Running Head: MARKETING SITUATION ANALYSIS
1
Marketing situation analysis for Hewlett-Packard
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MARKETING SITUATION ANALYSIS
2
Marketing situation analysis for Hewlett-Packard
Introduction
Hewlett Packard commonly abbreviated as HP is an international information technology
corporation whose headquarters are located in Palo Alto, California. This report comprises of a
strategic analysis of HP and examines the internal as well as external factors that affect Hp defining
its current strategic as well as competitive position. The PESTEL model, SWOT analysis model,
and Porters five forces model are employed in the analysis.
PESTEL Analysis
Political
HP maintains decency, quality, reputable supply chain relations and
environment consciousness in order to comply with government
controls in regards to Corporate Social Responsibility codes as well
as environment codes (HP, 2013).
Economical
HP primarily depends on revenues from small as well as medium
enterprises, printing hardware, internet solutions, as well as financial
investments for its overall maintenance. HP registers high
production excellence currently shipping two PCs as well as two
printers at every split of second. This is a clear indication of its
prominence in the industry. HP is ranked in the second position
worldwide in regards to shipping equipment. Its current market
share is 20% and in the printer production industry, HP has 40.5%
market share (US SEC, 2012).
MARKETING SITUATION ANALYSIS
Social
3
HP has a well captured the local market in USA and there is little
room left for expansion. There is little left for HP to do in US market
to attract the young generation as the market is pretty dominated by
Intel that updates new models on monthly basis. HP can meet the
needs of the young generation by updating its PC models as well
hardware models for printing to meet the competition posed by the
likes of Intel. HP targets both businesses; small businesses and large
corporations as well as individual consumers (US SEC, 2012). Its
marketing strategy targets anyone with the need for a PC or printer.
The undifferentiated marketing strategy helps HP market to reach
out to more customers instead of focusing on a single target market.
Technological
Almost one decade ago, HP went “cyber” that was quite a turning
point compared to its 70 years market presence. However, the major
turning point of HP was in 1998 its corporate software, corporate
system division, as well as support division was amalgamated with
Ann Livermore taking over to lead the novel Enterprise Computing
Solutions Organization (ECSO). The new investment was $15
billion and the workforce was 44,000 workers (US SEC, 2012). This
new advancement gave HP a new market advantage. HP also invests
a lot in research to stay ahead in the market. Its investment in
technology research has grown in the past as shown in the graph.
MARKETING SITUATION ANALYSIS
Environment
4
The operations of HP are subject to the local and state regulations as
well as foreign laws regarding the environment such as laws that
regulate release of pollutants in the air as well as water, regulations
governing release of waste materials and hazardous substances as
well as clean out of sites that are contaminated (HP, 2013).
Legal
The Patent Reform Legislation is the leading patent holder in U.S
and grants HP and average of four patents on a daily basis. HP has
also being subject to frivolous patent lawsuits on many occasions.
These lawsuits have negative impacts on HP as it is forced to deflect
important and scarce resources from innovation as well as product
development that results in minimized economic benefits registered
from invention. For example, the recent lawsuit of $1 billion filed
by shareholders regarding the Autonomy deal (Garside, 2013).
The HP has a strong brand value as shown in the graph although competition in the market
is quite prominent.
MARKETING SITUATION ANALYSIS
Technological
Investment in technology research at HP
5
MARKETING SITUATION ANALYSIS
6
Porter’s Five Forces Analysis
Threat of Entry
HP’s threat of entry is moderate. There is minimal brand loyalty in the industry as
consumers often compare the prices of various brands in the market when make a decision to
purchase PCs. Consumers assume that the PCs have the same features and functions in the same
way and as a result use price in deciding the brand to purchase. As result, the industry is
characterized by minimized product differentiation (US SEC, 2012). In the manufacturing process,
there is an average capital necessity, low economies of scale as well as lack government
regulations. Independent stores use low investments. There is also decreased profitability that
reveals the existence of the threat of new entrants.
