Lecture 1 Flashcards
Define ‘service’
- any act, performance or experience that one party can offer another
- does not result in ownership of anything
- process that provides time, place, form, experience
Explain the 5 differences between goods and services
Intangibility = customer cannot touch, taste, smell or see a service so hard to evaluate. Introduces element of perceived risk. Inseparability = service provider and consumer co-produce (otherwise doesn't matter who's made it) eg. Deakin's multiple campuses Variability = difficult to maintain uniform standard of service quality (rotation of staff) Perishability = cannot be stored to be used later to satisfy demand (might have to turn people away one night but have barely any seats filled the next) Ownership= service personnel and their performance cannot be owned by the customer
Identify 5 differences between goods and services. Explain their implications and how effective marketing can address these.
- Most service products cannot be inventoried
- customers may have to wait or be turned away
- > advertise promotions, dynamic pricing and reservations
- > work with operations to adjust capacity - Intangible elements dominate value creation
- customers cannot see, hear, touch elements
- harder to evaluate and distinguish from competitors
- > put emphasis on physical cues
- > use concrete metaphors and vivid images in advertising/branding - People may be part of the service experience
- appearance, attitude, behaviour (service personnel and other customers) can shape experience and affect satisfaction
- > recruit, train and reward employees to reinforce planned service concept
- > target the right customers at the right time and shape their behaviour - Operational inputs/outputs vary widely
- harder to maintain consistency, reliability and service quality
- harder to lower costs through higher productivity
- difficult to shield customers from service failure
- > set quality standards based on customer expectations, redesign product elements for simplicity and failure-proofing
- > institute good service recovery procedures
- > automate customer-provider interactions - Distribution may take place through non-physical channels
- information-based services can be delivered through electronic channels eg. internet, but core products involving physical activities cannot (eg personal training)
- > seek to create user-friendly, secure websites or free access by telephone (ensure all information-based service elements easily downloaded)
Explain how services create value for consumers
- customers expect to obtain value in exchange for money, time and effort
- value-creating elements rather than ownership eg. more convenient location, moving furniture before painting, delivery
- firms must create and deliver services that are perceived (by customer) to provide value and communicate this effectively
Service Dominant Logic = customer is a co-creator of value. If they don’t bother using the gym membership then they are going to gain little value
How might a company manage the intangibility, variability, inseparability and perishability of its services?
Intangibility - introduce key members of staff - provide testimonials - explain schedule of fees - offer free no-obligation consultation - affiliations - appropriate office surroundings Variability - hire qualified, experienced staff - ongoing professional training (technical and interpersonal skills) - develop reward system - standardise tasks Inseparability - convenient location - staff training - implement service recovery programme - use of electronic delivery channels Perishability - reservation system - non-peak demand - flexible pricing - use casual staff and extend work hours when busy
Summarise the key components of the Marketing Mix for the Hilton Hotel
Price
- 5 star so more expensive, expect luxury facilities eg pool, gym, conference rooms
Product
- accommodation and experience, high quality, premium (clean rooms, luxurious bedding)
Place
- accessibility!! accessible 24hrs/day, close to CBD
Promotion
- WoM important, list on hotel sites, promote aspects to attract customers (eg. business facilities for business travellers)
Process
- ‘backstage’ needs to be very smooth so customer’s ‘frontstage’ is positive eg. check in/out, high quality service (room service, turndown)
Physical Evidence (servicescape)
- expect atmosphere, full bar, room with a view (differentiate from other hotels), reputable chain lowers guests perceived risk
People
- need people that will work hard to deliver high quality service
Briefly explain the hollowing out effect
Is the deterioration of a country’s manufacturing sector when producers opt for low-cost facilities overseas to reduce overheads
- loss of employment means people move to service industry
- eg. deregulation and privatisation (telecomms, banking)
- eg. social changes (aging popn=safety features, duel income families = less time cleaning)
Outline 5 differences between services
- Recipient of service
- directed at the customer or objects that belong to them (hairdresser vs cleaning), so may not consume the benefits until later - Customisation vs standardisation
- should all customers receive the same service or underlying processes and service features be adapted to meet individual requirements (eg. KFC vs private health insurance) - High vs Low contact
- experiences shaped by the extent they are exposed to tangible elements and how these are divided between people (employees, other customers) and objects (buildings, equipment) - Discrete vs Continuous
- regular contact (Uni) means customers develop realistic expectations of value and service performance vs discrete (hospital stay), customer has less experience and fewer concrete expectations -> harder to evaluate - Relationship with customer
- each transaction is individually acknowledged (membership, hairdresser), others the customers make unidentified, fleeting transactions (hotel) so must use loyalty programs to create ongoing relationship
Outline the service operations, delivery and marketing systems
Service operations system
- involve service personnel or involve physical facilities and other tangibles
- > customers evaluate production according to elements experienced and the perceived service outcome
- > if a process backstage fails, will impact the customer (range from high-low contact)
Service delivery system
- concerned with where, when and how service product is delivered to the customer
- > may entail exposure to other customers and may seek to reduce direct contact with customers (self-service), can create sense of impersonalisation and may not be acceptable to all
- > may require information campaign to educate customers and promote benefits
Service marketing system
- all the different ways in which the customer may encounter or learn about the service organisation
- > offers clues about the nature and quality of service product (inconsistency may weaken organisation’s credibility)
- > customer encounters sometimes random (driving past an erratic driver of a company car)
Outline features of each of the elements of the services marketing mix.
Product
- performance characterstics, right product being sold in the right market, product mix
Price
- establishing the selling price to customers, trade margins or credit terms, low price tends to mean inferior goods
Promotion
- how to communicate to the audience, PR, adveritising, promotions
Place
- select the types and locations of outlets (cyberspace, physical), position and distribute somewhere accessible to consumers
People
- direct, personal interaction, those that believe in the product will perform better
Process
- how to make and deliver service, procedures to deliver (eg. script), systems/processes affecting execution
Physical Evidence
- tangible cues (servicescape - layout, ambience, furnishings)
- evidence service was delivered, how the business is perceived in the market place
Briefly outline the service management trinity
Marketing function
- segmentation, targeting, positioning, loyalty
Operations function
- creation and delivery of service product, implementation of productivity and quality improvement, technological infrastructure
HR function
- job definition, recruitment, training, rewards, engage in design and monitoring of all service delivery processes involving employees
