Services Marketing: People Technology Strategy, 8th edition PDF

Preview

Summary

Eighth Edition SERVICES MARKETING People Technology Strategy Jochen Wirtz Christopher Lovelock :RUOG6FLHQWLÀF This book you downloaded is the old  8th edition of Services Marketing.  The latest edition is available on  Amazon.com for $48   (correct as of June 25, 2021)  Click to   Connect   to Amaz...

Description

Accelerat ing t he world's research.

Services Marketing: People Technology Strategy, 8th edition Jochen Wirtz

Related papers

Download a PDF Pack of t he best relat ed papers 

Essent ials of Services Market ing Jochen Wirt z SERVICES MARKET ING People, Technology, St rat egy BRIEF CONT ENT S EB23 AMARANT E

Eighth Edition

SERVICES MARKETING People

Technology

Strategy

Jochen Wirtz Christopher Lovelock :RUOG6FLHQWLÀF

This book you downloaded is the old  8th edition of Services Marketing.  The latest edition is available on  Amazon.com for $48   (correct as of June 25, 2021) 

Click to   Connect   to Amazon

Published by World Scientific Publishing Co. Inc. 27 Warren Street, Suite 401-402, Hackensack, NJ 07601, USA Head office: 5 Toh Tuck Link, Singapore 596224 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

For orders of individual copies, course adoptions, bulk purchases: [email protected] For orders for individual chapters, customized course packs: [email protected] For adaptions or translation rights, permissions to reprint: [email protected]

Library of Congress Cataloging-in-Publication Data Names: Lovelock, Christopher H., author. | Wirtz, Jochen, author. Title: Services marketing : people, technology, strategy / Jochen Wirtz, Christopher Lovelock. Description: Eighth edition. | New Jersey : World Scientific, [2016] | Includes index. Identifiers: LCCN 2016003724| ISBN 9781944659004 (hardcover) | ISBN 9781944659011 (pbk.) Subjects: LCSH: Marketing--Management. | Professions--Marketing. | Service industries--Marketing. | Customer services--Marketing. Classification: LCC HF5415.13 .L5883 2016 | DDC 658.8--dc23 LC record available at http://lccn.loc.gov/2016003724

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

Copyright © 2016 by World Scientific Publishing Co. Inc., USA This book was previously published by: Pearson Education, Inc. All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the publisher.

For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher.

Desk Editor: Karimah Samsudin

Printed in Singapore

Services Marketing: People, Technology, Strategy Brief Contents About the Authors About the Contributors of the Case Studies Preface Acknowledgements

PART I: UNDERSTANDING SERVICE PRODUCTS, CONSUMERS, AND MARKETS 1. Creating Value in the Service Economy 2. Understanding Service Consumers 3. Positioning Services in Competitive Markets

PART II: APPLYING THE 4 PS OF MARKETING TO SERVICES 4. 5. 6. 7.

Developing Service Products and Brands Distributing Services Through Physical and Electronic Channels Service Pricing and Revenue Management Service Marketing Communications

PART III: MANAGING THE CUSTOMER INTERFACE 8. 9. 10. 11.

Designing Service Processes Balancing Demand and Capacity Crafting the Service Environment Managing People for Service Advantage

PART IV: DEVELOPING CUSTOMER RELATIONSHIPS 12. Managing Relationships and Building Loyalty 13. Complaint Handling and Service Recovery

PART V: STRIVING FOR SERVICE EXCELLENCE 14. Improving Service Quality and Productivity 15. Building a World-Class Service Organization

PART VI: CASE STUDIES Glossary Name Index Subject Index

iv Contents

xi xiii xiv xvi

2 4 50 90

120 122 156 194 236

288 290 332 366 400

454 456 504

544 546 598

608 764 773 776

Contents About the Authors About the Contributors of the Case Studies Preface Acknowledgements

xi xiii xiv xvi

PART I: UNDERSTANDING SERVICE PRODUCTS, CONSUMERS, AND MARKETS

2

1. Creating Value in the Service Economy

4

Why Study Services • Services Dominate the Global Economy • Most New Jobs are Generated by Services • Understanding Services Offers Personal Competitive Advantage What Are the Principal Industries of the Service Sector? • Contribution to Gross Domestic Product Powerful Forces are Transforming the Service Markets B2B Services as a Core Engine of Economic Development Outsourcing and Offshoring Often Work in Tandem What Are Services • The Historical View Benefits Without Ownership • Defining Services • Service Products versus Customer Service and After-Sales Service Four Broad Categories of Services – A Process Perspective • People Processing • Possession Processing • Mental Stimulus Processing • Information Processing Services Pose Distinct Marketing Challenges The 7Ps of Marketing The Traditional Marketing Mix Applied to Services • Product Elements • Place and Time • Price and Other User Outlays • Promotion and Education The Extended Services Marketing Mix for Managing the Customer Interface • Process • Physical Environment • People Marketing Must be Integrated with Other Management Functions The Service–Profit Chain A Framework for Developing Effective Service Marketing Strategies • Understanding Service Products, Consumers and Markets • Applying the 4 Ps of Marketing to Services • Managing the Customer Interface • Developing Customer Relationships • Striving for Service Excellence

