Notesale: Turn your study into money

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Topics : Services, Non-profit and CRM
Services

Using industry examples, critically discuss what elements of the marketing mix are
important to services marketing
Critically discuss the core characteristics of services and, using examples, illustrate the
challenges of delivering successful services marketing
...
definition of services
...


This should include all characteristics
...
The question asks for a range of examples
...


Answers should identify all of the service characteristics with a supporting example
...
Better answers will evidence a full understanding by not only explaining what all of
the characteristics are, but how they interconnect
...
They should be able to contextualise the overall topic of ‘service characteristics’ in to
Services Marketing, highlighting the differences between Services and Products
(Service Continuum) and also how within the subject of Marketing, the additional
three Ps of Process, People and Physical Evidence
...
Answers may also discuss what service firms can do to mitigate the issues that arise
– for example Service Blueprint
...
Consumption of the service does not result in any transfer of ownership even
though the service process may be attached to a physical product
...
Due to this
reason, competition can be very intense and so it is very important for the firms to add value
and differiantiatae
...

Most products contain an element of service where there is a combination of both service
and product designed to provide a way of adding value, differentiation and earning a higher
return
...
, 2011)

●
●

Pure product- no services, purely a product like salt and sugar
...

● Combination- products and services used in equal proportion to meet customer
expectatiosn
...

● Service with some products- emphasis on the service with some products for
example, renting a hotel which has leisure facilities but in order for this to be
experienced, some products such as internet connection and food are necessary to
complete the experience
...

Service processes ​(Baines et al, 2011)
★ People Processing​:
○

people have to physically present themselves so that they become immersed
within the service process
...


★ Possession Processing:
○

objects are liable to breakdown or need maintenance
...
For
example, repairing of posessions like kitchen gadgets which are liable to
breakdown
...
Eg
education- the use of summers schools operated by university requires
leraners needing to spend some of theri learning time in interation with the colearners and in the presence of a tutor
...
For example, EasyJet uses their
webiste to make use of FAQs to answer customer queries rather than
allwoing cusotmers to call or seek advice from expensive staff in order to
reduce cost
...
Services are characterised by five distinct
characterisitcs:

● Intangible

●
●
●
●

Inseparable (Cannot be separated from its provider)
Perishable
Heterogeneous (result in different experience to different users)

Lack of ownership
These are important aspects that shape the way in which marketers design, deliver and
evaluate the marketing of services
...
​They are delivered and experienced post purchase
...

Intangibility does not mean that consumers buy services without using their senses
...
Consumers make
judgements based on range of ​quality-related cues​
...
Intrinsic cues are directly from the ‘service product’ itself, and are difficult to
change
...
Differnt brands need different type of cues- for example,
investment-based brands uses intrinsic cues such as strong reputation and favourable
media reviews
...
The use of
cues is very important because they help to ​tangiblize the intangible​ which means
engineering of customer service​
...

Service blueprints
Service blueprints are used in the early stages of the design process, to help specity the
various elements of a design service
...

What is a service blueprint?
Shostack (1984) defines service blueprint diagrams as a visual map that map out the steps
in a service process, making it easier to design a new process or to document and improve
an existing one
...


Inseprability​ means services cannot be separted from the service providers which also
means ​service delivery​ cannot be separated out of ​service consumption​, there should be an
interaction between the two parties​
...
​Compared to a prodcut which can be taken away
from the producer once bought like clothing
...
​Service delivery ​is
either a ​mass service experience or a solo experience
...
In the ​mass service experience,
such as a theatre play, the audience have a great influence ont the percieved ​quality​ of the
experience
...
A good production can involve audiences in a play and keep them
focused for the entire performance
...

Interaction within the ​solo experience​ allows for greater control by service provider such as
doctor to patient interaction as there is no wider environmental influence
...


Heterogenity/ variability -​each service experience can ​not be identical​ each time ​because

service providers and customers ​vary​
...
​ As a result, it becomes extremely ​difficlut ​to ​standardize services ​aroudnd
the blueprint model as mentioned earlier
...
As ​demand can change unexpectedly​, and there is i​nsufficient
capacity​ to deal withthe excess number of customers
...
(Baines et al, 2011)
...
For
example, an actor at a theatre where the show may be doing well but one of the lead actor
may not feel well cuz of stress and workload which can change the performance quality not
meeitng the compann promise
...

However, the ​variability of the services​ does not mean that planning is worthless activity
...

