Good service company

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Good service companies like university, hospital, motel, etc focus attention on both customers and employees. They understand the service-profit chain, which links service firm profits with employee and customer satisfaction. Services marketing strategy calls not only for external marketing but for internal marketing to motivate employees and interactive marketing to create service delivery skills among service providers.

To succeed, service marketers must create competitive differentiation, offer high service quality, and find ways to increase service productivity

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Managing Service Differentiation

Good services companies manage service differentiation by developing a differentiated offer, delivery and image. The offer can include innovative features that one company's offer apart from competitor's offer.

Service companies can differentiate their service delivery by having more able and reliable customer-contact people, by developing a superior physical environment in which the service product is developed or by designing a superior delivery process.

Service companies can work on differentiating their images through symbols and branding

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Managing Service Differentiation:

Service companies can differentiate their service delivery by having more able and reliable customer-contact people. For university: they can be counselors, coordination officers, public relations officers and teachers.

Service companies can work on differentiating their images through symbols and branding.

For example: We can change our slogan or mission statement. "A distinguished landmark in higher education" is Not mind blowing. We can change it saying: For quality education or Better education, better career or A university with a vision or Come to learn and go for service, A university with a difference or A career facilitator university

A brand expert can suggest a very good mind-catching slogan.

We also have to manage quality and service productivity.

Service productivity can be managed by motivating the customer-contact people. Motivation should be both intrinsic and extrinsic.

To succeed, service marketers must create competitive differentiation, offer high service quality, and find ways to increase service productivity

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In conclusion, service marketers must create competitive differentiation, offer high service quality, and find ways to increase service productivity.

1. Service differentiation, i.e., providing something different and extra than the competitors do. For example: CDC can initiate mock interview sessions for the fresh graduates and can conduct job fair or the like.

2. Service quality, i.e., Not compromising with quality.

3. Service productivity, i.e., motivating internal employees. Motivating external employees is a wrong strategy.  

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The Service-Profit Chain

As much as the customers, front line employees would have to be placed in the center of the attentions of the company, if the company desired to succeed in a service economy. It suggests that satisfied employees tend to deliver services with higher added value to customers, what, in turn, tends to make them satisfied and faithful, keeping them in the company, impacting positively in company’s growth, and increasing its profitability. This model became, since
then, part of the strategic orientations of many corporations.

Some basic considerations from the elements of the chain relationships:

• customer loyalty causes increase of growth and profit. 5% of increase in the fidelity of the customer can increment the profits about 25% to 85%.

• customer satisfaction induces fidelity. Xerox discovered that their very satisfied customers had six times more intention to repurchase company’s goods than mere satisfied ones.

• aggregate value to services induces to customers’ satisfaction. The effort of an insurance company to deliver the maximum value includes to train a team to supply special services like offer onsite services even in catastrophes. The
company has one of the highest margins in industry.

• employees productivity aggregate value to the services. Southwest Airlines has the fastest land service of the industry. The pilots fly more 20 hours a month in comparison with the competition. The tariffs remain low while the
value of the services keeps high.

• employee fidelity induces to productivity. The cost of substitution of a salesman of automobiles who on average has 8 years of experience for another with less of one year represents $ 432,000 in sales lost.

• employee satisfaction leads to fidelity. A recent study in a company, 30% of all the unsatisfied employees had expressed their intention to leave, in 11 comparison with 10% of all the satisfied employees. Moreover, low rotation
rate has direct relation with customer satisfaction.

• adequate support system leads to customer satisfaction. Services employees are happier when they have “room” to carry through their customer’s needs and when they have authority to take action.

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the 15 P's of Marketing


1.Product

2.Price

3.Place

4.Promotion

5.People

6.Process

7.Physical Evidence

8. Privacy

9.Personal Interest

10. Personal Social Networks

11. Public Commentary

12. Personalization

13. Participation

14. Peer to Peer

15. Predictive Modeling

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5. People: For most services, people are a vital element of the marketing mix. The interaction between staff and customers can be the essential turning point between any decision making process.


6. Process: A service firm has no products, only interactive processes – Gronroos, 2001 cited from Adrian Palmer Principles of Service Marketing 4th Edition. With services, a clear distinction cannot be made between marketing and operations management.


7. Physical Environment: Because of the intangible nature of a service this subsequently means that potential customers are unable to judge that service before it is consumed. An important element of marketing planning is therefore to reduce this level of risk by offering tangible evidence of the nature of the service. - cited from Adrian Palmer Principles of Service Marketing 4th Edition.

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8. Privacy: In accordance with the rules and regulations of data protection acts it is important especially in the online digital age. Privacy from unwanted spam, junk and telecommunications provides customers with a sense of anonymity and allows for more selective forms of marketing.


9. Personal Interest: As services are becoming more interactive, advertising and promotion are becoming more personalized with the incorporation of personal tastes. Personal interests are becoming an increasing important decision making process for customers. Personal interests can make the different between customer choosing a particular brand or product.

10. Personal (e.g. social) Networks: For instance Facebook, Myspace forum sites and social media. These sites generate a new form of marketing know as social media marketing.


11. Public Commentary: Important in the age of online trading and entrepreneurship. For instance online auction sites like E-Bay, Amazon have more credibility when providing market information that place a 2 directional form of communication (social exchange process)

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12. Personalization: With emerging social media and increasing development of Web 2.0 applications Through the combination of emerging technologies and the increasing form interaction between customers via the internet, there is a greater degree of customization of products and services.


13. Participation: This allows customers to participate in what a brand should stand for. What the direction of product should be and the style of advertisements, creating a free flow of information between customers and companies.


14. Peer to Peer: Now referred as social computing is becoming an increasing disruptive form of the traditional balance in marketing, as customers bases are being replaced by active customer communities. Rather than the companies imposing brand awareness and advertising it is increasingly engaging towards the customers as active instruments in the selling process.


15. Predictive Modeling: This refers to the neural network algorithms used in applied marketing problems. In essence to try to predict the best probability of an outcome on the basis of detection theory. Extensively developed in analytical customer relationship management helps plan out the expectations that a customer will take a particular action.