Service Marketing Free Essay Example

At the time when the economy was developing apace and the significant change on economic structure was progressing, the importance of service industry in economic system has been increasing steadily so to become one of principal drivers for most countries’ economy development, e.g. In the United States, 78% of the GDP is attributed by service industry1. Due to such kind of tendency, the interrelated studies of service bearing high research value were developed, which crown multiple subject areas.

Service Marketing, one of those areas, was not really dealt with until the 1970’s either in Europe or the USA.

Since that time it has grown considerably and has received much attention from various authors. Service marketing is the recognition that contacts between service providers and their customers is the basis of a process of building relationships, and the term service management is used in order to recognize the management of this relationship process. This project will focus on how to manage the service encounter to create customer’s satisfactory experience, which is a prevalent topic of this research area.

Service differentiates product by its four characteristics that are frequently expatiated in marketing literatures, i.e. intangibility, inseparability, heterogeneity, perish-ability. Zeithaml and Bitner (2002) also generalized service as deeds, process, and performance. ‘Customer involvement’ or ‘provider and customer interact’ is the most important phenomenon in all services, which means in a service environment, customers interact with the service firm – its employees, delivery systems, physical facilities, and even other users. The difference only depends on what the level of such ‘firm and customer contact’ is.

Figure 1. Customer Contact Level

Services are divided into High-contact Services and Low-contact Services (Figure 1)2. The former is group of services involves personal visits by customer to facility, such as hairdressing, lodging and medical services. The latter is customer involves little physical elements caused by new technologies development and adoption, especially on the use of information technology that changes the original interpersonal interaction.

Despite the level of contact, because of service’s unique characteristics in the process of consuming service, the core products, as well as the interaction among personnel and customer performance, physical facilities and other visual evidence are regarded as parts of service mix. All of them are important elements that influence customer to value his/her satisfaction. The service consumption has a steady process of customer’s purchase behaviour that is driven from needs or expectations to further indications e.g. satisfaction or not, retention or avoid. In this process (Figure 2)3, Prepurchase Stage (focus on individual needs and expectations) and Post-purchase Stage (focus on individual evaluations) are lacking in such interaction between customer and personnel. Therefore, Service Encounter Stage is the core of managing service quality, delivering service, and enhancing customer’s satisfaction.

Figure 2. The Purchase Process for Services

A service encounter is a period of time during which customers interact directly with a service (Chase and Dasu, 2001). Depending on the service, encounters can be very brief or extend over days. For instance, extended service encounters can last 30 minutes, or consist of a hospital stay of several days. It encompasses face-to-face interactions and interactions with the physical evidences. Amongst these interactions, customer can estimate and evaluate received service, and provider has chance to mold and manage customer’s perceptions of the service quality and individual satisfaction. As the service encounter is critical to customer satisfaction and evaluation, it is regarded as ‘Moments of Truth’.

Summarizing above-mentioned, thus, to create customer satisfaction via managing the service encounters, certainly, it is process that service organisation measures and evaluates the service encounters so to solve problems via redesigning or rebuilding the service, e.g. service systems. Based on this concept, the Service Quality is an important element to evaluate the customer’s perception of service encounter.

As marketing perspective, ‘Quality’ is that goods provided to match customer’s prior needs or expectations (Lockwood and Andrew, 1994). Because of service’s specialty, compared with tangible product, service quality is an abstract and intangible concept. Service quality used to be defined as the extent to which a service meets customers’ needs or expectations (Parasuraman et al., 1993, 1995). So, discovering the expectations that the participants in a service encounter bring to an interaction is an important prerequisite for understanding personnel and customers on both sides of the encounter. Customer expectations being in prepurchase stage (Figure 2) embrace several elements, including desired service, adequate service, predicted service, and a zone of tolerance (Figure 3).

Figure 3. Factors Influencing Customer Expectations of Service

* Desired Service – is the type of service customers hope to receive. It is the ‘wish-for’ level, since most companies cannot achieve.

* Adequate Service – the minimum level of service customer can accept without dissatisfactory.

* Predicted Service – is the level of service that customers anticipate receiving. It will affect customer to define the adequate service directly in that moment, e.g. if a bad service is predicted, the adequate level will be lower than good service predicted.

* Zone Of Tolerance – the scope to which customers are willing to accept the variation between the desired service and adequate service.

In service process, the customer’s perceived service quality is the differences between his/her above-expectations and perceived service, e.g. if expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs. The quality of service is less easily testable and evaluated before using it. Setting up the standard service quality would be the aims for the organization. The benchmark of standard quality is derived from the customer’s perception of service delivery and their expectation. From focus group research, Parasuraman et al., found a methodology, which is called SERVQUAL having 5 dimensions as follows:

* Tangibles: Physical facilities, equipment and appearance of personnel.

* Reliability: Ability to perform the promised service dependably and accurately.

* Responsiveness: Willingness to help customers and provide prompt service.

* Assurance (including competence, courtesy, credibility and security): Knowledge and courtesy of employees and their ability to inspire trust and confidence.

* Empathy (including access, communication, understanding the customer): Caring and individualized attention that the firm provides to its customers.