Threat of Substitutes
The current threat of substitute for HP is low. HP relies on standards-based technology that
signifies the opportunity to choose the item of preference. In order to eliminate barriers and
maintain the top position in the industry, HP continuously presents new products and updates
processes.
The Power of Buyers
The bargaining power of the HP buyers is very high. The consumers are very sensitive and
considerate of the prices as they prefer buying affordably cheap and high quality products. When
presented with PC, software, or hardware from different brands and with varied prices, the
consumers opt for the cheaper brand (HP, 2013). The consumer power for HP is quite low as the
brand has a very high demand and as a result, HP has the power to decode the production amount
MARKETING SITUATION ANALYSIS
7
as well as the prices of the products. Consumers are presented with very many substitutes. Further,
there lacks any prominent variation between products made in the market.
The Power of Suppliers
The bargaining power of suppliers for HP is high as well. The supply of the various
components of PC in the market is very high. And as a result, a company can build a PC by utilizing
components from varied suppliers such as monitor, DVD drive, and hard disk among others (US
SEC, 2012). Microsoft as well as Intel has promiscuous bargaining power held against the various
suppliers of PC components
Competitive Rivalry
Competitive rivalry in the industry is very high. For example, when one company lowers
the price of its PCs in order to maintain its position and attract customers, it directly impacts the
other companies. In response, the other companies have to lower the price of their products in
order to maintain and attract customers as well (HP, 2013). The companies also register lower
profits as they are forced to sell their products at low prices in order to attract customers.
SWOT ANALYSIS
MARKETING SITUATION ANALYSIS
8
Strengths
Weaknesses
1. Well established presence in China Profound
1. meager existence in tablet market
brand reputation
2. 29% of HP’s revenues is from the division of
2. Diversified product assortment
3.
personal systems
3. deprived proficiency in acquisitions
Opportunities
1.
Threats
1. sluggish growth rate in the PC market reprisal from
current software service firms
2. Growing demand for cloud based services
2. Rapid technological change
3. increase services as well as project solutions
divisions
3.
4. achievement of supplementary patents related
to technology
5.
Conclusion
HP has a strong brand that gives an added market advantage. Its target customers entail anyone who might
need a PC or a printer. This diversified marketing strategy helps HP meet a diverse range of consumers. It market
MARKETING SITUATION ANALYSIS
9
dominance in China is one of its strongholds. However, HP needs to diversify in order to meet a wider range of
consumers including investing in tablet market.
References
MARKETING SITUATION ANALYSIS
10
HP (2013). HP Corporate Information. Available at: http://www8.hp.com/us/en/hpinformation/index.html
Garside, J. (2013). Hewlett-Packard faces $1bn lawsuit from shareholders over Autonomy deal.
The Guardian. Available at:
http://www.guardian.co.uk/business/2013/may/07/shareholders-sue-hp-autonomy-deal
US SEC (2012). Hewlett-Packard Company 10-K. Available at:
http://www.sec.gov/Archives/edgar/data/47217/000104746912011417/a2211959z10k.htm
Interbrand (2012). Best Global Brands 2012. Available at: http://www.interbrand.com/en/bestglobal-brands/2012/Best-Global-Brands-2012.aspx
This is 2 part assignment:
1. Write a discussion post answering Discussion question 1 and 2 (ill attach my situation analysis
for DQ2) and all other needed resources. Need to be at least 250 words long.
2. Write 2 responses to other students post (see below) with 100 words each min. They will also
be examples on how our part 1 should be just in case you are confused. ( will upload by
Wednesday or as soon as someone posts)
Discussion Question 1
Harvard Business Review's "In Search of a Second Act" case study. You can search for it in Business
Source Complete (EBSCO) https://www.ebsco.com/ or use the see "How to find an article" in the
Course Information tab. Two authors gave their point-of-view on the company's thoughts on launching
a new product. What is your opinion on what the company should do? Please use at least one outside
resource to support your answer. The resource must be professional but does not need to be scholarly.
Discussion Question 2
Identify a strategy for your business in the product area of the marketing mix. Use support from your
situation analysis. We want you to comment on each other’s strategies to get you ready for your next
assignment.
