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Ten Lessons in Services Marketing 1981-2006
2006 Doctoral Consortium Valarie
Zeithaml University of North Carolina at Chapel
Hill
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An Historical Perspective

• Journal of Retailing, Spring 1993
• Building a New Academic FieldThe Case of
  Services Marketing by Berry and Parasuraman
• Tracking the Evolution of the Services Marketing
  Literature, by Fisk, Brown and Bitner
• Services Marketing Self-Portraits, 2000
• Introspections, Reflections, and Glimpses from
  the Experts, by Fisk, Grove, and John, American
  Marketing Association.
• Journal of Marketing, January 2004
• Evolving to a New Dominant Logic for Marketing,
  by Vargo and Lusch

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Services Marketing Lessons Learned

• Lesson 1 7 Ps of Services Marketing
• Lesson 2 Service Quality
• Lesson 3 Service Encounters
• Lesson 4 Service Design and Blueprinting
• Lesson 5 Service Recovery
• Lesson 6 Return on Service Quality
• Lesson 7 Self-Service Technologies
• Lesson 8 Service Tiers
• Lesson 9 Internal Marketing
• Lesson 10 Servicescapes

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Lesson 1 Expanded Mix for Services --The 7 Ps

• Product
• Price
• Place
• Promotion
• People
• All human actors who play a part in service
  delivery and thus influence the buyers
  perceptions namely, the firms personnel, the
  customer, and other customers in the service
  environment.
• Physical Evidence
• The environment in which the service is delivered
  and where the firm and customer interact, and any
  tangible components that facilitate performance
  or communication of the service.
• Process
• The actual procedures, mechanisms, and flow of
  activities by which the service is deliveredthe
  service delivery and operating systems.

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Elements of the 3 Ps

• Contact Employees
• Customer Him/Herself
• Other Customers

People

• Operational Flow of Activities
• Steps in Process
• Flexibility v. Standard
• Technology v. Human

• Tangible Communication
• Price
• Servicescape
• Guarantees
• Technology
• Web Site

Physical Evidence
Process
.
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Lesson 2 Service Encounters

• Occur any time the customer interacts with the
  firm
• The moment of truth
• Critical in determining customer satisfaction and
  loyalty
• Every encounter is an opportunity to
• build trust
• reinforce quality
• build brand identity
• increase loyalty

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Lesson 3 Service Quality
Expected Service
CUSTOMER
Perceived Service
External Communications to Customers
COMPANY
GAP 4
Customer-Driven Service Designs and Standards
Company Perceptions of Consumer Expectations
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The Five Dimensions of Service Quality SERVQUAL
Reliability

• Ability to perform the promised service
  dependably and accurately.
• Knowledge and courtesy of employees and their
  ability to convey trust and confidence.
• Physical facilities, equipment, and appearance
  of personnel.
• Caring, individualized attention the firm
  provides its customers.
• Willingness to help customers and provide
  prompt service.

Assurance
Tangibles
Empathy
Responsiveness
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Lesson 4 Service Design and Blueprinting
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Lesson 5 Service Recovery
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Lesson 6 Return on Service Quality
Key Drivers
Service Encounters
Service Encounter
Service Encounter
Customer Retention
Behavioral Intentions
Service Quality
Profits
Service Encounter
Service Encounter
Source Rust and Keiningham
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Return on Service Quality in a Larger Framework
Customer Equity
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ASCI and Annual Percentage Growthin SP 500
Earnings
Source C. Fornell Customer Satisfaction and
Corporate Earnings, commentary appearing on ACSI
website, May 1, 2001, http//www.bus.umich.edu/res
earch/nqre/Q1-01c.html.
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Lesson 7 Self-Service Technologies

• Self-Service Technologies are
• technological interfaces that allow
• customers to perform entire
• services on their own,
• without direct assistance from employees