In the service encounter stage, the provider can apply 5 dimensions to compare customer expectation and perceived service to assessing levels of service quality. If the perceived service cannot match customer’s expectations, it will cause Service Quality Gap (Figure 4)4. The information on the gaps can help managers diagnose where performance improvement can best be targeted. The largest negative gaps, combined with assessment of where expectations are highest, facilitate prioritization of performance improvement. Equally, if gap scores in some aspects of service do turn out to be positive, implying expectations are actually not just being met but exceeded, then this allows managers to review whether they may be ‘over-supplying’ this particular feature of the service and whether there is potential for re-deployment of resources into features which are underperforming.

Figure 4. Seven Service Quality Gaps

Expect the service quality dimension, service encounter can be managed or evaluated by other interrelated elements. As Lovelock (2004) indicates that a service business can be viewed as a system made up of 3 overlapping elements, i.e.:

* Service operations, where by inputs are processed and the elements of the service product are created.

* Service delivery, during which final ‘assembly’ and deliver to the customer.

* Service marketing, embraces all points of contact with customers, e.g. advertising.

In addition, due to the service’s intangibility, inseparability, heterogeneity and perish-ability, the service encounter has interactions with the multiple factors in these three systems, such as physical environment, contact personnel, and other users, etc (Figure 5 & 6)5.

Figure 5. High-Contact Service Marketing System

Figure 6. Low-Contact Service Marketing System

The Service Theater theory developed by Grove and Fisk (1983), consisting 4 elements: Setting, Actors, Audiences, and Performance, is very useful to evaluate and manage those multiple interactions in service encounter.

1. Setting

Although the service is intangible, the delivery of service needs to occur in a physical environment so to affect the interaction between staff and customer. In theater theory, ‘setting’ represents the ‘service environment’, also called ‘servicescapes’ (Bitner, 1992), where to provide the services. It is comprise of a front region designed to appeal to customers and to facilitate service delivery and a back region housing the operational support system of service. Especially in high-contact services, the organizations could use the different color, texture and symbolic cues to provide customers distinctive nature and quality of the service experiences. There are 3 aspects can be addressed to implementation of managing service environment in service encounter.

* The Impact of The Ambient Conditions – the people’s five senses would guide the organization to design the ambient conditions: listen – music, sight – colour, etc. These factors will influence the customer emotion and satisfaction.

* Spatial Layout and Functionality – the narrow and unreasonable facilities and layout still may bring uncomfortable and inconvenient for either consuming or operating. So, the arrangement of the facilities need consider whether is helpful to gain the customer satisfaction.

* Signs Symbols and Artifacts – this dimension is often emerged from the low-contact services, e.g. someone buys goods via online-shop, there will be some notices on website to show how to process this purchase. It is not only for guidance, but also to communicate company’s image.

Generally, organisation’s services in the ‘person to person contact’ – service encounter, scrupulous layout and design of service environment can lead achieving organisation’s goals. For successfully delivering services, organisation must provide appropriate physical facilities so to improve the productivity of service’s delivery, operation, and marketing.

2. Actors

‘Actor’ in the theory means the ‘contact personnel’ who is the main channel to interact with customers, so, the actors’ role could significantly influence customers’ perceptions of service satisfaction. There are several factors of contact personnel to affect customer’s service experience, including dressing, behaviour, attitude, professionalism, etc. The service staff is one of the most visible elements of the service, delivers the service; furthermore, the frontline staff represent the service firm, and its brand. When customer use the service, the frontline can be seen as the entire firm, and the staff’s service will determine if the brand promise gets delivered.

Moreover, according to previous-mentioned SERVQUAL research, for the customer’s complaints caused by service quality gaps, the personnel can help them solve those problems professionally and perfectly that it is important to assure the service quality degree. Thus, company must provide appropriate trainings to its staffs leading them to keep potentially destructive information undisclosed; guard against the intrusion of personal strife; and ensure a well-devised service delivery through forethought. Generally speaking, contact personnel have critical influences either in the process of service encounter or for the creation of the service quality.

3. Audiences

Every theatrical performance is designed to appeal to a particular audience. In the service encounter, the ‘audiences’ is the ‘service customers’. During the process, due to inseparability of service’s production and consumption, customers actually are the co-producer of services so that their behaviours can affect the final service performance (Lovelock, 1981).

Bitner et al. (1997) figures that service provider can identify customers as ‘potential employees’, assisting them to be their roles. Approaching contact personnel’s education and the extra promotion to improve the efficiency of customers’ participations, and to increase the productivity and satisfaction of services that are co-produced by customers themselves.

4. Performance

Within the service process, the interaction between customer and contact personnel is called ‘performance’, which is the core of service encounter. In theater theory, the service performances created by the interactions among service environment, contact personnel and customer are the visible service quality, consisting tangible product quality, service speed, service flow, and system support, and so on. The perceived performance will become customer’s experience of this service, of course, customer satisfaction is included.

The theater theory emphasizes to discuss service encounter as holistic perspective, and to reify its process as the interactions between above-mentioned four dimensions. Because the theory integrates various dimensions of service consumption, it is not only useful to research service, but also is an instrument convenient to design, implement specialized service, and evaluate the service. Therefore, in conclusion, the service company seeks to enhance the customer’s service satisfaction via managing the service encounter stage, firstly, it cannot ignore to find out and understand what the customer’s expectations are. Then, it must produce and control its service quality as a high degree, because the customer’s satisfaction actually is result of match of expectation and service quality. Of course, it also cannot forget the variables whatever is mentioned above. Only all of these dimensions are harmonized very well, the customers’ experiences will reach the satisfactions what they expected.