Marketing Strategy
in Service Business
- amegaro@unisa.it -
Programme
• Marketing and Service Marketing: an overview
• Marketing plan
• Complexity management
• New marketing strategies approaches: Relationship
Marketing and Many-to-Many network; Experiential
marketing; Unconventional marketing
• New marketing vision: Service Research - from S-D logic &
Service Science to service ecosystems & service systems
• Technologies as Decision Support Systems for marketing
strategies
Case studies
Examples
Project work
Agenda: Lesson 3
• Complexity management
• New approaches: Relationship Marketing and Many-toMany
network; Experiential marketing; Unconventional
marketing
Examples
Complexity management
3.1
The world of business is increasingly interested in the
evolution of research studies concerning complexity, in the
widespread conviction that, to deal with new situations and
survive in a context characterized by an elevated degree of
dynamism, existing interpretation schemes, based on
predefined and standardized solutions, are often not sufficient.
Complexity definitions
Phenomena for which there isn’t a potential solution in the
realm of problem solving approach can be identified, and they
are ever more widespread and complex.
Should the phenomenon in itself be considered as complex?
Is it possible that the same phenomenon can be perceived as
complex by one and even simple by another one?
In other words, what does make a phenomenon “complex”?
Complexity definitions
Decision makers are increasingly facing new situations and
behave in contexts characterized by an elevated degree of
dynamism (change, social inference, numerous actors,
numerous external resources, different goals/perspectives)
This is the reason why their existing interpretation schemes,
based on predefined and standardized solutions, are often
inadequate…
7
Complexity definitions
Definitions on complexity have to take into account the
traditional distinction between quantitative and qualitative
elements.
In quantitative terms, complexity generally depends on elements
such as:
• size of the market;
• number and parts;
• different social roles incorporated, the number of social
personalities present;
• many coordination mechanisms.
Complexity definitions
In the qualitative dimension:
• complexity is characterized by a large number of parts
that are linked in various ways;
• complexity is an emerging phenomenon and cannot be
predicted.
Complexity definitions
Do we share the same idea of complexity?
complication versus complexity
Complexity definitions
Complexity within the realm of social sciences, and therefore in
business organizations, intervenes when it is forced to neglect
a structural perspective to analyze the context, and needs to
evaluate “objects”, both tangible or intangible, not solvable
through calculation criteria.
Observers are forced to analyze objects characterized by:
• indistinct relational boundaries,
• changing and evolving relationships (in time and space),
• emergent and not predictable behavior,
• dynamic social interactions.
Perspectives of analysis
We can adopt the Viable Systems Approach:
- as an interpretative approach to qualify
the concept of complexity, highlighting its
systemic nature
- as a governance approach for
investigating the general implications of
complexity for decision making and the
specific implications for the marketing
approach
Viable Systems Approach (vSa) as an
interpretative approach
• Complexity does not characterize the system in itself, but emerges
subjectively, charactering the interpretation of the context made by the
decision maker.
• A phenomenon can generate chaos, complexity or simply complication. It
depends on the interpretative capacity of the decision maker, not on the
characteristics of the phenomenon (huge variety, variability, etc.).
• Complexity emerges when the interaction emerging from relations in a
specific process does not comply with clear behavioral rules and criteria.
• Organizations are viable systems aiming at surviving in their context
– the context conditions in which they act are relevant for the system’s
outcome
vSa as an interpretative approach
The VSA suggests that the adoption of a systemic view of
the phenomenal reality helps to highlight some
important aspects of complexity, which allow to manage
organizations with greater awareness.
Different observers perceive different levels of complexity
because the complexity is fundamentally linked to the
understanding of the subject observer than the observed
reality; it follows that it is necessarily subjective.
vSa as an interpretative approach
Premise I
Different observers perceive different levels of complexity.
The affirmation in 1. postulates an important element: whilst referring mainly
to a phenomenon as much as to a process or a material object being
observed, the attribute “complex” qualifies not only the case or the object in
itself, but also the context in which it is perceived.
It is not the problem in itself that is complex, but rather the relative problem
solving process in which complexity emerges, depending on the perspective
from which reality is observed and objectives are set forth.
Premises
Premise II
An observer, at different times, perceives different levels of
complexity.
The observer is in fact able to increase his knowledge and his
understanding of the situation observed over time, and gradually
he will perceive a decreasing level of complexity of the same
phenomenon, since he, with a repeated observation, will be able
to understand more and most operating rules and the explanatory
variables than in analysis.
Premises
Dimensions of
Complexity
variety
variability
indeterminacy
Possible variations with
which the phenomenon
presents itself to the
observer
Ability to understand the
phenomenon in its entirety
vSa as an interpretative approach
Additional varieties that can
emerge with the passing of
time
Representation Model of Complexity
comprehensible
+ 
Area of complication
not comprehensible
indeterminacy
0
variety of the observer
Area of Unknowing
vSa as an interpretative approach
A taxonomy of difficult situations was necessary.
