes use of a speciÞc brand, he or she expresses a particular lifestyle or status. Customers of a particular ADAPTIVE FUNCTION brand often imitate a particular lifestyle or want to identify themselves with a particular subgroup in society SECURITY FUNCTION Due to the risk associated with buying services, emotional factors can play a decisive role in consumer buying decisions. Familiar brand names provide trust and security concerning the quality of the service to the customer. It further conveys reliability and consistency, which contribute to the perceived beneÞts ASSOCIATIVE FUNCTION: The combination of various signals and symbols attached to the brand, results in associations customerÕs mind. Brand associations can de com positive ana negative Downloaded by Wayne Redmond ([email protected]) 11/4/24, 12:19 PM Chapter 5 Physical Evidence CHAPTER 5 PHYSICAL EVIDENCE Physical evidence (servicescape) can be defined as the physical environment where the service is delivered, including any tangible element used to support the role of the service. e.g. Attorneys offer advice as their service, but they enhance this intangible offering with physical evidence such as documents that confirm what they have done, the décor in their offices, degree certificates hanging on the wall, and brochures or other printed information about their services. The type of physical evidence used is determined by the utilisation and complexity of the environment. PHYSICAL EVIDENCE BASED ON UTILISATION self-service In this environment, the customer performs most of the service activities and only a few or no employees are involved. This environment should be designed to enhance customer satisfaction and attraction. e.g. ATMs, movie theatres, online internet services interpersonal service In this environment, the physical space is shared by both customers and employees. The design should depend on how the service environment affects the nature and quality of the social interactions between and among customers and employees. e.g. a patient’s hospital room will be designed to enhance patient comfort and privacy as well as to facilitate employee productivity. remote service In this environment, there is little or no customer involvement in the service environment. This environment should be designed in a manner to keep the employees motivated, productive and satisfied. e.g. mail order services, telecommunication services, financial consultants, editorial services, google PHYSICAL EVIDENCE BASED ON COMPLEXITY basic environment A service environment that is very simple, with few elements, few spaces, and few pieces of equipment. The design of these environments is relatively basic, especially in a self-service or remote environment in which there is no or little interaction among employees and customers. e.g. ATMs, post office kiosks, ticket offices detailed environment A service environment that is complex, consisting of a variety of different elements and forms. e.g. banks, airlines, schools, hospitals, restaurants study_ingmadesimple Luca du Toit about:blank 1/4 11/4/24, 12:19 PM Chapter 5 Physical Evidence ROLES OF PHYSICAL EVIDENCE packaging service packaging refers to the exterior, interior, and other tangible elements of the service e.g. the signage outside a bank facilitating physical evidence is used to facilitate the interaction between both customers and employees participating in the service process e.g. barriers and signage to direct customers at an airport socialising physical evidence has to convey the expected roles, behaviours and relationships among employees and customers – the purpose of socialising is to project a consistent and positive image e.g. the uniforms worn by employees of fast-food chains support the service strategy by representing a symbol that embodies the group’s image differentiation the physical environment can serve as a differentiator in signalling quality to the target market, confirming the positioning of the organisation, and conveying distinctiveness from competitors e.g. well-designed facilities will be perceived as having an advantage over poorly decorated alternatives managing trust physical evidence can be used to reduce perceived risk and increase the level of perceived quality e.g. the type of office furniture and décor in a lawyer’s office and the way they are dressed and present themselves will influence the consumer’s belief about whether the lawyer is trustworthy or not DIMENSIONS OF PHYSICAL EVIDENCE AMBIENT FACTORS Ambient factors refer to the air quality and temperature, smell, noise, lighting, music, and other sounds in the building. These factors have a physiological effect on customers and employees. smells, air quality Some organisations use aromatic smells very effectively to lure and temperature customers into their shops e.g. coffee shops, flower shops, bakeries, perfume shops. Negative impressions about the service organisation will be formed if foul and musty odours are present. The smell in a service environment should be consistent with the type of environment or service product in order to be effective. If the temperature in the service organisation is too hot or too cold, the employees may become irritable and customers will probably resort to avoidance behaviour and not stay very long in the store. music