CHAPTER EIGHT • PRICING STRATEGIES FOR SERVICES 185 chairs, restaurants put a sizeable mark-up on the food and drink items consumed. Long- distance phone call pricing reflects a combination of distance and time rates. Transportation firms have traditionally charged by distance, with freight companies using a combination of weight or cubic volume and distance to set their rates. Another straightforward pricing strategy involves charging a flat rate, like postal charges for domestic letters below a certain weight or a zone rate for packages that groups geo- graphic distances into broad clusters. These policies have the virtue of consistency, but they ignore relative market strength on different routes. Price Bundling Many services unite a core product with various supplementary services, such as a cruise ship where the tariff includes meals and bar service. Should such service packages be priced as a whole (referred to as a "bundle"), or should each element be priced separately? If people prefer to avoid making many small payments, price bundling may be preferable—and it's certainly simpler to administer. However, if customers dislike being charged for product elements they don't use, itemized pricing may be better. Bundled prices offer a guaranteed revenue from each customer, while giving users a clear idea in advance of how much the bill will be. By contrast, unbundled pricing provides customers with flexibility. Some firms offer an array of choices. Mobile phone subscribers, for instance, can select from among several service options. One choice involves paying a small monthly fee for a basic service and then extra for each call. Another alternative is to pay a higher flat rate in return for several hundred minutes of calling time. At the top of the pricing scale is the option that provides business users with unlimited access to long-distance calls over a prescribed area. Discounting To attract the attention of prospective buyers or to boost sales during a period of low demand, firms may discount their prices, often publicizing this price cut with coupons or an advertising campaign. Marketers of subscription services, such as cable television, Internet service, cellular telephone service, or credit cards, often employ a strategy of offering the service at a discount—or even free of charge—for an introductory period. There are risks to a discounting strategy. It dilutes the contribution from each sale, may attract customers whose only loyalty is to the firm that can offer the lowest price on the next transaction, and may give a bargain to customers who would have been willing to pay more. Nevertheless, selective price discounting targeted at specific market segments can help to fill capacity that would otherwise go unused. Volume discounts are sometimes used to cement the loyalty of large corporate customers, who might be inclined to spread their purchases among several different suppliers. Rewarding smaller customers by occasionally offering them a discount off their next purchase may also build loyalty. price bundling: the practice of charging a base price for a core service plus additional fees for optional supplementary elements. discounting! a strategy of reducing the price of an item below the normal level. Who Should Collect Payment? Sometimes firms choose to delegate provision of supplementary services like billing to an intermediary. Although the original supplier pays a commission, using a third party may still be cheaper and more efficient than performing those tasks itself. Commonly used intermediaries include travel agents who make hotel and transportation bookings; ticket agents who sell seats for theaters, concert halls, and sports stadiums; and retailers who sell services ranging from prepaid phone cards to home and equipment repair. Where Should Payment Be Made? Payment for many services is collected at the service facility just before or immediately following service delivery. When consumers purchase a service well in advance of using it, there are obvious benefits to using intermediaries that are more conveniently located, or allowing payment by mail. (Airports, theaters, and stadiums, for instance, are often situated 186 PART THREE . SERVICE MARKETING STRATEGY some distance from where potential customers live or work.) A growing number of ser- vice providers now accept credit cards for telephone bookings and sales over the Internet. The simplicity and speed with which payment is made may influence the customer's perceptions of overall service quality. Thus service firms should pay special attention to providing payment collection procedures that are both efficient and effective from both the customers' and the companies' perspectives. Poorly designed payment methods may encourage "jaycustomer" behaviors like delayed payments—or worse yet—no payment at all. For example, one driver told a journalist that he refuses to pay tolls at New Jersey's automated