Flower of service approach capturing and adding value.
MKT 3210 Services Marketing
Questions for Mid-Term Exam I (20%)
You will be given 2 or 3 questions from the list below (depending on the difficulty of questions). You will have seventy minutes to answer these questions.
Read carefully all questions!
Good luck!
- “The 4Ps are all a marketing manager needs to create a marketing strategy for a service business.” Prepare a response that argues the contrary and justify your conclusions. Apply the 7Ps marketin mix model. (Pg44-45)
There are 4 basic strategic elements or 4 Ps that developing strategies to market manufactured goods. Actually 4 Ps of goods marketing are not good to deal with the issues arising from marketing services and have to be adopted and extended. Also,marketing mix doesn’t cover managing the customer interface. In order to extend the marketing mix by adding 3Ps connecting with service delivery; process, physical environment,people. So,in all these 7 elements called 7Ps of service marketing which represent the ingredients required to create viable strategies for meeting customer needs profitably in a competitive marketplace.
Product elements. Planning the marketing mix begins with creating a service concept that will offer value to target customers and satisfy their needs better than competing alternatives. Service products consist of product that responds to the customer’s primary need and an array of supplementary service elements that are mutually reinforcing value-added enhancement that help customers to use the core product more effectively.
Place and Time.
Pg44-47
Explain the “Flower of Service” concept and identify each of the petals. What insights does this concept provide for service marketers? pg 108-109
flower of service approach capturing and adding value.
Like a flower, any service offering start-up should strive to develop at the beginning a core that offers the basic functionality, the functionality that the users are willing to pay for and, later on, an array of complementary services which in-term will help retain customer by adding value to the core...not the other way around. In flower terms: the pistil is the one that draws users to the application/service offering the functionality that solves users pain points and the corolla is just a bunch of additional services/features that sets the core apart.
Ok, enough with the start-up-biology lesson, time for some concrete examples. Every service, be it on-line or off-line, has a core that is backed-up by various supplementary services. This supplementary services can be classified in 2 categories: facilitating services and enhancing services.
The facilitating services are needed for core service delivery and they help in the use of the core service/product. Here are some examples of facilitating services: billing, payment, order tacking, information - it is up to each management team in part to decide which are the facilitating services for their business.
On the other hand the enhancing services are meant to add extra value to the customers (you can think about them as additional features). Enhancing services might consist of: customer support, consulting, hospitality - like in the case of the facilitating services the enhancing ones are not set in stone, so it's up to you to decide what's enhancing and what not.
For companies that go for the cost leadership strategy, the number of supplementary services that they offer, be it enhancing or facilitating, is quite small opposed to the number of services offered by companies that aim for differentiation.
A good example of flower of service approach, from the Internet business, is Google. At the beginning there was only the search engine, and it still is the core of the company, later on came Analytic, Docs or Translate.
The mistake I see being made by a lot of start-ups is that they try to sell petals and wonder why they are not successful or why they have huge customer acquisition costs. Bear in mind that a perfect core is nothing without good petals butgood petals will not compensate for a poor core.
- Describe the relationship between customer expectations and customer satisfaction.
Customer expectations and satisfaction are closely related. Customers feel less satisfied when they expect something from a company but do not get what they expected. On the other hand, if they have low expectations of a company and are pleasantly surprised, they may feel more satisfied than if they had high expectations and feel they have been let down. Interestingly, companies are not always able to accurately predict what customers will expect from them, and systems of gathering and analyzing feedback are typically important.
Often, a customer's level of satisfaction is dependent on the expectations he has for a company. For example, if he expects a company to offer prompt service, but he encounters delays in the processing of his order, he may feel unsatisfied. Likewise, if he believes a company will provide a quality product and his purchase seems cheaply made, he may feel unhappy. Additionally, a customer may feel dissatisfied with a company if he believes his business is valued, but a company proves otherwise by allowing its employees to ignore him, behave rudely, or fail to respond appropriately to complaints.
In many cases, customer expectations and satisfaction are influenced by the advertisements a company uses to sell its products or services. For example, if a company advertises that it processes orders within a certain time frame but then fails to live up to this, its customers are likely to feel misled by the advertisement and dissatisfied. Likewise, if a company advertises itself as putting customer servicefirst, but then shows only an average level of concern in this area, its customers are likely to be less satisfied. In such cases, the connection between customer expectations and satisfaction is one the company influenced with its advertising claims.
