CH 12 Services Marketing

Services
Intangible activities or benefits that an organization provides to satisfy consumer needs in exchange for money or something else of value

Important in the US economy

The 4 I’s
For unique elements to services

Intangibility
Inconsistency
Inseparability
Inventory

Intangibility
Services that are intangible; they can’t be held, touched, or seen before the purchase decision
Inconsistency
Services depends on the people who provide them, their quality battles with each person’s capabilities and day to day performance
Inseparability
The consumer cannot and does not separate the deliverer of the service from the service itself

The amount of interaction between the consumer and the service provider depends on the extent to which the consumer must be physically present to receive the service

Disadvantages of done self service technologies such as ATMs, grocery store scanning stations, and self service gad pumps is that the are perceived as being less personal

Inventory
With services, inventory carrying costs are more subjective and are related to idle production capacity Which is when the service provider is available but there is no demand for the service. The inventory cost of a service is the cost of paying the person to provide the service along with any needed equipment

The inventory carrying costs of airlines are high because of high salaried pilots and expensive equipment

Service Continuum
The range of product dominant to service dominant offerings
Classifying Services
Services classified by…
Delivered by ppl or equipment
Profit or nonprofit
Government sponsored
Delivered by People or Equipment
Skilled labor is required by people

Equipment based services do not have the marketing concerns of inconsistency because people are removed from the provision of the service

Profit or Non-Profit Organizations
Companies also distinguish themselves by their tax status as profit or nonprofit organizations

Nonprofit organizations excesses in revenue over expenses are not taxed or distributed to shareholders

When excess revenue exists the money goes back into the organization’s treasury to allow continuation of the service

The Purchase Process
Tangible goods such as clothing, jewelry, and furniture have search properties such as color, size, and style, which can be determined before purchase
Experience Properties
Services such as restaurants and child care which can be discerned only after purchase or during consumption
Credence Properties
Services provided by specialized professionals such as medical diagnosis and legal services that have characteristics that the consumer may find impossible to evaluate even after purchase and consumption
Government Sponsored
Government provides services too like the post office
Assessing Service Quality
Comparing expectations of a service offering to the actual experience a consumer has the service
Gap Analysis
This type of analysis asks consumers to assess their expectations and experiences on dimensions of service quality
Word of Mouth
How expectations are influenced rather than how the organization delivers its services
Customer Contact Audit
A flowchart of the points of interaction between consumer and service provider

Basis for developing relationships with customers

Relationship Marketing
The contact between a customer and service provider represents a service encounter that is likely to influence the customers assessment of the purchase

Relationship may also be developed through loyalty incentives

7 Ps of Service Marketing
Product
Price
Place
Promotion
People
Physical Environment
Process
Price
Charges, rates, fees, fares, and tuition
Off Peak Pricing
Consists of charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service
Place
The distribution site and the service deliverer are the tangible components of the service
Promotion
Value of promotion is to show consumers the benefits of purchases

Publicity is important

People
The nature of the interaction between employees and customers strongly influences perceptions of the service experience
Internal Marketing
Based on the notion that a service organization must focus on its employees or internal market before successful programs can be directed at customers
Customer Experience Management
The process of managing the entire customer experience with the company
Physical Environment
Service firms need to manage physical evidence carefully and systematically to convey the proper impression of the service to the customer
Process
Refers to the actual procedures, my mechanisms, and flow of activities by which the service is created and delivered
Product
Brand name or identifying the logo of the service organization is particularly important when a consumer makes a purchase decision

Strong brand names and symbols are important for service marketers as a means of differentiation and image of quality

Capacity Management
The service component of the marketing mix must be integrated with efforts to influence consumer demand

Service organizations must manage the availability of the offering so that demand matches capacity over the duration of the demand cycle and the organization’s assets are used in ways that will maximize the return on investment (ROI)

Services in the Future
Technological advances and the social imperative for sustainability