MARK2055 Final EXAM PDF

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MARK 2055 FINAL EXAMINATION TERM 3 2020

Word count: Answer 1) A) The supplementary services model, also known as the flower of service The flower of Service model was introduced by Christopher Lovelock primarily to provide any type of business with an inventory of service product augmentation possibilities ie. to introduce the different types of supplementary services in addition to the core service provided by the firm either needed for service delivery or help to use the core service and enhance supplementary services to add more value to the customer.These supplementary services can be categorised into 4 facilitating services (information, order taking, billing & payment) helping the customers to make use of the core-service more efficiently and 4 enhancing or supporting services (consultation, hospitality, safekeeping & exceptions) that adds value to the core service and even tries to reduce the monetary cost of it- making up the total of 8 petals of the respective model.

However, it must be noted that with the different nature of service core products and the company’s market positioning strategy, there has to be a different set of supplementary services to augment the product in order to enhance its value and make the company easy to do business with. Also when providing people-processing and high-contact services, companies must provide more supplementary services when compared to any other services such as possession-processing or low-contact services. The more supplementary and value-driven services, the stronger the barrier for customers to switch to competitors. In addition to this, the company must make sure that all petals of the model must be properly working ie. it must be well-designed and well-managed and even if 1 petal out of the 8 petals isn't being managed properly or missing, then its impact would be reflected on the entire service offering.

B) Service blueprinting Service blueprinting or mapping the customer journey is a diagram identifying and managing and controlling the relationships between different service components (backstage and frontstage)- people, props (physical or digital evidence), and processes- that are directly tied to touchpoints in a specific customer-journey helping us to understand the nature of the service process and the nature of the customer’s personal experiences in order to create and deliver a service (Nielsen Norman Group, 2017). Blueprinting can help identify the SEO’s (Service Enhancement Opportunities) and the OTSU’s (Opportunities To Screw Up) helping the company to improve efficiency and productivity of the system by tailoring out OTSU’s and engineering in SEO’s, thus preventing any sort of service failures by developing contingency recovery plans with the help of OTSU’s and other identified fail points. This makes the service experience more appealing not just to the customers but also to the service providers by identifying whether the service delivery process needs to be streamlined or make more resource/time efficient, suggesting new product development opportunities by reconfiguring delivery systems, adding or deleting elements in order to differentiate itself from its competitors, standarding the execution for each activity and facilitating marketing, operations and human resource management integration within a firm. Even though there is no specific way to develop a customer blueprint, it would be beneficial to follow some basic and consistent principles and approach in each service company. Thus, with the help of such blueprinting, companies can see the bigger picture of how a service is implemented by the company and used by the customers (Nielsen Norman Group, 2017).

C) The service profit chain - discussed by Prof Patterson

The service profit chain is a version of the “linkage model”- theory/framework developed to identify relationships between profitability, customer loyalty, employee satisfaction, loyalty and productivity. This highlights the importance of not just customers in a service setting but also the service employees and signals that the success in one area would also have an impact on another. For instance, a friendly frontline employee can have a significant impact on customers’ perceptions of the overall service experience, thus a satisfied employee would lead to a satisfied customer. This framework can work even more effectively when accompanied by the

“linkage model” shown below.

This framework altogether focuses on how a good organisational culture, leadership and climate can lead to outstanding financial performance. However, when going in-depth, employee satisfaction, internal service climate and leadership drives positive employee behavior leading to employee loyalty and retention, this leads to efficient and effective perceived service quality and customer value driving customer satisfaction leading to their retention and advocacy which finally leads to profitability, revenue growth and operating margin. Understanding this framework helps managers target new investments to develop service and satisfaction levels giving them maximum competitive advantage, widening the gap between service leaders and their competitors (Harvard Business Review, 2016).

D) Internal marketing Internal marketing is the effective promotion and communication of a company’s objectives, vision, goals, culture and mission statement to employees or the internal customers within the organization (Smarp.com, 2019). This is built on the idea that everyone is a customer to each other internally and supplier to others externally and that the organizational culture is built on the personal brands of its employees. It is making sure that everyone within the organization is focused in the same direction. The basic idea behind internal marketing is to create enthusiasm and emotional connection among the employees by motivating and engaging them which will positively impact on their satisfaction and retention. This commitment among the employees to the organization’s objectives would help them provide high-quality service by communicating the same objectives to the external customer, colleagues and future employees, thus making them aware about the unique value propositions of the organization, helping it to grow and prosper by effectively differentiating and positioning the organization from its competitors. The main purpose of this is making sure that both the internal and external customer needs are satisfied by aligning each aspect of organizational internal operations, improving internal marketing relationships, quality and customer service. This coordination and standardisation way within the organization can provide a more consistent experience to their customers as the quality of service culture internally is very important for what is going to be seen externally (Marketing-schools.org, 2011). Thus managing internal marketing effectively can even lead to the “perfect” customer experience.

