kerinmarketing12

AFTER READING THIS CHAPTER

YOU SHOULD BE ABLE TO:

•Describe four unique elements of services.

•

•Recognize how services differ and how they can be classified.

•Understand the way in which consumers purchase and evaluate services.

•

•Develop a customer contact audit to identify service advantages.

•Understand the important role of internal marketing in service organizations.

•

•Explain the role of the four Ps in the services marketing mix.

MANAGING SERVICES

THE HARD ROCK CAFÉ KNOWS WHAT YOU WANT: AN EXCEPTIONAL EXPERIENCE

THE UNIQUENESS OF SERVICES

FIGURE 12-1 Importance of services in the
U.S. gross domestic product

Intangible activities, benefits, or satisfactions that an organization provides to consumers in exchange for money or something else of value.

THE UNIQUENESS OF SERVICES

•The Four I’s of Services

•Intangibility
•Inconsistency
•Inseparability
•Inventory

§Idle production capacity

•The Service Continuum

Four I’s of Service

Four unique elements to services: intangibility, inconsistency, inseparability, and inventory.

Idle Production Capacity

When the service provider is available but there is no demand.

Service Continuum

A range from the tangible to the intangible or good-dominant to service-dominant offerings available in the marketplace.

FIGURE 12-2 Inventory carrying costs of services

FIGURE 12-3 Service continuum

THE UNIQUENESS OF SERVICES

•Classifying Services
•Delivery by People or Equipment

FIGURE 12-4 Service Classifications

THE UNIQUENESS OF SERVICES

•Classifying Services (cont)

•Profit or Nonprofit Organizations
•Government Sponsored or Not

1. What are the four I’s of services?

A: Intangibility, Inconsistency, Inseparability, Inventory.

2. Would inventory carrying costs for an accounting firm with certified public accountants be: a) high, b) medium, or
c) low?

A: High

3. To eliminate service inconsistencies, companies rely on _____________ and _______.

A: standardization/ training

HOW CONSUMERS
PURCHASE SERVICES

•The Purchase Process

§Search properties
§Experience properties
§Credence properties

FIGURE 12-5 Dimensions of service quality

HOW CONSUMERS
PURCHASE SERVICES

•Assessing Service Quality

§Gap Analysis

An evaluation tool that compares expectations about a service offering to the actual experience a consumer has with the service.

FIGURE 12-6 Dimensions of service quality

HOW CONSUMERS
PURCHASE SERVICES

•Customer Contact and Relationship Marketing

§Customer contact audit

•A Customer’s Car Rental Activities

§Relationship marketing

Customer Contact Audit

A flowchart of the points of interaction between customer and service provider.

FIGURE 12-7 Customer contact in car rental (green shaded boxes indicate customer activity.

1. What are the differences between search, experience, and credence properties?

A: Search properties can be determined before purchase, experience properties can only be assessed during or after consumption. Credence properties may be impossible to evaluate even after purchase and consumption.

2. Hertz created its differential advantage at the points of __________________ in their customer contact audit.

A: customer interaction

MANAGING THE
MARKETING OF SERVICES

•Internal marketing

•Product (Service)

•Exclusivity
•Branding
•Capacity Management

•Pricing

§Off-peak pricing

•Place (Distribution)

•Promotion

Internal Marketing

The notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers.

Capacity Management

Integrating the service component of the marketing mix with efforts to influence consumer demand.

Off-Peak Pricing

Charging different prices during different times of the day or days of the week to reflect variations in demand for the service.

FIGURE 12-8 Managing capacity in a hotel

SERVICES IN THE FUTURE

§Deregulation
§Technological development

1. Matching demand with capacity is the focus of ________ management.

A: capacity

2. How does a movie theater use off-peak pricing?

A: Movie theaters reduce prices for matinees and often for weekdays.

3. What factors will influence future changes in services?

A: Deregulation and technological development.

Chapter 12 - Summary

Services have four unique elements: intangibility, inconsistency, inseparability, and inventory.
Intangibility refers to the difficulty of communicating the service benefits. Inconsistency refers to the difficulty of providing the same level of quality each time a service is purchased. Inseparability means that consumers cannot separate the deliverer of the service from the service itself. Inventory costs for services are related to the cost of maintaining production capacity.
Services can be classified in several ways. The primary distinction is whether they are provided by people or equipment. Other distinctions of services are in terms of tax status (profit versus nonprofit) or whether the service is provided by a government agency.
Consumers can evaluate three aspects of goods or services: search properties, experience properties, and credence properties.
A gap analysis determines if consumers' expectations are different from their actual experiences.
A customer contact audit is a flowchart of the points of interaction between a service provider and its customers. Interactions are opportunities for relationship marketing.
Internal marketing, which focuses on an organization's employees, is critical to the success of a service organization.
Because services cannot be patented, unique offerings are difficult to protect. In addition, because services are intangible, brands and logos (which can be protected) are particularly important to help distinguish among competing service providers.
The inseparability of production and consumption of services means that capacity management is important in the service element of the mix. This process involves matching demand to meet capacity.
The intangible nature of services makes price an important cue to indicate service quality to the consumer.
Distribution has become an important marketing tool for services, and electronic distribution allows some services to provide global coverage.
Historically, promotion has not been viewed favorably by many nonprofit and professional service organizations. In recent years this attitude has changed, and service organizations have increased their promotional activities.

Chapter 12

Marketing: Managing Services