MKT Chap. 13 Services Marketing The Intangible Product

Superior Customer Service
Example) DISNEY
*Mass customization

*Lessons from the Mouse:
o Day 1 in Training: How to create Magical moments/sweat the details
o Use your mouse ears—listen to the customers wants (weddings/parking solutions)
o Green side up (All hands on deck)
o Always show ready: cast members/onstage/guests NOT customers
o Every guest is important: Assertive friendly—special treatment
o Provide communications training
o Magic bands—enhancing customer service further
o Builds loyalty
o Other companies use service as benchmark

The importance of Services
• Deed
• Performance
• Effort
-% of GDP: 81%
-% of employment: ~50%
• By providing good customer service, firms add value to their products and services

ex) Mellow Mushroom pays off

Economics of Services
Developing economies are increasing service opportunities

Household maintenance became more specialized → Developed economies are increasingly service oriented economies→ Production was cheaper in other countries → High value placed on convenience & leisure

The Service Continuum
**Most offerings lie somewhere in the middle

Service Dominant:
Doctor
Hotel
Dry Cleaning

Product Dominant:
Restaurant
Apparel
Grocery

The Service Offering
• Core Service: the most basic benefit the consumer is buying

• Supplementary Service: a group of services that support or enhance the core service

ex) FedEx/UPS–> delivery of packages

Services Marketing Differs From Product Marketing
Factors differentiating services from goods:

1. Intangible
2. Inseparable Production & Consumption
3. Heterogeneous
4. Perishable

Intangible
it cannot be touched, tasted, heard or seen like a products/goods can

a. Requires using cues to aid customers
b. Atmosphere is important to convey value
c. Images are used to convey benefit of value

Inseparable Production & Consumption
it is produced and consumed at the same time; that is, service and consumption are inseparable

a. Production and consumption are simultaneous
b. Little opportunity to test a service before use
c. Lower risk by offering guarantees or warranties

ex) Haircut; Massage

Heterogeneous ( Means variability)
Variability in service quality (mkt vs. delivery); it’s not always going to be the same experience

Affected by:
i. Technology: make more efficient
ii. Training
iii. Automation

Perishable
-Services expire; cannot be stored for later purpose
-If you don’t sell all you need to sell, the opportunity expires

Once date has passed–>no value

ex) Happy Hour

When are services assessed?
-search quality
-experience quality
-credence quality
Search Quality
applied to goods more often, assessed before purchase
Experience Quality
assessed after purchase
Credence Quality
assessed only with appropriate knowledge

ex) doctors; getting tires rotated & oil changed

Services as a Process
-People Processing
-Possession Processing
-Mental Stimulus Processing
-Information Processing
People Processing
services directed at customer

ex) Hair done, massage, training, counseling

Possession Processing
services directed at customer’s physical possessions

ex) Car mechanic, dry cleaners, lawn maintenance

Mental Stimulus Processing
(entertainment) services directed at people’s minds

ex) football game, concert, theater

Information Processing
services that use technology/brain power directed at customer’s assets

ex) banking services, retirement planning

Evaluating Service Quality
customers’ perceptions of how well a service meets or exceeds expectations
1. Reliability
the ability to perform the service dependably and accurately

ex) getting the haircut you want by the hair dresser you always go to

2. Responsiveness
the willingness to help customers and provide prompt service

ex) Restaurant service

3. Assurance
the knowledge of and courtesy by employees and their ability to convey TRUST and confidence

-trust is what makes the difference from reliability

ex) Hairdresser

4. Empathy
the caring, individualized attention provided to customers

ex) Doctors office

5. Tangibles
the appearance of physical facilities, equipment personnel and communication materials
Providing Great Service: The GAPS Model
-The Knowledge Gap
-The Standards Gap
-The Delivery Gap
-The Communication Gap
The Knowledge Gap: Knowing What Customers Want
**reflects the difference between customers expectations and the firm’s perceptions of those expectations (MKT research, evaluating service quality and understanding customer expectations)

Closing the Knowledge Gap:
• Matching customer expectations with actual service through research
• Understanding customer expectations:
–Are based on knowledge and experience
–Vary according to type of service
–Vary depending on the situation
• Knowing the Zone of Tolerance
–What is the desired and expected level of service for each dimension?
–What are the customers perceptions of how well the focal service performs and how well a competitive service performs?
–What is the importance of each service quality dimension?
• Customer Evaluation of Service Quality

The Standards Gap: Setting Service Standards
**the difference between the firm’s perceptions of customers’ expectations and the service standards they set

Closing the Standards Gap:
• Setting appropriate service standards for quality
• Training employees to meet and exceed those standards
• Measuring service performance

ex) bringing food out ‘hot’ but there are varying degrees of ‘hot’

The Delivery Gap: Delivering Service Quality
**the difference between the firm’s service standards and the actual service it provides for customers

Closing the Delivery Gap:
• Empowering employees (Chick-fil-a)
• Use of technology
• Provide support and incentives

The Communications Gap: Communicating the Service Promise
**the difference between the actual service provided and the service that the firm’s promotion program promises

Closing the Communication Gap:
• Manage customer expectations
• Promise only what you can deliver
• Communicate service expectations

ex) Hotels that promise 24/7 babysitters, but say they have no babysitters on staff (look at like a lie)

Service Recovery
If you…

• Listen to the customer
• Resolve problems quickly
• Provide a fair solution

You will increase service recovery