Marketing management Chapter 13 pps

IN THIS CHAPTER, WE WILL ADDRESS THE FOLLOWING QUESTIONS: 1. How are services defined and classified, and how do they differ from goods? 2. How are services marketed? 3. How can service quality be improved? 4. How do services marketers create strong brands? 5. How can goods-producing companies improve customer support services? CHAPTER 13 DESIGNING AND MANAGING SERVICES As companies find it harder and harder to differentiate their physi- cal products, they turn to service differentiation. Many books point out the significant profitability of companies that manage to deliver superior service. 1 Companies seek to develop a reputation for superior performance in on-time delivery, better and faster answer- ing of inquiries, and quicker resolution of complaints. Service becomes the mantra. Perhaps the most dramatic example of how the growth of services has changed the face of business is what has happened to one of the world's most successful companies, IBM. A print ad from IBM's "On Demand" campaign, which focuses on customizing hardware, software, and systems to help other companies harness the power of technology with IBM products and services. 401 amous for its accomplishments in computer hardware and soft- ware, IBM has undergone a massive transformation. Currently, almost half of its $81 billion in annual revenues comes from global services. Companies such as American Express are signing up for consulting engagements that involve customized software, hardware, and systems solu- tions worth literally billions of dollars to IBM. IBM's "e-business on demand" Initiative is a company-wide effort to help other companies harness the lower of technology through IBM products and services. To fulfill its service iromises, IBM has had to develop new skills and become more customer : ocused. The $3.5 billion acquisition of PriceWaterhouseCoopers Consulting n October 2002 has provided valuable strategic expertise. To help improve ?&D designs and service implementation, Big Blue is now sending hundreds 402 PART 5 SHAPING THE MARKET OFFERINGS of its brightest researchers to visit customers to better understand how they actu- ally use information technology. "The aim is to create a very deep connection between IBM and its customers ," said David B. Yoffie, a Harvard Business School Professor, "But it's making IBM more like a service business with technol- ogy thrown in than a technology business. " 2 Service businesses increasingly fuel the world economy. Because it is critical to understand the special nature of services and what that means to marketers, in this chapter we systematically analyze services and how to market them most effectively. Ill The Nature of Services The Bureau of Labor Statistics reports that the service-producing sector will continue to be the dominant employment generator in the economy, adding 20.5 million jobs by 2010. Employment in the service-producing sector is expected to increase by 19 percent over the 2000-2010 period, whereas manufacturing employment is expected to increase by only 3 percent. In fact, manufacturing's share of total jobs is expected to decline from 13 percent in 2000 to 11 percent in 2010. 3 These numbers and others have led to a growing interest in the special problems of marketing services. 4 Service Industries Are Everywhere The government sector, with its courts, employment services, hospitals, loan agencies, mili- tary services, police and fire departments, postal service, regulatory agencies, and schools, is in the service business. The private nonprofit sector, with its museums, charities, churches, colleges, foundations, and hospitals, is in the service business. A good part of the business sector, with its airlines, banks, hotels, insurance companies, law firms, management con- sulting firms, medical practices, motion picture companies, plumbing repair companies, and real estate firms, is in the service business. Many workers in the manufacturing sector, such as computer operators, accountants, and legal staff, are really service providers. In fact, they make up a "service factory" providing services to the "goods factory." And those in the retail sector, such as cashiers, clerks, salespeople, and customer service representatives, are also providing a service. We define a service as follows: A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Manufacturers, distributors, and retailers can provide value-added services or simply excellent customer service to differentiate themselves. ONSTAR General Motors has gone a step further with its OnStar service, which helps customers with related tasks includ- ing emergency services dispatch, stolen vehicle location, roadside assistance, remote diagnostics, and route support. Every month OnStar unlocks about 28,000 car doors, dispatches 13,000 roadside assistance vehicles, and locates 700 lost vehicles. While the first year of OnStar is free to GM car owners, it now claims renewal rates as