Service - (3.3) Characteristics of traditional marketing mix elements for service firms

Question 1

How does intangibility influence product - price - communication and sales?

Answer 1

PRODUCT
> Patenting not possible
> Lower importance of product decisions for creation of competitive advantage
> Branding is more complicated
PRICE
> Communication has to be convincingly
COMMUNICATION
> Make service more tangibly with
» before - after pictures
» visualize concrete service results
SALES
> Indirect sales are lower important

Question 2

How does perceived purchase risk influence product - price - communication and sales?

Answer 2

PRODUCT
> Dilemma in branding
> Umbrella branding
> Quality guarantees
PRICE
> Trial offers
> Image based premium pricing
> Negotiating is legitim
COMMUNICATION
> Use opinion of leaders and celebs
> Word of mouth
> Present quality certificates and exisiting customers
SALES
> Select good sales partners

Question 3

How does inseperability influence product - price - communication and sales?

Answer 3

PRODUCT
> producion process becomes crucual in the interaction with the customer
> use service quality standards to ensure satisfaction
PRICE
> customers will negotiate less agressively out of fear of lower service quality

Question 4

How does perishability influence product - price - communication and sales?

Answer 4

PRODUCT
> capacities are more flexible and variable
PRICE
> temporal price differentiation is important
> yield management
COMMUNICATION
> sales promo and advertising to stimulate the demand and the yield management initiatives
SALES
> Necessary to harmonize service capacities and demand

Question 5

How does variability influence product - price - communication and sales?

Answer 5

PRODUCT
> More active role of customer in the service delivery process
(externalization and internalization)
PRICE
> Facilitation of price differentiation
> Price-based service recoveries
COMMUNICATION
> A lot of opportunities for communication during the service delivery process
SALES
> Service delivery process is an opportunity to generate sales
> Customer proximity is important

Question 6

How to balance demand management?

Answer 6

• Temporal and spatial extension for the satisfaction of demand
• Informing customers about high-demand periods
• Incerasing demand during slower periods through
  » price differentiation
  » approaching new target groups
  » intensified advertising in general

Question 6

How to balance the flexibility of the offer?

Answer 6

• Seasonal extension of opening times
• Flexible use of workforce
• Expansion of capacity by rental, temporary over utilization, repair during weaker periods

Question 7

What is yield management?

Answer 7

Offer price sensitive customers a performance variant at lower price and offer less price sensitive customers a performance variant at higher price
» very common in capital-intensive services as passenger transportation or hospitality
» top necessary is an accurate prediction of cancellations and no show - other wise compensation costs and image loss

Question 8

What are requirements on supply and demand side for yield management?

Answer 8

SUPPLY
- Capacity is fixed
- low variable costs, high fixed costs
- capacity is perishable
DEMAND
- service is purchased in advance
- demand can be divided into separable market segments
- demand is uncertain
- demand fluctuates

Question 9

Why is price-based recovery
incentives in subscription-based services a managerial dilemma?

Answer 9

• Short term benefits
  > Smoothens dissatisfaction
  > Triggers positive word of mouth
  > Signals a firms intention to remedy mistakes and improve CRM
• Long term risks
  > New price point to anchor to - comparison will give small likelihood of renewal