B to B Marketing

Services
What is a service?
An idea?
A circumstance?
A convenience?
A physical thing?
Some definitions
• Services are deeds, processes, and performances
• A precise definition of goods and services should distinguish them on the
basis of their attributes. A good is a tangible physical product that can be
created and transferred; it has an existence over time and thus can be
created and used later. A service is intangible and perishable. It is an
occurrence or process that is created and used simultaneously or nearly
simultaneously. While the consumer cannot retain the actual service after it is
produced, the effect of the service can be retained
• A service is a time-perishable, intangible experience performed for a
customer acting in the role of co-producer
Some definitions
• Service enterprises are organizations that facilitate the production and
distribution of goods, support other firms in meeting their goals, and add
value to our personal lives
Role of Services in an Economy
The service package
• Generally goods and services are packaged together as bundles
• A service package is defined as a bundle of goods and services that is provided in
some environment
• The bundle consists of:
Supporting facility: The physical resources that must be in place before a service can
be offered. Like golf course, a ski lift, a hospital, and an airplane
Facilitating goods: The material purchased or consumed by the buyer, or the items
provided by the customer. Like golf clubs, skis, food items, replacement parts, legal
documents and medical supplies
Information: Operations data or information that is provided by the customer to
enable efficient and customised service. Like patient medical records, seats available
on a flight, customer preferences from a prior visit, and location of customer to
dispatch a taxi
The service package
Explicit services: The benefits that are readily observable by the senses and
that consist of the essential or intrinsic features of the service. Like absence
of pain after tooth is repaired, a smooth running automobile after a tune-up,
and the response time of a fire department
Implicit services: psychological benefits that the customer may sense only
vaguely, or the extrinsic features of a service. Like the status of a degree
from an Ivy League school, or a worry-free auto repair
The service package
• All these features are experienced by the customer and form the basis of his
or her perception of the service
• It is important to offer a total experience for the customer that is consistent
with the desired service package
Product vs service

• On the surface there appear to be many similarities between the

marketing of tangible products and the marketing of intangible
services.
• But there are a number of important differences as well.
• Nearly every successful B2B firm offers a combination of products
and services,
• and often the services are more profitable than the products are.
Goods/ Services continuum
• In truth, there are few pure goods or pure services.
• Most offerings contain some portion of service and some portion of good.
• While surgery and a consulting service may seem to be nearly pure services,
often there is a tangible output such as an X-ray or a report.
• A large computer or an elevator system is often provided with a maintenance
contract tying tangible goods and intangible services together.
• Whether the business is classified toward the pure good (tangible) or the
pure service side (intangible) of the continuum depends entirely on how it is
perceived by the customer.
• The more the business is characterized by intangible aspects, the less
applicable will be the standard goods-oriented marketing approach.
Goods/ Services continuum

Tangible Intangible

Pure Salt Automobile; Restaurant Financial Surgery; Pure

Good Personal Svcs. Consulting Service
Computer Insurance
Five different categories of combinations of services and tangible goods have been identified:

• Pure tangible good: This includes products far on the left side of our Goods/Services
Continuum such as paper or diskettes. In general, a very limited amount of service is
offered with this purely tangible product.
• Tangible good with accompanying services: This is a tangible product with services
added. Highly technical products usually are more dependent upon services such as
planning, installation, training, and maintenance.
• Hybrid: In this case there is an equal offering of goods and services. So, the service
portion of the offering is of equal importance to the tangible product offering.
• Major service with supporting goods and services: In this case, the most important part
of the offering is the service, but some goods and supporting services are required.
The best example of this would be business travelers on an airline who buy a
transportation service but also need some tangibles such as food and tickets. While
the service requires a capital intensive good (an airplane) to be effective, the primary
portion of the offering is a service.
• Pure service: This offering is primarily a service, such as consulting or advertising.
Very little in the way of tangible goods is required.
T A B L E 9 .2 U nique services characteristics

