This slideshow talks about service delivery, role of employees and customers in service delivery, service blueprint, physical evidence, pricing of services, methods of service promotion etc

1. Department of MBA
IMS Engineering College,
Ghaziabad
Marketing of Services
UNIT 3
Delivering, Pricing and Management of Service Promise

2. Role of Employees in
Service Delivery
• The employees are the true assets of an
organization. They are the ones who contribute
effectively towards the successful functioning
of an organization. They strive hard to deliver
their level best and achieve the assigned
targets within the stipulated time frame.
• Employees are the organization in the eyes of
the customers, they are the marketer and the
brand. For customers, employees are the
‘points of contact’

3. The Service Marketing Triangle
(Employees)
(Management)

4. Impact of Employee behaviour
on Service Quality Dimension
• Satisfied employees make for satisfied
customers (and satisfied customers in turn,
reinforce employees’ sense of satisfaction)
• Front line employees (those who interact with
the customers directly e.g. receptionist,
salespersons etc) and the ones who support
them directly from behind are critical for
service delivery – Wilson

5. Impact of Employee behaviour
on Service Quality Dimension
• Service delivery is greatly impacted by the
service employee as service delivery and
consumption takes place simultaneously (at the
same time). Service employee is directly in
contact with the customer.
• In the next slide, ‘service profit chain is shown’
through this diagram, it can be easily understood
that profitability, customer loyalty, employee
satisfaction and productivity are inter-related

6. The Service Profit Chain
• The service profit chain suggests that there are critical
linkages between internal service quality, employee
satisfaction and productivity, the value of services
provided to the customer and ultimately customer
satisfaction, retention and profits.

7. Role of Customers in
Service Delivery
• Customer’s level of participation in the service
delivery process can be:
Low: customer presence not required during
service delivery e.g. fast food home delivery
Moderate: Customer inputs required during
service delivery e.g. haircut, restaurant etc
High: Customer co-creates the service product
e.g. counselling, consulting etc

8. Customer Roles in
Service Process
• The various customer roles are:
Passive customer: e.g. patient
Learning: customer can be a source of learning
Resource: Customer provide important inputs
Co-producer: Customers co-create services
Auditor: customer evaluates service quality
Marketer / promoter: Recommends service
(WOM)

9. Service Blueprint
• To have an effective service delivery process, it is
necessary to document the flow of activities and
map them carefully. This is achieved through a
‘service blueprint’.
• According to Zeithaml and Bitner (2000), a
service blueprint visually displays the service by
simultaneously depicting the process of service
delivery, the points of customer contact, the role
of customers and employees, and the visible
elements of the service (refer to figure in the next
slide)

10. Steps to build Service Blueprint
• Identify the process to be blueprinted
• Identify the customer or segment targeted
• Map the process from the customer’s point of
view
• Map contact employee actions, onstage and
backstage
• Link customer and contact person activities
needed to support functions
• Ask for evidence of service at each customer
action step

11. Advantages of Blueprinting
• Brings clarity to the service delivery process
• Enable identification of critical incidents
• Provides insights on areas where employees need
to be trained
• Enables further improvement of the process
• Helps to put coordination activities in
perspectives
• Can be used to assess and control costs
• Facilitates internal and external marketing

12. Service Blueprint Example

13. Physical Evidence
• According to Zeithaml and Bitner (2003) Physical
Evidence is ‘The environment in which the
service is delivered and where the firm and
customers interact and any tangible component
that facilitate performance or communication of
service’
• Bitner (1992) introduced the nomenclature of
‘servicescape’ to the physical facility where the
services are delivered and offered/performed.

14. Importance of Physical
Evidence/Servicscapes
• It helps to package the service offering for the
customers
• Servicescapes can appeal to the emotions of a
person and deduce a favorable response from the
customers
• It can act as a facilitator to shape customer’s
behaviour
• It can act as a differentiator to distinguish a
service provider from its competitors e.g.
McDonalds’ restaurants can be identified from its
interior designs

15. Types of Servicescapes
• Servicescapes can be of two types:
Lean: design of physical evidence for a lean
Servicescapes will be simple. Services requiring a
simple structure, few elements to deliver the
service are referred to as lean servicescapes. E.g.
post office
Elaborate servicescapes: Services requiring a
complex structure, with many elements and forms
is referred to as an elaborate servicescape. E.g.
heart hospital, bank, college

16. Classification
of Physical Evidence
Atmospheric & image
Perspective
These include controllable
factors of internal and external
environment such as – Layout &
interior decor, signage and
ambience of the service.
Contact Person Perspective
This focuses on the contact
personnel – dress code,
cleanliness, behaviour etc. These
form a lasting impression on the
customer’s perception of the
service.
Consumer Use Perspective
This focuses on the degree to
which a servicescape is designed
around the customer. This
includes – billing statement,
stationery (cards, brochures),
Web Page, Tickets etc
Operational Perspective
This includes both production
and delivery of service The
physical evidence includes –
equipment, signs used for
technology (instructions in an
ATM) and cleanliness
Location Perspective
A good strategic location does
most of the work for the service
provider, specially in hospitality,
banking, retail outlets etc. For
day to day services, customer
prefer convenient location.