In business economics, changing contexts, have led to the
constant revision of reference paradigms where the inefficiency of
interpretation schemes based on non codified rules have resulted
in complexity.
This is best expressed in the curve of the “4C” where individual
knowledge is applied initially in a context of chaos, i.e. incapacity
to understand the dynamics of the phenomenon/problem
observed and an interpretation scheme of cognition is devised
through three phases: abduction, induction and deduction.
The knowledge curve: the «4C»
The knowledge curve: the «4C»
The knowledge curve: the «4C»entropy
information
Problematic situation: CHAOS
In the chaotic phase, the incoming information
confuses the decision maker; he is unable to use
the incoming information to circumscribe the
phenomenon.
There is a trend towards states of ever greater
disorder.
The knowledge curve: the «4C»entropy
information
ABDUCTION
The decision maker has a decisive idea. The solution idea
allows him to start observing more clearly.
Abduction occurs in a moment of cognitive effort: it takes
passion, interest, commitment.
Abduction ≠ Intuition that does not presuppose the
availability of information.
The knowledge curve: the «4C»
information
entropy
Problematic situation: COMPLEXITY
The growth of entropy is still ongoing and the
confusion is still increasing, but at a
decreasing rate. The decision maker still does
not know how to approach the problem. In
this phase, the maximum peak of entropy is
reached.
The knowledge curve: the «4C»
Barile, 2009
information
entropy
INDUCTION
Induction implies the empirical test of the
hypothesis developed in the abductive moment.
In this phase the decision-maker has built an
interpretative scheme but has to understand if it
may be valid or not to solve that situation.
The knowledge curve: the «4C»
Barile, 2009
information
entropy
Problematic situation: COMPLICATION
The decision maker has a solution hypothesis to
apply but there are still methodological, technical
and instrumental difficulties.
The knowledge curve: the «4C»
Barile, 2009
information
entropy
The hypothesis test gave a positive result.
The hypothesis, confirmed by experience and
repeated application to the problem, is
schematized in technique or operating model.
This phase is centered on the formalization of
problem solving criteria, as a specific
interpretative scheme for a generalized use.
DEDUCTION
The knowledge curve: the «4C»
Barile, 2009
information
entropy
Problematic situation: CERTAINTY
The area of certainty is the area in which the
problem appears to be completely overcome. The
decision maker, at this moment, has full knowledge
of the problem and of the solution path. He only
needs new information to better circumscribe the
situation and how to manage it.
The curve of the “4C” illustrates the distinction between the three
critical phases relative to the evolution through problematic situations
of chaos, complexity, complication and certainty.
1. abduction, by means of creativity, posits a solution to the problem;
2. induction, implies the empirical testing of such a hypothesis;
3. deduction, is centered on the formalization of problem solving
criteria, as a specific interpretation scheme for generalized use.
The described dynamic manifests itself each time context
conditions change and decision makers are impeded from fully
grasping the change.
The knowledge curve: the «4C»
From Traditional Marketing to
Relationship Marketing
3.2
From
Traditional Marketing
to
Relationship Marketing
O Q
O Q
From traditional to Relationship
Marketing
A New Perspective of Marketing
Relationship marketing involves a change in managing the
relationship with customers and other stakeholders.
This change involves the adoption of a collaborative logic,
in the management of a business and in the managing the
relationships with other actors.
... to strategic
relationships
From
exchange…
From traditional to Relationship
Marketing
The exchange approach implies that the companies involved in
the transaction are oriented to exclusively maximize subjective
value.
operator
“A”
operator
“B”
TransactionSearch for the subjective maximization
of the value generated by the
transaction.
From traditional to Relationship
Marketing
The Relational Approach implies that companies involved in
strategic relationships are oriented to create and share new
value.
operator
“A”
operator
“B”
RelationshipContribution to maximize total value of
the relationship.
From traditional to Relationship
Marketing
Relationship Marketing
3.1
The rational reasons why a new way of marketing is born
can be found in the relationship with the target audience.
Relationship marketing: origins
Relationship marketing: example of
prosumer
Relationship marketing: example of
prosumer
Relationship marketing: example of
prosumer
Customer
CUSTOMERS
ORIENTATION
After 1960...
Relational
Marketing (RM)
Customer
Relationship
Management
(CRM)
ProviderCustomer
The focus is on
the relationships
between two key
actors
After 1990...
Customers
Providers
Many-to-many
approach
After 2000...
Customers as the
pivot, the focus
of attention in
the market
Network
orientation
Focus on multilevelled
networks
of actors/
stakeholders
Relationship marketing: origins
Hakansson (1979)
Establishing, negotiating and managing relationships with
stakeholders is essential to obtain sustainable competitive
advantage based on long-term agreements.