Factor Description
Intangibility Services cannot be touched, felt or even tried out.
C onsum ed w hen produced Production and consumption of services take place at the
sam e tim e.
User participation Even when the user is not required to be at a location
where the service is performed, users participate in every
service production.
Perishability Services cannot be inventoried.
Variability Because of the labor-intensive nature of services, there is a
great deal of difference in the quality of service provided
by various providers, or even by the same providers at
different tim es.
T A B L E 9 .3 S e rvice ch a ra cte ristics/m an a ge m e nt im plicatio ns

Factor Implications
Intangibility Enhance and differentiate the “tangible clues,” establish
tangible evidence of service.
C o ns u m ed w he n p ro du ced Careful selection of and training for “part-time marketers.”
Must handle “moment of truth” correctly the first time.
User participation F ully un de rsta nd cu sto m e r e xp e ctatio ns of se rvice. In volve
customer more in service performance where appropriate.
Perishability Work to alter demand or supply to avoid extremes of
“chase demand” or “level capacity” strategies. Plan
capacity at a high level of demand. Use marketing tools
(price, promotion) to control demand. Use part-time
employees, cross-training or other methods to control
supply.
Variability Either standardize completely for low cost, low-skilled
e m ploye es o r re cruit hig h er-co st, highe r-skille d e m plo yee s
and allow them latitude to deliver customer satisfaction.
 Support Part Interactive Part

Technology and Systems

Know-how Systems and Operational
Part

Systems Support Resources

Concepts

Line of V isibility

Expectations
T o tally Invisible

Customers
Managers and
Supervisors Contact Persons
Management Support
Service

Support Functions and

Support Persons Physical Resources and
Physical Support Equipment
Product support services
• Product support is an often overlooked marketing tool.
• In many B2B markets, the support of the equipment sold is at least as important as
the equipment itself.
• In addition, the support services offered can frequently set a vendor apart from its
competitors.
• Frequently customers use a lifecycle approach to the purchasing of equipment and
related services.
• In this area, customer needs can be defined as follows:
• frequency of failure;
• downtime experienced;
• cost of the downtime;
• uncertainty about all of the aspects listed above
Support strategies
• Three major support service strategies:
• Design-related strategies: increasing product reliability or changing the
product to make it more modular in construction or to build in redundancy
• Support-system-related strategies: improving response time by adding more
technicians or improving repair time by better training or built-in diagnostics
• Strategies that reduce customer risks: warranties and service contracts
• In choosing a specific service strategy, manufacturers must weigh speed and
cost of product development, manufacturing and service costs as well as the
needs of customers and their willingness to pay for services
T A B L E 9 .4 S ervice quality dim ensions

D im ension Description
Tangibles Appearance of physical facilities, equipment, personnel,
and com m unications m aterials.
R eliability Ability to perform the promised service dependably and
accurately.
R esponsiveness Willingness to help customers and to provide prompt
service.
A ssurance Knowledge and courtesy of employees, ability to convey
trust and confidence.
E m pathy Caring, individualized attention to customers.
Source: Berry et al. (1992).
Customer perception-four dimensions
• customer perception of service encounter quality in a B2B context is defined
by four dimensions:
• professionalism,
• civility,
• friendliness, and
• competence.
• Generally customers look at two broad aspects
• Process
• Outcome
T A B L E 9 .5 e -S e rvic e q u a lity d im e n sio n s

D im e n sio n Description
No problem
E fficie n c y Ability to get to website, find desired product/info and
ch e c k o u t.
F u lfillm e n t Accuracy of service promises, product in stock, on-time
delivery.
R e lia b ility Availability and proper functioning of the site.
P riv a c y Assurance that shopping and credit card info is secure.
After a problem
R es po nsive nes s P ro vid in g n e c e s s a ry in fo , m e c h a n is m s fo r re tu rn s, o n -lin e
guarantees.
C o m p e n sa tio n Return of payment, shipping, and handling costs.
C o n ta ct Ability to contact live customer service agent by phone or
e-mail.

