Chapter 6:

Educating Customers
and Promoting the
Value Proposition

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 1
 Overview of Chapter 6

1. Role of Marketing Communications

2. Challenges and Opportunities of Communicating

Services

3. Setting Communication Objectives

4. The Marketing Communications Mix

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 2
 1. Role of Marketing Communication

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 3
 Adding Value through
Communication Content

 Provide information to prospective customers

 Service options available, cost, specific features,
functions, service benefits
 Persuade target customers that service offers best
solution to meet their needs and build relationship
with them

 Help maintain relationships with existing customers

 Requires comprehensive, up-to-date customer database
and ability to make use of this in a personalized way
 Direct mail and contacts by telephone, e-mail, websites,
text messages

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 4
 Wausau: “People@work” Program
Fig 6.1

 Wausau Insurance
promotes innovative
people@work program
 Targeted at employers
 Gets injured employees
back to work faster, doing
appropriate tasks
 Builds on expertise in
preventing and managing
workplace accidents
 “Bottom Line, A Better Value”

Source: Courtesy of Wasau Insurance

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 5
 2. Challenges and Opportunities

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 6
 1) Overcoming Problems of Intangibility

 Difficult to communicate service benefits to

customers, especially when intangible

 Intangibility creates four problems:

 Abstractness
― No one-to-one correspondence with physical objects
 Generality
― Items that comprise a class of objects, persons, or events
 Nonsearchability
― Cannot be searched or inspected before purchase
 Mental impalpability
― Customers find it hard to grasp benefits of complex,
multidimensional new offerings

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 7
 Advertising Strategies for
Overcoming Intangibility (Table 6.1)

Intangibility problem Advertising strategy

 Generality
 objective claims Document physical system capacity
Cite past performance statistics
 subjective claims Present actual service delivery incident

 Nonsearchability Present customer testimonials

Cite independently audited performance

 Abstractness Display typical customers benefiting

 Impalpability Documentary of step-by-step process,

Case history of what firm did for customer
Narration of customer’s subjective experience

Source: Banwari Mittal and Julie Baker, “Advertising Strategies for Hospitality Services,” Cornell Hotel and Restaurant Administration Quarterly 43, April
2002, 53
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 8
 Accenture Promotes Ability to Turn
Innovative Ideas into Results (Fig 6.2)

 Ad dramatizes abstract notion

of helping clients capitalize on
innovative ideas in fast-
moving world

 Features Tiger Woods in eye-

catching situations

 Highlights firm’s ability to

help clients “develop the
reflexes of a high-
performance business”

 Use tangible metaphors when

possible!
Source: Courtesy of Accenture

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 9
 2) Using Metaphors to
Communicate Value Propositions

 Tangible metaphors help to communicate benefits of

service offerings, for example:
 Allstate—“You’re in good hands”
 Prudential Insurance—uses Rock of Gibraltar as symbol of
corporate strength

 Metaphors communicate value propositions more

dramatically and emphasize key points of difference

 Highlight how service benefits are actually provided

 Some examples from recent advertising?

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 10
 AT Kearney: Using Bear Traps as
Metaphors for Problems (Fig 6.3)
 Emphasizes that firm includes all
management levels in seeking
solutions
 Ad shows bar traps across office floor
 Headline: “What Did Your
Consultants Leave Behind” raises
doubts about services of other
suppliers
 Message: Avoid problems caused by
consulting firms that work only with
top management
 Draws attention to how AT Kearney
differentiates its service through
careful work with “entire team” at
all levels in client organization
Source:”What Did Your Consultants Leave Behind,” Copyright A.T. Kearney. All
rights reserved. Reprinted with permission
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 11
 DHL: Promoting the Efficiency of
Its Import Express Service (Fig 6.4)

 Use of an easily grasped

metaphor
Heavily knotted string
represents how complex
importing can be
Straight string represents
how easy it would be using
DHL’s express service

Source: Courtesy DHL Express Singapore

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 12
 3) Facilitate Customer Involvement in
Production
 Show service delivery in action
 Television and videos engage viewer
Dentists showing patients videos of surgical procedures
before surgery
 Streaming videos on Web and podcasts are new channels
to reach active customers
 Advertising and publicity can make customers aware of
changes in service features and delivery systems
Sales promotions to motivate customers
Offer incentives to make necessary changes
Price discounts to encourage self-service
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 13
 4) Help Customers to Evaluate
Service Offerings
 Provide tangible clues related to service
performance
 Some performance attributes lend themselves better
to advertising than others
Airlines
― Boast about punctuality
― Do not talk overtly in advertising about safety, admission that
things might go wrong make prospective travelers nervous
― Use indirect approach: promote pilot expertise, mechanic’s
maintenance skills, newness of aircraft

