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Ninth Edition Ninth Edition SERVICES MARKETINGSERVICES SERVICES MARKETING SERVICES People, Technology, Strategy Services Marketing: People, Technology, Strategy is the ninth edition of the globally leading textbook for Services Marketing by Jochen Wirtz and Christopher Lovelock, extensively updated to feature the latest academic research, industry trends, and technology, social media and case examples. MARKETING This book takes on a strong managerial approach presented through a coherent and progressive pedagogical framework rooted in solid academic research. It features cases and examples from all over the world and is People Technology Strategy suitable for students who want to gain a wider managerial view. Full-color visual aids Content thoroughly Supplementary promote learning revised to include teaching materials and organizational real-life industry complement the frameworks examples and textbook to make capture essence of global case studies teaching and individual chapters supported by assessment easier. in one look. academic research. Lovelock Wirtz Jochen Wirtz Christopher Lovelock World Scientific ISBN 978-194-4659-00-4 www.worldscientific.com Y0001 hc World Scientific Ninth Edition Ninth Edition SERVICES MARKETINGSERVICES SERVICES MARKETING SERVICES People, Technology, Strategy Services Marketing: People, Technology, Strategy is the ninth edition of the globally leading textbook for Services Marketing by Jochen Wirtz and Christopher Lovelock, extensively updated to feature the latest academic research, industry trends, and technology, social media and case examples. MARKETING This book takes on a strong managerial approach presented through a coherent and progressive pedagogical framework rooted in solid academic research. It features cases and examples from all over the world and is People Technology Strategy suitable for students who want to gain a wider managerial view. Full-color visual aids Content thoroughly Supplementary promote learning revised to include teaching materials and organizational real-life industry complement the frameworks examples and textbook to make capture essence of global case studies teaching and individual chapters supported by assessment easier. in one look. academic research. Lovelock Wirtz Jochen Wirtz Christopher Lovelock World Scientific ISBN 978-194-4659-00-4 www.worldscientific.com Y0001 hc World Scientific View publication stats Ninth Edition SERVICES MARKETING People Technology Strategy Jochen Wirtz Christopher Lovelock World Scientific NEW JERSEY • LONDON • SINGAPORE • BEIJING • SHANGHAI • HONG KONG • TAIPEI • CHENNAI • TOKYO Available on Amazon at a student- friendly price. Click here to order: Published by World Scientific Publishing Co. Inc. 27 Warren Street, Suite 401-402, Hackensack, NJ 07601, USA Head office: 5 Toh Tuck Link, Singapore 596224 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE Library of Congress Cataloging-in-Publication Data Names: Lovelock, Christopher H., author. | Wirtz, Jochen, author. Title: Services marketing : people, technology, strategy / Jochen Wirtz, Christopher Lovelock. Description: Ninth edition. | New Jersey : World Scientific, [2022] | Includes bibliographical references and index. Identifiers: LCCN 2021023736 | ISBN 9781944659790 (hardcover) | ISBN 9781944659820 (paperback) | ISBN 9781944659806 (ebook) | ISBN 9781944659813 (ebook other) Subjects: LCSH: Marketing--Management. | Professions--Marketing. | Service industries--Marketing. | Customer services--Marketing. Classification: LCC HF5415.13 .L5883 2022 | DDC 658.8--dc23 LC record available at https://lccn.loc.gov/2021023736 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Copyright © 2022 by Jochen Wirtz & Christopher Lovelock All rights reserved. For any available supplementary material, please visit https://www.worldscientific.com/worldscibooks/10.1142/Y0024#t=suppl Desk Editors: Jiang Yulin/Lai Ann Design and layout: Loo Chuan Ming Printed in Singapore Lai Ann - Y0024 - Services Marketing.indd 2 22/6/2021 9:54:35 am Services Marketing: People, Technology, Strategy Brief Contents About the Authors xiii Preface xiv Acknowledgments xvi PART I: UNDERSTANDING SERVICE PRODUCTS, 2 MARKETS, AND CUSTOMERS 1. Creating Value in the Service Economy 4 2. Understanding Service Consumers 40 3. Positioning Services in Competitive Markets 76 PART II: APPLYING THE 4 PS OF MARKETING TO SERVICES 104 4. Developing Service Products and Brands 106 5. Distributing Services Through Physical and Electronic Channels 138 6. Service Pricing and Revenue Management 172 7. Service Marketing Communications 210 PART III: MANAGING THE CUSTOMER INTERFACE 258 8. Designing Service Processes 260 9. Balancing Demand and Capacity 302 10. Crafting the Service Environment 328 11. Managing People for Service Advantage 358 PART IV: DEVELOPING CUSTOMER RELATIONSHIPS 404 12. Managing Relationships and Building Loyalty 406 13. Complaint Handling and Service Recovery 442 PART V: STRIVING FOR SERVICE EXCELLENCE 476 14. Improving Service Quality and Productivity 478 15. Building a World-Class Service Organization 520 PART VI: CASE STUDIES 546 Name Index 640 Subject Index 654 iv Contents Contents About the Authors xiii Preface xiv Acknowledgements xvi PART I: UNDERSTANDING SERVICE PRODUCTS, 2 MARKETS, AND CUSTOMERS 1. Creating Value in the Service Economy 4 Opening Vignette 5 • Introduction to the World of Services Marketing 5 Why Study Services? 