Source: adapted from Zeithaml et al. (2002).

E Services
• Other differences exist between the measurement of the quality of services in
general and the measurement of e-service quality.
• Customers do not have well developed expectations for service from websites.
• Where providing more of any dimension in a non-Internet based service results
in greater satisfaction, this does not appear to be true with an e-service.
• There appears to be a satisfaction point beyond which customers find
providing more service intrusive.
• For example, customers want to have an e-mail acknowledging an order and
another notifying them that a shipment has taken place. More e-mails than this
decrease satisfaction rather than increase it.
Service
Quality

• Measuring and improving quality is more

difficult for services than for products
• Unsatisfactory service cannot be replaced or
repaired
• Intangible and temporary nature
 Quality Systems

• Total Quality Management (TQM)

• Managing the entire organization so that it excels
on all dimensions of products and services that
are important to the customer
• Drivers are often set internally
• Return on Quality (ROQ)
• Customers set parameters and marketers select
quality improvements that lead to the highest
return on investment
Defining Service
Quality

• Specifications
• Company: Standard operating procedures
• Customer: Personal expectations
• Misalignment of company and customer
specifications can lead to dissatisfaction, even
if the service is delivered as designed
• Effective communication is key in eliminating
misalignment
Defining service quality
• For services the assessment of quality is made during the service delivery process
• Each customer contact is referred to as a moment of truth
• Every moment of truth is an opportunity to satisfy or dissatisfy the customer
• Customer satisfaction with a service can be defined by comparing perceptions of service(received)
with expectations of service (desired)
• When expectations are exceeded-service is perceived to be of exceptional quality, and also a
pleasant surprise
• When expectations are not met-service quality is unacceptable
• When expectations are confirmed by perceived service quality is satisfactory
• Expectations are based on several sources like WOM, personal needs and past experience
Defining Expectations

• Will expectation: Average level of quality

that is predicted based on all known
information
• Should expectation: What customers feel
they deserve from the transaction
• Ideal expectation: What would happen
under the best of circumstances; useful as a
barometer of excellence
• Minimally acceptable level: The threshold at
which mere satisfaction is achieved
Types of Definitions of
Quality

• Transcendent: Innate excellence that can be

recognized only through experience
• Product-based: Measurable quantities are used to
define quality
• User-based: “Quality is in the eyes of the beholder”
• Manufacturing-based: Conformance to requirements
• Value-based: A balance between conformance or
performance quality and an acceptable price to the
customer
Perceived Service Quality

Word of Personal Past

mouth needs experience

Service Quality Expected Service Quality Assessment

Dimensions service 1. Expectations exceeded
Reliability ES<PS (Quality surprise)
Responsiveness 2. Expectations met
Assurance Perceived ES~PS (Satisfactory quality)
Empathy service 3. Expectations not met
Tangibles ES>PS (Unacceptable quality)
COMPONENTS OF QUALITY: SERVICE-BASED

Tangibles: Appearance of physical elements

Reliability: Dependable and accurate performance

Responsiveness: Promptness; helpfulness

Assurance: Competence, courtesy, credibility,

security
Empathy: Easy access, good communication, understanding
of customer
 CAPTURING THE CUSTOMER’S PERSPECTIVE OF SERVICE
QUALITY: SERVQUAL

 To measure customer satisfaction with various aspects of service

quality- Zeithmal developed a survey research instrument
 based on premise that customers evaluate firm’s service quality by
comparing
 Their perceptions of service actually received
 Their prior expectations of companies in a particular industry