Resources
http://www.viddler.com/embed/7b4e36c2/?f=1&autoplay=0&player=full&disablebranding=0
http://www.viddler.com/embed/7c33265d/?f=1&autoplay=0&player=full&disablebranding=0
http://www.viddler.com/embed/d2fa62d1/?f=1&player=arpeggio&secret=47063622&make_responsive
=0
PART2
Other student discussions ( will upload by Wednesday evening)
1
CHAPTER 7:
PRODUCT STRATEGY
AND NEW-PRODUCT
DEVELOPMENT
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
McGraw-Hill
Education
Part 3: Develop the Value Offering—The Product
Experience
LEARNING OBJECTIVES
2
Understand the essential role of the product experience in
marketing
Define the characteristics of a product
Recognize how product strategies evolve from one product
to many products
Understand the life of a product and how product strategies
change over time
Recognize the importance of new-product development to
long-term success
Understand the new product development process
Identify how new products become diffused in a market
Product Characteristics
3
A product is anything that
delivers value to satisfy a
need or want and includes
physical merchandise,
services, events, people,
places, organizations,
information, or ideas.
Product Characteristics
4
Defining the Product
Essential
Benefit is the fundamental need met by
the product (getting from point A to point B on an
Southwest Airlines)
Core Product is the physical, tangible elements. (One
kind of aircraft, low fares, good website)
Enhanced Product includes additional features,
designs, and innovation that exceed expectations.
(Frequent flyer program, fun and entertaining flight
attendants)
5
Four Products and Their
Essential Benefits
EXHIBIT 7.2
DEFINING THE PRODUCT AT SOUTHWEST AIRLINES
CHAPTER 01
Enhanced Product
Experiences exceed minimum expectations
Frequent flyer programs
Reserved seating
Core Product
On time
Safe
Experience matches expectations
Essential Benefit
Moving from Point
A to Point B
6
Product Classifications
7
Tangibility – physical
aspects of the product
experience
Durability – product
usage
Product Classifications
8
Consumer Goods
Convenience
Goods
Shopping
Goods
Specialty
Goods
Unsought
Goods
Product Classifications
9
Business Goods
Materials
Parts
MRO
Supplies
Capital
Goods
Product Discrimination: Create
a Point of Differentiation
10
Form
Style
Features
Performance
Quality
Repairability
Conformance
Quality
Reliability
Durability
1010
Product Plan: Moving from One
Product to Many Products
11
Product Line: A group of products linked
through usage, customer profile, price
points, and distribution channels or
needs satisfaction
Product Mix: all the products offered by
a company
Product Decisions Affect other
Marketing Mix Elements
12
Pricing
Individual product pricing within the product line
“good, better, best” product line strategy
Technology companies face special challenges as newer
models have better features and lower prices
Marketing Communications
Focus on a single product or the brand?
Allocation of budget: Most popular products? Entire line?
New products?
BUILDING THE
PRODUCT EXPERIENCE
13
Product Life Cycle
Product
Life Cycle Sales Revenue and
Profitability
Product Life Cycle Timeline
Product Life Cycle Caveats
CHAPTER 01
EXHIBIT 7.12
THE PRODUCT LIFE CYCLE
Reprinted from Roger Kerin, Steven Hartley and William Rudelius, Marketing 9E, 2009.
14
Product Life Cycle
15
Introduction Phase
Market
Conditions
Strategy
Product
Price
Marketing
Communications
Distribution
10-15
Product Life Cycle
16
Growth Phase
Market
Conditions
Strategy
Product
Price
Marketing
Communications
Distribution
Product Life Cycle
17
Maturity Phase
Phase
defined by the sales growth of
the product category
1.
2.
3.
