Test 1 Flashcards
IHIP (O)
Intangibility Heterogeneity Inseparability Perishability Ownership
When a product is high in the characteristic of Intangibility….
…it lacks the tactile quality of goods
When a product is high in the characteristic of Heterogeneity….
…it is different across customers
When a product is high in the characteristic of Inseparability….
…it is produced and consumed at the same time
When a product is high in the characteristic of Perishability….
….it cannot be produced ahead of time or returned
When a product is high in the characteristic of Ownership….
…it has a part or outcome that involves the transfer of ownership between the seller and buyer.
What does Intangibility mean to marketing
Intangible products are harder to assess. Benefits of intangible products must be made tangible. Tangible products often push intangible benefits to take advantage of the lasting power of abstract concepts in memory. Also, assessing the cost of a “unit of service” is difficult.
What does Heterogeneity mean to marketing
A heterogeneous product cannot be standardized.
Because the product cannot be standardized it is harder to take advantage of economies of scale.
Also, a heterogeneous product has greater FLE and customer input and therefore quality is harder to control.
What does Inseparability mean to marketing
An inseparable product must be produced at the time of order often in front of and along with customers.
Quality is hard to achieve and assess for the organization. Also, the customer must be accommodated within the servicescape creating capacity issues. Demand must be forecast accurately to properly facilitate production. Mass production and economy of scale is difficult to obtain. And customers impact each other.
What does Perishability mean to marketing
A perishable product cannot be inventoried. This means the product cannot be produced ahead of time. A perishable product cannot be returned for a comparable product and therefore, additional remedies must be offered.
What does ownership mean to marketing
Products will often be judged based on the quality of the transferred object. The object will often be considered the core product whereas everything else is periphery. When there is no ownership transfer, other things start to become more relevant such as relationships and tangible cues.
Examples of service high / low in Intangibility
Education, psychotherapy / car rental, restaurant, air travel
Examples of service high / low in heterogeneity
Consulting, interior design / credit monitoring, storage
Examples of service high / low in Inseparability
Operation, haircut / dry cleaning, car repair, movie rental
Examples of service high / low in Perishability
Haircut, legal counsel / restaurant, painting
Examples of service high / low in Ownership
Lawn maintenance, daycare, typing service, restaurant, home builder
Search attributes
….quality can be assessed before consumption.
Experiential attributes
…quality can only be assessed after consumption
Credence attributes
…quality cannot be assessed even after consumption.
What does Search attributes mean in regards to marketing?
Because quality can be assessed beforehand, customers rely less on external reviews and WOM. Also, these products are typically price elastic (i.e., customers are price sensitive).
What does Experiential attributes mean in regards to marketing?
Because quality can be assessed after consumption, service guarantees tend to play a bigger role. Cues of quality play a prominent role (i.e., price, brand).
What does Credence attributes mean in regards to marketing?
Cues of quality (i.e., price, brand) are even more prominent.
Though price is used as a cue for quality, credence products tend to be price inelastic. Credence products carry a lot of risk and therefore testimonials, WOM, and service guarantees are extremely important.
Example of Search attributes
Most goods (e.g., car, house, computer, diamond)
Example of Experiential attributes
Restaurants, amusement parks, haircut
Example of Credence attributes
Car repair, education
9 THINGS TO KNOW ABOUT SERVICE
- Service makes up a majority of our economy
- Service is harder which is why service typically stinks
- Service is co-created by the employees and customers
- Service is very hard to patent
- So good service becomes a point of differentiation
- Service is also usually easier to find new revenue streams
- Products have core and periphery elements
- All goods can be considered a service
- The Ps become even more linked together
The cost of service failure
Companies who provide bad service have 47% of their customers stop spending with the company.
Companies lose $83 billion annually from bad customer service.
Service failure recovery process
Service failure -> Recovery expectations -> Complaint behavior-> Service recovery -> Outcome
Complaint ice burg stats
1-4% of people complain to management
45% complain to FLE
50%+ do not complain
Interactional
Interactional justice refers to the treatment that an individual receives as decisions are made and can be promoted by providing explanations for decisions and delivering the news with sensitivity and respect (Bies & Moag, 1986).
Procedural
Procedural justice is defined as the fairness of the processes that lead to outcomes. When individuals feel that they have a voice in the process or that the process involves characteristics such as consistency, accuracy, ethicality, and lack of bias then procedural justice is enhanced (Leventhal, 1980).
Distributive
Distributive justice is conceptualized as the fairness associated with decision outcomes and distribution of resources. The outcomes or resources distributed may be tangible (e.g., pay) or intangible (e.g., praise). Perceptions of distributive justice can be fostered when outcomes are perceived to be equally applied (Adams, 1965).
Service recovery paradox
“A good recovery can turn angry, frustrated customers into loyal ones. ..can, in fact, create more goodwill than if things had gone smoothly in the first place.” (Hart et al.)
Problems with service recovery paradox
-only a small percent of customers complain
- service recovery must be SUPERLATIVE
- only with tangible rewards and empathy/courtesy
- only with tangible rewards
- even though service recovery can improve satisfaction, it has not been found to increase purchase intentions, perceptions of the brand, or overall
- service recovery is expensive
The service recovery paradox is more likely to occur when:
the failure is not considered by the customer to be severe
- the customer has not experienced prior failures with the firm (double deviation)
- the cause of the failure is viewed as unstable by the customer
- the customer perceives that the locus of control is external
People prefer
service that is decently good all the time
