Service - (3.1) Introduction to service marketing Flashcards
Define service =
Economic exchange of activities that create a non-physical output for which production and consumption usually occur simultaneously.
Explain the importance of services with examples
Share of service sector in GDP has increased over the years
> Most industrialized countries even switch to services.
> Ex: distribution, transport and storage, horeca, business and finance, government services
What are the characteristics of services?
- Intangibility
- Inseperability
- Perishability
- Variability
- Perceived purchase risk
Explain intangibility
= tastbaarheid
* No experience before purchase
* Claims only possible if service has been delivered already
* Difficult to show and communicate
* No simple patenting
* Difficult to price - take the price of employees?
Explain inseperability
= onafscheidelijkheid
* Production and consumption at the same moment
* Interaction between provider and customer is necessary for exchange
* Production process is crucial in company-customer interactions because the customer can prove it
Explain perishability
= bederfelijkheid
* Services cannot be stored
* Difficult synchronization of supply and demand
* Daily, weekly and seasonly demand variations
Explain variability
- Performance and customer satisfaction depend on customer and employee activities
- External factor: person and information
- Quality depends on many uncontrollable factors
- No assurance that the provided service satisfies what has been planned and promised
- Individuality as chance for customization
Explain the perceived purchase risk
- Search qualities - characteristics assessed before buying, easier to evaluate for goods
- Experience qualities - characteristics assessed after purchase / during consumption
- Trust qualities - easiest to evaluate for services
Are all characteristics required to be service?
No - more relatively. Services TEND to demonstrate these characteristics to a greater degree.
Describe the service centered view
- Develop core competences, fundamentel knowledge and skills for an economic identity that represent potential competitive advantage
- Identify other entities that could benefit from these competences = potential customers
- Cultivate relations –> involve customers in developing customized, competitively value propositions to meet specific needs
- Gain market feedback by analyzing financial performance, exchange and learn how the firm could be even better
How can we typologue services?
- By the degree of formalization of the relationship and the continuity of service delivery
- By the (degree of customer interaction/ customization) and the (labor intensity/ value of the infrastructure)
» high labor, low customer = mass service ex. retail, schools, private banking
» high labor, high customer = professional service
ex. physicians, tax consultants
» low labor, low customer = service factory ex. airlines, shipping, hotels
» low labor, high customer = hospitals, auto repair shop
Strategic marketing priorities by typology
- Mass service
> grow
> team of qualified customer contact employees
> emotional enrichment
> services are designed to support image - Professional service
> grow
> team of qualified customer contact employees
> securing loyalty
> avoidance of cost increases in marketing and sales
> promote interaction with customers - Service factory
> emotional enrichment
> services are designed to support quality management
> manipulate demand to facilitate optimal capacity utlization - Service shop
> avoidance of cost increases in marketing and sales
> promote interaction with customers
> securing loyalty
> manipulate demand to facilitate optimal capacity utlization
Should market share be a business objective in services?
67% of managers say yes: economies of scale, market power, product quality assessment signal, motivational idea of beating competitors
–> Empirical evidence: market share is less important in services ; only product quality assessment signal could be relevant
What is a two-sided digital platform?
Special type of service business models
> business based on value-creating interactions between external producers and consumers ex. uber drivers and passengers
> open, participative infrastructure, governance conditions
> value creation = matches among users, echanges of goods, services and social currency
What are network effects?
positive impact than an additional user or participant has on the value of a product or service for others in the network
