chapter 12 Flashcards
Services
intangible activities/benefits that an org provides to satisfy consumers’ needs in exchange for money or something else of value
Services
are situations where there is no tangible product. However, services may surround a tangible product
Four I’s of Services
- intangibility
- inconsistency
- inseparability
- inventory
Intangibility (Personify)
services cannot be held, touched, or seen before the purchase decision (intangible)
-Associates person w/ service & establishes connection you would normally feel by touching things
Ex: Flo from Progressive, legal service, salon service
Inconsistency (Service Industrialization)
quality of service is inconsistent
-Servs are about the performance & are being delivered by people who are inconsistent
Ex: Soprano at New York’s Opera has a cold & gives a less-than perfect performance on the night that you attend
Inseparability (Customer Participation)
Consumer cannot separate service deliverer from the service itself
-You can’t separate the customer from it because they’re purchasing it
› Serv provider & consumer co-create value together
Ex: Haircuts, doctor visits, food servs
Inventory (Yield Management)
Cost of paying service provider & needed equipment
Idle Production Capacity
Service provider available but no demand for the service
Ex: Physician is paid to see patients but no one schedules an appointment, the fixed cost of the idle physician’s salary is a high inventory carrying cost
Service Continuum
the range of offerings companies bring to the market, from the tangible to the intangible or the product-dominant to the service-dominant
Three Ways Services Can Be Classified
- Delivery by People or Equipment
- For-Profit or Nonprofit Orgs
- Government Sponsored
Delivery by People or Equipment
Classification of services based on how they are delivered
Ex: Lawyers & self-checkout
For-Profit or Nonprofit Orgs
distinguished by tax status
Nonprofit Org: excesses in revenue over expenses are not taxed or distributed to stakeholders. When excess revenue exists, the money goes back into the org
Ex: Salvation Army
Government Sponsored
governments at the federal, state, and local levels provide a broad range of services
Ex: USPS
Successful service orgs, must…
(1) understand how the consumer makes a service purchase decision
(2) understand how the consumer evaluates quality
(3) determine how to present a differential advantage relative to competing offerings
The Purchase Process
consumers use search, experience, & credence properties to evaluate product/services
Search Properties
color, size, and style, which can be determined before purchase
Ex: Clothing, jewelry, furniture (tangible products)
Experience Properties
Characteristics discerned only after purchase or during consumption
Ex: Restaurants, child care, vacations, haircuts
Credence Properties
Characteristics impossible to evaluate even after purchase & consumption
Ex: Medical diagnoses, legal servs, auto repair, root canal
Assessing Service Quality
consumer compares expectations about a service offering to his/her actual experience w/ the service
Gap Analysis
compares the differences b/w the consumer’s expectations about experiences w/ a service based on dimensions of service quality
Five Dimensions of Service Quality (RATER)
- Reliability
- Assurance
- Tangibles
- Empathy
- Responsiveness
Reliability
ability to perform the promised service dependably & accurately
-being consistent
Ex: Is my flight on time?
Assurance
knowledge & courtesy of employees & their ability to convey trust/confidence
-Confidence that you’re going to meet my needs
Ex: Are the ticket counter attendants, flight attendants, & pilots knowledgeable about their jobs?
Tangibles
appearance of physical facilities, equipment, personnel, & communication materials
Ex: Clean shelves at stores
Empathy
caring, individualized attention provided to customers
-caring about your customer & realizing what they’re going through
Ex: Apologizing if customer isn’t satisfied
Responsiveness
willingness to help customers & provide prompt service
-provide the service the right way & responding if something didn’t go right
Ex: Are the flight attendants willing to answer my questions?