2. Understanding Service Consumers The Three-Stage Model of Service Consumption Pre-purchase Stage • Need Awareness • Information Search • Evaluation of Alternative Services • Purchase Decision Service Encounter Stage • Service Encounters are “Moments of Truth” • Service Encounters Range from High Contact to Low Contact • The Servuction System • Theater as Metaphor for Service Delivery: An Integrative Perspective • Role and Script Theories • Perceived Control Theory Post-Encounter Stage • Customer Satisfaction • Service Quality • Customer Loyalty

7 7 8 11 11 13 14 14 16 18 18 18 21 21 23 24 24 25 26 26 28 29 29 29 30 30 32 32 33 33 34 35 38 40 40 40 41 41

50 52 52 54 54 55 64 66 66 67 68 70 71 73 74 74 77 82

Contents

v

3. Positioning Services in Competitive Markets Customer-Driven Services Marketing Strategy • Customer, Competitor and Company Analysis (3 Cs) • Segmentation, Targeting and Positioning (STP) Segmenting Service Markets • Important versus Determinant Service Attributes • Segmentation Based on Service Levels Targeting Service Markets • Achieving Competitive Advantage through Focus Principles of Positioning Services Using Positioning Maps to Plot Competitive Strategy • An Example of Applying Positioning Maps to the Hotel Indsutry • Mapping Future Scenarios to Identify Potential Competitive Responses • Positioning Charts Help Executives Visualize Strategy Developing an Effective Positioning Strategy

90 92 94 96 97 99 100 102 102 106 109 109 112 114 114

PART II: APPLYING THE 4 PS OF MARKETING TO SERVICES

120

4. Developing Service Products and Brands

122

Creating Service Products • What are the Components of a Service Product? The Flower of Service • Facilitating Supplementary Services • Enhancing Supplementary Services • Managerial Implications Branding Service Firms, Products and Experiences • Branding Strategies for Services Tiering Service Products with Branding Building Brand Equity Delivering Branded Service Experiences New Service Development • A Hierarchy of New Service Categories Achieving Success in New Service Development

5. Distributing Services Through Physical and Electronic Channels Distribution In a Services Context What Is Being Distributed? How Should A Service Be Distributed? • Customers Visit the Service Site • Service Providers Go to their Customers • The Service Transaction is Conducted Remotely • Channel Preferences Vary among Customers • Channel Integration is Key Where Should a Service Facility be Located? • Strategic Location Considerations • Tactical Location Considerations • Locational Constraints • Innovative Location Strategies When Should Service be Delivered? The Role of Intermediaries • Benefits and Costs of Alternative Distribution Channels Franchising The Challenge of Distribution in Large Domestic Markets Distributing Services Internationally • Factors Favoring Adoption of Transnational Strategies • How does the Nature of a Service Affect International Distribution? • Barriers to International Trade in Services • How to Enter International Markets?

6. Service Pricing and Revenue Management Effective Pricing is Central to Financial Success • Objectives for Establishing Prices Pricing Strategy Stands on Three Foundations • Cost-based Pricing • Value-based Pricing • Reducing Related Monetary and Non-monetary Costs • Competition-based Pricing

vi Contents

124 124 128 129 132 136 138 139 141 143 144 144 144 146

156 158 158 160 160 160 163 165 166 166 166 167 168 168 170 172 172 174 177 179 179 182 184 186

194 196 198 199 199 202 203 207

Revenue Management: What It Is and How It Works • Reserving Capacity for High-yield Customers • How can we Measure the Effectiveness of a Firm’s Revenue Management? • How does Competitor’s Pricing Affect Revenue Management? • Price Elasticity • Designing Rate Fences Fairness and Ethical Concerns in Service Pricing • Service Pricing is Complex • Piling on the Fees • Designing Fairness into Revenue Management Putting Service Pricing Into Practice • How Much to Charge? • What Should be the Specified Basis for Pricing? • Who Should Collect Payment and Where Should Payment be Made? • When Should Payment be Made? • How Should Payment be Made? • How Should Prices be Communicated to the Target Markets?