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Examples of SSTs in Use

• Internet banking
• MVD auto registration on-line
• On-line auctions
• Home car buying on-line
• Automated investment transactions
• Insurance on-line
• Package tracking
• Internet shopping (Amazon.com, Gap, E-Stamps,
  etc.)
• Internet information search
• Various IVR phone systems (phone banking,
  prescription ordering, etc.)
• Distance learning/training

• ATM
• Pay at the pump
• Automated airline check-in
• Automated hotel check-in/out
• Automated car rental
• Automated filing of legal claims
• Automated drivers license testing
• Automated betting machines
• Electronic blood pressure machines
• Various vending services (food, drink, cameras,
  etc.)
• Tax preparation software
• Self-scanning at retail stores

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Lesson 8 Service Tiers
What segment spends more with us over time, costs
less to maintain, spreads positive word of mouth?
Most Profitable Customers
Platinum
Gold
Iron
What segment costs us in time, effort and money
yet does not provide the return we want? What
segment is difficult to do business with?
Lead
Least Profitable Customers
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Lesson 9 Internal Marketing
Management
External Marketing
Internal Marketing
setting the promise
enabling the promise
Customers
Employees
Interactive Marketing
delivering the promise
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Lesson 10 Servicecapes
The servicescape is the physical environment in
which a service is delivered.

• The servicescape may be highly interactive,
  involving both customers and employees.
• In other cases, the servicescape may be a
  self-service setting, or a remotely delivered
  service.

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Services Marketing Lessons Learned

• Lesson 1 7 Ps of Services Marketing
• Lesson 2 Service Quality
• Lesson 3 Service Encounters
• Lesson 4 Service Design and Blueprinting
• Lesson 5 Service Recovery
• Lesson 6 Return on Service Quality
• Lesson 7 Self-Service Technologies
• Lesson 8 Service Tiers
• Lesson 9 Internal Marketing
• Lesson 10 Servicescapes

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Ten Avenues for Future Service Research 2006
AMA-Sheth Foundation Doctoral Consortium

• Ruth N. BoltonProfessor of MarketingW. P. Carey
  Chair in Marketing
• Center for Service Leadership
• W. P Carey School of Business
• Arizona State University

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Avenues for Future Research

• New Strategic Perspectives on Service
• New Contexts
• Service Brand
• Service Innovation
• Service Metrics and Business Performance
• Customer Service Experiences Over Time
• Customers as Participants in Relationships
• Competing Through Service
• Service Through New Media and Channels
• ???

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A Problem-Driven Approach to Research The
Managerial Context

• A New Organizational Reality
• There has been an international debate about the
  definition of marketing.
• Marketing has become more complex with multiple
  challenges role/value of marketing, emphasis on
  accountability, balancing short term bottom line
  orientation vs. long term brand building and
  organic growth, changing customer dynamics,
  marketing mix issues, evolving media and channel
  relations, etc.
• This requires marketing leaders to assess and
  build marketing organizations with new and
  different skills, competencies, capabilities,
  processes and technology.
• Vargo and Lusch (2004) have a vision of
  marketing at the center of the integration and
  coordination of the cross-functional processes of
  a service-dominant business model.
• Hunt (2004) argues that Instead, it will be
  marketing as a general management responsibility
  of the top team that will play the crucial roles
  of (1) navigation through effective market
  sensing, (2) articulation of the new value
  proposition, and (3) orchestration by providing
  the essential glue that ensures a coherent
  whole.
• Big M marketing

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Avenue (1) New Strategic Perspectives on Service

• Research concerning service and relationships
  must be extended to incorporate a broader set of
  variables. In this way, we can obtain a better
  understanding of how background factors or
  context variables moderate the effectiveness of
  organizational activities on business performance
  outcomes. By background factors, I refer to
  critical organizational activities that act as
  boundary conditions (in experimental parlance) or
  contingencies (in strategic parlance).
• How can we challenge our current thinking?
• Study problems at the intersection of different
  functions marketing, human resources and
  operations decisions are still usually examined
  in isolation.
• E.g. Service Science, Management and Engineering
• Draw on other disciplines social networks,
  system theory etc. This may require the
  development of research teams with diverse
  expertise and skill sets.

