MARKETING Real People Real Choices Fourth Edition CHAPTER

MARKETING Real People, Real Choices Fourth Edition CHAPTER 10 Services and Other Intangibles: Marketing the Product That Isn’t There

Marketing an experience (not a product) • Are all products just tangibles or are their elements of intangibles attached to them? – Selling a car – Selling toothpaste – Selling a college education • Selling a product is a short-sighted perspective; selling an experience is an enlightened perspective 2

What is a Service? • Services are acts, efforts, or performances exchanged from producer to user without ownership rights – Consumer services – Business services • In 2004, service industry jobs – 835 of all employment and over 67% of US GDP 3

Characteristics of Services • Intangibility – Cannot see, touch, smell service – Physical cues to service • Perishability – Cannot store a service for later use – Performance = consumption – Pricing adjustment to influence demand 4

Characteristics of Services • Variability – Same service rendered by the same person at two different times may vary – Marketing response – standardize, service guarantees • Inseparability – Production = consumption – Focus on the service encounter • Bad service encounters are avoided by disintermediation 5

The Goods/ Services Continuum • Good-Dominated Products - tangible products accompanied by supporting services – automobiles, home appliances, electronics • Equipment or Facility-Based Services heavy reliance on both equipment and personnel – hospitals, tanning salons, health clubs • People-Based Services – wardrobe consultants, decorators, realtors 6

Core and Augmented Services • Core service is a benefit that a customer gets from the service • Augmented services are additional offerings that differentiate the firm • Example: Airline transportation – Core: travel – Augmented services: frequent flier miles, sky caps, in-flight entertainment services and Internet access 7

Services on the Internet • Banking/ brokerages • Software • Music • Travel • Dating • Career development • Distance learning • Medical care 8

The Service Encounter • Consumer comes into contact with the organization – The “moment of truth” • Two dimensions – Quality of the social contact – “Servicescapes” – physical evidence of service quality 9

Service Quality • Subjective assessment based on customer’s expectations • Expectations > delivery = disservice • Expectations < delivery = excellent service E. g. Jet Blue and expectations from a low – cost airline 10

Dimensions of Service Quality • Search qualities - characteristics of a product that the consumer can examine prior to purchase • Experience qualities - characteristics that customers can determine during or after consumption • Credence qualities - attributes we find difficult to evaluate even after we’ve experienced them 11

Measuring Service Quality • Gap Analysis - measurement tool that gauges the difference between a customer’s expectation of service quality and what actually occurred • Critical Incident Technique - company collects and closely analyzes very specific customer complaints to identify critical incidents – CI are those complaints that are most likely to result in dissatisfaction 12

Gap Analysis • Gap between consumer expectations and management perceptions • Gap between management perception and quality standards set by the firm • Gap between established quality standards and service delivery • Gap between service quality standards and consumer expectations • Gap between expected service and perceived service 13

Service Failure and Recovery • When services do fail, recover fast! – Apologize – Resolve the problem – Do not further inconvenience the customer • Analyze what happened to eliminate future failures • Front line employees empowerment 14

Strategies for Services • Targeting: Defining the Service Customer or Audience • Positioning: Defining the Service to Customers 15

The Future of Services • Increasing service component in products – Marketing experiences not products • Greater use of the internet in marketing • Increasing globalization – logistical and transportation services have a great future • Outsourcing services • Information exchange 16

Strategies for Marketing People • Pure selling approach – an agent presents a client’s qualifications to potential “buyers” until he finds one who is willing to buy • Product improvement approach – the agent works with the client to modify certain characteristics that will increase market value; person’s image changes to conform to what is currently in demand (e. g. Madonna, Paris Hilton) 17

Strategies for Marketing People • Market fulfillment approach – agent scans the market to identify unmet needs. Then agent finds a person that meets qualifications and develops product – “manufactured stars” – N-Sync, The Spice Girls, New Kids on the Block 18

Marketing Places • Place marketing strategies treat a city, state, country, or other locale as a brand attempt to position this location so that consumers choose to visit • Example: – Mauritius & Grey Advertising 19

Marketing Ideas • Idea marketing is about gaining market share for a concept, philosophy, belief or issue • Examples: – Do churches market their faith and philosophy? – Do consultants peddle their ideas? – “Anti-smoking”, “Anti-drug”, “Responsible drinking and driving” campaigns 20