Chapter 2 Fundamental Differences Between Goods and Services

Chapter 2 Fundamental Differences Between Goods and Services COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

INTANGIBILITY: ASSOCIATED PROBLEMS Ø Lack the ability to be stored Ø Not protected by patents Ø Not easily displayed or communicated Ø Pricing is difficult COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

INTANGIBILITY: SUGGESTED SOLUTIONS Ø Use tangible clues/physical evidence Ø Utilize personal sources of information Ø Create a strong organizational image COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

INSEPERABILITY: ASSOCIATED PROBLEMS Ø Service provider is involved in the production process Ø Other customers are involved in the production process (shared experience) Ø The mass production of services presents special challenges COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

INSEPARABILITY: ASSOCIATED PROBLMES Ø Customer is involved in the production process: Ø impact on the type of service desired Ø length of the delivery process Ø cycle of service demand Ø service factory must be built with the customer’s presence in mind COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

INSEPARABILITY: SUGGESTED SOLUTIONS Ø Focus on the training and selection of public contact personnel Ø Develop strategies to manage consumers Ø Develop multi-site locations COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

HETEROGENEITY: ASSOCIATED PROBLEMS Ø Standardization and quality control are difficult to achieve COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

HETEROGENEITY: SUGGESTED SOLUTIONS ØCustomization ØConstructed to fit customer’s exact needs ØIncreased profit potential ØStandardization ØFaster ØLess expensive ØMore consistent COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

PERISHABILITY: ASSOCIATED PROBLEMS Ø Services cannot be inventoried Ø Production and consumption cannot be separated by time and space Ø Statistical sampling techniques cannot be used Ø Marketing and production must work together COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

DEMAND SUPPLY SCENARIOS Ø Demand exceeds maximum available supply Ø Demand exceeds optimum supply level Ø Demand is below optimal levels of supply Ø Demand supply are at optimal levels COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

STRATEGIES FOR ALTERING DEMAND SUPPLY DEMAND STRATEGIES: Ø Ø Creative pricing strategies Reservation systems Complementary services Developing nonpeak demand Ø utilizing nonpeak periods to prepare for peak periods Ø appeal to different market segments with different demand patterns COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

STRATEGIES FOR ALTERING DEMAND SUPPLY STRATEGIES: Ø Ø Utilize part-time employees Share capacity Prepare in advance for expansion Utilize third-parties COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

STRATEGIES FOR ALTERING DEMAND SUPPLY STRATEGIES: Ø Increase customer participation Advantages: Ø convenience Ø price Ø customization Ø Disadvantages: Ø loss of control over service quality Ø may be perceived as an attempt to distance form from customer Ø COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

THE ROLE OF MARKETING IN A SERVICE FIRM Ø Different functions are interwoven Ø Marketing must maintain closer relationships with other departments Ø Marketing, operations, and human resources should work together. COPYRIGHT © 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.