Perishabiltiy-​ ​services are manufactured and consumed simultaneoulsy and cannot be
used stored ​either prior to or after the service encounter unlike goods that can be stored and
used for later use (Baines et al, 2011)
...
Moreover, once a train pulls out of a station, those seats are lost and can never be sold
...
Due to perishability, managers have to ensure that number of
empty seats and lost-forever revenue is minimised
...
However, if the
deamnd is unpredictable and unexpected, managers would be challaenged to provide
varying levels of service capacity at short notice which can be​ linked to the resturant
example given in the variability section
...
By
lowering prices to attract customers during quieter times and raising prices when demand is
at its highest, demand can be levled and marginal revenue increased
...

In addition to differntial pricing, extra services can be introduced to divet demand
...
This
example also links to the example given in variabilty section both of which aims to imrpove
cusotmer service
...
This characteristc strongly links to all the other characteristcs mentioned above
...
For example, the seat in a plane, is
rented on a temporary basis in exchange for a fee
...
Loyaly schemes are provided
such as membership clubs where the service provider actively promotes a sense of
ownership
...
This leads to cusotmers developinmg an
attutude based around their percieved right to be a part of the service provider
...
Services are Perishable
...
Services are inconsistent
C
...
Services are Variable
...
Services are inseparable
...


These all characteristics ebven though they are separately characteised, they all link back to
the definiton of a service
...
The controllable variables in
this context refer to the 4 ‘P’s [product, price, place (distribution) and promotion]
...

However it adds 3 more P’s which are required for ​optimum ​service delivery​
...


●

The extended service marketing mix places 3 further P’s which include ​People​,
Process and ​Physical evidence​
...

Product
○ The product in service marketing mix is intangible in nature
...


●

●

○

For example: the education industry (service as a product)

○

At the same time service products are ​heterogenous​, ​perishable​ and cannot
be ​owned​
...
(Baines et al, 2011)

○

As the service as the product is intangible it self, the use of sampling and fre
trials is a popular approach to reduce risk in service-based purchases
...


○

Pricing in case of services is rather more difficult than in case of products
...


○

example, an airline charging for flights would need to consider many factors:
like high pricing when charge more for peak times or offer discounts for group
bookings - ​due to perishability and variability

○

This is where pricing strtegies come into picuture in order to set prices
according to the ​perishability of the serq
vice​ as once an aeroplane takes

off, those seats are lost and can never be sold
...
​As demand
increases unexpedelty due to ​variability of the service
...
lowering prices tto attract customer during quiter times and raising prices
when demand is at highest
...


Promotion
○

promotion is an important ingredient of marketing mix as it refers to a
process of informing, persuading and influencing a consumer to make choice
of the product to be bought
...


○

This is because there is nothing physical that can be assessed by a potential
customer
...


○

Main goal of services-based promotional activity is to reduce the ​uncertainty
associated witht the intangibility of a service
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○

How?

○

By branding

○

make the service easy to recognise by providing a logo consistently in all
communications
...


○

Advertising can be used to help tangibilize the benefits of a service rather
than the features that cAn be limited
...


○

However, communication shoudl still be an importanvt part of their marketing
...
Kotler and Armstrong (2010)
...


○

Second, referes to the simultaneous production/ consumption interaction
...


○

These are functions of direct supply and suggests that place has little
relevance in a service context
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●

Physical evidence
○ The environment in which the service is delivered, and where the firm and
customer interact, and any tangible components that facilitate performance of
the service
...

○ Due to the ​intangibiltiy of a service m
​ eans that it is important to provide
tangible cues for potential customers to deduce the service quality
...

○ jThese cues can have many examples of physical evidence, including some
of the following buildings, equipment, signs and logos, annual accounts and
business reports, brochures, business website, as well as business cards
...

○ Staff dress also provide clues about a service provider’s attitude and attention
to tidiness and customer orientation
...

○

This is an exteremely important element for service industry
...
It does not matter how the people
speak to one another in the factory or how they dress
...


○

Staff represent the servie and should be able to provide consistent service to
a level that matches the desired postioning and service blueprint
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Processes
○

Process are all the tasks, schedules, activities and routines that enable a
service to be delivered to a customer
...


○

For example, getting a haircut deon involves process such as making an
appoitment by phone, arriving at the salon, waiting for attention onced booked
in, being shampooed by the junior, discussing style and requirements,
drinking coffee, having a haircut and styled, drying, paying and tippings,
collecting belongings and leaving
...


