Services Marketing: Managing the Service Value Chain Argues That All Service Management Efforts Are Aimed to Enhance Value in Order to Increase the Bottom Line
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0273681575_COVER 12/10/05 12:44 AM Page 1 Manfred Bruhn and Dominik Georgi Services Marketing Services Marketing Managing The Service Value Chain Managing The Service Value Chain “An innovative and useful services marketing textbook.” Dr. Manto Gotsi, University of Aberdeen Business School “This textbook ostensibly demonstrates how services firms can create value by marketing. Lecturers and students will love the numerous cases and ‘Services Marketing in Action’ boxes.” Prof. Dr. Christian Homburg, University of Mannheim, Germany At last! A European services marketing text that presents the subject from a value orientation perspective. Services Marketing: Managing the Service Value Chain argues that all service management efforts are aimed to enhance value in order to increase the bottom line. Through strategic orientation and innovation, the firm/shareholder will reap positive benefits. Divided into five parts, Part 1 presents the core of the value-oriented services marketing approach. Part 2 focuses on the primary processes and elaborates upon provider activities within these processes. Parts 3 and 4 concentrate on the secondary value processes of services marketing. Finally, Part 5 links the value-oriented services marketing and its environment internally and externally to the service corporation. Geared toward third and fourth year marketing students, the book is also useful for postgraduate students and for practitioners who work, or wish to specialise, in the area of services management and marketing. Manfred Bruhn and Dominik Georgi “This is a long-awaited addition to the resource base for teaching services marketing to business students. By utilising the value chain concept, Bruhn and Georgi approach the topic from a novel perspective that is useful for students and practitioners alike.” Bruhn and Georgi Dr. Gillian Lyons, University of Wolverhampton Services Marketing “The Service Value Chain is an innovative approach for integrating customer orientation and the value orientation - two of the most important cornerstones of our strategy at Deutsche Telekom.” Kai-Uwe Ricke, CEO, Deutsche Telekom (T-com, T-Mobile, T-Online, and T-Systems) Managing The Service Value Chain Prof. Dr. Manfred Bruhn Dr. Dominik Georgi is head of the Department of Marketing at the Center is head of the Services Management Group in “Value creation is the major challenge of service firms. This book is a scholarly and practical approach the Department of Marketing at the Center for for Business and Economics (WWZ), University of to value-oriented services marketing. It should be on the shelf of every serious services manager.” Basel, Switzerland. He has authored numerous books Business and Economics (WWZ), University of and articles in the areas of services marketing, Basel, Switzerland. He has authored books and Professor Adrian Payne, Director of the Centre for CRM, Cranfield University relationship marketing, integrated communications, articles in the areas of services marketing, quality sponsoring, internal marketing and retailing. management and relationship marketing. and Getty Images images © Corbis Cover an imprint of www.pearson-books.com 9650 BRUH_AO1.QXD 6/10/05 4:06 pm Page i Services Marketing 9650 BRUH_AO1.QXD 6/10/05 4:06 pm Page ii About the authors Prof. Dr. Manfred Bruhn is head of the Department of Marketing at the Center for Business and Economics (WWZ) at the University of Basel (Switzerland) and honorary professor at the Technical University Munich (TUM). He has been teaching in marketing and management at all levels, as well as in further education, for more than 25 years. He is author of more than 30 German and international textbooks and management books, amongst them, Relationship Marketing (Pearson Education). Manfred Bruhn authors aproximately 20 articles a year for publications such as the European Journal of Marketing, the Journal of Relationship Marketing and Total Quality Management, as well as many German marketing and business journals. He is also editor of several anthologies, a marketing encyclopedia, as well as the Swiss Journal of Business Research and Practice. As a counsellor for top management at some major global corporations and a member of several companies‘ supervisory boards, he is closely connected to business practice. Dr. Dominik Georgi is head of the Services Management group at the Department of Marketing, University of Basel (Switzerland). He teaches marketing and management courses at all levels and researches in the fields of services marketing, service quality, relationship marketing and value management. He has authored books on topics such as the cost-benefit analysis of quality management as well as the dynamics of customer relationships. He has also published many articles in international marketing and management journals, anthologies, encyclopedias and business magazines. Dominik Georgi is also a reviewer for several international journals. He frequently consults with service corporations on topics such as value management and customer relationship management, as well as service quality and customer satisfaction measurement and management. 9650 BRUH_AO1.QXD 6/10/05 4:06 pm Page iii Manfred Bruhn and Dominik Georgi Services Marketing Managing the Service Value Chain 9650 BRUH_AO1.QXD 6/10/05 4:06 pm Page iv Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published 2006 © Pearson Education Limited 2006 The rights of Manfred Bruhn and Dominik Georgi to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN-13: 978-0-27368-157-1 ISBN-10: 0-27368-157-5 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Bruhn, Manfred. Services marketing : managing the service value chain / Manfred Bruhn and Dominik Georgi. p. cm. Includes bibliographical references and index. ISBN 0-273-68157-5 1. Service industries--Marketing--Management. 2. Customer services--Marketing--Management. 3. Business logistics--Management. I. Georgi, Dominik. II. Title. HD9980.5.B78 2005 658.8--dc22 2005053044 10 9 8 7 6 5 4 3 2 1 10 09 08 07 06 Typeset in 10pt Palatino by Pantek Arts Ltd, Maidstone, Kent Printed by Ashford Colour Press Ltd., Gosport The publisher’s policy is to use paper manufactured from sustainable forests. 9650 BRUH_AO1.QXD 6/10/05 4:06 pm Page v Contents List of figures xi List of tables xv Preface xvi Guided tour xx Publisher’s acknowledgements xxii Part 1 Basic concept: The Service Value Chain Chapter 1 Managing the service process by the Service Value Chain 5 It’s all about value 7 Services marketing in action 1.1: Strong competition in many service industries 7 Services are processes 13 The Service Value Chain 16 Services marketing in action 1.2: Grocery market share through customer retention 19 Services marketing in action 1.3: Service Value Chain in the tourism industry 20 Summary 22 Case study: Creating value at Ritz-Carlton 27 Chapter 2 Value creation by services marketing: Service Value Chain and Service Profit Chain 31 Integrating the Service Value Chain and the Service Profit Chain 33 Customer value 36 Services marketing in action 2.1: Customer segmentation based on customer profitability in a Scandinavian bank 41 Value-driving customer behaviours 44 Services marketing in action 2.2: Customer migration analysis 46 How customers evaluate services 48 Services marketing in action 2.3: Different sides of the same coin 50 Value contribution of the Service Value Chain 57 Summary 58 Case study: The Service Profit Chain at a UK grocery store 61 Case study: The Service Profit Chain at Canadian Imperial Bank of Commerce (CIBC) 64 v 9650 BRUH_AO1.QXD 6/10/05 4:06 pm Page vi vi Contents Part 2 Primary value processes: Managing interactions and relationships Chapter 3 The customer interaction process: Managing customer integration, the service encounter and service recovery 71 Value creation by service interactions 73 Customer integration 74 Producing a service in the service encounter 76 Services marketing in action 3.1: Critical incidents of a cruise operator 81 Service recovery 91 Services marketing in action 3.2: Service recovery at Club Med Cancun 97 Services marketing in action 3.3: Successful and unsuccessful recovery strategies in retailing 100 Summary 102 Case study: Fujitsu Consulting: Mobile operators creating value by service interactions 106 Chapter 4 The customer relationship process: Managing customer acquisition, retention and recovery 109 Value contribution of customer relationships 110 Understanding customer relationships 113 Services marketing in action