high as 80% at annual subscription fees ranging from $200 to more than $800. By 2005, OnStar is projected to bring in more than $2 billion for GM. 5 DESIGNING AND MANAGING SERVICES CHAPTER 13 403 The home page from eDiets.com's award-winning site is easy to look at and easy to customize, making it one of the most popular diet sites on the Web. Many pure service firms are now using the Internet to reach customers. A little surfing on the Web will turn up a large number of virtual service providers. Here's what the judges of the 2003 Webby Business awards said about one of their winners: - eDIETS.COM A Google search under "diet" generates a staggering 8,530,000 responses, suggesting that America's fixation on its collective girth has become decidedly more high-tech. Of the many diet sites, eDiets has done the best job of compiling information and cementing partnerships (with weight-loss specialists like Atkins and healthy- eating magazines like Cooking Light) most desired by dieters. Add in exercise guides as well as sections that account for a host of medical conditions (diabetes, high cholesterol, lactose intolerance), and eDiets is by far the i most customizable—and cleanly designed—dieting resource on the web. 6 Categories of Service Mix A company's offerings often include some services. The service component can be a minor or a major part of the total offering. Five categories of offerings can be distinguished: 1. Pure tangible good -The offering consists primarily of a tangible good such as soap, toothpaste, or salt. No services accompany the product. 2. Tangible good with accompanying services - The offering consists of a tangible good accompanied by one or more services. Levitt observes that "the more technologically sophisticated the generic product (e.g., cars and computers), the more dependent are its sales on the quality and availability of its accompanying customer services (e.g., display rooms, delivery, repairs and maintenance, application aids, operator training, installation advice, warranty fulfillment). In this sense, General Motors is probably more service intensive than manufacturing intensive. Without its services, its sales would shrivel." 7 3. Hybrid -The offering consists of equal parts of goods and services. For example, people patronize restaurants for both food and service. 4. Major service with accompanying minor goods and services - The offering consists of a major service along with additional services or supporting goods. For example, airline passengers buy transportation. The trip includes some tangibles, such as food and 404 PART 5 SHAPING THE MARKET OFFERINGS drinks, a ticket stub, and an airline magazine. The service requires a capital-intensive good—an airplane—for its realization, but the primary item is a service. 5. Pure service -The offering consists primarily of a service. Examples include baby-sitting, psychotherapy, and massage. Because of this varying goods-to-service mix, it is difficult to generalize about services without further distinctions. Here are some additional distinctions that can be helpful: • Services vary as to whether they are equipment-based (automated car washes, vending machines) or people-based (window washing, accounting services). People-based services vary by whether they are provided by unskilled, skilled, or professional workers. • Service companies can choose among different processes to deliver their service. Restaurants have developed such different formats as cafeteria-style, fast-food, buffet, and candlelight service. m Some services require the client's presence and some do not. Brain surgery involves the client's presence, a car repair does not. If the client must be present, the service provider has to be considerate of his or her needs. Thus beauty salon operators will invest in decor, play background music, and engage in light conversation with the client. • Services differ as to whether they meet a personal need (personal services) or a business need (business services). Service providers typically develop different marketing programs for personal and business markets. s Service providers differ in their objectives (profit or nonprofit) and ownership (private or public). These two characteristics, when crossed, produce four quite different types of orga- nizations. The marketing programs of a private investor hospital will differ from those of a private charity hospital or a Veterans' Administration hospital. 8 The nature of the service mix also has implications for how consumers evaluate quality. For some services, customers cannot judge the technical quality even after they have received the service. Figure 13.1 shows various products and services according to difficulty of evaluation. 9 At the left are goods high in search qualities—that is, characteristics the buyer can evaluate before purchase. In the middle are goods and services high in experience qual- ities—characteristics the buyer can evaluate after purchase. At the right are goods and ser- vices high in credence qualities—characteristics the buyer normally finds hard to evaluate even after consumption. 