○

Knowing these steps means that marketers can build benefits into key steps
to avoid boredom or enhance the experience
...


Managing services - ​internal marketing
★
★
★
★

Managing service quality
...

Managing service productivity
Managing service staff
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The variability of service performance is a distinguishing characteristic and every effort
needs to be made to ensure that each time the service is performed it is of a consistent high
quality
...

Employees contribute to internal market in whih paid labour is exchanged for designated
outputs
...

For example, a customer who doesnt tell the dentist where the pain is which restricts the
quality of the performancce the dentist is likely to give
...


Service quality
1
...
How can services be managed in order to ensure quality is delivered and
problems are recovered from?
1-​Answers should discuss:
the concept of service quality management
...
Services are produced “live” and the quality is dependent on
how that customer perceives the service at that point in time because of
heterogeneity (variability)
...
If you have dissatisfied customers you will get negative word
of mouth and this can be very powerful in the case of services
...
Good: more than meets
its promises - gives good value; feel valued and listened to; easy to use; makes me
feel great
...
The benchmark approach (and most widely used) is
Parasuraman, Zeithaml, and Berry’s (1988) SERVQUAL method, should be covered
...

A good answer may offer balance and debate relating to the ‘service recovery
paradox’
...

A typical answer will provide detail on each of these dimensions
...

It can be argued that some dimensions are easier for a consumer to evaluate
objectively compared to others (i
...
tangible vs intangible)
...

Better students may discuss the various criticism of SERVQUAL regarding its validity
and reliability

Service quality
Importance
● Service quality more complex construct than product quality (encounter)
● Measuring service quality through - The ServQual “Gaps” Model
● Competing goods retailers (department stores, supermarkets) may sell many
identical products and services and so, ​quality of service​ is a primary means of
competitive differentiation
...
, 1985)
● a multiple-item scale for ​measuring service quality ​is called ​SERVQUAL
Parasuraman, et al
...
Parasuraman, et al
...
Parasuraman, et al
...

Parasuraman, et al
...
Therefore, customer compare
perceived service with expected service (baines et al
...

➔ Service quality depends on customers satisfaction
◆ If the percieved service meets or even exceeds expectations,
◆ then customers are deemed to be satisfied
◆ And more likely to return in future
...
It is a disconfirmation
model based on the difference between the expected services and the actual percieved
service
...
These are:
● Gap 1
○ The gap between what the customers actually expects and what the
management thinks the customers expect
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For example, train service
operator would think that the customers want places to store bags,
whereas they actually want a seat in a comfortable, safe environment
...

■ Management perceive customer wants correctly but fail to clarify it and
hence unachievable
...

● Gap 3○ The gap between the service designed and the service that is delivered
...
For example, the trolly-buffet
service on a train may be perceived as poor because the trolley
operator was impolite because they had not received suitable training
or because the supplier had not delivered the sandwiches on time
...
If these promises
are not fulfilled in service delivery practice, customers become
dissatisfied
...

●

Gap 5○ The gap between percieved service and expected service
■ This gap arises because customers misunderstand the service quality
relative to what they expect
...
For example, a customer might assume that the lack of
information when a train comes to a standstill for an unexpectedly long
period of time is due to ignorance or a ‘they never tell us anything’
attitude
...

SERVQUAL approach is an instrument that measures service quality using five dimensions
of service activity
...
Reliability-- the accuracy and dependability of repeated performance of service
delivery
...
responsiveness -- the helpfulness and willingness of staff to provide prompt service
3
...
Empathy-- the ease and individualised care shown towards customers
...
Tangibles-- the appearance of employees, the physical location and any facilities and
equipment, and the communication materials
...
When completed by customers it provides management with opportunities to
correct areas where service performance is perceived to be less than satisfactory and learn
from and congratulate people about the successful components
...
There is an inevitability that where there
is intangibility, inseparability and variability then service performance may somtimes fall
short of the required standard
...

Service failures arise from one of three main areas: (Bitners, et al
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Failures in delivery system
a
...

2
...
Explicit and implicit customer requests
...
Explicit eg - room with a sea view
c
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Failure through employee action
a
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The problem with service failure is not the failure itself but how mangers and customers
react
...
Negative ​word of mouth ​increases, more dissatisfied
customers become
...
Whenever there is a service failure, steps have to be taken immediately to correct the

situation and turn a potentially negative situation into one that leads to positive outcomes for
all involved
...