Relative Market Expansion
Market Stability
Market Deterioration
Product Life Cycle
18
Maturity Phase
Market
Conditions
Strategy
Product
Price
Marketing
Communications
Distribution
Product Life Cycle
19
Decline Phase
Market
Conditions
Strategy
Product
Price
Marketing
Communications
Distribution
New Products Defined
20
Company
Perspective
New-to-the-World
Disruptive Innovation are so innovative they create a
fundamental change in the marketplace. Ex. Cell phones, tablets
Sustaining Innovations are newer, better faster versions of
existing products or additions to existing product lines. Ex. Diet
Coke, Coke Zero
Reposition
Add new market segments Ex. Cell phones from business usage
to adults to teens
Cost
Existing Products
Reduction
Introduce lower cost products with fewer features or scaled
back warranty or service
New Products Defined
21
Customer’s
The
Perspective
customer’s perspective is much more
narrow and self directed.
The customer is most interested in an answer to
the fundamental question—is this new product
new to me?
First purchase of a cell phone , house or auto
can be a intimidating experience
Why do Products Fail?
22
23
New Product
Development Process
The three major activities in new
product development are:
1.
2.
3.
Identify Product Opportunities
Define the Product Opportunity
Develop the Product Opportunity
Identify Product Opportunities
24
Generate New Ideas
Internal
External
Customers
Distributors
Identify Product Opportunities
25
Screen
and Evaluate Ideas
Go-to-Market
Mistake
Firm
fails to keep a bad product idea
from moving into product development
Stop-to-Market
A
Mistake
good idea is eliminated prematurely
Identify Product Opportunities
26
Screen and Evaluate Ideas
Prioritize
ideas that pass initial screening
and evaluation
Time
to market (how long will it take to develop
and get the product to market).
ROI (what is the expected return for the dollars
invested in the project).
New product fit with overall company
product portfolio.
Define the Product Opportunity
27
Define the Product
Opportunity
Define
and test the product
idea
Create a marketing strategy
Analyze the product’s business
case
Define the Product Opportunity
28
Define and Test the Product
Concept
Product
Define
Definition Objectives
the value proposition
Identify the target market and purchase
frequency
Delineate the product characteristics
Look, feel, physical characteristics, features
Define the Product Opportunity
29
Create the Marketing Strategy
Budget
Target
Market
Define the Product Opportunity
30
Define the Product Opportunity
Conduct
Business Case Analysis
Total
Demand
New purchases
Repeat purchases
Replacement purchases
Profitability Analysis
Long and short term analysis
Define the Product Opportunity
31
Define the Product Opportunity
Conduct
Total
Business Case Analysis
Demand
New
purchases
Repeat purchases
Replacement purchases
Profitability Analysis
Develop the Product Opportunity
32
Develop the Product Opportunity
Develop The
Product
Product Testing:
Test
alpha and beta
the Market
Consumer Product Market Tests
Business Product Market Tests
Product Launch
33
CONSUMER ADOPTION AND
DIFFUSION PROCESS
Consumer Product Adoption Process
Innovation
diffusion process is how long it takes a
product to move from first purchase to last purchase
(the last set of users to adopt the product).
An individual moves through five stages before
adopting a product.
Awareness
Interest
Evaluation
Trial
Adoption
The Diffusion of Innovations
34
CHAPTER 8:
BUILD THE BRAND
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
McGraw-Hill
Education
Part 3: Develop the Value Offering—The Product
Experience
LEARNING OBJECTIVES
2
Recognize the essential elements in a brand
Learn the importance of brand equity in product
strategy
Explain the role of packaging and labeling as critical
brand elements
Define the responsibility of warranties and service
agreements in building consumer confidence
3
BRAND: THE FUNDAMENTAL
CHARACTER OF A PRODUCT
A brand is “a name, term, sign, symbol, or
design, or a combination of them,
intended to identify the goods or
services of one seller or groups of
sellers and to differentiate them from
those of competitors”.
~American Marketing Association
Brands Play Many Roles
4
Branding strategy is an integral part of the
product development process because
companies know that successful new products
result from a well conceived branding
strategy.
Brands Play Many Roles
5
Customer Brand Roles
The
brand conveys information
about the product.
Brands educate the customer
about the product.
Brands help reassure the
customer in the purchase
decision.