 Developed primarily in context of face-to-face encounters

 Scale contains 22 items reflecting five dimensions of service quality

 Subsequent research has highlighted some limitations of SERVQUAL

SERVQUAL

 Respondents complete a series of scales that

measure their expectations of companies in a
particular industry on a wide array of service
characteristics
 Susbsequently they are asked to record their

perceptions of a specific company whose services

they have used
 When perceived performance ratings are lower

than expectations =poor quality

 Reverse= good quality
OTHER CONSIDERATIONS IN
SERVICE QUALITY MEASUREMENT

 In uncompetitive markets or in situations where

customers do not have a free choice, researchers
should use needs or wants as comparison
standards
 Time constraints
 Services high in credence characteristics may
cause consumers to use process factors and
tangible cues as proxies to evaluate quality—halo
effect
 Process factors: Customers’ feelings
The Gaps Model—A
Conceptual Tool to Identify
and Correct Service Quality
Problems
Dimensions of service quality

• As in the figure the there are five major dimensions identified that a
customer uses to judge service quality they are:
• Reliability: Perform promised service dependably and accurately.
Example: receive mail at same time each day.
• Responsiveness: Willingness to help customers promptly. Example:
avoid keeping customers waiting for no apparent reason.
• Assurance: Ability to convey trust and confidence. Example: being
polite and showing respect for customer.
• Empathy: Ability to be approachable. Example: being a good listener.
• Tangibles: Physical facilities and facilitating goods. Example:
cleanliness.
Customers use these five dimensions to form their judgments of service
quality, which are based on a comparison between expected and
perceived service
Gaps between expected and perceived service is a measure of service
quality
Satisfaction is either negative or positive
 Service Quality Gap Model
Customer Customer Satisfaction Customer
GAP 5
Perceptions Expectations

Managing the Customer / Understanding

Evidence Marketing Research the Customer
Communication
GAP 4 GAP 1

Management
Service
Perceptions
Delivery of Customer
Expectations
Conformance
Design GAP 2
GAP 3
Conformance Service Design
Service
Standards
Gaps in service quality
• The gap between customer expectations and perception is defined as GAP 5 in the figure
• Customer satisfaction is dependent on minimising the four gaps that are associated with delivery of
service
• Market research gap is the discrepancy between customer expectations and management
perceptions of these expectations
• Gap 1 arises from management’s lack of full understanding about how customers formulate their
expectations on the basis of a number of sources- advertising, past experience, competition,
personal needs and WOM
• Strategies for closing this gap include improving market research, fostering better communication
between management and it’s contact employees, and reducing the number of levels of
management that distance the customer
Gaps in service quality
• The design gap results from management’s inability to formulate target levels of service quality to meet
perceptions of customer expectations and translate these into workable specifications
• This gap may result from a lack of management commitment to service quality or a perception of the un-
feasibility of meeting customer expectations
• However, setting goals and standardising service delivery tasks can close this gap
• The conformance gap occurs because the actual delivery of the service does not meet the specifications set by
management
• This gap can arise for a number of reasons, including lack of teamwork, poor employee selection, inadequate
training, and inappropriate job design
• Communication gap is the discrepancy between service delivery and external communication in the form of
exaggerated promises and lack of information provided to contact personnel
• Since customer expectations are formed by media advertising and other communication from the firm, it is
important to control all communication
 SERVQUAL
Model
Word-of-Mouth Personal Needs
Communicatio Past Experience
ns

Expected Service
Gap 5
Customer
Perceived Service
Gap 1 Gap 4 External
Service Delivery Communications
Gap 3
to Customers

Service Quality
Specifications
Provider Gap 2

Management Perceptions of
Customer Expectations
 Gaps in Service Quality
Gap Problem Cause(s)
1. Consumer expectation The service features offered don’t Lack of marketing research; inadequate upward
– mgmt. perception meet customer needs communication; too many levels between contact
personnel and management

