Business-To-Business Services Services That Are Bought By Business Organizations For Incorporation Into Their Production Processes

GLOSSARY 7/e

Adoption process: Rate at which individuals start buying a product. Advertising: The process by which an advertiser communicates with target audiences through paid-for messages. AIDA (Attention, Interest, Desire, Action): A mnemonic used to describe the process of communicating a series of messages. App A programme that runs on a mobile phone / tablet computer. Balanced Scorecard (BSC): A tool for reporting the activities of employees using diverse and predetermined criteria Banner ads: Paid-for advertising on websites, which typically targets a predetermined profile of visitors to the website. Benchmark: To set performance standards by reference to best practice elsewhere. Blueprinting: A method of visually portraying the processes and participants involved in the production of a service. Bottleneck: A stage in a process that causes the entire process to slow down or stop. Brand: A distinctive identity comprising a name, logo, slogan and/or design scheme that distinguishes a service from other services and conveys expectations about the service. Business environment: The social, technological, economic and political factors external to an organization that are likely to have an impact on its activities, either directly or indirectly. Business-to-business services: Services that are bought by business organizations for incorporation into their production processes Cause-related marketing Promoting the interest of a particular cause (eg a social issues) without a specific aim of exchange of value Channel of communication: Medium used to convey information from a sender (or transmitter) to a receiver. Channels of distribution: A group of individuals and organizations that directs

1 the flow of products from producers and customers. Closed system - a system with known elements and definable boundaries Co-creation The consumer is a contributor to the service production process

Codes of conduct: A code outlining the responsibilities of, or best practice for, an individual or organization. Cognitive dissonance: Mental discomfort that occurs following a purchase decision that the buyer may subsequently believe to have been a poor decision. Consumer surplus: Difference between the price consumers are willing to pay and the actual price paid. Contribution: Sales revenue less variable costs. It is the amount available to pay for fixed costs and provide any profit after variable costs have been paid. Cookie: A message given to a web browser by a web server, which is stored by the browser in a text file. The message is then sent back to the server each time the browser requests a page from the server. Co-producers: Consumers and suppliers that work together to produce the end product or service transaction. Sometimes also referred to as “co-creation” of value Co-production: A service benefit can be realized only if more than one party contributes to its production, e.g. customer–producer co-production implies that customers take a role in producing service benefits. Core workers: Employees who are generally functionally flexible and perform activities central to an organization. Cost-plus pricing: A pricing method in which a percentage mark-up is added to the costs of producing a service. Critical incidents: Encounters between customers and service producers that can be especially satisfying or dissatisfying. Cross-selling: Strategy of selling other products to a customer who has already purchased (or intends to purchase) a product from the vendor. Cultural convergence: A tendency for attitudes and values of previously distinct

2 groups of people to gradually become more similar. Customer charter: A statement by a service organization to its customers of the standards of service that it pledges to achieve. Customer delight: A service that exceeds a customer’s expectations. Customer experience: Customers’ perception of, and emotional response to, the totality of processes and outcomes that comprise a service offer. Customer lifetime pricing: An approach to pricing that is based on developing a profitable long-term relationship with customers. Customer loyalty: The tendency of a customer to choose one business or product over another for a particular need. It shows the preference of a customer to buy from or visit a business more often. Loyalty is demonstrated by the actions of the customer and is also defined by their attitudes. Customer Relationship Management (CRM): An operational procedure for understanding customers’ needs and enabling the firm to build better relationships and increase sales. It creates a comprehensive picture of customer needs, expectations and behaviours by analysing information from every customer transaction. CRM creates the customer intelligence necessary to develop customer relationships. Data mining (also called knowledge discovery in databases (KDD) or knowledge discovery and data mining): An analytic process designed to explore data (usually large amounts of data – typically business- or market- related) in search of consistent patterns and/or systematic relationships between variables, and then to validate the findings by applying the emerged patterns to new subsets of data. Demand forecasting: An attempt to obtain the best estimate of the number of people who are able and willing to buy a product at some time in the future. Diffusion models: Processes by which a new idea or new product is accepted by the market. Direct marketing: Direct communication between a seller and individual customers using a method of promotion other than face-to-face selling. Disconfirmation model: Customers’ prior expectations of a service are