The management of relationships between the company and
the main stakeholders is entrusted to marketing which should
represent the “sensitive soul” of the company capable of
understanding, adapting, proposing, measuring.
Relationship marketing: origins
Kotler (1992)
Focus on long-term objectives and relationships
Berry (1983)
Service is created, built and developed to start, maintain and
improve relationships with users.
Relational marketing: origins
Bendapudi and Berry (1997)
Four variables influence the characteristics of relationships:
1. Environmental dimensions
Providers
environment
Consumers
I
N
T
E
R
A
C
T
I
O
N
2. Service providers’ main features
3. Consumers interested in the service
4. Interactive dimension
Relationship Marketing
PASSIVE
Marketing
ACTIVE
Marketing
Marketing
=
Selling
Relationship
Marketing
Aim: to increase the value of relationships with customers
through the enhancement of users’ loyalty
Definition: Creation, development, maintenance and
optimization of relationships between customers and
organizations
Selection and analysis of specific targets (not anymore broad
segments) to reduce the asymmetry between the company and
every single user through multi-channel strategies: from classic
media (telephone/ print) to web communication
Bidirectional relationships and increased knowledge of users
Relationship Marketing
Relationship Marketing: a new mindset
Shfit to a collaborative approach to
relationships that pursues total value
maximization and subjective value
maximization to improve:
- Synergistic relationships and involvement
in the value creation;
- Long term partnerships that contribute to
system’s well-being.
A change in the managerial approach to relationships with
users and stakeholder is needed
Identification of strategies to establish durable relationships
consumers-brands
THROUGH the involvement of target users in long term
programmes that provide immediate benefits and sense of
belonging to brand
Relationship Marketing
ONE-TO-ONE: direct relations between
consumers- companies and brand-targets
ONE-TO-ONE RELATIONSHIPS
• New technologies, social networks and IT systems contribute
to engage customers in business decision- making
• Personalization of relationships with users, seen as unique
individual entities with specific needs.
• Customers become partners of organizations and contribute to
the design of value proposition for theirselves, for the
organizations, for other customers
• Development and creation of relationships based on
interactivity, connection and mutual learning
Personalizing Relationships
Personalizing Relationships
• Creation of different targets with different needs for
different actions and service offering;
• Knowledge on users’ requirements, needs and tastes;
• Bidirectional communication.
To optimize relationships, personalized strategies are needed
• Marketing mix – Personalizing product
Product operational decisions concern attributes such as
packaging, brand, materials
Personalizing Relationships
"Share a Coca-Cola" vs "Nutella is you“
Divergence of intent between the two brands: while the first - starting from
the person who buys the drink - wants to involve other people, meaning the
buyer as a sort of donor, the second stops with those who buy Nutella who,
therefore, do not donate and he does not share, but keeps it for himself.
Coca-Cola's choice could be defined as “social”.
Nutella's choice as “individual”.
Both, therefore, try to release a viral-emotional contamination, taking however
- different paths at some point.
• Marketing mix – Personalizing product
Personalizing Relationships
Personalizing Relationships
• Marketing mix – Personalizing price
Customizing the price means setting different prices for each
customer, also possible thanks to Internet:
• different prices depending on the quantity (eg. Reduction
of shipping costs based on volumes of sales)
• group prices: different prices for each group of customers
with homogeneous characteristics (no shipping costs for
Amazon Prime subscribers)
Personalizing Relationships
Pizza Hut Table
https://www.youtube.com/watch?v=xvT0MCugb58
• Marketing mix – Personalizing place
Personalizing Relationships
Pizza Hut proposes this concept to indicate how ordering a pizza
could become an experience in the near future.
The concept is a restaurant table with multi-touch technology
that allows you to customize, order and pay for the pizza you
want with a few simple touches on your smartphone.
You can pay by simply placing your smartphone on the table
thanks to the next NFC technology and wait for the order,
perhaps while we are playing on the table which in the meantime
has transformed into the mega second screen of your
smartphone.
The new pizza experience is served.
Special birthday promotions
A clear communication plan
must be created, because
loyalty is a transversal process
in which it is necessary to
know and be known.
• Marketing mix – Personalizing promotion
Personalizing Relationships
Everyone is much more than a customer
Life stage defines a person’s major
concern
Customer Lifetime value
Customer Relationship Management
The sharing of a common language: that can enhance
knowledge sharing and the exchange of information that
increase marketing collaboration and the creation of a cohesive
set of value
Relationship Marketing
Relationships can be developed over time through:
A coherent culture: based on common trust and shared
purposes that allow at reducing uncertainty and opportunistic
behaviors of partners
To retain customers (and obtain loyalty) is better than acquire
new ones with the reduction of service quality
The aim of relationship marketing is to establish, strengthen and
renewover time stable and durable relationships with customers
to create and regenerate constantly the production of mutual
benefits
Relationship Marketing
Antonietta Megaro
amegaro@unisa.it
THANK YOU.
Questions?
Comments?