7. Service Marketing Communications Integrated Service Marketing Communications Defining the Target Audience Specifying Service Communication Objectives • Strategic Service Communications Objectives Tactical Service Communications Objectives • Promote Tangible Cues to Communicate Quality Crafting Effective Service Communication Messages • Problems of Intangibility • Overcoming the Problems of Intangibility The Services Marketing Communication Mix • Communications Originate from Different Sources • Messages Transmitted through Traditional Marketing Sources • Messages Transmitted Online • Messages Transmitted through Service Delivery Channels • Messages Originating from Outside the Organization Timing Decisions of Services Marketing Communication Budget Decisions and Program Evaluation Ethical and Consumer Privacy Issues in Communications The Role of Corporate Design Integrated Marketing Communications

208 209 211 211 211 212 216 216 218 220 222 223 225 226 227 228 228

236 238 240 241 241 242 245 248 248 249 253 254 254 258 264 266 273 274 275 277 279

PART III: MANAGING THE CUSTOMER INTERFACE

288

8. Designing Service Processes

290

What is a Service Process? Designing and Documenting Service Processes Developing a Service Blueprint • Blueprinting the Restaurant Experience: a Three-Act Performance • Identifying Fail Points • Fail-Proofing to Design Fail Points out of Service Processes • Setting Service Standards and Targets • Consumer Perceptions and Emotions in Service Process Design Service Process Redesign • Service Process Redesign Should Improve Both Quality and Productivity Customer Participation in Service Processes • Levels of Customer Participation • Customer as Co-creators • Reducing Service Failures Caused by Customers Self-Service Technologies • Customer Benefits and Adoption of Self-Service Technology • Customer Disadvantages and Barriers of Adoption of Self-Service Technology • Assessing and Improving SSTs • Managing Customer’s Reluctance to Change

9. Balancing Demand and Capacity Fluctuations in Demand Threaten Profitability • From Excess Demand to Excess Capacity • Building Blocks of Managing Capacity and Demand Defining Productive Service Capacity

292 292 295 297 304 304 205 306 308 309 313 313 314 314 316 319 320 321 321

332 333 334 335 336

Contents

vii

Managing Capacity • Stretching Capacity Levels • Adjusting Capacity to Match Demand Understanding Patterns of Demand Managing Demand • Marketing Mix Elements Can be used to Shape Demand Patterns Inventory Demand Through Waiting Lines and Queuing Systems • Waiting is a Universal Phenomenon • Managing Waiting Lines • Different Queue Configurations • Virtual Waits • Queuing Systems can be Tailored to Market Segments Customer Perceptions of Waiting Time • The Psychology of Waiting Time Inventory Demand Through Reservation Systems • Reservation Strategies Should Focus on Yield Create Alternative Use for Otherwise Wasted Capacity

10. Crafting the Service Environment Service Environments – An Important Element of The Service Marketing Mix What is the Purpose of Service Environments? • Shape Customer’s Service Experience and Behaviors • Signal Quality and Position, Differentiate and Strengthen the Brand • Core Component of The Value Proposition • Facilitate the Service Encounter and Enhance Productivity The Theory Behind Consumer Responses to Service Environments • Feelings are a Key Driver of Customer Responses to Service Environments • The Servicescape Model – An Integrative Framework Dimensions of the Service Environment • The Effect of Ambient Condition • Spatial Layout and Functionality • Signs, Symbols and Artifacts • People are Part of the Service Environment too Putting It All Together • Design with a Holistic View • Design from a Customer’s Perspective

11. Managing People for Service Advantage Service Employees are Extremely Important • Service Personnel as a Source of Customer Loyalty and Competitive Advantage • The Frontline in Low-Contact Services Frontline Work is Difficult and Stressful • Service Jobs are Boundary Spanning Positions • Sources of Role Conflict • Emotional Labor • Service Sweatshops? Cycles of Failure, Mediocrity and Success • The Cycle of Failure • The Cycle of Mediocrity • The Cycle of Success Human Resource Management – How to Get it Right • Hire the Right People • Tools to Identify the Best Candidates • Train Service Employees Actively • Internal Communications to Shape the Service Culture and Behaviors • Empower the Frontline • When are High Levels of Empowerment Appropriate? • Build High-Performance Service-Delivery Teams • Integrate Teams Across Departments and Functional Areas • Motivate and Energize People • The Role of Labor Unions Service Culture, Climate and Leadership • Building a Service-Oriented Culture • A Climate for Service • Qualities of Effective Leaders in Service Organizations • Leadership Styles, Focus on the Basics, and Role Modelling • Focusing the Entire Organization on the Frontline

viii Contents

338 338 339 340 343 345 348 348 349 352 354 356 356 356 358 360 360

366 368 368 368 370 371 372 373 373 376 377 378 386 387 390 391 391 391

400 402 404 405 406 406 406 407 408 410 410 413 415 416 417 420 422 427 428 428 431 433 434 436 437 437 438 438 440 442