tollbooths "on principle, because the toll plazas are badly designed and irritat- ing—the state set up a system so bad, you have to abuse it. When Should Payment Be Made? Two basic options are to ask customers to pay in advance (e.g., an admission charge, air- line ticket, or postage stamps), or to bill them on completion of service delivery (e.g., restaurant bills and repair charges). Occasionally a service provider may ask for an initial payment in advance of service delivery, with the balance being due later (e.g., manage- ment consulting).This approach is also quite common with expensive repair and main- tenance jobs, especially when the firm—often a small business with limited working capital—must buy materials up front. Asking customers to pay in advance means that the buyer is paying before the benefits are received. But prepayments may be advanta- geous to the customer as well as to the provider. Advance payment saves time and effort, especially with frequently purchased services. How Should Payment Be Made? Service businesses must decide on the types of payments they will accept. Although cash is a simple payment method, it raises security problems and is not always convenient for customers (especially for large purchases). Checks are convenient for customers, but sellers need to develop controls to discourage invalid payment. A $15 to $20 charge for returned checks is not uncommon at retail stores. Credit cards are convenient and have the advantage of being accepted worldwide, regardless of currency. Businesses that refuse to accept such cards increasingly find them- selves at a competitive disadvantage. Prepayment cards simplify the process of paying for services like road and bridge tolls or telephone calls. Internet service provider World Online has introduced a new type of prepayment card in the United Kingdom that oper- ates on the prepaid model popular in the mobile phone industry. British consumers buy the cards from local retailers and then use a PIN number located on a scratch-off panel on the back of the card to open an account with World Online. These cards are mainly aimed at teenagers, but they are also marketed to the 50 percent of British adults who don't have credit cards. World Online plans to roll out the service across the rest of Europe. 23 Smart cards store value in a microchip embedded within the card. To accept payment in this form, however, service firms must first install card readers.This sophisticated payment option requires partnerships between banks, retailers, and telephone companies. Working together, these partners can provide a smart card that serves as an "electronic wallet," enabling customers to download digital money to their cards from their bank accounts from an ATM or by telephone, using a special card reader. The latest innovation is card readers that can be attached to an account holder's computer. As a student, you may have personal experience with this form of payment, since many universities provide students with personalized smart cards that can be used to buy drinks from vending machines, make photocopies, pay fines for late return of library books, and many other purposes. Other payment procedures include directing the bill to a third party for payment and using vouchers as supplements to (or instead of) cash. Insurance companies often designate approved garages to inspect and repair customers' vehicles when they are CHAPTER EIGHT • PRICING STRATEGIES FOR SERVICES 187 involved in accidents. To make life easier for the customer, the garage bills the insurance company directly for the work performed. This saves the customer the effort of paying personally, filing a claim, and waiting for reimbursement. Vouchers are sometimes pro- vided by social service agencies to elderly or low-income people. Such a policy achieves the same benefits as discounting but avoids the need to publicize different prices or require cashiers to check eligibility. In the business-to-business environment, most suppliers offer credit accounts, payable monthly, which generate membership relationships with customers. Online payments are often made through third-party firms like Clareon that specialize in man- aging electronic transactions between customers and vendors (Figure 8.7). Communicating Prices to the Target Markets The final task is to decide how the organization's pricing policies can best be commu- nicated to its target markets. People need to know the price for some product offerings well in advance of purchase. They may also need to know how, where, and when that price is payable. This information must be presented in ways that are intelligible and unambiguous, so that customers will not feel misled. Managers must decide whether or not to include information on pricing in advertisements for the service or on the com- pany's Web site. Advertising sometimes relates the price to those of competing products or to alternative ways of spending one's money. Customers expect salespeople and ser- vice representatives to be able to give prompt, accurate responses to queries about pric- ing, payment, and credit. Good signage at retail points of sale saves staff members from having to answer basic questions on prices. Finally, when the price is presented in the form of an itemized bill, marketers should ensure that it is both accurate and intelligible. Hospital bills, which may run to several pages and contain dozens of items, have been much criticized for inaccuracy. 