Answer 2) A) PVR Cinemas or PVR Ltd. is a film entertainment company and market leader in terms of screen count in India. The company started as a joint venture agreement between Priya Exhibitors Private Limited and Village Roadshow Limited in 1995 with 60:40 ratio. It has, over the years, consistently added screens, both organically and inorganically and currently operates 845 screens in 176 cinemas in 71 cities in India and Sri Lanka with an aggregate seating capacity of approximately 1.82 lakhs seats (www.pvrcinemas.com, n.d.). Its diversified cinema viewing experience such as ‘PVR Director’s Cut’,

‘PVR Gold Class’, ‘PVR IMAX’ etc enables it to serve different customer segments across India including the regional segments, however, having its key target segments limited to only the urban and semi-urban middle and upper-middle class audiences (www.pvrcinemas.com, n.d.).

B) ACURA Framework: 1. Acquisition: PVR Ltd. has been consistently developing and improving its marketing strategy to acquire more of its key-target customers as well as customers from other segments (budget focused-college students) by providing them attractive offers such as buy-one-get-one free, 50% cashback with specific credit cards and other redeemable coupons. Not just such offers, but also its heavy advertising on billboards and social media in India has created awareness in almost every 9 out of 10 Indian citizens. Even after having such strong brand-awareness, it can attract more customers from competitors and other segments by collaborating with networking sites and franchises, extending relationships with village road shows and growing family spending on entertainment. 2. Cross-selling: PVR Ltd. being a film entertainment company and having numerous movie theatres across the country has been successfully earning a lot with the help of its effectively developed cross-selling strategies and its diversified revenue streams which generates revenues primarily from box office and non-box office which primarily includes revenue from Sale of varieties of Food and Beverages such as popcorn, coke etc (www.pvrcinemas.com, n.d.). However, adding a backstage tour for kids, food and beverages with the ticket and gift cards in the cross-selling strategies would also result in profitability. 3. Up-selling: PVR Ltd. is famous for providing varieties of cinema experiences in the country such as PVR Gold Class, IMAX etc. as mentioned in the introduction. It has already been following approaches to upgrade the customer from a silver class ticket to either a gold or platinum class in the same theatre, however, it can also upgrade the customers from a PVR gold class to PVR director’s cut by showcasing the leather

seats and other attractive treatments such as early bird tickets and better varieties of food and beverages. 4. Retention and Advocacy: The first mover advantage acquired by PVR Ltd. in multiplex business in India has led to better customer retention and their advocacy. Its diversified product offerings and premium customer experience and satisfaction has led to drastically improved profitability due to their retention and advocacy. However, adding more offers to retain loyalists, implementation of feedback channels, special offers for personal special occasions, star endorsement and referral promotions can help better retain customers and gain their advocacy. Such satisfied customers and their positive word-of-mouth can help PVR Ltd. better operate in future and stay ahead of its competitors such as Inox and Wave cinemas in the country or even help them compete internationally.

C) Among all the elements of the ACURA model, my personal focus would be on the Acquisition and the Retention of the customers as focusing on these two would help to gain their advocacy as well. 80% of the companies I have been taught about are extensively focusing on the acquisition of customers and 20% on the retention of customers, therefore having no correct balance between the two, which according to me is completely unprofitable in the long run. For any company to succeed, it is really important to have a proper balance between these two areas of the ACURA model but only a few of them have allocated marketing spend appropriately between acquisition and retention. As the ACURA process starts with the selection of key profitable segments, the company in my case, PVR Ltd. can take help of the various acquisition strategies relevant to its service offerings. Acquiring customers is one of the most crucial stages of any service as well as product offerings because it helps to increase the brand awareness, economies of scale thus boost sales. This basically involves the steps taken to attract new customers with the help of marketing, branding, advertisements and any other steps to persuade new customers to try out the company’s offerings. This is often known as “conventional marketing” (www.trybaker.com, n.d.). However, PVR Ltd. being not a new business has already acquired a huge base of customers and is often in the evoked set of its target customer segments. However, my recommendation to the company would be to attract more customers from different segments as well (especially who are price conscious) by offering a cheaper version of their cinema theatres with the help of offers such as “buy 2 seats and get the 3rd seat free”, this would help gain economies of scale. However, it must be kept in mind that acquiring new customers every time would cost more both in monetary form and non-monetary form than retaining the old ones. Retaining customers refers to the actions to keep customers coming back. This may include an email newsletter, relationship building, reward or loyalty programs etc (www.trybaker.com, n.d.). With the help of relevant retention strategies for PVR Ltd. such as providing intimate shows only for loyal customers, giving them a free pass for the first show, giving them a signatured ticket for the show etc. can help retain them. These all will result in improved

customer experience and satisfaction, further leading to customer advocacy through positive Word-Of-Mouth. Therefore, having a proper balance between these two crucial areas can be beneficial for the company in the long-run, also leading to customer advocacy.