2. Management The service specifications defined Resource constraints; management indifference; poor
perception – service do not meet management’s service design
quality specification perceptions of customer
expectations
3. Service quality Specifications for service meet Employee performance is not standardized; customer
specification – service customer needs but service delivery perceptions are not uniform
delivery is not consistent with those
specifications
4. Service delivery – The service does not meet customer Marketing message is not consistent with actual service
external communication expectations, which have been offering; promising more than can be delivered
influenced by external
communication
5. Expected service – Customer judgments of high/low A function of the magnitude and direction of the gap
perceived service quality based on expectations vs. between expected service and perceived service
actual service
 PRESCRIPTIONS FOR CLOSING THE
SEVEN SERVICE QUALITY GAPS

1. Knowledge gap: Learn what customers expect

2. Standards gap: Specify SQ standards that reflect expectations
3. Delivery gap: Ensure service performance meets standards
4. Internal communications gap: Ensure that communications promises are realistic
5. Perceptions gap: Educate customers to see reality of service quality delivered
6. Interpretation gap: Pretest communications to make sure message is clear and
unambiguous
7. Service gap: Close gaps 1 to 6 to meet customer expectations consistently
Measuring and Improving
Service Quality
 SOFT AND HARD MEASURES OF SERVICE QUALITY

 Soft measures—not easily observed, must be collected by

talking to customers, employees, or others
 Providedirection, guidance, and feedback to employees on ways
to achieve customer satisfaction
 Can be quantified by measuring customer perceptions and
beliefs
 For example: SERVQUAL, surveys, and customer advisory panels
 Hard measures—can be counted, timed, or measured
through audits
 Typicallyoperational processes or outcomes
 Standards often set with reference to percentage of occasions on
which a particular measure is achieved
 Control charts are useful for displaying performance over time
against specific quality standards
 COMPOSITION OF FEDEX’S
SERVICE QUALITY INDEX—SQI (TABLE 14.4)

Weighting Daily
Failure Factor
Number of
X Incidents =
Points
Type
Late delivery—right day Late Delivery 1
—wrong day Tracing request 5
unanswered Complaints reopened 1
Missing proofs of delivery Invoice 5
adjustments 1
Missed pickups Lost packages 1
Damaged packages 10
Aircraft delays (minutes) 10
Overcharged (packages missing label) 10
Abandoned calls 5
5
1

Total Failure Points (SQI) = XXX,XXX

Front Stage Back Stage

E n te r d a t a , a c c e s s d a ta b a s e ,
R e s e rv a tio n
v e r i f y a v a i l a b i li t y

V e rify l i c e n s e , a c c e s s
A rriv e fo r c h e c k - in
d a t a b a s e , a s s i g n v eh i c l e

A rra n g e in s u r a n c e A c c e s s d a ta b a s e
a n d is s u e c o n tr a c t enter data

R e c e iv e o t h e r O b ta i n ite m s fro m O rd e r i t e m s f r o m
e x tra s (e .g . m a p s ) s u p p lie r s u p p lie r

M a i n t a in b u s ,
T ra n s p o rt t o c a r l o t D is p a t c h b u s o r v a n
a s s ig n d riv e r

E m p lo y e e a s s ig n e d
Receive a car P a rk c a r in lo t
t o a s s is t

O b ta in E m p lo y e e a s s ig n e d
a d v i c e / d ir e c ti o n s t o a s s is t

D e p a rt c a r lo t
M A IN T A IN
A C C O U N T F IL E S
AND
R E S E R V A T IO N S
D r iv e c a r d u r in g
DATAB ASE
re n ta l p e rio d

Problem solving
2 4 - h o u r h e lp lin e
(if necessary)

M a in t e n a n c e ,
R e tu r n c a r C h e c k c a r, r e f u e l
c le a n in g

B i l li n g a n d C o m p u te ch a rg e s
paym ent and accept paym e nt

T ra n s p o rt f r o m car M a i n t a in b u s ,
D is p a t c h b u s o r v a n
lo t a s s ig n d riv e r
Service Mapping/Blueprinting

A tool for simultaneously depicting the service

process, the points of customer contact, and the
evidence of service from the customer’s point of
view.