and other Some organisations believe that employees are happier and thus sounds more productive when listening to background music. Shoppers tend to spend less time in a store when music is played loudly. noise Undesirable sounds detract from the organisation’s overall atmosphere. lighting Lighting can help too set the mood, tone, and pace of the service encounter. Customers tend to talk more softly when lights are dim. The lighting creates a formal atmosphere and it tends to slow down the encounter. In contrast, brightly lit service environments are perceived as informal, cheerful, and fast- paced. study_ingmadesimple Luca du Toit about:blank 2/4 11/4/24, 12:19 PM Chapter 5 Physical Evidence DESIGN FACTORS Design factors refer to the exterior appearance and architecture of the organisation’s physical facilities, as well as the interior décor, layout, colour, furniture and equipment, texture, and accessories. EXTERIOR DESIGN FACTORS The exterior appearance of the facility has to be consistent with the image of the service organisation. When designing the physical facility, there needs to be a balance between attractiveness, efficiency, and affordability. The larger the size of the organisation and the more impressive its physical evidence, the more customers associate the organisation with success, security, and stability – which tends to lower perceived risk when purchasing the service. It could, however, be seen as impersonal and sometimes uncaring. The organisation’s visibility is also essential in creating awareness. Signage should attempt to indicate the who, what, where, and when of the service offering. Entrances should be non-slippery, flat, and provide easy access. The location of the organisation in terms of customer convenience, is also an important factor influencing the customer experience. INTERIOR DESIGN FACTORS Interior design factors can include flooring, colour, fixtures, wall textures, layout, as well as odour, temperature, sound, and lighting. These factors influence different emotions in customers. flooring Flooring contributes to the image customers have of an organisation and should be consistent with the positioning of the organisation. colour The colour of the service organisation’s communication material, personnel, interior and exterior appearance, as well as the official colours of the organisation all create the customer’s first impression of the organisation. Warm colours such as red, yellow, and orange can evoke feelings of comfort, friendliness, and warmth. Cool colours such as blue, green, and violet can be perceived as cold and aloof. Light colours tend to make a room look larger, whereas dark colours make small spaces look smaller. Darker coolers attract customers’ attention. Duller colours are perceived as softer and brighter colours as harsher. fixtures The use of fixture such as pipes, plumbing, beams, doors, storage rooms, display racks, and tables should be considered in terms of utility and aesthetics. wall textures The use of wall textures can enhance or diminish the atmosphere of an organisation. layout If displays and aisles are placed in a manner to generate straight traffic flow (aisles in a rectangular fashion) customers can shop quickly, an efficient atmosphere is created, and self-service is easy. However, if displays and aisles are place in a free-flowing pattern, customers are more likely to browse and make impulse or unplanned purchases which can increase the profitability of the organisation. study_ingmadesimple Luca du Toit about:blank 3/4 11/4/24, 12:19 PM Chapter 5 Physical Evidence SOCIAL DESIGN FACTORS Social factors concern the interaction between customers and service employees, including factors such as the number of people involved, their behaviour, and appearance. This means that the moods and behaviour of employees have an impact on customers and in visa versa. It is important for service marketers to monitor the behaviour of customers, as one customer can influence the perception of a service experienced by others. Social factors can influence customers to react to service organisations in two different ways: approach behaviour These behaviours include all positive behaviours that might be direct at a particular organisation. For employees, it includes a desire to affiliate, work, and express commitment. For customers, it includes behaviours such as entering, staying, spending money, and loyalty. avoidance behaviour These behaviours reflect a desire not to stay, or explore, or work or affiliate. e.g. crowding has a negative effect on customers and may result in customers avoiding service providers (time and risk pressures increase the feeling of crowding) COMMUNICATION DESIGN FACTORS The service organisation’s communication to customers as well as to employees is another dimension of physical evidence. Quality of materials used in artwork, presence of certificates and photographs on the wall, floor coverings, and personal objects displayed in the service environment can all communicate symbolic meaning and create a sound overall aesthetic impression. Communication devices include advertisements, invoices, statements, membership cards, and delivery vehicles. REFERENCES – the above summary is made using the following textbook: Y. Jordaan, J. Samuels. 