7 • Services Dominate the Global Economy 7 • Most New Jobs are Generated by Services 8 • Understanding Services Offers Personal Competitive Advantage 9 What are the Principal Industries of the Service Sector? 11 • Contribution to Gross Domestic Product 11 Powerful Forces are Transforming Service Markets 12 Business-to-Business Services as a Core Engine of Economic Development 14 Outsourcing and Offshoring Often Work in Tandem 15 What are Services? 16 • The Historical View 16 • Benefits Without Ownership 16 • Defining Services 18 • Service Products versus Customer Service and After-Sales Service 18 Four Broad Categories of Services — A Process Perspective 19 • People Processing 19 • Possession Processing 20 • Mental Stimulus Processing 21 • Information Processing 22 Services Pose Distinct Marketing Challenges 22 The 7 Ps of Services Marketing 24 The Traditional Marketing Mix Applied to Services 24 • Product Elements 24 • Place and Time 25 • Price and Other User Outlays 26 • Promotion and Education 26 The Extended Services Marketing Mix for Managing the Customer Interface 27 • Process 27 • Physical Environment 28 • People 28 Marketing Must be Integrated with Other Management Functions 28 The Service-Profit Chain 30 A Framework for Developing Effective Service Marketing Strategies 31 Conclusion 32 2. Understanding Service Consumers 40 Opening Vignette 41 • Susan Munro, Service Consumer 41 The Three-Stage Model of Service Consumption 42 Prepurchase Stage 42 • Need Awareness 42 • Information Search 42 • Evaluation of Alternative Services 42 • Purchase Decision 52 Service Encounter Stage 53 • Service Encounters are “Moments of Truth” 53 • Service Encounters Range from High Contact to Low Contact 54 • The Servuction System 55 Contents v • Theater as Metaphor for Service Delivery 57 • Role and Script Theories 58 • Perceived Control Theory 60 Post-Encounter Stage 61 • Customer Satisfaction 61 • Service Quality 63 • Customer Loyalty 65 Conclusion 68 3. Positioning Services in Competitive Markets 76 Opening Vignette 77 • Positioning a Chain of Childcare Centers Away from the Competition 77 Customer-Driven Services Marketing Strategy 78 • Customer, Competitor, and Company Analysis (3 Cs) 78 • Segmentation, Targeting, and Positioning (STP) 80 Segmenting Service Markets 81 • Important versus Determinant Service Attributes 82 • Segmentation Based on Service Levels 83 Targeting Service Markets 84 • Achieving Competitive Advantage Through Focus 84 Principles of Positioning Services 89 Using Positioning Maps to Plot Competitive Strategy 90 • An Example of Applying Positioning Maps to the Hotel Industry 90 • Mapping Future Scenarios to Identify Potential Competitive Responses 92 • Positioning Charts Help Executives Visualize Strategy 94 Positioning Digital Services and Platforms 94 • Attributes of Digital Service Available for Positioning 94 • Ecosystem Orchestration and Governance 96 • Direct and Indirect Network Effects 96 Developing an Effective Positioning Strategy 98 Conclusion 99 PART II: APPLYING THE 4 PS OF MARKETING TO SERVICES 104 4. Developing Service Products and Brands 106 Opening Vignette 107 Understanding Service Products 107 • What is a Service Product? 108 • What are the Benefits of ell-DevelopedW Service Products? 108 • Creating Service Products 110 The Flower of Service 110 • Facilitating Supplementary Services 111 • Enhancing Supplementary Services 114 • Managing the Flower of Service 118 Branding Services 119 • Service Brand Architecture at the Corporate Level 119 • Branding Service Products and Experiences 121 • Branding Service Levels — Service Tiering 123 • Building Brand Equity 124 • Delivering Branded Service Experiences 125 New Service Development 125 • A Hierarchy of New Service Categories 126 • Design Thinking in New Service Development 130 • Achieving Success in New Service Development 130 Conclusion 131 5. Distributing Services Through Physical and Electronic Channels 138 Opening Vignette 139 • Being Global in an Instant? … Or Does It Take Forever? 139 Distribution in a Services Context