Customer Contact Audit
Flowchart of interaction points between consumers & service provider
-Important in high-contact servs (hotels, educational institutions, automobile rental agencies)
Service Blueprint
includes all employee actions & acknowledges that services are designed to be “experiences”
Relationship Marketing Benefits for Customers
- Continuity of a single provider
- Customized service delivery
- Reduced stress due to a repetitive purchase process
- Absence of switching costs
Seven Ps of Services Marketing
an expanded marketing mix concept for servs that includes the four Ps (product, price, place, promotion) as well as people, physical environment, & process
Seven Ps of Services Marketing
- product
- price
- place
- promotion
- people
- physical environment process
Product (Service)
managers of products/servs must design the product concept w/ the features/benefits desired by customers
› Important aspect of the product concept is branding
› Servs are intangible/difficult to describe, brand name/logo is important when consumer makes purchase decision
› Strong brand names/symbols are important to differentiate & convey an image of quality
› Ex: McDonald’s, Verizon, Red Cross
Price
perceived by consumers as a possible indicator of the quality of the service
› Customers also consider nonmonetary costs (mental/physical efforts required to consume a service)
Off-Peak Pricing
charging different prices during different times of the day or during diff days of the week to reflect variations in demand for the serv
Ex: Airlines offers discounts for weekend travel
Place (Distribution)
access & convenience
Ex: using multiple locations for a serv & technology to deliver servs
Promotion (Advertising)
shows consumers the benefits of purchasing the service
› It’s valuable to stress availability, location, consistent quality, & efficient, courteous serv, & to provide a physical representation of the serv/serv encounter
Ex: Amazon ad features its free two hour delivery option- Amazon Fresh & shows a tangible example of fresh food
› Publicity also plays a major role in the promotional strategy of many serv orgs
Use the public serv announcement (PSA) bc it’s free
People
responsible for the creation & delivery of the customer service experience
› Customers will judge the quality of the service experience based on the performance of the people providing the service
› Includes employees & all customers
Internal Marketing
a service org must focus on its employees, or internal market, before successful programs can be directed at customers
Service-Profit Chain
Relationships between internal marketing, internal service quality, productivity, & firm profitability
Customer Experience Management (CEM)
the process of managing the entire customer experience w/ the company
Ex: Disney, Ritz-Carlton, Starbucks manage the experience they offer customers
Physical Environment
the appearance of the environment/place where the service is delivered & where the firm and customer interact can influence the customer’s perception of the service
› The physical evidence of the serv includes all the tangibles surrounding the serv
Ex: Buildings, landscaping, vehicles, furnishings, signage, brochures, & equipment
Process
the actual procedures, mechanisms, & flow of activities by which the service is created & delivered
› Steps involve “what” gets created & “how” it is created
› The customer contact audit can serve as a basis for ensuring better serv creation & delivery process
Capacity Management
Integrating service component with efforts to influence consumer demand
Factors That Will Influence Future Changes in Services
- Technological Development/Advances
- Improved Understanding of Service Delivery & Consumption
- The Social Imperative for Sustainability
Defining Retail Service
- core service
- expected service
- augmented service
- potential service
Core Service
“The right product, at the right place, at the right price, at the right time”
Ex: You go in to get a haircut & your hair is the same when you get out (the actual haircut)
Expected Service
customer expectations regarding dependability, courtesy, etc
Ex: Expected to get your hair wash but you didn’t (expectations)
Augmented Service
The service the customer doesn’t expect
Ex: Free champagne on the house
Potential Service
ideas for future service attributes
Ex: Using AI to show how different hair colors could look on you
Relationship Marketing
an effort to develop a long-term, cost-effective link w/ individual customers for the mutual benefit of the customer & the org
Relationship Marketing
- Frequency marketing
- Share of Wallet
Frequency Marketing
a marketing technique that reinforces regular purchasers by giving them prizes with values that increase along with the amount purchased
- Create Lock In: barrier that makes it difficult to switch
Ex: Apple, people keep buying the latest iPhone
Share of Wallet
want customers to buy more from you
Ex: Disney wants customers to stay at their hotels & buy food from them instead of someone else
Database Marketing
- Customer relationship management (CRM)
- Recency/Frequency/Monetary Analysis
Customer Relationship Management (CRM)
tools that keeps a lot of info about customers
Ex: Salesforce
recency-frequency-monetary analysis
Looking at when was the last time you came to me, how often you come to me, & how much you spend
Levels of Market Offering
- commodity
- good
- service
- experience
Commodity
a product that is the same no matter who produces it
Ex: Coffee Beans
Good (Product)
Physical items that businesses produce to sell to customers
Ex: Coffee that’s brewed at Starbucks, selling product put together
Service
work that is performed for someone
Ex: Brewing the coffee right in front of customer/customer designs their own drink
Experience
overall experience
Ex: Starbucks has free WIFI, comfortable seats, friendly barista, overall you feel great
*Experience is the most important