2015. Grasping Service Marketing. Third Edition. Ant Production Management CC. South Africa. study_ingmadesimple Luca du Toit about:blank 4/4 11/4/24, 12:08 PM Chapter 6 People CHAPTER 6 PEOPLE A customer’s first impression of the service organisation is based on his or her first interaction with the employees of that organisation. The manner in which an organisation manages its employees impacts on its ability to satisfy external customers’ needs. TYPES OF SERVICE EMPLOYEES SUPPORT Customers seldom come into contact with support personnel. The PERSONNEL technical quality of the service delivery is determined by support personnel. These employees thus represent the internal production process of the service organisation. Their skills and competencies form the backbone of the service organisation’s operational activities and can be seen as the internal strength of the organisation. e.g. the pilot of an aircraft, the caretaker of the hotel who cleans the facilities CUSTOMER- Customer-contact personnel are highly visible to the customers. They CONTACT represent the interface between the service organisation and its PERSONNEL customers, and they largely determine the functional quality of the service. Customer-contact personnel are frequently referred to as boundary spanners. e.g. nurses at a hospital, air hostesses on a aircraft BOUNDARY SPANNERS can be defined as personnel who interact with both the organisation’s internal and external environments, thereby linking the organisation to the outside world. FUNCTIONS OF A BOUNDARY SPANNER (1) information transfer – by collecting information from the environment and feeding it back into the organisation, as well as communicating with the environment on behalf of the organisation (2) personal representatives – customer-contact personnel influence customer’s perceptions, such as the organisation’s corporate reputation and image Boundary spanners can be classified on a continuum where the two extreme roles are: (a) subordinate service roles – represent the parts played by personnel working for organisations where the customer purchase decisions are entirely discretionary e.g. air hostesses, bus drivers, bank tellers, and others who function at the very base of the organisation (b) professional service roles – represent the parts played by personnel whose professional qualifications give them a level of status independent of their position in an organisation. In these roles, customers often do not consider themselves to be ‘superior’ to the professional as they acknowledge the professional’s expertise. e.g. doctors, dentists, accountants, management consultants study_ingmadesimple Luca du Toit about:blank 1/7 11/4/24, 12:08 PM Chapter 6 People DIFFERENT GROUPS OF CAPABILITIES technical know-how Thorough knowledge of the latest organisational about the organisation developments is a prerequisite in delivering superior service. This demonstration of insight will not only impress the customer but will also influence the technical quality of the service quality. ability to serve customers To cultivate a favourable service quality image, employees well and maintain the have to be sensitive to the customer during the service quality of the service encounter, be empathetic and responsive, communicate with the customer, and make the customer feel valued. ability to work as a team This requirement emphasises the importance of internal communication and efficient administration procedures. EMPLOYEE ISSUES 1. RECRUITMENT, SELECTION, AND TRAINING Recruitment is the process by which an organisation secures and builds its human resources. The goal of recruitment is to attract and retain the right employee for the right job. Inadequate customer retention is often caused by poorly selected, inefficient employees, lacking a service attitude towards the organisation ’s customers. Selection is the process of choosing the right employee for the right job. Line managers should be included in the selection and appointment process since they have a clear understanding of the requirements of a specific job and can use their previous selection experience to good effect. Training refers to the acquisition of specific knowledge and skills that enable employees to perform their jobs effectively. Training is used to build teams, change cultures, and communicate the organisation’s values to new recruits. Staff development is concerned with activities directed at the future needs of the employee, which may themselves be derived from the future needs of the organisation. 