Brands Play Many Roles
6
Company Brand Roles
Brands
offer legal
protection for the product
through a trademark.
Brands offer an effective
and efficient methodology
for categorizing products.
Brands Play Many Roles
7
Competitor Brand Roles
Market-leading
brands provide competitors
with a benchmark against which to compete.
Avis:
We’re #2. We try harder.
Pleasure motorboat makers “we re just as good
as Sea-Ray but less expensive.”
The Boundaries of Branding
8
A good branding strategy will not overcome a
poorly designed product that fails to deliver on the
value proposition.
Counterfeit products or illegal activities conducted
under the name of another company’s brand can do
significant damage to the brand.
There must be real, identifiable and meaningful
differences among products in the market space.
9
BRAND EQUITY – OWNING
A BRAND
Defining Brand Equity
“a
set of assets (and liabilities) linked to a
brand’s name and symbol that adds to (or
subtracts from) the value provided by a
product or service to a firm or that firm’s
customers.”
10
BRAND EQUITY –
OWNING A BRAND
Defining Brand Equity
Brand
Awareness
Brand
Assets
Brand
Association
Brand
Loyalty
Perceived
Quality
EXHIBIT
8.3
World’s Most Valuable Brands
11
Source: Business Week, August 6, 2007, http://bwnt.businessweek.com/interactive_reports/top_brands/
12
BRAND EQUITY –
OWNING A BRAND
Perceived
Quality
Brand
Connections
Brand Loyalty
Customers
Gives them a
reason to buy
1. Customers seek
information on
familiar brands
2. Strong brands
generate
positive attitude
Brand loyal
customers spend
less time in the
purchase decision
Brand Sponsor
1. Extend the
product range
2. Price premium
3. Differentiates n
the marketplace
Strong brands
create a barrier for
competitor’s new
brand
1. Reduces
marketing costs
2. Gives channel
leverage
3. Word-of-mouth
4. Forgiving
customers
Linking Strategy to
Benefit
Build quality into
Extend the brand
the entire customer to new products
experience
Marketers have
more flexible
budgets
BRANDING DECISIONS
13
Stand Alone or Family Branding
Stand
alone brands separate the company from the
brand which insulates the company if there is a
problem with the brand but are expensive and offer
little or no synergy between company brands.
Lever
Brothers personal care products: AXE, Dove,
Lifebuoy, Lux, Ponds, Rexona, Sunsilk,Vaseline
Family
branding advantages and disadvantages are just
the opposite.
Heinz
ketchup and other condiments
14
Brand, Line, and Category
Extensions
BRANDING DECISIONS
15
National or Store Branding
National
brands that are sold around the country
under the same brand.
Create
efficiencies in marketing communications and
distribution
Higher perceived quality and price
Store
brands are when large retailers create a store
brand to market their own products.
Stores
contract with national manufacturers like P&G and
compete with national brands through lower prices.
BRANDING DECISIONS
16
Licensing
Companies
can also choose to extend their brand
by licensing – offering other manufacturers the
right to use the brand in exchange for a set fee or
percentage of sales.
Little
risk
Generates additional revenue
Extends the brand and builds brand associations with
new users
Most be monitors closely for product quality and brand
image protection
BRANDING DECISIONS
17
Co-Branding
Co-branding
joins two or more well known
brands in a common product or takes two
brands and markets them in partnership.
Soft
drinks and Splenda
Intel Inside
Co-Branding
18
Advantages
Strength
of each
brand supports the
other
Opens up new
markets
Lowers marketing
communication
costs
Disadvantages
Loss
of control
Negative effect if
one brand has
problems
Overexposure
Branding Decisions
19
Co-Branding Relationships
Joint Venture
like American Express affinity cards
Two internal brands are linked like P&G linking
Scope and Crest
Multiple companies join to create a new brand like
Marriott Hotels and Ikea creating a new European
hotel brand for Millenials
Retailers share the same location like Starbucks
and Barnes & Noble
PACKAGING AND LABELING:
ESSENTIAL BRAND ELEMENTS
20
Package Objectives
Protect
Promote
Usage
Communicate
PACKAGING AND LABELING:
ESSENTIAL BRAND ELEMENTS
21
Effective Packaging
Aesthetics
Color
plays a significant role in package design and in the
entire branding strategy.
