serma finals

four key questions

1. what is being distributed

2. how should a service be distributed

3. where should a service facility be located

4. when should service be delivered

three interrelated flows in what is being distributed

1. information sharing

2. negotiation flow

3. product flow

information and promotion flow

this involves sharing information and promotional materials about a service to attract customers. The goal is to spark the customer’s interest in purchasing the service.

negotiation flow

this stage involves reaching an agreement with the customer on the service features, terms, and conditions. This aims to finalize a purchase contract, often for services like reservations or tickets.

product flow

for services that require physical facilities for delivery such as in-person services or possession processing, a network of local sites is needed for distribution.

information-processing services, like online banking or distance learning, can be delivered electronically through centralized sites.

3 nature of interaction between customer and service organization

1. customer goes to service organization

2. service organization comes to customers

3. customer and service organization transact remotely

5 infomation processes

1. information

2. consultation

3. order-taking

4. billing

5. payment

3 physical processes

1. hospitality

2. safekeeping

3. exceptions

5 important factors that attract customers to use online services

1. convenience

2. ease of earch

3. a broader selection

4. potential for better prices

5. 24/7 services with prompt delivery

7 tactical location considerations

1. population size and characteristics

2. pedestrian and vehicular traffic and its characteristics

3. convenience of access for customers

4. competitors in this area

5. nature of nearby businesses and stores

6. availability of labor

7. availability of site locations, rental costs, and contractual conditions

2 innovative distribution strategies

1. mini-stores

2. locating in multi-purpose facilities

mini-stores

creative innovation in the multi-site service industry where businesses establish multiple small service outlets to expand their geographic coverage and reach a wider customer base.

locating in multi-purpose facilities

most obvious locations for consumer services are close to where customers live or work.

2 factors that encourage extended operating hours

1. pressure from consumers

2. changes in legislation

3 industry drivers

1. market drivers

2. competition drivers

3. technology drivers

gain profit

Set prices to generate revenue that exceeds costs, ensuring profitability.

cover cost

Ensure prices cover production and operational expenses, without necessarily making a profit.

build demand

Focus on increasing the usage or product, as long as an acceptable revenue level is met or exceeded.

develop a user-base

Encourage trial and adoption, even at lower initial prices, to grow long-term customers.

support positioning strategy

Communicate a strong value proposition such as "We will not be undersold"—best service at best price.

support competitive strategy

Set prices to discourage competitors from expanding or entering the market.

costs

ensure you do not price too low to lose money

value to customer

ensures you do not price too high to lose demand

competition

ensures you stay relevant in the market

cost-based pricing

pricing strategy where the price of a service is determined by calculating the costs involved in providing the service and adding a markup to ensure a profit margin

value-based pricing

price of a product or service is determined based on the perceived value it provides to customers

reducing related monetary and non-monetary costs

When we consider customer needs, we need to understand the customers' perceived costs. When buying, and the price charged by a supplier is only one part of the equation, there are other costs of service, which are made up of the related monetary and non-monetary costs.

related monetary costs

These are the extra money customers spend when searching for, buying, and using a product or service. For example, going to the theater with young children includes costs like hiring a babysitter, transportation, parking, and buying tickets.

non-monetary costs

These are inefficiencies felt during the purchase process, including time and effort involved in finding, buying, and using a product or service.

time costs

are the time customers spend on service-related activities, which can increase customer anxiety and uncertainty. Customers may often feel frustrated when they have to spend time on tasks they consider undesirable or when their time with a government or customer service agent is unproductive.

physical costs

tangible efforts, discomfort, or fatigue that customers may experience during any part of service process, such as traveling to the source location or using the product.

psychological costs

involve the mental or emotional strain, anxiety, or stress that customers might feel during the entire process. This can include concerns about the service quality, safety, or the overall response to feelings of unease or discomfort.

sensory costs

relate to unpleasant sensations affecting any of the five senses

competition-based pricing

businesses set prices for their products or services based on the prices charged by their competitors

4 price competition intensifiers

1. increasing number of competitors

   1. increasing number of substituting offers

2. wider distribution of competitor and/or substitution offers

3. an increasing surplus capacity in the industry

3 price competition is lower when

1. personal relationships matter

2. switching costs are high

3. services are tied to time and location

personal relationships matter

In services like hairstyling or family medical care, customers value their relationship with the provider and are less likely to switch, even if competitors offer lower prices.

switching costs are high

If it takes a lot of time, effort, or money to change providers, customers tend to stay.

services are tied to time and location

When a service must be used at a specific place or time, customers have fewer choices.