2. MOTIVATIONAL JOB CHARACTERISTICS After the most suitable candidates have been recruited and training has started, it is important to take note of five guidelines to ensure that employees remain motivated: (1) Employees who have jobs requiring a variety of skills and abilities tend to be more motivated than employees whose jobs entail only tedious, repetitive tasks (2) The more visible the outcomes of a given service are, the more motivational the task tends to be (3) The degree of impact an employee perceives his/her job to have on the lives of others inside and outside the organisation also influences motivation levels (often customer-contact personnel can see the influence of their jobs on customers but support staff do not usually experience the impact of their efforts) (4) The higher the degree of freedom and discretion/autonomy an employee experiences in his/her work, the more motivated he/she will tend to be (5) Feedback can be used to motivate employees as it will help them understand the result of their efforts. study_ingmadesimple Luca du Toit about:blank 2/7 11/4/24, 12:08 PM Chapter 6 People DIFFERENT GROUPS OF CAPABILITIES technical know-how Thorough knowledge of the latest organisational about the organisation developments is a prerequisite in delivering superior service. This demonstration of insight will not only impress the customer but will also influence the technical quality of the service quality. ability to serve customers To cultivate a favourable service quality image, employees well and maintain the have to be sensitive to the customer during the service quality of the service encounter, be empathetic and responsive, communicate with the customer, and make the customer feel valued. ability to work as a team This requirement emphasises the importance of internal communication and efficient administration procedures. EMPLOYEE ISSUES 1. RECRUITMENT, SELECTION, AND TRAINING Recruitment is the process by which an organisation secures and builds its human resources. The goal of recruitment is to attract and retain the right employee for the right job. Inadequate customer retention is often caused by poorly selected, inefficient employees, lacking a service attitude towards the organisation ’s customers. Selection is the process of choosing the right employee for the right job. Line managers should be included in the selection and appointment process since they have a clear understanding of the requirements of a specific job and can use their previous selection experience to good effect. Training refers to the acquisition of specific knowledge and skills that enable employees to perform their jobs effectively. Training is used to build teams, change cultures, and communicate the organisation’s values to new recruits. Staff development is concerned with activities directed at the future needs of the employee, which may themselves be derived from the future needs of the organisation. 2. MOTIVATIONAL JOB CHARACTERISTICS After the most suitable candidates have been recruited and training has started, it is important to take note of five guidelines to ensure that employees remain motivated: (1) Employees who have jobs requiring a variety of skills and abilities tend to be more motivated than employees whose jobs entail only tedious, repetitive tasks (2) The more visible the outcomes of a given service are, the more motivational the task tends to be (3) The degree of impact an employee perceives his/her job to have on the lives of others inside and outside the organisation also influences motivation levels (often customer-contact personnel can see the influence of their jobs on customers but support staff do not usually experience the impact of their efforts) (4) The higher the degree of freedom and discretion/autonomy an employee experiences in his/her work, the more motivated he/she will tend to be (5) Feedback can be used to motivate employees as it will help them understand the result of their efforts. study_ingmadesimple Luca du Toit about:blank 3/7 11/4/24, 12:08 PM Chapter 6 People Owing to the nature of the service delivery process, the employees of the organisation and its customers have a direct influence on one another. They feel that since they They feel that in order to are paying for the deliver the service properly, service, they want to they need maximum ensure they get the control. service they want. They have an interest in how the service is performed and therefore want to control employee performance. CONTROL STRATEGIES can be used to increase organisational and service personnel control, as well as perceived customer control PHYSICAL CONTROL many service organisations use this type of control to take charge of the service encounter e.g. at the dentist, the customer is placed in a reclined chair with a towel and instruments on his/her chest CONTROL THROUGH EXPERTISE the service personnel take the lead in a situation or demonstrate expertise in order to gain control e.g. a surgeon can use a certain tone of voice when telling a child not to walk on his injured leg EDUCATING THE CUSTOMER the customer is educated as to what is expected of him or her e.g. when you rent a car, you receive instructions on the refuelling policy to communicate to you not to refuel the vehicle on return CONTROL THROUGH REWARDS the customer can be controlled by being offered some form of a reward e.g. loyalty programmes to offer customers discounts if they always choose the service organisation study_ingmadesimple Luca du Toit about:blank 4/7 11/4/24, 12:08 PM Chapter 6 People METHODS TO INCREASE PERCEIVED CONTROL COGNITIVE This is when the customer believes that he or she has some control over CONTROL the service encounter based on acquired knowledge or expertise. Cognitive control focuses on the fact that customers tend to feel safer when they have more knowledge of a given situation. This can be used when the customer cannot gain behavioural control. e.g. a computer company explains to a customer how a computer works and why it has malfunctioned BEHAVIOURAL This is when the customer is