24 Telephone bills, too, used to be confusing. They were often printed on small sheets of "Suveny, if I'm going to take irvditfiir tins fxtyment jxiiwtigm shift, lint hud dii/rtti well better teH me what it all means!" The check's not in the mail. There's tic faking it m the new economy. Real success requires something more. Something better. Weteome to Clareon, the B2B payment solution that makes paper checks viriuaiiy obsolete. Ctoraon tmabfea internet commerce with cross platform ease. Global access. State-of-the-art security Breakthrough efficiency. in otfter words, everyirwno, electronic payment needs !o be. www.clareoo.net clareon the business payment network FIGURE 8.7 Clareon Offers Internet-Based B2B Payment Services 188 PART THREE • SERVICE MARKETING STRATEGY paper, crammed with technical jargon and it was hard to determine how the total charge due was computed. But many firms have worked to develop new and clearer formats that are easier for consumers to interpret. Conclusion Customers pay more to use a service than just the purchase price specified by the sup- plier. Additional outlays may include related financial costs (such as travel to the service site), time expenditures, psychological and sensory burdens, and physical effort. Customers are often willing to pay a higher price when the nonfinancial outlays are minimized, since the value of a service reflects the benefits that it delivers to the cus- tomer minus all the associated costs. Pricing strategy must address the central issue of what price to charge for a given unit of service at a particular point in time, no matter how that unit may be defined. It's essential that the monetary price charged should reflect knowledge of the service provider's fixed and variable costs, competitor's pricing policies, and the value of the ser- vice to the customer. Study Questions and Exercises 1. Is pricing strategy more difficult to implement in some service industries than in others? If so, why? Be specific and give examples. 2. Of the various nonfinancial outlays incurred by customers, which are likely to be the most significant in situations involving: (a) traditional retail banking; (b) home banking; (c) going to the movies; (d) taking a taxi in an unfamiliar city; (e) surgery? 3. Why is cost-based pricing (as it relates to financial costs) particularly problematic in service industries? 4. In what ways does competition-based pricing work in favor of many service providers? In what circumstances does it not? 5. Explain the concept of yield management in a service setting. How might it be applied to (a) a professional firm (e.g., consulting); (b) a restaurant; (c) a golf course? 6. Identify three aspects of pricing strategy that might raise ethical considerations. In each instance, how should such abuses be prevented? 7. From a customer perspective, what defines value in the following services: (a) a nightclub; (b) a hairdressing salon; (c) a legal firm specializing in business and tax law? 8. Choose a service organization and investigate its pricing policies and methods. In what respects are they similar to, or different from, what has been discussed in this chapter? 9. Review recent bills that you have received from service businesses. Evaluate each one against the following criteria: (a) general appearance and clarity of presentation; (b) easily understood terms of payment; (c) avoidance of confusing terms and definitions; (d) appropriate level of detail; (e) unanticipated ("hidden") charges; (f) accuracy; (g) ease of access to customer service in case of problems or disputes. CHAPTER EIGHT • PRICING STRATEGIES FOR SERVICES 189 Endnotes 1. Thomas Eisenmann and Jon K. Rust, "Priceline WebHouse Club," Journal of Interactive Marketing 14, no. 4 (Autumn 2000): 47-72; Jeff Fischer, "Priceline as Rule Breaker," www.fool.com, 26 September 2000; Pamela L. Moore, "Will Priceline Need a Lifeline?'" Business Week, 24 October 2000; "Priceline Says Fixing Customer Service Problems," Reuters News Service (reuters.com), 20 December 2000; and the priceline.com and marketingguide.com Web sites, December 2000. 2. Paul J. Kraus, "Pricing the Service Offering," in Teresa A. Schwartz and Dawn Iacobucci, Handbook of Service Marketing and Management (Thousand Oaks, CA: Sage Publications, 2000), 191-200. 3. Leonard L. Berry and Manjit S.Yadav, "Capture and Communicate Value in the Pricing of Services," Sloan Management Review 37 (Summer 1996): 41-51. 