Chapter 6: Service Marketing: Customer Experience Management and Customer Relationship Management Flashcards Preview

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I. Service Marketing
New, integrated paradigm (model) of the Service Marketing

- Original development of marketing with focus on the production and marketing of physical products

- Marketing fulfills an important communication function (communicate the benefits and finding out the expectations of customers)

- The Special Features of Services (IHIP) require a coherent, holistic understanding of marketing (its role is bring together operations, mktg, and hhrr)

Current Marketing Definition of the American Marketing Association: „Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.“

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Integration of Marketing, Operations and Human Resources

- Successful service organizations pursue a cross-functional marketing strategy (traditionally was a department) for the best possible customer experience

- Service marketing requires close collaboration of marketing, operations and human resources functions

- Simultaneity of production, consumption and marketing of services

- Moments of Truth as a marketing tool for managing customer experience and customer relationships

- Relevance of service marketing in all three phases of the customer experience:
(1) pre-consumption (classic mktg),
(2) during consumption (service mktg – most important),
(3) post-consumption (role of promotion, WOM is very important through blogs, etc.)

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II. Marketing mix for services
Extended Marketing Mix for Services (7Ps): The original 4 Ps

Product: Everything that a service organization (potential) customer offers to satisfy their needs. Not a physical object, but a process

Price: Pricing intangible services (e.g. knowledge). Value perception of the customers (i.e. consultant of taxes). Price discrimination (different customers, different prices)

Place: Accessibility and availability (service location at the company, i.e. parking). Speed (service location at the customer).

Promotion: Word-of-Mouth. Transparency of service production (i.e. Vapiano, cooking while ordering). Corporate Image

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The new 3Ps

People: Employees ("front-line") as a personification of the company (represents the firm). Information about the service provided by employees (friendly, prepared). Information about the service by other customers.

Process: Services consist of processes. Customer-centered processes (cust essential to the process). Personalized processes (plan in advance).

Physical Evidence: Services also include physical product components (food in rest.). Physical Services Environment (Service scape, i.e. airline ticket). Digitization (advertising in web site). Consistency (coordinate all physical evidence).

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III. Management of relationships and experiences
Relevance of customer relationships: "Service ... and service activities are inherently relational."

- Most customers want to develop a relationship with their service providers

- Customers are loyal to those service providers with whom they have built a good relationship

- Employee-customer interactions critical to the customer experience and customer relationship development

- Successful service strategies are based on developing personal relationships between employees and customers

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Triad of service interaction

Three parties in the service interaction between customer and company:
- Customers
- Service employees
- Service organization

- All parties are of great importance to the outcome of the service interaction and the customer experience

- Cooperation and harmony between the three parties is relevant

Customer and Service organization = efficiency vs. satisfaction
Customer and Service employees = perceived control
Service employees and service organization = efficiency vs. autonomy

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Internal Marketing (focus of mktg is on service employees)

Meaning of service employees:
- Most important "capital" of service companies
- Internal customers

Importance of internal marketing:
- Internal application of marketing concepts
- Establishing and maintaining trusting employee relationships
- Motivation of employees as part-time marketers
- Gaining and retaining high-performing employees
- Transmit the service vision
- Continuous motivation and training

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Relationship and experience marketing

Relevance of Relationship Marketing for Customer Relationship:
- Relationship with customer (today) versus new customer acquisition (goods)
- customer loyalty (cross-buying)
- customer commitment (participate in the product of service, i.e. new Burgers)

Relationship mktg. = Systematic management of relationships with all stakeholders:
- Primary relationships (customers)
- Secondary relationships (employees, suppliers, shareholders / investors)

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Three components of Service marketing

Employees, customer, firm (see graphic)
Service marketing includes the three components of (1) external marketing, (2) interactive marketing, and (3) internal marketing

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Summary of Service Marketing: Customer Experience Management and Customer Relationship Management

The Special Features of Services (IHIP) require a coherent, holistic, holistic understanding of marketing

Service marketing requires close collaboration of marketing, operations and human resources functions

Service Marketing is based on an advanced marketing mix that includes 7 Ps: (1) Product, (2) Price, (3) Place, (4) Promotion, (5) People, (6) Process, (7) Physical Evidence

Every service interaction involves the service customer, the service provider and the service company

Internal marketing uses marketing concepts to build and maintain trusting relationships between companies and employees

Relationship marketing involves the systematic management of primary relationships (customers) and secondary relationships (employees, suppliers, shareholders / investors)

In summary, service marketing includes the three components of (1) external marketing, (2) interactive marketing, and (3) internal marketing