Proces
s
Service Points of
Mappin Contact

g Evidenc
e
Service Blueprint Components
CUSTOMER ACTIONS

line of interaction

“ONSTAGE” CONTACT EMPLOYEE ACTIONS

line of visibility

“BACKSTAGE” CONTACT EMPLOYEE ACTIONS

line of internal interaction

SUPPORT PROCESSES
Service design elements
• Service design elements is a blue print that communicates to customers and employees alike what
service they should expect to give and to receive
• These system elements are;
 Structural:
1. Delivery system- Front and Back office, automation, customer participation
2. Facility design- size, aesthetics, layout
3. Location- Customer demographics, single or multiple sites, competition, site characteristics
4. Capacity planning- Managing queues, number of services, accommodating average or peak demand
 Managerial:
1. Service encounter- Service culture, motivation, selection and training, employee empowerment
2. Quality- Measurement, monitoring, methods, expectations versus perceptions
3. Managing capacity and demand- Strategies for altering and controlling demand, queue management
4. Information- Competitive resource, data collection
Service Blueprinting
• Developing a new service based on a service concept, can lead to costly errors, when
translating the concept to reality
• When a building is developed, the design is captured as architectural drawings called
blueprints
• G. Lyn Shostack has proposed that a service delivery system also can be captured in a visual
diagram (a service blueprint) and used in a similar manner for the design of services
• The service blue print is a map or flow chart of all the transactions constituting the service
delivery process
• A blueprint is a precise definition of the service delivery system that allows management to
test the service concept paper before any final commitments are made
• The blueprint also facilitates problem solving and creative thinking by identifying potential
points of failure and highlighting opportunities to enhance customers’ perception of the service
Service Blueprinting
 Express Mail Delivery Service
Truck Truck
Packaging Packaging
Forms Forms

EVIDENCE
CONTACT PERSON CUSTOME PHYSICAL
Hand-held Hand-held
Computer Computer
Uniform Uniform

Customer Customer Receive

Calls Gives Package
Package
(Back Stage) (On Stage)R

Driver
Picks Deliver
Up Pkg. Package

Customer
Service
Order

Airport Fly to
Dispatch Unload Load
Driver
Receives Sort Fly to
& Loads Center & On
Destinati Sort Truck
PROCESS
SUPPORT

Load on
Airplane
on

Sort
Packages
 Overnight Hotel Stay
Bill

EVIDENCE
CUSTOMER PHYSICAL
Desk
Hotel Cart for Desk Elevators Cart for Room Menu Delivery Food Lobby
Exterior Bags RegistrationHallways Bags Amenities Tray Hotel
Parking Papers Room Bath Food Exterior
Lobby Appearance Parking
Key
Arrive Give Bags Call Check out
Go to Receive Sleep Receive
at to Check in Room Eat and
Room Bags Shower Food
Hotel Bellperson Service Leave
(Back Stage)(On Stage)
CONTACT PERSON

Greet and
Process Deliver Deliver Process
Take
Registration Bags Food Check Out
Bags