actually given the authority and the ability CONTROL to change or modify the service. This technique works better for customised services rather than standardised services. e.g. an interior decorator asks the customer to choose colours and styles before redecorating their house Customers want to be offered a high level of service at the lowest possible price. Service providers want to offer a high level of service but not at the expense of profit. These contradictory objectives create a natural tension between employees and customers. DISADVANTAGES OF CONFLICT increase employee stress levels which leads to health problems, absenteeism, decrease in job satisfaction, and an increase in possible staff turnover decline in productivity and efficiency negative impact on organisational profitability TYPES OF CONFLICT SITUATIONS PERSON/ROLE A person/role conflict occurs when playing a specific role makes CONFLICT another person uncomfortable. e.g. customer-contact personnel are often required to smile and be helpful even if they are not in a good mood ORGANISATION/ The organisation/customer conflict arises when the customer CUSTOMER requests or expects services that violate the rules of the organisation. CONFLICT e.g. asking the waiter for a second loaf of curtesy-bread INTER-CUSTOMER Inter-customer conflict refers to conflicts arising between customers. CONFLICT e.g. when a waiter is requested to ask another diner to not be so lord and disruptive STRATEGIES TO REDUCE CONFLICT AND STRESS reducing person/ role conflict by requesting employee input into how service roles can be changed to reduce conflict reducing organisational/ by ensuring that customer expectations are customer conflict consistent with the capabilities of the service system reducing inter-customer conflict by making use of segmentation to minimise the chances that two or more divergent groups will share the encounter study_ingmadesimple Luca du Toit about:blank 5/7 11/4/24, 12:08 PM Chapter 6 People DIFFERENT GROUPS OF CAPABILITIES technical know-how Thorough knowledge of the latest organisational about the organisation developments is a prerequisite in delivering superior service. This demonstration of insight will not only impress the customer but will also influence the technical quality of the service quality. ability to serve customers To cultivate a favourable service quality image, employees well and maintain the have to be sensitive to the customer during the service quality of the service encounter, be empathetic and responsive, communicate with the customer, and make the customer feel valued. ability to work as a team This requirement emphasises the importance of internal communication and efficient administration procedures. EMPLOYEE ISSUES 1. RECRUITMENT, SELECTION, AND TRAINING Recruitment is the process by which an organisation secures and builds its human resources. The goal of recruitment is to attract and retain the right employee for the right job. Inadequate customer retention is often caused by poorly selected, inefficient employees, lacking a service attitude towards the organisation ’s customers. Selection is the process of choosing the right employee for the right job. Line managers should be included in the selection and appointment process since they have a clear understanding of the requirements of a specific job and can use their previous selection experience to good effect. Training refers to the acquisition of specific knowledge and skills that enable employees to perform their jobs effectively. Training is used to build teams, change cultures, and communicate the organisation’s values to new recruits. Staff development is concerned with activities directed at the future needs of the employee, which may themselves be derived from the future needs of the organisation. 2. MOTIVATIONAL JOB CHARACTERISTICS After the most suitable candidates have been recruited and training has started, it is important to take note of five guidelines to ensure that employees remain motivated: (1) Employees who have jobs requiring a variety of skills and abilities tend to be more motivated than employees whose jobs entail only tedious, repetitive tasks (2) The more visible the outcomes of a given service are, the more motivational the task tends to be (3) The degree of impact an employee perceives his/her job to have on the lives of others inside and outside the organisation also influences motivation levels (often customer-contact personnel can see the influence of their jobs on customers but support staff do not usually experience the impact of their efforts) (4) The higher the degree of freedom and discretion/autonomy an employee experiences in his/her work, the more motivated he/she will tend to be (5) Feedback can be used to motivate employees as it will help them understand the result of their efforts. study_ingmadesimple Luca du Toit about:blank 6/7 11/4/24, 12:08 PM Chapter 6 People Cognitive dissonance is the doubt that creeps into the customer’s mind as to whether or not the right decision was made. For satisfied customers, post-purchase actions include repeat purchases, customer loyalty, and positive word-of-mouth communication. For dissatisfied customers, post- purchase actions include negative word-of-mouth communication and possibly the switching of vend