PPT slides from Chapter 17

1. Services Marketing
Chapter 15:
Striving for
Service Leadership
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 1

2. Overview of Chapter 15
Services Marketing
 The Service-Profit Chain
 Integrating Marketing, Operations, and Human Resources
 Creating a Leading Service Organization
 In Search of Human Leadership
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 2

3. Services Marketing
The Service-Profit Chain
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 3

4. The Service-Profit Chain
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 4

5. Links in the Service-Profit Chain
Services Marketing
8. Top
2. Customer 5. Employee 6. Employee
1. Customer 3. Value 7. Internal management
satisfaction 4. Quality and loyalty drives satisfaction
loyalty drives drives quality drives leadership
drives productivity service drives
profitability customer employee underlies the
customer drives value quality and employee
and growth satisfaction satisfaction chain’s
loyalty productivity loyalty
success
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 5

6. Firm Value Created by Customer
Satisfaction
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 6

7. Qualities Associated with
Service Leaders
Services Marketing
 Understands mutual dependency
among marketing, operations, and
human resource functions of the
firm
 Has a coherent vision of what it
takes to succeed
 Strategies are defined and driven by
a strong, effective leadership team
 Responsive to various stakeholders
 Value created through customer
satisfaction
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 7

8. Services Marketing
Integrating Marketing,
Operations, and
Human Resources
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 8

9. Defining the Three Functions
Services Marketing
• Target “right” customers and build relationships
Marketing • Offer solutions that meet their needs
Function • Define quality package with competitive advantage
• Create, deliver specified service to target customers
Operations • Adhere to consistent quality standards
Function • Achieve high productivity to ensure acceptable costs
Human • Recruit and retain the best employees for each job
Resource • Train and motivate them to work well together
• Achieve both productivity & customer satisfaction
Function
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 9

10. Reducing Interfunctional Conflict
Services Marketing
 One challenge is to avoid creating “functional silos”
 High-value creating enterprises should be thinking in terms of activities,
not functions
 Top management needs to establish clear imperatives for each
function that defines how a specific function contributes to the
overall mission
 Interfunctional transfers will  Appointing formally designated
provide a holistic perspective individuals to integrate
for individuals objectives
 Establishing integrated project  Internal marketing and training
teams
 Commitment of top
 Having interfunctional service management
delivery teams
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 10

11. Services Marketing
Creating a Leading
Service Organization
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 11

12. From Losers to Leaders: Four
Levels of Service Performance
Services Marketing
• Bottom of the barrel
Service • Patronized because there is no viable alternative
• New technology introduced only under duress; uncaring
Losers workforce
• Dominated by a traditional operations mindset
Service • Unsophisticated marketing strategies
• Consumers neither seek out nor avoid them
Nonentities
• Clear market positioning strategy such that customers
Service within target segment(s) seek them out
• Proactive, investment-oriented approach to HRM
Professionals
• The crème da la crème of their respective industries
Service • Names synonymous with outstanding service, customer
delight
Leaders • Employees are empowered and committed
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 12

13. Four Hurdles for Moving up the
Performance Ladder
Services Marketing
 Cognitive Hurdles
 People cannot agree on causes of current problems and the need
for change
 Resource Hurdles
 Firm is constrained by limited funds
 Motivation Hurdles
 Prevent rapid execution when employees are reluctant to change
 Political Hurdles
 Organized resistance forces in forms from powerful vested
interests seeking to protect their positions
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 13

14. Leading Change in a Service
Organization Involves 8 Stages
Services Marketing
6. Producing 7. Building
1. Creating a sense
sufficient short-term momentum and
of urgency to
results to create using that to tackle
develop the impetus
credibility and tougher change
for change
counter cynicism problems
8. Anchoring new
2. Putting together a 5. Empowering
behaviors in
strong enough team employees to act on
organizational
to direct the process that vision
culture
3. Creating an
appropriate vision of 4. Communicating
where the that new vision
organization needs broadly
to go
Source: John Kotter
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 14

15. Services Marketing
In Search of
Human Leadership
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 15

16. Leadership vs. Management
Services Marketing
Leadership Management
• Development of vision and strategies, • Keeps current situation operating
and empowerment of people to
Setting direction through planning, budgeting,
Planning
overcome obstacles, make vision organizing, staffing, controlling, and
• happen visions and strategies that
Creating problem solving
• A management process designed to
describe a business, technology, or
• Emphasis on emotional and spiritual • produce orderly results, not change
Emphasizes physical resources
resources culture
corporate
• Works through hierarchy and systems
• Works through people and culture
In terms of what it should become
• Keeps current system functioning
over long term and articulating
• Produces useful change, especially
feasible way of achieving goal
non-incremental change
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 16

17. Individual Leadership Qualities
Services Marketing
 Love for the business  Make communication a
priority
 See service quality as
foundation for  Work with a team on
competing decision-making
 Recognize key role of  Know when to change
employees when necessary
 Driven by a set of core  Walk the talk
values they pass on
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 17

18. Leadership, Culture, and Climate
Services Marketing
Leadership
 Leadership traits are needed of everyone in supervisory or
managerial positions, including those heading teams
Organization Culture
 Represents the shared
 Perceptions/themes regarding what is important
 Values, beliefs, and assumptions
 Shares understanding about what works and what doesn’t work
 Styles of working and relating to others
Organizational Climate
 The tangible surface layer on top of the organization’s underlying
culture that requires radical rethinking of:
 HRM activities
 Operational procedures
 Firm’s reward and recognition policies
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 18

19. Summary
Services Marketing
 Service profit chain provides summary of relationships between
key variables that explain service leadership
 Four levels of service performance
 Service losers  Service professionals
 Service nonentities  Service leaders
 Service leadership must cut across marketing, operations, and
human resources
 Leaders need to understand the difference between leadership
vs. management, as well as setting direction vs. planning
 Leaders play a big part in nurturing an effective organizational
culture that moves an organization towards service leadership
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 15 – Page 19