PART IV: DEVELOPING CUSTOMER RELATIONSHIPS

454

12. Managing Relationships and Building Loyalty

456

The Search for Customer Loyalty • Why Is Customer Loyalty So Important to a Firm’s Profitability? • Assessing the Value of a Loyal Customer • Worksheet for Calculating Customer Lifetime Value • The Gap between Actual and Potential Customer Value • Why Are Customers Loyal? The Wheel of Loyalty Building A Foundation For Loyalty • Target the Right Customers • Search for Value, Not Just Volume • Manage the Customer Base through Effective Tiering of Service • Customer Satisfaction and Service Quality Are Prerequisites for Loyalty Strategies for Developing Loyalty Bonds with Customers • Deepen the Relationship • Encourage Loyalty through Financial and Non-financial Rewards • Build Higher-Level Bonds Strategies for Reducing Customer Defections • Analyze Customer Defections and Monitor Declining Accounts • Address Key Churn Drivers • Implement Effective Complaint Handling and Service Recovery Procedures • Increase Switching Costs Enablers of Customer Loyalty Strategies • Customer Loyalty in a Transactional Marketing Context • Relationship Marketing • Creating “Membership-Type” Relationships as Enablers for Loyalty Strategies CRM: Customer Relationship Management • Common Objectives of CRM Systems • What Does a Comprehensive CRM Strategy Include? • Common Failures in CRM Implementation • How to Get CRM Implementation Right

13. Complaint Handling and Service Recovery Customer Complaining Behavior • Customer Response Options to Service Failure • Understanding Customer Complaining Behavior • What Do Customers Expect Once They Have Made A Complaint? Customer Responses to Effective Service Recovery • Impact of Effective Service Recovery on Customer Loyalty • The Service Recovery Paradox Principles of Effective Service Recovery Systems • Make It Easy for Customer to Give Feedback • Enable Effective Service Recovery • How Generous Should Compensation Be? • Dealing with Complaining Customers Service Guarantees • The Power of Service Guarantees • How to Design Service Guarantees • Is Full Satisfaction the Best You Can Guarantee? • Is It Always Beneficial to Introduce a Service Guarantee? Discouraging Abuse and Opportunistic Customer Behavior • Seven Types of Jaycustomers • Consequences of Dysfunctional Customer Behavior • Dealing with Consumer Fraud

458 460 462 463 464 464 466 467 467 468 470 475 476 476 477 482 484 484 485 485 486 487 487 487 488 489 490 491 493 493

504 506 506 506 510 511 511 512 513 514 515 517 517 519 519 521 521 524 524 525 531 532

PART V: STRIVING FOR SERVICE EXCELLENCE

544

14. Improving Service Quality and Productivity

546

Integrating Service Quality and Productivity Strategies • Service Quality, Productivity, and Profitability What is Service Quality? Identifying and Correcting Service Quality Problems • The Gaps Model in Service Design and Delivery • Key Ways to Close the Gaps in Service Quality Measuring Service Quality • Soft and Hard Service Quality Measures

548 548 551 552 552 553 556 556

Contents

ix

Learning from Customer Feedback • Key Objectives of Effective Customer Feedback Systems • Use a Mix of Customer Feedback Collection Tools • Analysis, Reporting, and Dissemination of Customer Feedback Hard Measures of Service Quality Tools to Analyze and Address Service Quality Problems • Root Cause Analysis: The Fishbone Diagram • Pareto Analysis • Blueprinting — A Powerful Tool for Identifying Fail Points Return on Quality • Assess Costs and Benefits of Quality Initiatives • Determine the Optimal Level of Reliability Defining and Measuring Productivity • Defining Productivity in a Service Context • Measuring Productivity • Service Productivity, Efficiency, and Effectiveness Improving Service Productivity • Generic Productivity Improvement Strategies • Customer-Driven Approaches to Improve Productivity • How Productivity Improvements Impact Quality and Value Integration and Systemic Approaches to Improving Service Quality and Productivity • Total Quality Management • ISO 9000 Certification • Six Sigma • Malcolm-Baldrige and EFQM Approaches • Which Approach Should a Firm Adopt?

15. Building a World Class Service Organization Creating a World-Class Service Organization • From Losers to Leaders: Four Levels of Service Performance • Moving to a Higher...