Designs that are appropriate, interesting, and persuasive
to the target market are critical.
Harmonizes
with All Marketing Mix Elements
The package reinforces marketing
communications by connecting advertising
images (logo, pictures on the package) to the
customer.
PACKAGING AND LABELING:
ESSENTIAL BRAND ELEMENTS
22
Labeling
Legal
Requirements
Marketing
Requirements
Consumer
Requirements
WARRANTIES AND SERVICE AGREEMENTS:
BUILDING CUSTOMER CONFIDENCE
23
General warranties make broad promises about
product performance and customer satisfaction.
Allows
customers to return for a variety of reasons
Specific warranties, on the other hand, offer explicit
product performance promises related to
components of the product.
Auto
warranties are specific like drive train or tires
WARRANTIES AND SERVICE AGREEMENTS:
BUILDING CUSTOMER CONFIDENCE
24
Warranties help define the brand
Cost
versus benefit
Must
be competitive within the industry
Hyundai uses warranty to build confidence in Korean cars
Conveys
a message to the customer about perceived
quality and manufacturer commitment to customer
satisfaction
Photo Credits
25
Slide 8-4: McGraw-Hill Education, Mark Dierker,
photographer
Slide 8-5: The McGraw-Hill Companies/Jill
Braaten, photographer
Slide 8-6: The McGraw-Hill Companies/Jill Braaten,
photographer
Slide 8-9: McGraw-Hill Education, Mark Dierker,
photographer
CHAPTER 9:
SERVICE AS THE
CORE OFFERING
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
McGraw-Hill
Education
Part 3: Develop the Value Offering—The Product
Experience
LEARNING OBJECTIVES
2
Understand why service is a key source of potential differentiation
Explain the characteristics that set services apart from physical
goods
Explain the service-profit chain and how it guides marketing
management decisions about service
Describe the continuum from pure goods to pure services
Discuss concepts of service quality and gap analysis
Measure service quality through use of SERVQUAL
Understand service blueprinting and how it aids marketing
managers
WHY SERVICE IS IMPORTANT
3
A service is a product in the sense that it
represents a bundle of benefits that can satisfy
customer wants and needs, yet it does so without
physical form.
More than 80% of U.S. jobs are service-related
Services produce 75% of GDP
Service as a Differentiator
4
Focusing on service and on enabling employees to
effectively deliver service can be one differentiator
that is hard for the competition to replicate.
Great service provides sustainable competitive
advantage
A New Dominant Logic for Marketing
5
Customers do not buy goods or services:
They
buy offerings which render services which create
value ….
The traditional division between goods and services is
long outdated.
A service-centered perspective leads to market
expansion by assisting customers in the process of
specialization and value creation.
EXHIBIT
9..1
Characteristics of Services
6
Intangibility
Inseparability
Variability
Perishability
Intangibility
7
A service cannot be experienced through the
physical senses.
It cannot be seen, heard, tasted, felt, or smelled by
a customer.
Goods can easily be experienced through the
senses.
Inseparability
8
A customer still can’t really experience it
until it is actually consumed.
It is produced and consumed at the same
time and cannot be separated from its
provider.
Variability
9
Because it cannot be separated from the
provider, a service’s quality can only be
as good as that of the provider
him/herself.
Perishability
10
A service cannot be stored or saved up for
future use.
Perishability is a major potential problem for
service providers.
Fluctuating demand is related to perishability
of services.
EXHIBIT
9.2
The Service-Profit Chain
11
Reprinted by permission of Harvard Business Review, from “Putting the Service–Profit Chain to Work”, by James L. Heskett, Thomas O. Jones, Gary
W. Loveman, W. Earl Sasser Jr. and Leonard A. Schlessinger, March/April 1994. Copyright © 1994 by the Hardvard Business School Publishing
Corporation; all rights reserved.