3 confirmed/disconfirmed by subsequent delivery of the service. Disintermediation: The removal of intermediaries in a supply chain in order to sell products directly to the end consumer. E-commerce: Distributing, buying, selling, marketing and servicing of products using electronic systems such as the internet. Economies of scale: A productivity improvement caused when an increase in the scale of the firm causes a decrease in the long-run average cost of each unit of production. Economies of scale: Unit costs decrease as output/throughput increases. Ecosystem – the broader environment in which a service system operates Elasticity of demand: The responsiveness of customer demand to changes in price or some other variable. Empowerment: Giving employees authority to act using their own initiative, without reference to senior management. Ethics: A set of principles based on moral judgement. Expectations: The standard of service against which actual service delivery is assessed. Extended marketing mix: An extension of the 4Ps marketing mix framework to make it relevant to services. Usually includes people, processes and physical evidence. Extended promotion mix: The traditional goods promotion mix, with the addition of elements related to visible service processes. Fixed costs: Costs that do not increase as total output increases. Flow: A mode of experience when an individual becomes absorbed in their activity and feels a sense of control over the environment. Focus group: A form of qualitative research in which a group of people are asked about their attitude towards a product, service, concept, advertisement or idea. Franchising: A continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organizing training, merchandizing and management in return for a consideration from the

4 franchisee. Functional quality: Customers’ subjective judgements of the quality of service delivery. Gaps model: An analysis of the causes of differences between what customers expect and what they get. Geodemographic analysis: The analysis of markets using a combination of geographic and demographic information. Glocalisation: Combining global standardization with adaptability to local markets Guerrilla marketing: The use of unconventional promotional tactics that are unexpected by the target audience. Hard system – systems which can be easily defined and measured Hedonistic benefits: A service provides essentially pleasurable rather than practical benefits High-contact services: Services in which the production process involves a high level of contact between an organization’s employees and its customers. Hub and spoke system: A model that uses a centrally located production hub and geographically dispersed outlets linked to the hub. Human Resource Management (HRM): Strategies and practices to improve the effectiveness and efficiency of an organization’s human resources. Human–computer interaction: The study of how humans interact with computers, physically, psychologically and socially. Industrialization of services: The process of deskilling and simplifying service production processes with the aim of reducing variability in outcomes and processes. Inseparability: The production of most services cannot be spatially or temporally separated from their consumption. Intangibility: Pure services present no tangible cues that allow them to be assessed by the senses of sight, smell, sound, taste or touch. Integrated marketing communications: Promotional planning designed to ensure that all brand communication received by a customer or prospect for a

5 service or organization are relevant to that person and consistent over time. Intermediary: A person or business who is acting as a third party that offers mediation services between two trading parties and acts as a conduit for goods or services offered by a supplier to a consumer. Internal marketing: The application of the principles and practices of marketing to an organization’s dealings with its employees. Joint venture: A partnership formed between two or more parties to share risk or expertise with each sharing in revenues, expenses and control of the enterprise. Just-in-time (JIT): A strategy to deliver goods and services at the time that they are required for consumption or for incorporation into a further production process. Loyalty programmes: Structured marketing efforts that reward, and therefore encourage, loyal buying behaviour. Management by Walking About (MBWA): A process by which key decision makers in an organization keep in touch with issues at the point of service production and delivery. Marginal cost pricing: The addition to total cost resulting from the production of one additional unit of output. Market: A group of potential customers with similar needs who are willing to exchange something of value with sellers offering products that satisfy their needs. Market segmentation: A process of identifying groups of customers within a broad product market who share similar needs and respond similarly to a given marketing mix formulation. Marketing mix: The aspects of marketing strategy and tactics that marketing management uses to gain a competitive advantage over its competitors. A conceptual framework that for services usually includes elements labelled the ‘product offer’, ‘price’, ‘promotion’, ‘accessibility’, ‘people’, ‘physical evidence’ and ‘processes’. Marketing: The management process that identifies, anticipates and supplies