 Firm’s expertise is hidden in low-contact services

Need to illustrate equipment, procedures, employee
activities that take place backstage
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 14
 5) Stimulate or Dampen Demand to
Match Capacity

 Live service performances are time-specific and can’t

be stored for resale at a later date
 For example, seats for Friday evening’s performance; haircut at
Supercuts on Tuesdays
 Advertising and sales promotions can change timing of customer use

 Examples of demand management strategies

 Reducing usage during peak demand periods
 Stimulating demand during demand during off-peak period, for
example:
― Run promotions that offer extra value—room upgrades, free
breakfast

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 15
 6) Promote the Contributions of
Service Personnel
 Frontline personnel are central to service delivery in
high-contact services
Make the service more tangible and personalized
Advertise employees at work to help customers
understand nature of service encounter
 Show customers work performed behind the scenes to
ensure good delivery
To enhance trust, highlight expertise and commitment of
employees whom customers normally do not normally
encounter
Advertisements must be realistic
Messages help set customers’ expectations
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 16
 3. Setting Communication Objectives

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 17
 Checklist for Marketing Communications
Planning: The “5 Ws” Model

 Who is our target audience?

 What do we need to communicate and achieve?

 How should we communicate this?

 Where should we communicate this?

 When do communications need to take place?

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 18
 Target Audience: 3 Broad Categories

 Prospects
Employ traditional communication mix because
prospects are not known in advance
 Users
More cost-effective channels
 Employees*
Secondary audience for communication campaigns
through public media
Communications may be directed specifically at
employees as part of internal marketing campaign, not
accessible to customers

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 19
 Common Educational and Promotional
Objectives in Service Settings (1) (Table 6.2)

 Create memorable images of companies and brands

 Build awareness/interest for unfamiliar service/brand

 Build preference by:

 Communicating brand strengths and benefits
 Comparing service with competitors’ offerings and countering
their claims

 Reposition service relative to competition

 Stimulate demand in off-peak, discourage during peak

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 20
 Common Educational and Promotional
Objectives in Service Settings (2) (Table 6.2)

 Encourage trial by offering promotional incentives

 Reduce uncertainty/perceived risk by providing useful

info and advice

 Provide reassurance (e.g., promote service guarantees)

 Familiarize customers with service processes before use

 Teach customers how to use a service to best advantage

 Recognize and reward valued customers and employees

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 21
 Key Planning Considerations

 Knowledge of target market segments

 Exposure to different media
 Awareness of products and attitudes
 Recognition of decisions to be made
 Content, structure, and style of message
 Manner of presentation
 Most suitable media
 Budget, time frames
 Methods of measuring and evaluating performance

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 22
 4. The Marketing Communications Mix

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 23
 1) Marketing Communications Mix

 Different forms have distinctive capabilities

 Types of messages that can be conveyed
 Market segments most likely to be exposed to them

 Two types of communication

 Personal communications: personalized messages that move in both
directions between two parties
 Impersonal communications: messages move in only one direction

 Technology creates gray area between both

 For example, combine word processing technology with information
from database to create impression of personalization; interactive
software; voice recognition technology

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 24
 Marketing Communications Mix
for Services (1) (Fig 6.5)

Personal Advertising Sales promotion

communications

Selling Broadcast, Sampling

podcasts

Customer Print Coupons

service

Internet Sign-up
Training
rebates

Telemarketing Outdoor Gifts

Word of Prize
* Word-of-mouth Direct mail
promotions
mouth
(other customers)

Key: * Denotes communications originating from outside the organization

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 25
 Marketing Communications Mix
for Services (2) (Fig 6.5)

Publicity & Instructional

public relations manuals Corporate design

Press Websites Signage

releases/kits

Press Manuals Interior decor

conferences

Special Events Brochures Vehicles

Sponsorship Interactive Equipment

software

Trade Shows, Voice mail Stationery

exhibitions

* Media-initiated
coverage Uniforms

Key: * Denotes communications originating from outside the organization

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 26
 2) Sources of Messages Received by
Target Audience (Fig 6.6)