10 Because services are generally high in experience and credence qualities, there is more risk in purchase. This has several consequences. First, service consumers generally rely on word of mouth rather than advertising. Second, they rely heavily on price, personnel, and physical cues to judge quality. Third, they are highly loyal to service providers who satisfy FIG. 13.1 J Continuum of Evaluation for Different Types of Products Sowce: Valarie A. Zeithaml. "How Consumer Evaluation Processes Differ between Goods and Services," in Marketing of Services. edited by James H. Donnelly and William R. George. Reprinted with permission of the American Marketing Association (Chicago: American Marketing Association, 1981). Easy to Evaluate Difficult to Evaluate High in Search Qualities High in Experience Qualities High in Credence Qualities DESIGNING AND MANAGING SERVICES CHAPTER 13 405 them. Fourth, because of the switching costs involved, much consumer inertia can exist. It can be challenging to entice a customer away from a competitor. Wachovia Bank's slogan, "Let's Get Started," was a call to action to new and existing customers alike. Distinctive Characteristics of Services Services have four distinctive characteristics that greatly affect the design of marketing pro- grams: intangibility, inseparability, variability, and perishability. INTANGIBILITY Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. The person getting a face-lift cannot see the results before the purchase, and the patient in the psychiatrist's office cannot know the exact outcome. To reduce uncertainty, buyers will look for evidence of quality. They will draw infer- ences about quality from the place, people, equipment, communication material, sym- bols, and price that they see. Therefore, the service provider's task is to "manage the evi- dence," to "tangibilize the intangible." 11 Whereas product marketers are challenged to add abstract ideas, service marketers are challenged to add physical evidence and imagery to abstract offers. Service companies can try to demonstrate their service quality through physical evidence and presentation. 12 A hotel will develop a look and a style of dealing with customers that realizes its intended customer value proposition, whether it is cleanliness, speed, or some other benefit. Suppose a bank wants to position itself as the "fast" bank. It could make this positioning strategy tangible through a number of marketing tools: 1. Place - The exterior and interior should have clean lines. The layout of the desks and the traffic flow should be planned carefully. Waiting lines should not get overly long. 2. People- Personnel should be busy. There should be a sufficient number of employees to manage the workload. 3. Equipment- Computers, copying machines, desks should be and look "state of the art." 4. Communication material - Printed materials—text and photos—should suggest effi- ciency and speed. 5. Symbols - The name and symbol should suggest fast service. 6. Price - The bank could advertise that it will deposit $5 in the account of any customer who waits in line for more than five minutes. Service marketers must be able to transform intangible services into concrete benefits. To aid in "tangibilizing the intangible," Carbone and Haeckel propose a set of concepts called customer experience engineering. 13 Companies must first develop a clear picture of what they want the customer's perception of an experience to be and then design a con- sistent set of performance and context clues to support that experience. In the case of a bank, whether the teller dispensed the right amount of cash is a performance clue; a con- text clue is whether the teller was properly dressed. The context clues in a bank are deliv- ered by people (humanics) and things (mechanics). The company assembles the clues in an experience blueprint, a pictorial representation of the various clues. To the extent pos- sible, the clues should address all five senses. The Disney Company is a master at devel- oping experience blueprints in its theme parks; so are companies such as Jamba Juice and Barnes & Noble in their respective retail stores. 14 The Mayo Clinic has set new standards in the health care industry. r- THE MAYO CLINIC The Mayo Clinic carefully manages a set of visual and experiential clues to tell a consistent and compelling story about its service. Mayo's credo is "the patient comes first." From public exam rooms to laboratories, Mayo facilities have been designed so that, in the words of the architect who designed one of the buildings, "patients feel a little better before they see their doctors." The 20-story Gonda Building in Rochester, Minnesota, has spectacular wide-open spaces, and the lobby of the Mayo Clinic hospital in Scottsdale, Arizona, has an indoor waterfall and a wall of windows overlooking mountains. Hospital rooms feature microwave ovens and chairs that really do convert to beds because, as one staff member explained, "People don't come to the hospital alone." In pediatric exam rooms, resuscitation equipment is hidden behind a large • cheery picture. 