Take
Take Bags Food
to Room Order
SUPPORT PROCESS

Registration Prepare Registration

System Food System
Service Blueprint of Luxury Hotel
Service Blueprinting
• At the top we find the ‘physical evidence’ that the customers will see (hotel exterior, uniform worn by bell persons, or
room décor) and experience (waiting for check-in, taking a bath, watching television, or eating a meal)
• Management should ask, is the evidence consistent with the customer’s expectation and hotel image?
• Activities in the first row above the ‘line of interaction’ are customer-initiated steps, choices, and interactions the
customer performs in the process of purchasing, consuming and evaluating the service
• Any vertical flow crossing the ‘line of interaction’ depicts a direct contact between the customer and the organisation
• We can ask questions such as, should the customer interact with the same person or be handed off; are different
interpersonal skills required of the bell-person, check-in clerk, bag handler, and food deliverer?
• Paralleling the customer actions are two areas of contact-employee actions.
• Above the ‘line of visibility’ are actions in full view of the customer and thus ‘onstage’
• Below the ‘line of visibility’ are activities that are ‘backstage’ and not seen by the customer
• Questions in this area concern appropriate backstage staffing to avoid unnecessary delays onstage
Service Blueprinting
• Below the ‘line of internal interaction’ we find the support process that
generate questions concerning the capacity requirements of these back-
office systems, such as reservation information system and kitchen
• Finally the ‘line of visibility’ in a service blueprint can immediately signal of
involvement of the customer in the delivery process
• Example: the line of visibility is relatively high for a gourmet restaurant as
compared to a fast food restaurant
 Building a Service Blueprint

Step
Step11 Step
Step22 Step
Step33 Step
Step44 Step
Step55 Step
Step66
Map Map Add
Identify
Identifythe
the Identify
Identifythe
the Mapthe
the Map Link
Link Add
process to customer process contact
contact customer evidence
evidence
process to customer process customer
from employee ofofservice
be
beblue-
blue- oror fromthe
the employee and
andcontact
contact service
printed. customer customer’s actions,
actions, person atateach
each
printed. customer customer’s person
point onstage customer
segment.
segment. pointofof onstage activities
activitiestoto customer
view. and
andback-
back- needed action
action
view. needed
stage.
stage. support step.
step.
support
functions.
functions.
Service Blueprinting
• Generic flow/ process for the process to be blueprinted can be:
1. Identify customer or customer segment
2. Map the process from the customer point of view
3. Map contact employee action onstage and backstage
4. Link customer and contact person needed to support functions
5. Add evidence of service at each customer action step
New service development
• Blueprinting is a key part of developing a new service.
• However, often new services result from trial and error.
• Steps to enhancing new service development:
• establish a culture for entrepreneurship;
• create an organization to foster new service development;
• test ideas in the marketplace;
• monitor results;
• reward risk takers.
New service development
• Four rules for the development of a new service:
• Give people a good reason to change
• Start strong
• Market to employees
• Make the service real.
B To B success factors
• Certain types of service projects generally succeed while others usually fail
in business to business markets.
• Types that succeed are:
• The Customized Expert Service: Customized Expert Service is one that
leverages the firm’s capabilities(expertise), but is customized to fit the needs
of customers
• The Planned Pioneering Venture: a firm develops a new service around its
core competencies but in an unfamiliar competitive environment
• The Improved Service Experience: a firm makes improvements to a current
service offering using new equipment to enhance the speed and reliability of
the service process
Service and Profitability

• Reduced operating expenses

• Competitive differentiation
• Increased quality
• Increased efficiency
• Increased responsiveness
• Increased market Share
• Increased customer loyalty
 Service and Profitability

• A service focus will lead to proactively managing the service function as a profit
center because it will generate future revenues as the product becomes a
commodity.
• Differentiation and Lower costs
• Improved transportation /Materials handling CAN/WILL cut costs as effectively
as cutting direct labor or material inputs
• CAD and MFG software can increase quality and Reduce costs as easily as can
new equipment
• Product Quality once the competitive Advantage is now just the Ante’
• Service is not A competitive edge IT IS THE Competitive edge
• In most mfg. industries service costs out weigh direct labor costs
• YET we only look at labor and cautiously look at service functions
• planning/Q.C./ Distribution/ accounting /Transportation/Advertising/
inventory/Design
 Satisfaction and Loyalty

apostle
zone of affection
100%

Loyalty (Retention)
80%

60% zone of indifference

40% zone of defection

20%

terrorist 1 2 3 4 5

Very Dissatisfied Neutral Satisfied Very

dissatisfied satisfied
Satisfaction