THE SERVICE-PROFIT CHAIN
12
Internal Service Quality
Internal
marketing, treating employees as customers,
and developing systems and benefits that satisfy their
needs, is an essential element of internal service
quality.
Internal Service Quality
13
Firms practicing internal service quality are customer-centric:
They do the following:
1.
2.
3.
Instill an organization-wide focus on understanding customers’
requirements.
Generate an understanding of the marketplace and disseminate that
knowledge to everyone in the firm.
Align system capabilities internally so that the organization can
respond effectively with innovative, competitively differentiated,
satisfaction-generating goods and services.
14
Satisfied, Productive, and
Loyal Employees
Internal marketing must include the following:
Competing for talent
Knowing and reacting
to employees’ needs.
Offering an overall
vision
Measuring and
rewarding great
service performance
Training and
developing people
Enabling employees
to make their own
decisions
Stressing teamwork
Modeling desired
behaviors by
managers
15
Greater Service Value for
External Customers
There is strong evidence that attention to internal
service quality and to employee satisfaction,
productivity, and retention result in stronger value
to external customers of a service.
16
Greater Service Value for
External Customers
Customers set their expectations based largely on
the evidence provided by the marketer before the
purchase.
Customer Expectations Management
Do
not set customer expectations so high that they
cannot be effectively met on a consistent basis.
17
Customer Satisfaction and
Loyalty
Loyalty sparks:
High
customer retention – low propensity to switch, as
well as repeat business and referrals.
Customer advocacy – a willingness and ability on the
part of a customer to participate in communicating
the brand message to others.
EXHIBIT
13.4
Focus on the Most Satisfied Customers
18
Reprinted by permission of Harvard Business Review, from “Putting the Service–Profit Chain to Work”, by James L. Heskett, Thomas O. Jones, Gary
W. Loveman, W. Earl Sasser Jr. and Leonard A. Schlessinger, March/April 1994. Copyright © 1994 by the Hardvard Business School Publishing
Corporation; all rights reserved.
EXHIBIT
9.5
Continuum of Evaluation for Different Types of Offerings
19
Source: Valarie A. Zeithaml, “How Consumer Evaluation Processes Differ between Goods and Services,” in Marketing of Services,
James H. Donnelly and William R. George, eds. 1991. Reprinted with permission of the American Marketing Association.
SERVICE ATTRIBUTES
20
Search Attributes
Experience Attributes
Credence Attributes
SERVICE QUALITY
21
Service quality represents a formalization of the
measurement of customer expectations of a
service compared to their perceptions of actual
service performance.
Service
Encounter
Customer Delight
Moment Of Truth
Gap Analysis
22
Gap 1
• Management’s Perceptions of Customer
Service Expectations versus Actual
Customer Expectations of Service
Gap 2
• Management’s Perceptions of Customer
Service Expectations versus the Actual
Service Quality Specifications Developed
Gap Analysis
23
Gap 5
Gap 3
• Perceived Service by
Customers versus
Actual Customer
Expectations of
Service
• Actual Service Quality
Specifications versus
Actual Service
Delivery
Gap 4
• Actual Service
Delivery versus What
the Firm
Communicates it
Delivers
EXHIBIT 9.6
Gap Model of Service Quality
24
Source: A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry, “A Conceptual Model of Service Quality and its Implications for Future
Research,” Journal of Marketing, Fall 1985, pp. 41–50. Reprinted with permission of the American Marketing Association.
SERVICE QUALITY
25
SERVQUAL: A Multiple Item Scale to Measure
Service Quality
Tangibles
Empathy
Reliability
Five
dimensions
of service
quality
Assurance
Responsiven
ess
SERVICE BLUEPRINTS
26
Service blueprints map out a complete pictorial
design and flow chart of all the activities from the
first customer contact to the actual delivery of the
service.
EXHIBIT 9.13
27
Service Blueprint for Floral Delivery
Photo Credits
28
Slide 9-4: Image Club
Slide 9-20: Tom Grill/Corbis
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