15 406 PART 5 SHAPING THE MARKET OFFERINGS < INSEPARABILITY Services are typically produced and consumed simultaneously. This is not true of physical goods, which are manufactured, put into inventory, distributed through multiple resellers, and consumed later. If a person renders the service, then the provider is part of the service. Because the client is also present as the service is produced, provider-client interaction is a special feature of services marketing. In the case of entertainment and professional services, buyers are very interested in the specific provider. It is not the same concert if Madonna is indisposed and replaced by Shania Twain, or if a legal defense will be supplied by John Nobody because antitrust expert David Boies is unavailable. When clients have strong provider preferences, price is raised to ration the preferred provider's limited time. Several strategies exist for getting around this limitation. The service provider can learn to work with larger groups. Psychotherapists have moved from one-on-one therapy to small- group therapy to groups of over 300 people in a large hotel ballroom. The service provider can learn to work faster—the psychotherapist can spend 30 more-efficient minutes with each patient instead of 50 less-structured minutes and can see more patients. The service organization can train more service providers and build up client confidence, as H&R Block has done with its national network of trained tax consultants. Creative artists have also developed techniques to overcome the limits of inseparability. BLUE MAN GROUP The Blue Man Group got its start in 1988 when the three original members—Matt Goldman, Phil Stanton, and Chris Wink—began performing on the streets of New York City. The company eventually moved into a theater, and the three performed every show for three straight years without the help of understudies. When the group opened a second show in Boston, the founders decided to add more Blue Men to help carry the weight. Today 33 different performers, including one woman, enable the Blue Man Group to take on various projects, such as performing in Las Vegas, recording a Grammy-nominated album, and starring in a series of commercials for Intel's Pentium processors. 16 The Blue Man Group, with three of its thirty-three performers. VARIABILITY Because services depend on who provides them and when and where they are provided, they are highly variable. Some doctors have an excellent bedside manner; others are less patient with their patients. Some surgeons are very successful in perform- ing a certain operation; others are not. Service buyers are aware of this variability and often talk to others before selecting a service provider. Here are three steps service firms can take to increase quality control. 1. Invest in good hiring and training procedures. Recruiting the right employees and providing them with excellent training is crucial, regardless of whether employees are highly skilled pro- fessionals or low-skilled workers. Ideally, employees should exhibit competence, a caring attitude, responsiveness, initiative, problem-solving ability, and goodwill. Service companies such as FedEx and Marriott empower their front-line personnel to spend up to Si00 to resolve a customer problem. 2. Standardize the service-performance process throughout the organization. This is done by preparing a service blueprint that depicts events and processes in a flowchart, with the objective of recognizing potential fail points. Figure 13.2 shows a service blueprint for a nationwide floral-delivery organization. 17 The customer's experience is limited to dialing the phone, making choices, and placing an order. Behind the scenes, the floral organization gathers the flowers, places them in a vase, delivers them, and collects payment. Any one of these activities can be done well or poorly. 3. Monitor customer satisfaction. Employ suggestion and com- plaint systems, customer surveys, and comparison shopping. General Electric sends out 700,000 response cards a year asking households to rate its service people's performance. Citibank DESIGNING AND MANAGING SERVICES CHAPTER 13 407 FIG. 13.2 A Service-Performance-Process Map: Nationwide Floral Delivery Source: Adapted trom G. Lynn Shostack, "Service Positioning Through Structural Change," Journal of Marketing (January 1987): 39. Reprinted with permission of the American Marketing Association. Inventory Inventory Facilitating goods and services checks continuously on measures of ART (accuracy, responsiveness, and timeliness). Firms can also develop customer information databases and systems to permit more personalized, customized service. 