4. Richard W. Olshavsky, Andrew B. Aylesworth and DeAnna S. Kempf, "The Price-Choice Relationship: A Contingent Processing Approach,"_/owm<3/ of Business Research 33(1995): 207-218. 5. "Cellular without the Static," Consumer Reports, February 2001, 12—18. 6. Valarie A. Zeithaml, "Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence," Journal of Marketing 52 fjuly 1988): 2—21. 7. Adrian Slywotzky and David Morrison, "Off the Grid," The Industry Standard, 23 October 2000, 204—209. See also Jane Tanner, "Everyday Plastic Spun into Gold," nytimes.com, 17 September 2000. 8. H.T.Johnson and Robert S. Kaplan, Relevance Lost:The Rise and Fall of Management Accounting (Boston, MA: Harvard Business School Press, 1987). 9. Antonella Card and Antonella Cugini, "Profitability and Customer Satisfaction in Services: An Integrated Perspective between Marketing and Cost Management Analysis," International Journal of Service Industry Management 10, no. 2 (1999): 132-156. 10. Robin Cooper and Robert S. Kaplan, "Profit Priorities from Activity-Based Costing," Harvard Business Review, May-June 1991. 11. Hermann Simon, "Pricing Opportunities and How to Exploit Them," Sloan Management Review 33 (Winter 1992): 71-84. 12. Frederick F Reichheld, The Loyalty Effect (Boston: Harvard Business School Press, 1996), 82-84. 13. Christopher Lovelock, Product Plus (NewYork: McGraw-Hill, 1994), Chapter 6; Southwest Airlines, 1995 Annual Report (Dallas,Texas, 1996), 8. 14. Wilter Baker, Mike Marn, and Craig Zawada, "Price Smarter on the Net," Harvard Business Review, 79, February 2001, 122—127. 15. Hermann Simon and Robert J. Dolan, "Price Customization," Marketing Management (Fall 1998): 11-17. 16. Sheryl E. Kimes and Richard B. Chase, "The Strategic Levers of Yield Management," Journal of Service Research 1, no. 2 (November 1998): 156-166. 17. Amy E. Cortese and Marcia Stepanek, "Good-bye to Fixed Pricing?" Business Week, 4 May 1999,71-84. 18. From the eBay Web site, www.eBay.com, December 2000. 19. From the uBid Web site, www.uBid.com, December 2000. 20. Cristopher C. Eugster, Jatin N. Kakkar, and Eric V Roegner, "Bringing Discipline to Pricing," The McKinsey Quarterly no. 1 (2000): 132-139. 21. K. Douglas Hoffman, Lou W.Turley, and Scott W Kelley, "Pricing Retail Services,"Journal of Business Research, forthcoming 2001. 22. "The Cheater Principle," The Wall Street Journal, 25 August 2000, Wl. 23. Wendy McAuliffe, "Pre-paid 'Credit' Card for the Web," from the zdnet.co.uk/news/2000 site, 4 September 2000. 24. See, for example, Anita Sharpe, "The Operation Was a Success; The Bill Was Quite a Mess," Wall Street Journal, 17 September 1997, 1. Promotion and Education Enterprise Rent-a-Car Courts Insurance Companies as Well as Consumers Although most people probably think of vacation travel when Enterprise Rent-a-Car comes to mind, the company's roots are in the business-to-business arena. 1 Founder Jack Taylor started Enterprise as an auto-leasing service in 1957 out of the Cadillac shop where he worked. But business didn't really take off until the early 1980s when he switched his primary focus from the highly competitive consumer market into the less-crowded replacement rental market, taking advantage of new legislation requiring insurance companies to provide their customers with rental cars while their own vehicles were being repaired or replaced following accidents or theft. With this focus, Enterprise grew quickly and the company now holds a majority share of the U.S. replacement market. But it also targets customers in the business and leisure travel markets and is expanding abroad. Ninety percent of its 4,400 offices and its fleet of half a million cars are based in the United States, with the balance in Canada, Britain, Ireland, and Germany. Enterprise is now one of the world's largest car rental com- panies. In addition to exploiting the replacement niche, what else makes Enterprise so successful? One reason is the company's location strat- egy, which emphasizes convenient access from people's homes and workplaces, placing 90 percent of the American population within 15 minutes of an Enterprise office. Its largest offices are limited to a max- imum of 300 vehicles—in sharp contrast to some of its competitors, which may locate several thousand cars at a major airport. Enterprise enjoys many advantages not found in the traditional model of car rental firms. They include avoiding the heavy expenses associated with airport space rental, not replacing its fleet as often, renting cars for longer periods of time, and experiencing more stability in demand (in contrast to fluctuations in business and pleasure travel, car accidents and breakdowns happen more consistently). And, as Jon LeSage, editor of Auto Rental News, observed, "repairs always take longer than they are supposed to." The company is devoted to effective salesmanship and good customer