099859 – Frontiers in Services Marketing

Prof. J-C W. (Shlomi) Chebat

Type of course: (lecture)

Academic Year: 2014-15

A. Course Objective;

1. To familiarize students with current issues and problems associated with services marketing.
2. To develop an understanding of both failed and successful marketing practices and strategies.
3. To develop an understanding of how marketing strategies impact modern economies.

B. Course Outline:
We review the major trends in western societies related to the productivity, the power relations between genders, the increasingly demanding and powerful consumers, the effects of technology available to both firms and customers and show that those trends affected the development of the present services economy.
Services firms send “messages” to consumers through various media (ads, promotion) but mostly the service personnel. These messages are not necessarily understood by consumers as firms would like them to be. Firms may paradoxically spend too much on quality, beyond a threshold of financial productivity. We review several approaches to the understanding of how consumers process the quality signals into satisfaction and loyalty. We stress the role of switching costs.
The contact personnel is a key element of the success (vs failure) of services marketing strategies. We examine how its behavior impacts the perception of quality, the satisfaction and the loyalty of customers. We put a special emphasis of the potential culture gaps between customers and service providers. We examine how technology may interfere between them.

Services firms neglect and/or cannot assess properly the effects of environmental cues on their customers. We review the effects of environmental features that change the relations customers entertain with the service providers, that is, music, scents, décor, layout and crowding. We show how these factors affect perception of quality and emotional attachment to the service provider, which leads to loyalty and sales.
Services failures are frequent and inevitable. A great deal of services firms’ profitability depends on the way they deal with dissatisfied customers. We examine the main types of failures that affect the most customers. The main focus of this lesson remains on the way potential conflicts may develop and can be avoided.
These conflicts can develop in harsh relations that may affect the brand image, especially in times of social media like Twitter or Facebook that are used as weapons by consumers who are seeking to get even with the firm. We also focus on forgiveness. Cultural and personal characteristics (at least partly) explain the variability of customers behavior, that firms should take care of.

It’s a major and common strategic mistake to manage communications of services as though they were not different from products. We focus on the power of the word of mouth (WOM), especially on the Internet, in both positive and negative cases; how this WOM can be oriented, amplified or reduced. WOM affects non only brand image but also share values. We show the importance of sponsorship (vs advertising) in the case of services.
Managing contact personnel must be done in a marketing perspective where it’s fully understood that the contact personnel is a key element of communications, customers’ loyalty and profits. This is not the case for most service firms. We focus on the way contact personnel is controlled through a combination of constraints and incentives. Taking into account that customers’ behavior is hard to predict, we insist on the management of empowerment granted to contact personnel, the success of which depends on the firm’s own culture. Workplace fairness to the employees has tremendous effects on their behavior and on their productivity and their opportunistic attitudes. The way the employees manage to reconcile work constraints with personal objectives is also examined.
Price is a signal. Just as the rest of the communication process, pricing is different for services than for products. We show some paradoxical reactions of customers when facing the price signal from services. We warn managers against commonsensical approaches to pricing services. What is a fair price for services? How fairness varies with segments of customers? Sensitivity to prices of services varies with some customers’ characteristics that are reviewed here. Same with price (asymmetrical) elasticity. A special attention is paid to bundles of services and the price strategies.
B2B and professional services represent an increasingly important share of the service sector and the economy of Western countries. They deserve a special attention. Customers of this sector have specific characteristics that are examined in this lesson.We focus on the antecedents of satisfaction and loyalty, as well as the process through which the relation with service providers evolve. We compare the complaining process of B2B vs B2C customers.
Teaching Method: (lectures, student participation)

 

Detailed lesson plan:

SESSION TOPIC READINGS
1 How culture and technology shaped the service sector Capizzi, M. T., & Ferguson, R. (2005). Loyalty trends for the twenty-first century. The Journal of Consumer Marketing, 22(2), 72-72-80.Ferguson, R. (2008). Word of mouth and viral marketing: Taking the temperature of the hottest trends in marketing. The Journal of Consumer Marketing, 25(3), 179-179-182.

Matthyssens, P., Kirca, A. H., & Pace, S. (2008). Business-to-business marketing and globalization: Two of a kind. International Marketing Review, 25(5), 481-481-486

2 &3 How services firm communicate quality signals to consumers and how these signals transform into satisfaction and loyalty  Rust, Roland T.; Lemon, Katherine N.; and Zeithaml, Valarie A. «Return on Marketing: Using Customer Equity to Focus Marketing Strategy», Journal of Marketing,  Vol. 68 (January), 2004, 109-127.Teas, R. Kenneth, and DeCarlo, Tomas E. «An Examination and Extension of the  Zone-of-Tolerance Model. A Comparison to Performance-Based Models of Perceived Quality», Journal of Service Research, Vol. 6 (3), 2004, p. 272-286.

Keiningham, Timothy L.; Perkins-Munn, Tiffany; and Evans, Heather. «The Impact of Customer Satisfaction on Share-of-Wallet in a Business-to-Business Environment», Journal of Service Research, Vol. 6 (1), 2003, p. 37-50..