6 customer requirements efficiently and profitably. Marketisation: Using market mechanisms to distribute services that were previously distributed through non-market mechanisms Mass customization: The use of mass production techniques which allow customization of output to individual customers’ preferences; combining mass production techniques with individualized design. Mission statement: A means of reminding everyone within an organization of the essential purpose of the organization. Multiplier effect: The addition to total income and expenditure within an area resulting from an initial injection of expenditure. Multi-tasking: Ability to execute two or more tasks simultaneously. Mystery customers: A person employed by an organization to systematically record the standard of its service delivery. Needs: The underlying forces that drive an individual to make a purchase and thereby satisfy their needs. New service: An additional service offered by a company, ranging from a completely new service that is unlike anything previously offered in the market, to minor modification of existing services. ‘Noise’ factors: Causes of distortion between the message that a communicator sends out and the message that a receiver perceives. Open system – a system with no clearly defined boundaries Outsource: To delegate non-core operations from internal production to an external entity specializing in the management of that operation. Peaks in demand: The greatest demand placed on a product or service. Peer-to-peer sites: Websites on which content is ostensibly defined by users, rather than being centrally determined by a commercial sponsor. Perishability: Describes the way in which service capacity cannot be stored for sale in a future period. If capacity is not sold when it is produced, the chance to sell it is lost for ever. Position in the market: How one service compares in its marketplace in terms of relevant customer-focused criteria.

7 Positioning decisions: Decisions about how the marketing mix for a company’s service offer should be developed in comparison to the marketing mix of competing services. Post-purchase dissonance: A buyer’s feelings after making a purchase are not in accordance with reality. Price bundling: The practice of charging a combined price for a number of service elements, rather than setting prices for each individual element. Price discrimination: The practice of selling a product at two or more prices, where the difference in prices is not based on differences in costs. Price points: Prices at which demand can suddenly increase/decrease. Price skimming: Pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. Private Finance Initiative (PFI): A method, developed initially by the UK government, to provide financial support for ‘Public Private Partnerships’ (PPPs) between the public and private sectors. Productivity: The efficiency with which inputs are turned into outputs. Difficult to measure for services as inseparability means that changes in production inputs often affect consumers’ perceptions of the value of service outcomes. Profiling: A means of generating prospects from within a large population; it involves inferring a set of characteristics of a particular class of person from past experience, then searching data bases for individuals with a close fit to that set of characteristics. Promotion mix: Combination of advertising, personal selling, sales promotion and public relations. Public Private Partnerships (PPP): A method by which a public service is funded and operated through a partnership between government and one or more private sector companies. Public relations: The deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics. Pure service Service that has none of the characteristics associated with goods, i.e. is intangible, inseparable, instantly perishable and incapable of

8 ownership. Push and pull channels: Producers either ‘push’ goods and services through a distribution channel to the final consumer, or consumers ‘pull’ them through the channel from the producer through intermediaries. Quality Circles (QC): Groups of employees formed to discuss methods of better meeting customers’ expectations of quality. Queuing system: A system for handling temporal excess of demand relative to capacity. Relationship marketing: An approach to marketing in which emphasis is placed on building longer-term relationships with customers rather than on individual transactions. It involves understanding the customer’s needs as they go through their life cycle and providing a range of products or services to existing customers as they need them. Reservation systems: Matching customers’ specific requests for service with actual availability of capacity. Role-playing: Behaviour of an individual that is a result of his or her social conditioning, as distinct from innate predispositions. Sales promotion: Techniques and incentives used to increase short-term sales. Scenario: A picture of possible external environments that are likely to be relevant to an organization in the future. Script A pattern of behaviour that is tightly specified by another party. Search Engine Optimization (SEO): Strategies and tactics to put a company’s web page at the top of the list of results seen by people using a search engine Service agent An intermediary who assists a service principal in making service benefits available to consumers. An agent is usually a co-producer of a service and acts on behalf of the service principal, with whom customers enter into legal relations. Service encounters: The period during which an organization’s human and physical resources interact with a customer in order to create service benefits. Service failure: Failure to meet customers’ expectations about the standard of service delivery.