18 PERISHABILITY Services cannot be stored. Perishability is not a problem when demand is steady. When demand fluctuates, service firms have problems. For example, public trans- portation companies have to own much more equipment because of rush-hour demand than if demand were even throughout the day. Some doctors charge patients for missed appointments because the service value exists only at that point. Several strategies can produce a better match between demand and supply in a service business. 19 On the demand side: s Differential pricing will shift some demand from peak to off-peak periods. Examples include low early evening movie prices and weekend discount prices for car rentals. a Nonpeak demand can be cultivated. McDonald's pushes breakfast service, and hotels promote mini-vacation weekends. m Complementary services can be developed to provide alternatives to waiting customers, such as cocktail lounges in restaurants and automatic teller machines in banks. H Reservation systenis are a way to manage the demand level. Airlines, hotels, and physi- cians employ them extensively. On the supply side: s Part-time employees can be hired to serve peak demand. Colleges add part-time teach- ers when enrollment goes up, and restaurants call in part-time servers when needed. a Peak-time efficiency routines can be introduced. Employees perform only essential tasks during peak periods. Paramedics assist physicians during busy periods. n Increased consumer participation can be encouraged. Consumers fill out their own medical records or bag their own groceries. n Shared services can be developed. Several hospitals can share medical-equipment purchases. n Facilities for future expansion can be developed. An amusement park buys surrounding land for later development. Many airlines, hotels, and resorts have e-mail alerts to self-selected segments of their customer base that offer special short-term discounts and promotions. Club Med uses early to midweek e-mails to people in its database to pitch unsold weekend packages, typically 30 to 40 percent off the standard package price. 20 After 40 years of making peo- ple stand in line at its theme parks, Disney instituted Fastpass, which allows visitors to reserve a spot in line and eliminate the wait. When polled, it turns out that 95 percent of visitors like the change. Disney's vice president, Dale Stafford, told a reporter, "We have 408 PART 5 SHAPING THE MARKET OFFERINGS been teaching people how to stand in line since 1955, and now we are telling them they don't have to. Of all the things we can do and all the marvels we can create with the attractions, this is some- thing that will have a profound effect on the entire industry." 21 Marketing Strategies for Service Firms A shopper uses the automatic express checkout to pay for and bag purchases herself. These computerized checkout systems allow the shopper to pay with a credit card, a debit card, or cash. At one time, service firms lagged behind manufacturing firms in their use of marketing because they were small, or they were professional businesses that did not use marketing, or they faced large demand or little competition. This has certainly changed. "Marketing Memo: A Service Marketing Checklist" out- lines the questions top service marketing organizations should be asking. A Shifting Customer Relationship Not all companies, however, have invested in providing superior service, at least not to all customers. BusinessWeek, in its October 23, 2000, issue, carried a cover story called "Why Service Stinks," based in part on the fact that from 1994 to 2000, customer satis- faction in the United States dropped 12.5 percent for airlines, 8.1 percent for banks, 6.5 percent for stores, and 4 percent for hotels. 22 Customers complained about inaccurate information; unresponsive, rude, or poorly trained personnel; and long wait times. And the picture doesn't look any rosier now. Customer ser- vice complaints are on the rise, even though many complaints never actually reach a live human being. Here are some statistics that should give service companies and customer service depart- ments pause: 2 ,.23 • On the phone. Some 80 percent of the nation's companies haven't figured out how to get customers the assistance they need. • Online. Forrester Research estimates that 35 percent of all e-mail inquiries to companies don't get a response within 7 days and about 25 percent don't get a response at all. E Interactive Voice Response. While many of America's largest companies have installed call routing software called Interactive Voice Response Systems, more than 90 percent of financial services consumers say they don't like them. In former times, service companies held out a welcoming hand to all customers, but these companies now have so much data on individuals that they are able to classify their customers into profit tiers. So service is not uniformly bad for all customers. Airlines, hotels, and banks all pamper good customers. Big spenders get special dis- counts, promotional offers, and lots of special service. The rest of their customers get higher fees, stripped-down service, and at best a voice message to answer inquiries. Financial services giants have installed special software that tells them—in an instant— when a lucrative customer is on the phone. Such systems immediately send the call ahead of dozens—even hundreds—of other callers who must wait while the big spender gets special attention. 