Flower of service approach capturing and adding value.

Like a flower, any service offering start-up should strive to develop at the beginning a core that offers the basic functionality, the functionality that the users are willing to pay for and, later on, an array of complementary services which in-term will help retain customer by adding value to the core...not the other way around. In flower terms: the pistil is the one that draws users to the application/service offering the functionality that solves users pain points and the corolla is just a bunch of additional services/features that sets the core apart.

Ok, enough with the start-up-biology lesson, time for some concrete examples. Every service, be it on-line or off-line, has a core that is backed-up by various supplementary services. This supplementary services can be classified in 2 categories: facilitating services and enhancing services.

The facilitating services are needed for core service delivery and they help in the use of the core service/product. Here are some examples of facilitating services: billing, payment, order tacking, information - it is up to each management team in part to decide which are the facilitating services for their business.

On the other hand the enhancing services are meant to add extra value to the customers (you can think about them as additional features). Enhancing services might consist of: customer support, consulting, hospitality - like in the case of the facilitating services the enhancing ones are not set in stone, so it's up to you to decide what's enhancing and what not.

For companies that go for the cost leadership strategy, the number of supplementary services that they offer, be it enhancing or facilitating, is quite small opposed to the number of services offered by companies that aim for differentiation.

A good example of flower of service approach, from the Internet business, is Google. At the beginning there was only the search engine, and it still is the core of the company, later on came Analytic, Docs or Translate.

The mistake I see being made by a lot of start-ups is that they try to sell petals and wonder why they are not successful or why they have huge customer acquisition costs. Bear in mind that a perfect core is nothing without good petals but good petals will not compensate for a poor core.

 

1. Describe the relationship between customer expectations and customer satisfaction.

Customer expectations and satisfaction are closely related. Customers feel less satisfied when they expect something from a company but do not get what they expected. On the other hand, if they have low expectations of a company and are pleasantly surprised, they may feel more satisfied than if they had high expectations and feel they have been let down. Interestingly, companies are not always able to accurately predict what customers will expect from them, and systems of gathering and analyzing feedback are typically important.

Often, a customer's level of satisfaction is dependent on the expectations he has for a company. For example, if he expects a company to offer prompt service, but he encounters delays in the processing of his order, he may feel unsatisfied. Likewise, if he believes a company will provide a quality product and his purchase seems cheaply made, he may feel unhappy. Additionally, a customer may feel dissatisfied with a company if he believes his business is valued, but a company proves otherwise by allowing its employees to ignore him, behave rudely, or fail to respond appropriately to complaints.

In many cases, customer expectations and satisfaction are influenced by the advertisements a company uses to sell its products or services. For example, if a company advertises that it processes orders within a certain time frame but then fails to live up to this, its customers are likely to feel misled by the advertisement and dissatisfied. Likewise, if a company advertises itself as putting customer servicefirst, but then shows only an average level of concern in this area, its customers are likely to be less satisfied. In such cases, the connection between customer expectations and satisfaction is one the company influenced with its advertising claims.

Sometimes a customer's own preconceived ideas about a company — unrelated to advertising — can also affect the relationship between customer expectations and satisfaction. For example, if a customer believes a company has the expertise to quickly and accurately diagnose an equipment issue, but the company is unable to provide a diagnosis right away, the customer may feel let down. The same may hold true if the customer expects a company to accept special orders but it refuses to do so.

Many companies make the mistake of trying to meet assumed expectations rather than learning what the customers' expectations really are. If the expectations are assumed, the company's priorities may seem off kilter due to the fact that is does not really understand what its customers want or consider most critical. In such cases and in light of the relationship between customer expectations and satisfaction, finding effective methods of gauging customer needs may prove critical for the company's success.

 

 

4. Why do marketing, operations, and human recourses have to be closely linked in services but less so in manufacturing? Give examples. Pg 49 b cfotala

 

What is so distinctive about services marketing that it requires a special approach, set of concepts, and body of knowledge (explain eight common differences between services and goods, their implications and marketers action to deal with these differences)?

There is a major difference between goods and services based on both tangible as well as intangible factors. Goods are basically objects or products which have to be manufactured, stored, transported, marketed and sold. Lays chips, BMW, Adidas are some companies manufacturing goods.

Thus the difference between goods and services is based on tangibility. Where goods are tangible in nature, services are mostly intangible. The classic rules which defined services were intangibility, heterogeneity, perishability and variability. However, there are several new rules to define the difference between goods and services.

Ownership-is not transferred – When buying a service, the service ownership is not transferred to the end customer. If you buy a car then the car is yours. But if you buy a ticket for an airline, then the airline is definitely not yours.

Intangibility – How do you measure service? In a restaurant, the dish can be measured, but the efforts gone in making the same dish by two different chefs cannot be measured from the customer end. Same goes for large service corporates like Accenture and Infosys. The time and effort gone for giving service to the customer is intangible. Both ownership and intangibility are old

school differences between goods and services.

Service marketing» Difference between goods and services