Chapter 12 Designing and Managing Services Power Point

Chapter 12 Designing and Managing Services Power. Point by Karen E. James Louisiana State University - Shreveport © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 0

Objectives § Learn how services are defined and classified. § Understand how service firms improve their competitive differentiation, service quality, and productivity. § Identify how goods-producing companies can improve their customer support services. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 1

Nature of Services § The Service Industry includes the: – Government sector – Private nonprofit sector – Business sector – Manufacturing sector © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 2

Nature of Services § Service Mix Categories: – Pure tangible good: no services – Tangible good with accompanying services – Hybrid: equal parts service and goods – Major service with accompanying minor goods and services – Pure service © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 3

Nature of Services Characteristics § Cannot be touched, seen, tasted, heard, or smelled before purchase § Intangibility § Lack of trial means higher consumer risk § Inseparability § Consumers rely on cues to draw quality inferences § Variability § Perishability © 2003 Prentice Hall, Inc. § Marketers must try to “tangibilize the intangible” To accompany A Framework for Marketing Management, 2 nd Edition 4

Nature of Services Characteristics § Intangibility § Inseparability § Variability § Perishability © 2003 Prentice Hall, Inc. § Services are produced and consumed at the same time (air travel) § Service providers and sometimes other customers become part of the service (restaurant) § Strong preferences for service providers exist To accompany A Framework for Marketing Management, 2 nd Edition 5

Nature of Services Characteristics § Intangibility § Inseparability § Variability § Perishability © 2003 Prentice Hall, Inc. § Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day. § Quality control is critical: – Hiring the right people – Standardizing service – Monitoring satisfaction To accompany A Framework for Marketing Management, 2 nd Edition 6

Nature of Services Characteristics § Intangibility § Inseparability § Variability § Perishability © 2003 Prentice Hall, Inc. § Services can not be inventoried or otherwise stored § Capacity / demand management is critical: – Demand side strategies – Supply side strategies To accompany A Framework for Marketing Management, 2 nd Edition 7

Nature of Services § Demand-side strategies – Use differential pricing – Cultivate nonpeak demand – Develop complementary services – Install reservation systems © 2003 Prentice Hall, Inc. § Supply-side strategies – Hire part-time employees – Introduce peak-time efficiency routines – Increase consumer participation – Plan facilities for future expansion – Share services To accompany A Framework for Marketing Management, 2 nd Edition 8

Marketing Strategies § People, physical evidence, and process must be considered in addition to the 4 “P’s” when creating external marketing plans. § Successfully delivering a service often depends on staff being trained via internal marketing efforts. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 9

Marketing Strategies § Interactive marketing refers to the employees’ skill in serving the client. § Customers judge a service by its: – Technical quality – Functional quality § Search qualities, experience qualities and credence qualities are evaluated by customers. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 10

Marketing Strategies Marketing Tasks § Managing differentiation § Managing service quality § Managing productivity © 2003 Prentice Hall, Inc. § Can not differentiate on price alone § Innovative features § Delivery system – Reliability – Resilience – Innovativeness § Image and branding To accompany A Framework for Marketing Management, 2 nd Edition 11

Marketing Strategies Marketing Tasks § Managing differentiation § Managing service quality § Managing productivity © 2003 Prentice Hall, Inc. § The service quality model identifies five gaps that can cause service delivery failure § Service companies that successfully address these gaps follow common practices To accompany A Framework for Marketing Management, 2 nd Edition 12

Marketing Strategies Service Delivery Failure Results from Gaps Between: § Consumer expectations and management perceptions § Service-quality specifications and service delivery § Management perception and § Service delivery and external service-quality specification communications § Service-quality specifications and service delivery © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 13

Marketing Strategies Well-Managed Service Firms Share These Characteristics § A strategic concept § High standards § Commitment from top-management § Firm and customer monitoring systems § Satisfaction of employees and customers © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 14

Marketing Strategies Marketing Tasks § Managing differentiation § Managing service quality § Managing productivity © 2003 Prentice Hall, Inc. § Have service providers work more skillfully § Decrease service quality, increase service quantity § Industrialize the service § Reduce need for service § Design a more effective service § Give customers incentives to serve themselves § Use technology To accompany A Framework for Marketing Management, 2 nd Edition 15

Managing Product Support Services § Product support services are often sources of competitive advantage § When designing service support programs, marketers must consider key customer concerns: – Failure frequency – Downtime duration – Out-of-pocket expenses © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 16

Managing Product Support Services § Marketers must design appealing and competitive service offerings that will attract customers. Service offerings should include: – Facilitating services – Value-augmenting services – Optional service contracts © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 17