service. In particular, it employs direct-marketing strategies to court the insurance companies that provide their policyholders with replacement vehicles when their own are stolen, under repair, or dam- aged beyond repair. Professionally trained telemarketers contact insurance agents to persuade them to set up accounts with Enterprise. They offer discounted rates and a direct billing option so that the insurance companies' customers will never have to pay per- sonally for their Enterprise car rentals. The direct billing option makes it easier for the companies to handle financial transactions. Thanks to these attractive benefits and the skills of the highly trained telemar- keters, Enterprise continues to capture a large percentage of the replacement market. Once an account is established, the company maintains the relationship by sending employees to make weekly sales calls and deliver gifts like food and plants to help foster goodwill and ensure that the insurance provider remains a loyal Enterprise cus- tomer. The company also reaches out directly to individual customers who need to rent a car for business or pleasure. Its mass media adver- tising in 2000 was designed to draw attention to a distinctive aspect of its service—picking people up at their homes or place of employment. The ads featured a car wrapped like a package speeding along the road with the name Enterprise emblazoned on the side (an advertising icon for almost a decade) and promoted the slogan: "Pick Enterprise. We'll Pick You Up." Complementing other marketing communications is the company's Web site, www.enterprise.com, which provides addi- tional information about Enterprise (including job opportunities), and enables customers to search online for the nearest location, check prices, and then make a booking. © Learning Objectives After reading this chapter, you should be able to =£> explain what is distinctive about marketing communications strategy for services =£> understand how the level of customer contact affects communication strategy =£> list common educational and promotional objectives for services =£> describe the marketing communications mix for services ==%> discuss potential uses of the Internet as a communication channel 191 192 PART THREE • SERVICE MARKETING STRATEGY THE ROLE OF MARKETING COMMUNICATION Marketing communications, in one form or another, are essential to a company's success. Enterprise Rent-a-Car could not have built its business without personal selling and advertising. Without effective communications, few prospects would ever have learned of Enterprise's existence, what it had to offer them, and how to use its services. In the absence of follow-up sales calls, a user-friendly Web site, and good signage, customers might be more easily lured away by competitors and competitive offerings, and there would be no proactive management and control of the firm's identity. So managers need to debate the question: How should we communicate what our service has to offer? Much confusion surrounds the scope of marketing communication. Some people still define it narrowly as the use of paid media advertising, public relations, and professional salespeople. But this view doesn't recognize the many other ways that a firm can communicate with its customers. The location and atmosphere of a service delivery facility, corporate design features like the consistent use of colors and graphic elements, the appearance and behavior of employees, Web site design—all of these factors contribute to an impression in the customer's mind. Communicating with Customers Communication efforts serve not only to attract new users but also to maintain contact with an organization's existing customers and build relationships with them. As we emphasized in Chapter 5, reinforcing loyalty and securing repeat sales are usually central to a firm's long-term profitability. Nurturing customer relationships depends on a com- prehensive and up-to-date customer database, and the ability to make use of this in a personalized way. Techniques for keeping in touch with customers and building their loyalty include direct mail and contacts by telephone or other forms of telecommunication, including " YOU ARE NOW FREE TO HAVE A FANTASTIC DAY!" From everyone at Southwest Airlines. FIGURE 9.1 A Birthday Card from Southwest Airlines CHAPTER NINE . PROMOTION AND EDUCATION 193 faxes, e-mail, and Web sites. Doctors, dentists, and household maintenance services often post annual checkup reminders to their customers. Some businesses even send birthday and anniversary cards to valued customers (Figure 9.1). Banks and utility companies often include a brief newsletter with their account statements or print customized information on each statement in an effort to cross-sell additional services. Internal Communications Marketing communications can be used to communicate with service employees as well as with external customers. Internal