24 Charles Schwab's best customers get their calls answered in 15 seconds; other customers can wait 10 minutes or more. Sears sends a repairperson to its best customers within two hours; other customers wait four hours. This shift from a customer service democracy to a meritocracy is also a response to lower profit margins resulting from customers becoming more price-driven and less loyal. Companies are now driven to seek ways to squeeze more profit out of the differ- ent customer tiers. Firms have decided to raise fees and lower service to customers who barely pay their way, and to coddle big spenders to retain their patronage as long as possible. DESIGNING AND MANAGING SERVICES CHAPTER 13 409 MARKETING MEMO A SERVICE MARKETING CHECKLIST Customers' expectations are the true standards for judging service quality. Berry and Parasuraman propose that marketing managers ask the following questions as they seek to manage and exceed expectations: 1. Do we strive to present a realistic picture of our service to customers? Do we always check the accuracy of our promo- tional messages? Is there regular communication between employees who serve customers and those who make promises to customers? Do we assess the impact of cues such as price on customer expectations? 2. Is performing the service right the first time a top priority? Are our employees trained and rewarded for delivering error-free service? Do we regularly evaluate our service designs to identify and correct potential flaws? 3. Do we communicate effectively with customers? Do we periodically contact customers to ascertain their needs and let them know we appreciate their business? Do we train and require employees to demonstrate to customers that we care about and value them? 4. Do we surprise customers during the service process? Are our employees aware that the service delivery process is our prime opportunity to exceed customers' expectations? Do we take specific steps to encourage excellence? 5. Do our employees regard service problems as opportuni- ties to impress customers? Do we prepare and encourage employees to excel in the service recovery process? Do we reward them for providing exceptional recovery service? 6. Do we continuously evaluate and improve our performance against customers' expectations? Do we perform consistently above the adequate service level? Do we capitalize on opportu- nities to exceed the desired service level? Sources: Excerpted from Leonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: The Free Press, 1991), pp. 72-73. Also see Leonard L. Berry, On Great Service: A Framework for Action (New York: The Free Press, 1995); and his Discovering the Soul of Service (New York: The Free Press, 1999). Companies that provide differentiated levels of service, however, must be careful about claiming superior service—the customers who receive poor treatment will bad-mouth the company and injure its reputation. Delivering services that maximize both customer satis- faction and company profitability can be challenging. Upstart airline JetBlue is a recent suc- cess story. JETBLUE While other airlines have lost millions of dollars and even declared bankruptcy, JetBlue has managed to head in a different direction. It has attempted to create a more contemporary alternative to Southwest Airlines. Like Southwest, it uses a single type of airplane, avoids "hub" cities to fly "point-to-point," and keeps turnaround time to a bare minimum. Unlike Southwest, however, JetBlue uses larger Airbus A320 planes, which permit longer-haul flights; adorns planes with cushy leather seats and seat-back TVs; and permits seat reservations. Slick advertising, nattily attired flight attendants, and a state-of-art Web site help to produce a very consumer- friendly, up-market image. JetBlue did share one other thing with Southwest Airlines—they were the only air- lines to turn a profit in 2002. 25 JetBlue also recorded a profit in 2003 before encountering some financial tur- bulence in 2004. There are also shifts that favor the customer in the client relationship. Customers are becoming more sophisticated about buying product support services and are pressing for "services unbundling." They want separate prices for each service element and the right to select the elements they want. Customers also increasingly dislike having to deal with a mul- titude of service providers handling different types of equipment. Some third-party service organizations now service a greater range of equipment. 