Answer3) A) FIVE STRATEGIC PROCESSES IN CUSTOMER RELATIONSHIP MANAGEMENT (CRM):

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Strategy Development Process: This refers to the evaluation of the company’s strategies i.e.the company’s mission statements, objectives, vision etc. which is primarily the job of the top management. This business strategy helps to guide customer strategies and other business operations and strategies including the selection of key target customers, acquiring strategies, retaining them- loyalty bonds, customer churn drivers and how to prevent customer switching. Value Creation Process: This translates the business strategies into specific value propositions for customers and the firm. This focuses on creating and enhancing value for the customer as well as for the firm. Value created for the firm would be reduced customer acquisition costs and retention costs and increased share-of-wallet whereas value created for customers would be customisation, loyalty rewards etc. This thus primarily focuses on the dual-creation of value for both firms and customers. CRM is considered to be most successful when both the firms and the customers are benefited. Multi-channel Integration process: This basically refers to interacting with the customers with the help of numerous channels. However, communicating the same objectives through these wide varieties of channels has now become complex for companies but with the help of CRM strategies, it has now been addressed and worked on. Information Management process: Dealing with customers through the various channels makes the use of information management more useful. This process collects customer information from all channels, integrates them and makes a proper information database for its customers which is provided to the frontline personnel so that they can interact with the customer effectively giving them some sort of recognition etc. This process encloses front-office applications (direct customer contact, salesforce automation etc), back-office applications (procurement,

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financial processing etc), analytical tools (data mining, customer profiling, churn management etc), IT systems (IT hardware and software) and data repository (all customer data). Performance assessment process: Under this process, the main focus is whether the current CRM strategy is creating relevant value for all its stakeholders (internal and external customers, shareholders etc)? And whether the objectives (marketing and service delivery performance) are achieved ? and finally whether the integrated CRM strategy/process worked as it was expected? This process helps to further tailor the strategy and drive continuous improvements of CRM itself.

B) Shouldice Case study: The Value Creation Process would be the most important process in the Shouldice Case study as this process focuses on the dual-creation of values for both the firm and its customers which no other case study would explain it better than the Value-based healthcare at Canada’s Shouldice Hospital. The target customers of Shouldice are healthy males with external inguinal hernia who are willing to travel to Ontario Canada to receive “gold standard” hernia repair. This hospital is famous for its hyper-specialized and standardized approach to deliver high value based care as it aims to achieve the best possible clinical outcomes at the lowest cost. Over the years the hospital has achieved a 99.5% lifetime success rate while consistently delivering services at a lower cost than other health providers. This case study has proved that developing values for customers such as reduced surgical time, free-checkups for life, price-competitive, high success-rate and patient satisfaction, it will automatically generate firm values such as less costs because of less staffing and other cost efficiently developed service performances, positive word of mouth, strong media exposure, free publicity including press and TV coverage, high levels of referrals and reputation etc. Therefore, undertaking the value creation process and performing it effectively helped Shouldice gain a position in the customer’s evoked set for hernia repair and that just creating proper values can help service companies like Shouldice reach success. Shouldice makes sure that only patients best suited for its famous recovery procedure are treated as this reduces the risk of complications from surgery, improves the likelihood of successful outcomes and lowers the probability of readmission—which reduces the long-term cost associated with the procedure. Undertaking this process has also helped Shouldice reduce its acquisition and retention costs and increase the share of wallet. Therefore, this process has created a win-win situation for both the hospital and its patients.

C) According to me, the most important process among the 5 key strategic processes is the value creation process. Almost every organisation in the marketplace has been extensively focusing on this process in order to enhance the current values and deliver better and new values to its target customer segments as well as to the organisation itself in order to position and differentiate itself effectively from its competitors. Value creation is now the aim for most of the service as well as product organisations which need constant improvement and research to stay above competitors. It is better being recognised by the firms as a better management goal than the traditional strict financial measures of performance (Referenceforbusiness.com, 2014). The importance of the Value process has been recognised in both the case studies of Shouldice hospital and Sears USA. This process when studied with the service profit chain framework can help us understand the various benefits provided by creating value for both the internal and external customers of the firm (customer satisfaction, loyalty and profitability). There are two aspects of this process i.e.value derived by customers (i.e.value proposition including loyalty rewards, service tiering etc) and value derived by organization (i.e.acquisition, retention economics and share of wallet). The organization when focusing on one of its aspects can automatically impact the other aspect as well leading to better financial performance of the organization in the long run. Therefore, an extensive focus on this process helps organizations reach success. However, we must keep in mind to keep appropriate balance between retention and acquisition economics under the value received by the organisation as focusing on just acquisition would mean high financial performance only in the short run. Some of the ways to improve CRM activities in this process would include: -

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Keeping track of the marketplace and customer behavior to relevantly change its value proposition in order to increase customer loyalty. Keeping track of the incremental profit potential of increasing t...