9 Service Level Agreement (SLA): A formal negotiated agreement between two parties specifying expected levels of service to be provided. Service life cycle: A hypothetical description of the stages that a service passes through between its development and deletion. Service offer: The complexity of tangible and intangible benefits that make up the total functional, psychological and social benefits of a service. Service portfolio: The total range of services offered by an organization. Service principal: The primary producer of a service, who may make part of its service available to consumers through intermediaries. Service system – A set of connected processes, actors and phenomena forming a complex whole, and existing within a shared environment Service recovery: Processes used by a company to recover from a service failure. Service–profits chain: The linkage between service production processes, value creation in the eyes of customers and, ultimately, the level of profitability achieved by an organization. Servicescape: A description of the environment in which service delivery takes place. SERVPERF: A method of measuring service quality using only performance measures. SERVQUAL: A method of measuring service quality, based on the gaps between the expectations of customers and their perceptions of actual service delivery. Servuction: A description of the producer–consumer service production system. Small and medium-sized enterprise (SME) There are various criteria for size (relative and absolute) used to define ‘small and medium’. Social network sites: Internet sites which facilitate communication between multiple users Soft system – elements of a system which are difficult to define and measure

Spatial location-allocation models: Models that are developed to locate multiple centres and allocate their demand area simultaneously on a network

10 space of nodes and lines. Sponsorship: Payment by a company to be associated with a particular event or activity. Stakeholder: Person or organization that has an interest in a project or entity. Strategic alliances: A formal relationship formed between two or more parties to pursue a set of agreed goals or to meet a business need while remaining independent organizations. Structural bonds: Economic, legal and social practices that tie two or more business parties to each other through increased costs of transferring their dealings to another partner. Tactical pricing: Short-term price variation aimed at thwarting competition or gaining market entry. Tangible cues: Physical elements of the service offer, brochures and adverts which provide tangible stimuli in the buying decision-making process. Technical quality: Objective measures of quality, not necessarily the measures that consumers consider to be the most important. Technology Acceptance Model (TAM): A theory that models how users come to accept and use new technology. The model suggests that acceptance is influenced by perceived usefulness and perceived ease of use. Telemarketing: Sales activity that focuses on the use of the telephone to enter into a two-way dialogue with present and potential customers. Theory of Reasoned Action: A theory that suggests that a person’s behavioral intention is dependent on their attitude to behaviour and to subjective norms. Total Quality Management (TQM): A management strategy aimed at embedding awareness of quality in all organizational processes. Utilitarian benefits: A service provides essentially functional and practical benefits Variability: The extent to which service processes or outcomes vary from a norm. Variable costs: Costs that change in proportion to the activity of a business. Viral marketing: Using friends, and friends of friends to spread a message

11 rapidly Web 2.0 A term often used to describe an internet environment in which peer- to-peer communication is just as important as business-to-consumer communication.

Webnography The collection and analysis of comments posted on open access internet fora Word of mouth Passing of information by verbal means, especially recommendations, but also general information, in an informal, person-to-person manner. Yield management (YM): Methods used to maximize revenue from each unit of finite and perishable capacity. Also often referred to as revenue management. Zone of tolerance: The area between minimally acceptable and desired service quality levels.