communications from senior managers to their employees play a vital role in maintaining and nurturing a corporate culture founded on specific service values. Well-planned internal marketing efforts are espe- cially necessary in large service businesses that operate in widely dispersed sites, sometimes around the world. Even when employees are working far from the head office in the home country, they still need to be kept informed of new policies, changes in service features, and new quality initiatives. Communications may also be needed to nurture team spirit and support common corporate goals. Consider the challenge of maintaining a unified sense of purpose at the overseas offices of compa- nies such as Citibank, Air Canada, Marriott, or McDonalds, where people from dif- ferent cultures who speak different languages must work together to create consis- tent levels of service. Effective internal communications can help ensure efficient and satisfactory service delivery, achieve productive and harmonious working relationships, and build employee trust, respect, and loyalty. Commonly used media include internal newsletters and mag- azines, videotapes, private corporate television networks like those owned by FedEx and Merrill Lynch, Intranets (private networks ofWeb sites and e-mail that are inaccessible to the general public), face-to-face briefings, and promotional campaigns using displays, prizes, and recognition programs. internal communications: all forms of communication from management to employees in a service organization. COMMUNICATION STRATEGIES FOR SERVICES Several of the differences distinguishing services from goods have important marketing communications implications.Thus communication strategies need to reflect the special characteristics of services. 2 Intangible Nature of Service Performances Since services are performances rather than objects, their benefits can be difficult to communicate to customers. Service providers should use tangible cues whenever pos- sible in their advertising campaigns, especially for low-contact services that involve few tangible elements. 3 It is also helpful to include "vivid information" that will pro- duce a strong, clear impression on the senses, especially for services that are complex and highly intangible. 4 For example, an ad by a large law firm showed a picture of empty jurors' chairs to draw attention to its trial lawyers' skills in presenting complex cases to juries, which must then withdraw from the courtroom to deliberate on the verdict (Figure 9.2). Similarly, MasterCard television and print advertisements empha- size the tangible things that can be purchased with its credit card—complete with a listing of the price of each item. In each ad, all of the items purchased with the card lead to a priceless experience (a clever and memorable reference to the concept of intangibility). At a very basic level, some companies have succeeded in creating tangible, recog- nizable symbols to associate with their corporate brand names. Animal motifs are com- mon physical symbols for services. Examples include the eagle of the U.S. Postal Service 194 PART THREE • SERVICE MARKETING STRATEGY FIGURE 9.2 Advertising by Robins, Kaplan, Miller & Ciresi in The Wall Street Journal, Fall 2000 (also used by AeroMexico and Eagle Star Insurance), the black horse of Norfolk Southern Railroad and Britain's Lloyd's Bank, Merrill Lynch's bull, the lion of Dreyfus Funds and Royal Bank of Canada, and the Chinese dragon of Hong Kong's Dragonair. Easily recognizable corporate symbols are especially important for international compa- nies when services are offered in markets where the local language is not written in Roman script or where a significant proportion of the population is functionally illiterate. Some companies have created metaphors that are tangible in nature to help com- municate the benefits of their service offerings. Insurance companies often use this approach to market their highly intangible products.Thus Allstate advertises that "You're in Good Hands," Traveler's umbrella motif suggests protection, and Prudential uses the Rock of Gibraltar as a symbol of corporate strength. When possible, advertising metaphors should also include some information about how service benefits are actually provided. 5 Consider Trend Micro's problem in adver- tising its new antivirus monitoring service for corporate Internets. Most advertise- ments for antivirus protection feature devils or evil-looking insects (remember the Millennium Bug used to highlight theY2K problem?).That approach may capture the reader's interest, but it doesn't show how virus protection actually works or how dev- astating its effects might be. In a technical context like this, explaining the problem and its solution in ways that senior management will understand is not always possible. Trend Micro's clever solution was to use the easily grasped metaphor of airport secu- rity guarding against terrorism. A picture of an aircraft was captioned "this is your company," a briefcase containing a bomb was labeled "this is a virus," and two security officers checking that bag on an X-ray machine were captioned, "This is Trend Micro." [...]