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Avenue (2) Service in New Contexts

• Insights can emerge from studying different
  social, economic and cultural contexts
• Emerging markets
• Global markets
• Different populations, such as marketing to the
  bottom of the pyramid
• Government
• Societal implications (e.g., privacy versus
  customization

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Avenue (3) The Service Brand

• B2C and B2B marketers are challenged with
  addressing the importance and relevance of the
  brand at every touch point with customers.
• More work is required establishing value of a
  brand, building brand equity and relating it to
  profitable growth requires
• new insights into customers and their interaction
  with brands (e.g., service experiences)
• new methods/tools for measuring brand value and
  importance.

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Avenue (4) Service Innovation

• Service innovation (rather than innovation in
  goods or technology) is critical to achieving
  competitive advantage and organic growth.
• A key challenge is sustaining innovation, such as
  through solution selling.
• Marketing leaders require a disciplined approach
  to put the right people, processes and
  capabilities in place for innovation.

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Avenue (5) Service Metrics and Business
Performance

• There is intense pressure on marketing leaders to
  connect marketing expenditures to bottom line,
  enterprise-wide performance (ROMI). Despite
  considerable attention on over the last few
  years, marketers are seeking the right metrics,
  processes, and tools for assessing and measuring
  marketing in general, as well as specific
  marketing programs.
• How should we evaluate investments in technology,
  training programs, alliances (e.g., changing
  service suppliers) within the customer equity
  framework thereby linking marketing actions to
  strategic evaluations of these investments?
• How should marketers incorporate intangibles such
  as brand equity, customer satisfaction, branding
  strategies or new product innovation into their
  decisions. Can we extend our treatment of these
  investment decisions from aggregate models of
  shareholder value to individual
  (company-specific) level models?
• How do we develop forward looking metrics and
  peripheral vision? How
  do metrics fit together?

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Avenue (6) Customer Service Experiences Over Time

• Customer choices and clout are increasing while
  marketing productivity is declining (e.g., due to
  fragmentation of media).
• Marketers must involve the customer in the
  marketing process and build a sense of
  collaboration and reciprocity with their
  customers (dual creation of value,
  co-production).
• Longitudinal studies are required that can
  describe path dependent outcomes over time,
  whereby relationships are influenced by how the
  organization responds to customers, competitors
  and markets (and vice versa).

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Avenue (7) Customer as Participants in
Relationships

• RC (2006) identify real time marketing,
  dynamic customer satisfaction and dynamic
  interaction and customization as three topics
  that require additional research.
• This feature the development of dynamic models
  for understanding relationships with customers,
  in which the customer is an active, rather than a
  passive participant, to whom the organization
  responds (rather than the reverse).

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Avenue (8) Competing Through Service

• The role of competition How do organizations
  compete through service?
• This extension is especially challenging in the
  current economic environment which is
  characterized by fuzzy market boundaries that
  allow competition to penetrate from adjacent
  market spaces.
• Implications for dynamic, customized pricing of
  service.

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Avenue (9) Service Through New Media Channels

• Proliferation of marketing options, fragmentation
  of media and convergence of media and channels
  have altered traditional marketing mix and
  resource allocation strategy.
• Given new media for reaching customers and
  prospects, marketers have questions about
• determining the right marketing mix
• measuring the effectiveness of alternatives,
  especially the newest vehicles for delivering
  service (PCs via broadband, 3-GB mobile phones,
  iPods with video, satellite radio, in-store
  digital media, RFID, others)
• Cross-selling of services
• Multi-channel behavior (e.g., online/offline
  retailers)
• Role of WOM and social networks

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Avenues for Future Research

• New Strategic Perspectives on Service
• New Contexts
• Service Brand
• Service Innovation
• Service Metrics and Business Performance
• Customer Service Experiences Over Time
• Customer as Participants in Relationships
• Competing Through Service
• Service Through New Media and Channels
• ???