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                                 Services Marketing


March 28, 30 Course Introduction
             Services Marketing & Management Overview

Readings:      Syllabus & Calendar
               Gustafsson & Johnson, Competing in a Service Economy, Ch. 1,2
               Davidow and Uttal, “Service Companies: Focus or Falter”

April 4, 6:    The Service Encounter: Moments of Truth

Readings:      Carlzon, “Putting the Customer First: The Key to Service Strategy”
               Hart, “The Profitable Art of Service Recovery”
               Reicheld, “Zero Defections: Quality Comes to Services”

Case: NW Airlines & the Detroit Snowstorm
Q1. What exactly went wrong? Why did it go wrong? Who, or what, is responsible –
the weather, a particular organization, several organizations?
Q2. Could this situation have been avoided? If not, could it have been mitigated (and, if
so, how)?
Q3. What should Northwest Airlines do in response to this situation?

April 11, 13: Service Quality Model for Improvements

Readings:      Zeithaml, Parasuraman, Berry, Delivering Service Quality, Ch.1-3
               Chase & Desu, “Want to Perfect Your Company’s Service? Use
               Behavioral Science”

Case: Starbucks: Delivering Service Quality
Q1: What factors accounted for the extraordinary success of Starbucks in the early 90s?
What was so compelling about the Starbucks value proposition? What brand image did
Starbucks develop during this period?
Q2: Why have Starbucks’ customer satisfaction scores declined? Has the company’s
service declined, or is it measuring satisfaction the wrong way?
Q3. How does Starbucks of 2002 differ from the Starbucks of 1992?
Q4. Describe the ideal Starbucks customer from a profitability standpoint. What would it
take to ensure that this customer is highly satisfied? How valuable is a highly satisfied
customer to Starbucks?


Q5. Should Starbucks make the $40 million investment in labor in the stores? What’s the
goal of this investment? Is it possible for a mega-brand to deliver customer intimacy?

April 18, 20: Customer Relationship Metrics & Management

Readings:     Peppers, Rodgers & Dorf “Is Your Company Ready for One-To-One
              Winer “A Framework for CRM”

Case: Harrah’s Entertainment Inc.
Q1. What are the objectives of the various data base marketing programs? Are they
Q2. Why is it important to use the “customer worth” in these efforts rather than the
observed level of play?
Q3. How does Harrah’s integrate the various elements of its marketing strategy to
deliver more than the results of data base marketing?
Q4. What is the sustainability of Harrah’s actions and strategy?
Q5. What are the privacy and ethical issues that Harrah’s should be concerned about?


April 25, 27: Service Innovation & Design

Readings:     Sawhney, Balasubramanian, Krishnan “Creating Growth with Services”
              Allmendinger & Lombreglia “Four Strategies for Smart Services”

Case: OnStar: Connecting to Customers through Telematics
Q1. Describe the OnStar service value proposition. What are the key components of the
service design? What are the key components of OnStar’s service delivery system?
Q2. How should OnStar’s business evolve in order to maximize its value? Explain your
Q3. What initiatives should OnStar undertake take to build closer relationships with GM
car customers? Explain how these initiatives help GM? How will these initiatives
impact OnStar’s business partnerships?

May 2, 4:     Beyond Customer Service

Readings:     Pine and Gilmore, “Welcome to the Experience Economy.”
              Prahalad & Ramaswamy, “The New Frontier of Experience Innovation”

Case: Euro Disney: The First 100 Days
Q1. What makes Disney’s service concept so successful?
Q2. Is the Euro Disney doing well or poorly in its early start up phase? Explain.
Q3. What aspects if the traditional Disney theme park formula are transferable to other
markets? What needs to be adapted to local market conditions?


Q4: What should be Euro Disney’s goals for next season? What should they do to
achieve these goals? Be sure to address pricing, service enhancements, and promotional


May 9, 11:    Delivering Service Excellence

Readings:     Ford, Heaton & Brown, “Delivering Excellent Service”
              Berry, Discovering the Soul of Service, Ch. 12
              Berry & Bendapudi, “Clueing in Customers”

Case: The Ritz-Carlton Hotel Company
Q1. “Service” can be an elusive concept. What is the essence of The Ritz-Carlton
experience? What is The Ritz-Carlton selling?
Q2. How does the Ritz-Carlton create “Ladies and Gentlemen” in only 7 days?
Q3. In what may be a first for the hospitality industry, Brian Collins, hotel owner, has
asked James McBride, Ritz-Carlton general manager, to lengthen the amount of time
spent training hotel employees before hotel opening? Should McBride lengthen the 7 Day
Q4. Or, is this the time that McBride should consider a total overhaul of the hotel
operating process? Of yes, what should he change, and how should he go about doing it?
What’s different about experimenting in a service business?

May 16, 18: The Role of Customers & Technology

Readings:     Prahalad & Ramaswamy, “The Co-Creation Connection”
              Rayport and Jaworski, “Best Face Forward”

Case: eBay
Q1. How successful is eBay? How does its performance compare to that of traditional
retailers such as Wal-Mart and Internet retailers such as
Q2. What service does eBay provide? What is the role of customers in providing this
Q3. Going forward, should eBay be concerned about increased corporate investment?

May 23, 25: Managing Perceptions: Promotions & Pricing

Readings:     Berry, “Cultivating Service Brand Equity”
              Hart “The Power of Unconditional Guarantees”
              Berry & Yadav, “Capture and Communicate Value in the Pricing of
              Gourville and Soman, “Pricing and the Psychology of Consumption”


Case: Federal Express: The Early History, Federal Express: The Money Back
Q1. Is a full refund enough to cover your customers’ true costs when you fail to deliver
your service?
Q2. Should you wait for customers to bring service failure mistakes to your attention or
should you proactively trace all system failures internally?
Q3. Should you pay out for all service failure mistakes whether reported by the customer
or not?


May 30 & June 1:      Team Projects (Meetings/Presentations)

June 6:     Finals Week