Marketing Services What the Winners Do Differently

John Gregg Principal, Navigate Consulting

Australian Marketing Institute Perth - 28 November 2011

The rise of service businesses

Maturity of product markets and erosion of margin

Decline in manufacturing
Rising standards New service ideas International opportunities

The discipline of service marketing

About 30 years old

Three key academic schools: American, Nordic and French

Good application of the scientific process Related to customer care/customer service

Nature & eras of product marketing

Pre-production Marketing Create Awareness

Production

Induce Trial

Post-production Marketing

Demonstrate Benefits

Consumption

Build Brand Preferences

Source: L. Berry

Nature & roles of service marketing

Create Awareness Pre-sale Marketing Induce Trial Word of Mouth Communication Demonstrate Benefits

Post-sale Marketing

Production Consumption

Build Brand Preferences

Strong influence

Weak influence
Source: L. Berry

Service Differences: The American School

Intangibility

Simultaneous consumption
Perishability Lack of ownership Variability Inseparability
Names: Zeithaml, Bitner, Lovelock, Berry, Parasuraman, Rust

Service Differences: The Nordic School

No product

Process outcomes are key

Names: Gronroos, Moseburg, Gummerson

Service Differences: The French School

Support
The physical support or technical and tangible configuration enabling the output to happen (e.g. ATMs, plane, hotel bed)

Process
The processes, procedures or operations which give access to the output (e.g. to call the bank, to connect to Internet)

Output
The fulfilment of the primary customer need (e.g. to eat, to sleep, to go from A to B)

Pierre Eiglier & Eric Langeard, 2007

For example: The marketing mix for services

Product Promotion Price Distribution (Place) Presence Process

People

Target Market

Examples from key areas

1. The brand

2. Product development
3. Communications

1. Brand strategy for product businesses FMCG

Corporate Company Image

Product Brand

Customer Relationship

How companies manage branded propositions

Perceived value Long term trend Added value Added value

Core proposition

Core proposition

Time

How brand literate companies manage branded propositions

Clear customer segments

Detailed, numeric research

Management of change in the proposition, as tastes change Gives direction to the rest of the company Talent management in the brand function

Brand strategy for service businesses

Services
Corporate Company Brand

Service Description

Customer Relationship

Brand integrity for service businesses

The Customer Journey
Awareness
Corporate marketing

Seeking Information
Sales points

Purchase and Use

Technical documents and service experience

Sale
Termination calls

2. Effective product development

High Contact time Customisation Discretion Capability Focus Front office oriented Professional Services

Drive for Volume & Cost Reduction

Source: Prof. Graham Clark

Professional Service Shop

Low Contact time Customisation Discretion Product Focus Back room oriented

Mass Service Shops

Drive for Flexibility and Customisation

Low

Mass Services

High

Number of customers processed by a typical unit per day

Features analysis of a car

Emotional Features Augmented

Core

Colour, Style Brand

The goods/services spectrum

Relatively Service-Intensive Pure Good Good Hybrid Goods-Intensive Relatively Service Pure Service

Supply of Automatic Lubricating oils ordering systems for oil

Supplying and Oil waste Consultancy financing management service workshop and collection for technical equipment service support marketing etc.
Intangible part of product

Tangible part of product

Models of service 1
High product content
Service sold as an emotional reassurance of enduring product performance (e.g. washing machine maintenance)

Emotional Features Augmented

Core

Service support Infrastructure

PRODUCT FEATURES

Models of service 2
Service used to differentiate a product

Emotional Augmented

Core

Service Features
Service packaged as an integral part of the offer in order to differentiate or add value (e.g. preventative maintenance of computer systems)
PRODUCT FEATURES

Models of service 3
Low margin product sold through a service environment
Emotional features Image and environmental design Service positioning Access to objectives Technology the service support People behaviour Process integrity Product offering
Product is sold through a service infrastructure which appeals to a particular segment (e.g. fast food or supermarkets)

SERVICE FEATURES

Models of service 4
Service only or Added Value offering
The companys proposition is almost entirely without product content (e.g. management consultancy)

Emotional Features Augmented

Core

FEATURES OF A SERVICE OFFER

Molecular modelling principles

Identify the nucleus of the proposition Identify physical and intangible elements

Link the elements

Ring the total entity and define it by a set value Circumscribe it by its distribution method

Describe its brand positioning or face

Molecular modelling
Airlines
Distribution Price

service frequency

vehicle

Transport pre & post flight service food & drink

in-flight service

KEY Tangible elements Intangible elements

Market Positioning (weighted towards evidence)

3. Marketing communications issues for service companies

1. Obviously: Benefit based

2. Enhance word of mouth

3. Professional services reputation to create demand pull 4. Collateral strategy to make the intangible tangible 5. The importance of internal marketing 6. Educative marketing

7. Locus of control and how it affects communications planning

The locus of control as part of communication planning

High

Complexity of the Proposition

Low

Low

Competence of the Customer

High

The contribution of services marketing

The Work

Word of mouth

Repurchase or referral

Reputation

Brand Amplification

Measurement