26 Most important, the Internet has empowered customers by letting them vent their rage about bad service—or reward good service—and have their comments beamed around the world with a mouse click. See "Marketing Insight: Voice Mail Hell" for a look at some ways in which the scales are tipping in the customer's favor and why service industries should take heed. [...]... services) APPLICATIONS : : : Marketing D e b a t e Is Service Marketing Different from Product Marketing? Some service marketers vehemently maintain that service marketing is fundamentally different from product marketing and that different skills are involved Some traditional product marketers disagree, saying "good marketing is good marketing. " Take a position: Product and service marketing are fundamentally... shown in Figure 13. 4, identifies five gaps that cause unsuccessful delivery: 1 Gap between consumer expectation and management perception -Management does not always correctly perceive what customers want Hospital administrators may think that patients want better food, but patients may be more concerned with nurse responsiveness DESIGNING AND MANAGING SERVICES CHAPTER 13 413 2 Gap between management perception... Product and service marketing are highly related DESIGNING AND MANAGING SERVICES CHAPTER 13 427 Marketing D i s c u s s i o n Colleges, universities, and other educational institutions can be classified as service organizations How can you apply the marketing principles developed in this chapter to your school? Do you have any advice as to how it could become a better service marketer? MARKETING SPOTLIGHT... H Booms and M J Bitner, "Marketing Strategies and Organizational Structures for Service Firms," in Marketing of Services, edited by J Donnelly and W R George (Chicago: American Marketing Association, 1981), pp 47-51 13 Lewis P Carbone and Slephan II Ilaeckel, "Engineering Customer Experiences," Marketing Management? , (Winter 1994): 17 14 Bernd II Schmitt, Customer Experience Management John Wiley &... Schrest, "Internal Marketing: The Key to External Marketing Success," Journal of Services Marketing^ , no 4 (1994): 5 -13; John R Hauser, Duncan I Simester, and Birger Werncrfclt, "Internal Customers and Internal Suppliers," Journal of Marketing Research (August 1996): 268-280; Jagdip Singh, "Performance Productivity and Quality of Frontline Employees in Service Organizations," Journal of Marketing^ (April... Gronroos, "A Service Quality Model and Its Marketing Implications," European Journal of Marketing 18, no 4 (1984): 36-44 11 Theodore Levitt, "Marketing Intangible Products and Product Intangibles," Harvard Business Review (May-June 1981): 94-102; Berry, "Services Marketing Is Different." 29 Leonard Berry, "Big Ideas in Services Marketing, " Journal of Consumer Marketing (Spring 1986): 47-51 See also,... pp 130 -138 ; Amy Goldwasser, "Something Stylish, Something Blue," Business2.0, February 1, 2002, pp 94-95 26 However, see Ellen Day and Richard J Fox, "Extended Warranties, Service Contracts, and Maintenance Agreement: A Marketing Opportunity?" Journal of Consumer Marketing (Fall 1985): 77-86 27 Susan M Keaveney, "Customer Switching Behavior in Service Industries: An Exploratory Study," Journal of Marketing. .. services requires external, internal, and interactive marketing (see Figure 13. 3).28 External marketing describes the normal work of preparing, pricing, distributing, and promoting the service to customers Internal marketing describes training and motivating employees to serve customers well Berry has argued that the most important contribution the marketing department can make is to be "exceptionally... 3 In the past service industries lagged behind manufacturing firms in adopting and using marketing concepts and tools, but this situation has now changed Service marketing must be done holistically: It calls not only for external marketing but also for internal marketing to motivate employees, and interactive marketing to emphasize the importance of both "high-tech" and "high-touch." 4 Customers' expectations... 4 G Lynn Shostack, "Breaking Free from Product Marketing, " Journal of Marketing (April 1977): 73-80; Leonard L Berry, "Services Marketing Is Different," Business (May-June 1980): 24-30; Eric Langeard, John E G Bateson, Christopher H Lovelock, and Pierre Eiglier, Services Marketing: New Insiglits from Consumers and Managers (Cambridge, MA: Marketing Science Institute, 1981); Karl Albrecht and . SERVICES CHAPTER 13 409 MARKETING MEMO A SERVICE MARKETING CHECKLIST Customers' expectations are the true standards for judging service quality. Berry and Parasuraman propose that marketing. of eight categories (see Table 13. 1). Holistic marketing for services requires external, internal, and interactive marketing (see Figure 13. 3). 28 External marketing describes the normal work. responsiveness. DESIGNING AND MANAGING SERVICES CHAPTER 13 413 2. Gap between management perception and service-quality specification - Management might correctly perceive customers'