Service recovery
Service recovery is concerned with an organisation’s systematic attempt to correct a
problem after service failure (Gronroos, 1988)
Service recovery is done to ​retain a customer’s​ goodwill (Lovelock, 2001)
organisations can ​overcome service failure​ and develop positive reputations
...
It is an based the idea that customers may be more impressed by a service
recovery than they are unimpressed by a failure itself
...
this means that customer
ends up having a greater opinion of a firm after the problem or a service failure occured
...
Thus , it can lead
to good reviews for the resturant and customer loyalty
...
An interpretation of this paradox is that when a company manages to
effectively handle a customer’s complaint and overcome a failure in the service delivery process,

then the customer will feel that the company actually cared for him and offered him individual
attention
...

The question here is whether the service recovery paradox doesn’t occur in situations like the
missed flight because, the problem is in the core service
...
Hence, the customer is paying a
company and although he receives some value, this value is irrelevant to his core needs
...
He paid for all sorts of
reasons, but mostly in order to be at his destination at the time he wanted
...

The primary ​purpose of service recovery​ is to help drive improvement throughout an
organisation(
...
It is also argued that successful service recovery
is where customer satisfaction was maximised and negative word of mouth minimised, only
occurred when the service recovery process was handled by employees who reacted
quickly, courteously, and in a caring way (Hocutt, Bowers, and Donavan, 2006)
...
​ In terms of
employee recovery, organisations with ‘good’ complaint procedures appear to generate
postive employee attitude and high levels of retention, which lead to a positive ​impact on
financial performance​
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Thus, organisations should​ manage service recovery​ by attending to customer, employee,
and process outcomes
...

2- What elements characterise not for profit organisations and how do these differ
from for-profit organisations
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All public sector organisations are legally governed by government
...

fifth characteristic – that of customer’s perceptions,
and all five key points of commonality interlock, highlighting that they are
interdependent
...

● Answers should outline the key characteristics that define a non-profit organisation
i
...
multiple objectives, transparency, multiple objectives, service orientation and
customer perceptions
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● Identify the need for private sector organisations to make a profit to redistribute to
shareholders and then contextualize that within stakeholder theory
...

● The focus of the answer should be on defining multiple stakeholders and financial
transparency and to provide examples in the private sector to contrast with the NMS
or a similar organisation
...

The non-profit sector is populated by organisations such as local government, churches,
museums, charities, universities, zoos and public hospitals
...


Marketing in non-profit organisations has grown substantially as marketing is necessary in
developing a strong understanding of customers and other stakeholders
...

For example, marketing is readily used by local governement, charities, universities and
public hospitals all of which operates without profit as their central goal
...

Rothschild (1979) indicated key ​differences​:
➢ Product -- weaker USP
...
For example, giving charity provides everyone with a sense of
‘doing good’ but this feeling is not sufficient enough to induce many to give
...
In relation to charity, the amount donated is
often determined by the donor, rather than being specified by the seller as in a
commercial transaction
➢ involvement -- consumers become involved with a product or servicein order to learn
more about it during the purchasing process, the involvement in non-business
situations displayes more extremen tendencies
...

➢ Segmentation-- in the not-for-profit environment, it may be necessary to develop a
campaign to drive behaviour in all targets rather than a specific audience, as in
commercial markets
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The values of the organisation have an ​impact​ not only on why the organisation exists but
also how it handles its marketing activites, including fundraising, promotional programmes
...

Key characteristics of not-for-profit organisations
1
...
Transparency
3
...
Orientation
5
...


For-profit industry stakeholders include financial backers like company owners and
shareholders and certain other parties like employees or customers
...
For this reason, a list of nonprofit stakeholders is
significantly longer, more nebulous and more diverse, and includes populations served and
board members
...
But nonprofit organizations do not have private owners and they do not issue
stock or pay dividends
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But that income cannot be distributed to persons
...

an organization must have members, and the term "shareholder" is translated to
"member" for NPO this means each director is also a member who are shareholders in
simple terms
...

Stakeholders are those groups with whom the organisations has a relationship asn which
impact on the operations of the organisation for example, shareholders (Trustees),
regulatory bodies, other not-for-profit partners, supply chain partners, employees and
customers
...
Instead of revenue from customers being used to reward
shareholders for commercial organisation, not-for-profit organisation do not have profits
being redistributed as those stakeholders do not require a return on resource provision
...