17. Pricing of Services
• Pricing the services is an immensely
challenging task. The characteristics of
services is very different from that of products.
The characteristics such as – intangibility,
inseparability, Perishability etc make the task
complicated. Services also vary on experience
and credence (acceptance, credibility)
attribute.

18. Service Pricing Objectives
• Maintenance of existing customers
• Attraction of new customers
• Cost coverage
• Long term survival of the company
• Achievement of satisfactory profits
• Sales maximization
• Market development
• Achievement of satisfactory market share
• Establish sales stability in the market

19. Important
Service Pricing Strategies
• Full Cost pricing: this strategy takes into account
fixed as well as variable cost of service
generation. The issue with this approach is that it
is not market driven, it is also called cost plus
pricing
• Going rate pricing: In this scenario, the pricing is
done as per the prevailing competition in the
market. E.g. pricing of telecom services
• Product Line Pricing: This pricing strategy offers
different levels of service at different prices. E.g.
economy and business class seats in a flight

20. Important
Service Pricing Strategies
• Penetration Pricing: Prices of the service are set at a
low level at the time of entry. This is done in order to
grab a large market share
• Skimming Pricing: The service is usually priced high in
the beginning and later on the price are reduced when
the competition is increased.
• Value Pricing: According to Cahill (1994), when a
fairly low price is set for a high quality service, it is
called value pricing. Company decides the price based
on what consumer is willing to pay for the service.
• Other popular methods of pricing are price bundling
(pure and mixed), captive pricing etc.

21. Managing Service Promise
• Need for marketing Communication:
To Differentiate
To Remind
To Inform
To Persuade
In the SERVQUAL model, the 4th gap is the
communication gap. It arises due to difference in
service promised to the customer and service that
is delivered. In order to bridge this gap, the
service companies must carefully make service
promises and once a promise is made, they must
keep it.

22. Why managing service promise
is important?
• Discrepancies between what is communicated
about a service and what a customer receives can
powerfully influence customer’s perception of
service quality.
• The factors that contribute to communication
challenge include:
Inadequate management of service promise
Inadequate management customer expectations
Inadequate customer education
Inadequate internal marketing communication

23. The Marketing Communication
Process
PROMOTION
PLANING: Internal
& External Analysis
Setting Marketing
Objectives
Allocation of Budget
Selection of
Promotion Mix
(Advertising, Sales
Promotion, Personal
Selling, PR,
Publicity)
Coordination and
Integration
Measuring
Effectiveness

24. Approaches for managing
Service Promise
Creating effective Service
Communications
Coordinate External
Communications
Make realistic Promises
Offer services guarantees
Carefully
Goal: Delivery is greater than
or equal to promises

25. Role of Advertising
• Advertising is paid form of promotion
(communication) by the service provider with
its target audience.
• 5 Ms of advertising (Kotler & Keller, 2006):
Mission, Money, Message, Media and
Measurement (of effectiveness)
• Advertising can be done in an integrated way
by using a mix of media (TV, Print ads,
internet, hoardings and billboards etc)

26. Role of Advertising
• Advertising has an important role in managing the
service promise as
Advertising corrects the misconceptions of the
target audience
It reminds and reinforce the service idea
Provides support to the sales force
Can be used for both long term image building
and boosting quick sales
Reaches mass audience

27. Role of Personal Selling
• Personal selling involves sales of service
product through sales force. This involves
maintaining a sales force and hence a sales
department.
• Sales force performs the functions like:
prospecting, targeting, communicating, selling,
servicing, information gathering etc.
• Personal selling can be a challenging job.

28. Role of Personal Selling
• Personal selling is most effective in building
buyer preference
• Is it interactive and can tailor presentations
according to buyer’s needs
• It is two way communication.
• The information provided to the customer is
current and updated
• Personal selling helps in relationship building

29. Role of Sales Promotion
• Sales promotion consists of offering short term
incentives to encourage purchase or sale of
service (Kotler et al. 2006)
• Sales promotion can include – coupons,
rebates, price off (discounts), contests, lucky
draws etc.
• Sales promotion is most effective when used
along with other promotional techniques

30. Role of Sales Promotion
• Sales promotion has a great role to play. It is
used to gain attention of the customers to using
the service.
• Sales promotions offers strong incentives to
the customers to purchase the service.
• Sales promotion has the following demerits –
the impact of sales promotion is short lived,
secondly, it does not contribute to long term
creation of brand value.

31. Public Relations (PR)
• PR focuses on organization’s interaction with
internal and external community.
• PR is a part of marketing strategy and
incorporated into the marketing communication
mix
• PR brings trust and commitment and control
mutuality into marketing communication process.
• Service marketing must focus on a ‘pro-active’
PR rather than a ‘reactive’ PR

32. Public Relations (PR)
• Strategically designed PR along with efficient
marketing communication tools can fill the
potential service gaps (refer to dimensions of
service quality)

33. Publicity
• Publicity is non paid form of promotion, it is also
called Word of Mouth (WOM), it happens as
other promotion techniques play their role
• Consumers believe publicity more in comparison
to paid ads because publicity is mostly experience
based
• Publicity can reach those customers who avoid
advertisements and sales force
• It can reach a wider audience at negligible cost
• Negative publicity however may be harmful for
marketing of a service