Front-line staff
Messages originating
within organization d u c tion
Pro nnels Service outlets A
cha
U
Mark
e
chan ting Advertising D
nels Sales promotions I
Direct marketing
Sources Personal selling
E
Public relations N
C
Messages originating E
outside organization Word of mouth

Media editorial

Source: Adapted from a diagram by Adrian Palmer, Principles of Services Marketing, London: McGraw-Hill,4th ed., 2005, p. 397

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 27
 Messages Transmitted through
Production Channels (1)

 Developed within organization and transmitted through

production channels that deliver the service itself

 Customer service from front-line staff

 Shape customer’s perceptions of service experience and the firm
 Responsible for delivering supplementary services such as providing
information, receiving payment, resolving problems, etc.
 Firm may require customer service staff to cross-sell additional
services

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 28
 Messages Transmitted through
Production Channels (2)

 Customer training
Familiarize customers with service product and teach them
how to use it to their best advantage
 Service outlets
Planned and unintended messages reach customers
through the medium of the service delivery environment
itself

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 29
 Messages through Marketing Channels:
Personal Selling
 Interpersonal encounters educate customers and promote
preferences for particular brand or product

 Relationship marketing strategies based on account

management programs

 Face-to-face selling of new products is expensive—

telemarketing is lower cost alternative

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 30
 Messages through Marketing Channels:
Trade Shows
 Popular in b2b marketplace

 Stimulate extensive media coverage

 Many prospective buyers come to shows

 Opportunity to learn about latest offerings

from wide array of suppliers
 Environment is very competitive
 Compare and contrast
 Question company reps

 Physical evidence displayed through exhibits, samples,

demonstrations

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 31
 Messages through Marketing Channels:
Advertising

 Build awareness, inform, persuade, and remind

 Challenge: How does a firm stand out from the crowd?
 Yankelovitch study shows 65% of people feel “constantly
bombarded” by ad messages; 59% feel ads have little relevance
 TV, radio broadcasts, newspapers, magazines, Internet, many
physical facilities, transit vehicles—all cluttered with ads
 Wide array of paid advertising media
 Ads reinforced by direct marketing tools
 Many e-tailers now using electronic recommendation agents (RI 6.2)

 Effectiveness remains controversial

 Research suggests that less than half of all ads generate
a positive return on their investment

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 32
 Messages through Marketing Channels:
Direct Marketing

 Mailings, recorded telephone messages, faxes, e-mail

 Potential to send personalized messages to highly

targeted microsegments

 Advance in on-demand technologies empower consumers

to decide how and when they prefer to be reached, and
by whom

 Permission marketing: customers encouraged to “raise

their hands” and agree to learn more about a company
and its products in anticipation of receiving something of
value

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 33
 Messages through Marketing Channels:
Sales Promotion

 Defined as “communication attached to an incentive”

 Should be specific to a time period, price, or customer

group

 Motivates customers to use a specific service sooner, in

greater volume with each purchase, or more frequently

 Provides a “competitive edge” during periods when

demand would be weak

 Speeds up introduction and acceptance of new services

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 34
 Messages through Marketing Channels:
Public Relations

 PR/publicity involves efforts to stimulate positive interest

in an organization and its products through third parties
 For example, press conferences, news releases, sponsorships

 Corporate PR specialists teach senior managers how to

present themselves well at public events, especially
when faced with hostile questioning

 Unusual activities can present an opportunity to promote

company’s expertise
 For example, FedEx safely transported two giant pandas from
Chengdu, China, to the National Zoo in Washington, D.C. in a FedEx
aircraft renamed FedEx PandaOne

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 35
 Messages Originating from Outside the
Organization (1)

 Word of Mouth (WOM) and Blogs

Recommendations from other customers viewed as more
credible
Strategies to stimulate positive WOM
―Referencing other purchasers and knowledgeable
individuals
―Creating exciting promotions that get people talking
about firm’s great service
―Developing referral incentive schemes
―Offering promotions that encourage customers to
persuade others to join them in using the service
―Presenting and publicizing testimonials that stimulate
WOM
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 36
 Developing an Integrated Marketing
Communications Strategy

 IMC ties together and reinforces all

communications to deliver a strong brand
identity

 Communications in different media should form

part of a single, overall message about the
service firm (need consistency within campaigns
about specific service products targeted at
specific segments)

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 37