These are the difficulties that may arise in trying to satisfy multile stakeholder groups:
x-They serve a range of stakeholders due to which, they do not always value their
beneficiary customers (i
...
those who receive their charitable services) which is becuase
there is a lack of market segmentation for beneficiaries undertaken
...

X- dealing with mulitple stakeholders can cause intergroup tension as one group’s call on
resources outweigh over others
...
A method to distingusih between interest and power of

stakeholders is ​stakeholder mapping matrix
...
Those with high levels of interest and
power, group (A), are key stakeholders that need to be continiously engaged
...
Those with high interest but low
levels of power group (B) for example, individual donor to charity should be informed about
chariities activities in order to maintain their interest
...
So the firm should increase information flow to thse
organisations to increae their interest so that they can exer their power in the not-for-profit’s
favour or intent to keep them satisfied if they intend to exert their power against the
not-for-profit
...

2-Transparency
The use of money and donations in not-for-profit organisations requires tha their source and
allocation be easily understood, audited, and tracked
...

In order for donations to continue to flow, not-for-profit organisations must be able to
demonstrate trust, integrity and honesty
...

Private sector organisations very often declaire the minimum financial information required ;
just enough to comply with customs and excise requirements
...
However, due
to this, future funding streams becomes terminated because a charity is seen to have
sufficient funds to cover its actiivties
...

3-Multiple Objectives
In manufacturing and other sectors, profit is a central goal
...
Profits provide an easy measure of success
...
They have range of goals, a mutliple set of tasks tht they
seek to achieve
...
Other goals can include increaseing their geographical spread to reach new people
who might benefit from the organisation’s activities and campaigning to get media attention
about a particular issue
...

4-Orientation
Not-for-profit organisations are oriented to deliver services
...

How the not-for-profit organisation raises its funding has an impact on the organisation’s
market orientation
...

Not-for-profit organisations (NPO) need to create posittive awareness about the
organisation’s cause or activities
...

Raising funds is an ongoing critical activity in NPO
...
This leads to greater focus on engaging supporters to become part of
and identify with, the aims of the not-for-profit organisation rather than simply being a
customer
...

Customers have a choice
...
Donors are
free to give to one charity rahter than anohter or not to give anything at all
...
In reality, however, it is little practical opportunity for the public to choose among
differnt public services in the same way that there is the private sector
...
In these cases, there is a pressure to deliver a superior level
of service interaction
...
public sector
2
...
(newly emerging) social enterprises
...
These services are
concerned with satisfying social needs in order to benefit society as a whole
...

public charities include entities such as churches, homeless shelters and hospitals,
educational sites such as universities and medical research institutions, which are
considered "statutory public charities
...
The collected funds must then
be used to directly support the organization's initiatives
Their marketing activitis are very much driben by a complex web of ​stakeholder relationships
which creates ​political tensions​ between stakeholder groups
For example,
Crucial ​conflict ​can occur between central and local government
...

2-​ private sectors including charities
organization is initially considered a private NPO, unless it requests, and is authorized to be, a
public charity
...
Private
NPO generally derive much of their income from a smaller pool of donors and from investment
income, and are typically subject to more restrictions than public NPO
...

These donations are in form of charities
...

Strategic Orientations
Lindsay and Murphy (1995) identify three strategic orientations for charitable organisations
Cause Orientation
Funding Orientation
Need Orientation
The idea is that charities move through these stages over time
Cause Orientation
Starting point for all charities
Charity is formed​ in response to a particular problem
Aims of the charity are focused, very clear and shared by all involved in the charity
for example: Unite Against Cancer
unite Against Cancer is a Scottish registered charity that raises money to
aims:

support individuals fighting cancer,
fund research into new cancer treatments,
and promote strategies for cancer prevention
...

Second stage after cause orientation stage
For example, Child’s i foundation is charity for the orphan children and they use fund-raising
activities like obstacle course and triathlon
...
”
For example : Terry Fox
Vision - “informing Canadians of the importance of finding a cure for cancer

3- ​social enterprises
BIS, The department for Business, Innovation and Skills says that a social enterprise is:
“a business with primarily social objectives whose surpluses are principally reinvested for
that purpose in the business or in the community, rather than being driven by the need to
maximise profit for shareholders and owners
...
There is a drive to
make a profit, but any surplus is reinvested into the enterprise and not redistributed as a
reward to owners
...

Social enterprise are not restricted in format
...
All of these can adopt social enterprise values

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