Sometimes a customer's own preconceived ideas about a company — unrelated to advertising — can also affect the relationship between customer expectations and satisfaction. For example, if a customer believes a company has the expertise to quickly and accurately diagnose an equipment issue, but the company is unable to provide a diagnosis right away, the customer may feel let down. The same may hold true if the customer expects a company to accept special orders but it refuses to do so.
Many companies make the mistake of trying to meet assumed expectations rather than learning what the customers' expectations really are. If the expectations are assumed, the company's priorities may seem off kilter due to the fact that is does not really understand what its customers want or consider most critical. In such cases and in light of the relationship between customer expectations and satisfaction, finding effective methods of gauging customer needs may prove critical for the company's success.
4. Why do marketing, operations, and human recourses have to be closely linked in services but less so in manufacturing? Give examples. Pg 49 b cfotala
- What is so distinctive about services marketing that it requires a special approach, set of concepts, and body of knowledge (explain eight common differences between services and goods, their implications and marketers action to deal with these differences)?
The eight common differences are:
Most service products cannot be inventoried
Intangible elements usually dominate value creation
Services are often difficult to visualize and understand
Customers may be involved in co-production
People may be part of the service experience
Operational inputs and outputs tend to vary more widely
The time factor often assumes great importance
Distribution may take place through nonphysical channels
There is a major difference between goods and services based on both tangible as well as intangible factors. Goods are basically objects or products which have to be manufactured, stored, transported, marketed and sold. Lays chips, BMW, Adidas are some companies manufacturing goods.
Thus the difference between goods and services is based on tangibility. Where goods are tangible in nature, services are mostly intangible. The classic rules which defined services were intangibility, heterogeneity, perishability and variability. However, there are several new rules to define the difference between goods and services.
8 points help you in noticing how goods and services differ.
Ownership is not transferred – When buying a service, the service ownership is not transferred to the end customer. If you buy a car then the car is yours. But if you buy a ticket for an airline, then the airline is definitely not yours.
Intangibility – How do you measure service? In a restaurant, the dish can be measured, but the efforts gone in making the same dish by two different chefs cannot be measured from the customer end. Same goes for large service corporates like Accenture and Infosys. The time and effort gone for giving service to the customer is intangible. Both ownership and intangibility are old school differences between goods and services.
Involvement of customer – When comparing the difference between goods and services we have to look at the involvement of customer as well. In services involvement of customers is much more than in products. For example – ATM’s are services wherein customer has to use the machine. The same goes for vending machines as well as for self service restaurants. Today ice cream chains like Hokey pokey and food chain like Subway have more than 50% involvement of customer where the customer gets to decide the ingredients they want in their ice cream / Sub.
Quality – In case of products, mass manufacturing is common. And mass manufacturing means uniformity. However, services involve a lot of manual labour due to which the quality may vary each time. Uniformity in services is a factor which each service owner tries for. For example – The major challenge of food chains like Subway, Pizza hut and dominos is to give the same quality over and over again, whereas in local restaurants the quality of food may vary time to time from the same restaurant.
Evaluation of services is tougher – As quality varies from time to time and the involvement of customer is maximum, evaluation of different services becomes tougher. For example – HDFC has more number of ATM than SBI. Thus we can evaluate that HDFC service is better because they have more reach to the end customer. But how do we evaluate how a barber cuts your hair.
Inventories are absent – Production and consumption of services happens at the same time. This does not mean that the raw material is not present to provide the service. For example in a restaurant, a dish is made only after you order it. The raw material and the chef might be present. But the production does not begin unless and until there is a customer to consume the service.
Time is very important in services – Because inventories are absent in services, and because production and consumption is at the same time, time is a very important difference between goods and services. The keyword here is “delay”. There should be no delay in providing the service. Thus the cab should arrive on time, the food should be prepared by time and the trains should run on time. Because time is important.
Thus the difference between goods and services is based on many different factors. These factors are become more and more acute as the services sector rises in demand.
6. What are the implications of the fact that service environments are perceived by customers holistically (no dimension of design can be optimized in isolation, because everything depends on everything else)? Give examples of match and mismatch (don’t use examples from the text book). (sfotkala)