 

4 Services Encounters: the Moment of Truth 

 

Sequential service quality in service encounter chains: Case studies. (2006). The Journal of Services Marketing, 20(1), 51-51-58. Jayawardhena, C. (2010). The impact of service encounter quality in service evaluation: Evidence from a business-to-business context. The Journal of Business & Industrial Marketing, 25(5), 338-348.

Noone, B. M., Kimes, S. E., Mattila, A. S., & Wirtz, J. (2009). Perceived service encounter pace and customer satisfaction. Journal of Service Management, 20(4), 380-380-403

 

 

5&6 SERVICE ENVIRONMENT: how the atmospherics of the service environment affect consumers’ emotions, perceptions and behaviors, including sales  Michon, Richard; Chebat, Jean-Charles; and Turley, L.W. «Mall Atmospherics: The Interaction Effects of the Mall Environment on Shopping Behavior», Journal of Business Research, Vol. 58, 2005, p. 576-583.Michon, Richard; and Chebat, Jean-Charles. «Cross-Cultural Mall Shopping Values and Habitats. A Comparison Between English-and French-Speaking Canadians», Journal of Business Research, Vol. 57, 2004, p. 883-892

 

 
7&8  DEALING WITH DISSATISFIED CUSTOMERS: from silence to revenge and forgiveness

 

Wirtz, Jochen; and Mattila, Anna S. “Consumer Responses to Compensation,  Speedof Recovery and Apology After a Service Failure”, International Journal, of Service Industry Management, Vol. 15 (2), 2004, p.150-166.

Zeelenberg, Marcel, and Pieters, Rik. «Beyond Valence in Customer Dissatisfaction: A Review and New Findings on Behavioral Responses to Regret and  Disappointment in Failed Services», Journal of Business Research, Vol. 57, 2004, p. 445-455.

Mattila, Anna S., and Patterson, Paul G. «Service Recovery and Fairness Perceptions in Collectivist and Individualist Contexts», Journal of Service Research, Vol. 6 (4), 2004, p. 336-346

9 SERVICES COMMUNICATIONS : why and how service firms communications cannot be managed as those of product firms  Garnefeld, I., Helm, S., & Eggert, A. (2011). Walk your talk: An experimental investigation of the relationship between word of mouth and communicators’ loyalty. Journal of Service Research : JSR, 14(1), 93. Nambisan, P., & Watt, J. H. (2011). Managing customer experiences in online product communities. Journal of Business Research, 64(8), 889. Retrieved from

Sok, P., & O’Cass, A. (2011). Understanding service firms brand value creation: A multilevel perspective including the overarching role of service brand marketing capability. The Journal of Services Marketing, 25(7), 528-528-539.

 

10&11 MANAGING SERVICE PERSONNEL: the neglected part of services marketing 

 

De Jong, Ad; De Ruyter, Ko; and Lemmink, Jos. «Antecedents and Consequences of Service Climate in Boundary-Spanning Self-Managing Service Teams», Journal of Marketing, Vol. 68 (April), 2004, p. 18-35.Chebat, Jean-Charles, and Kollias, Paul. «The Impact of Empowerment on Customer Contact Employees’ Roles in Service Organizations», Journal of Service Research, Vol. 3 (1), 2000, p. 66-81.

Boles, James S., and Babin, Barry J. «On the Front Lines: Stress, Conflict, and the Customer Service Provider», Journal of Business Research, Vol. 37, 1996, p. 41-50.

Tortosa, V., & Moliner, M. A. (2009). Internal market orientation and its influence on organisational performance. European Journal of Marketing, 43(11), 1435-1435-1456

 

12 Why pricing services is so very different from products  Bolton, Ruth N., and Myers, Matthew B. «Price-Based Global Market Segmentation For Services», Journal of Marketing, Vol. 67 (July), 2003, p. 108-128.Estelami, H. (2008). Consumer use of the price-quality cue in financial services. The Journal of Product and Brand Management, 17(3), 197-197-208.

Indounas, K., & Avlonitis, G. (2011). New industrial service pricing strategies and their antecedents: Empirical evidence from two industrial sectors. The Journal of Business & Industrial Marketing, 26(1), 26-26-33.

 

13 B2B and Professional

Services

Lapierre, Jozée , Pierre Filiatrault and Jean-Charles Chebat «Value Strategy Rather Than Quality Strategy: A Case of Business-to-Business Professional Services» Journal of Business Research, Volume 45, Issue 2, June 1999, p. 235-246.Cater, B., & Cater, T. (2009). Emotional and rational motivations for customer loyalty in business-to-business professional services. The Service Industries Journal, 29(8), 1.

Haj-Salem, Narjes & JC Chebat (2014) « B2B vs B2C complaining behavior ». JBR (forthcoming

 C. Course Requirements:

Prerequisites: Introduction to Marketing Management
Student Obligations/Requirements/Assignments:

1. Final grades will be determined on the basis of 50% for a take-home essay on a topic of the student’s choice related to services marketing (to be handed at the end of the session), and 50% for the final exam grade.
2. The final exam will cover class lectures.

D. Required Readings

The required readings are those shown above. Students are expected to have read the articles related to a given lesson before coming to class and are expected to fully participate in the discussion of the articles.