... in Service Settings • • • • • • • • • • • • Create memorable images of specific companies and their brands Build awareness of and interest in an unfamiliar service or brand Build preference by communicating the strengths and benefits of a specific brand Compare a service with competitors' offerings and counter competitive claims Reposition a service relative to competing offerings Stimulate demand... True Professionalism (New York: The Free Press, 1997), 178-184 9 K M Haywood, "Managing Word of Mouth Communications," Journal of Services Marketing 3 (Spring 1989): 55-67 10 Eugene W.Anderson, "Customer Satisfaction and Word of Mouth," Journal of Service Research 1 (August 1998): 5-17; Magnus Soderlund, "Customer Satisfaction and Its Consequences on Customer Behaviour Revisited: The Impact of Different... consumer marketing, advertising is often the first point of contact between service marketers and their customers, serving to build awareness, inform, persuade, and remind It plays a vital role in providing factual information about services and educating customers about product features and capabilities To demonstrate this point, Grove, Pickett, and Laband carried out a study c o m paring newspaper and. .. Communication Few aspects of marketing lend themselves so easily to misuse (and even abuse) as advertising, selling, and sales promotion.The fact that customers often find it hard to evaluate services makes t h e m more dependent on marketing communication for information and advice Communication messages often include promises about the benefits that customers will receive and the quality of service delivery... of Services: Meeting the Challenge of Intangibility," Journal of Service Research 2 (August 1999): 98-116 6 Legg and Baker,"Advertising Strategies"; D.J Hill and N Gandhi,"Services Advertising: A Framework for Effectiveness," Journal of Services Marketing 6 (Fall 1992): 63-76 7 Victor L Hunter and DavidTietyen, Business to Business Marketing: Creating a Community of Customers (Lincolnwood, IL: N T C... activities C u s t o m e r Service Employees in customer service positions are often responsible for delivery of a variety of supplementary services, including providing information, taking reservations, receiving payments, and problem solving N e w customers, in particular, often rely on customer service personnel for assistance in learning how to use a service effectively and h o w to resolve problems... lighting); and personnel Each of these elements is a critical form of physical evidence, since the appearance of a firm's service facilities and personnel affects customers' perceptions of service quality Corporate design consukants are sometimes asked to advise on servicescape design, to coordinate the visual elements of both interiors and exteriors— such as signage, decor, carpeting, furnishings, and uniforms—so... promotions, and public relations) FIGURE 9.5 The Marketing Communications Mix for Services 200 PART T H R E E • SERVICE M A R K E T I N G S T R A T E G Y Personal Communications As shown in Figure 9.5, personal communications include personal selling, telemarketing, customer training, customer service, and word of mouth personal selling: two-way communications between service employees and customers... understanding of the service product and the ability of prospective buyers to evaluate its characteristics in advance of purchase It's also essential to understand target market segments and their exposure to different media, as well as consumer awareness of the product and attitudes toward it Decisions include determining the content, structure, and style of the message TABLE 9.1 Common Educational and. .. in low-demand periods and discourage demand during peak periods Encourage trial by offering promotional incentives Reduce uncertainty and perceived risk by providing useful information and advice Provide reassurance (e.g., by promoting service guarantees) Familiarize customers with service processes in advance of use Teach customers how to use a service to their own best advantage Recognize and reward . Schwartz and Dawn Iacobucci, Handbook of Service Marketing and Management (Thousand Oaks, CA: Sage Publications, 2000), 191-200. 3. Leonard L. Berry and Manjit S.Yadav, "Capture and Communicate. awareness of and interest in an unfamiliar service or brand • Build preference by communicating the strengths and benefits of a specific brand • Compare a service with competitors' offerings and. Examples of account management for individual consumers can be found in insurance, investment management, and medical services. Customer Service Employees in customer service positions are often