Ch. 13: Intangible Products

Service:

any intangible offering ht involves a deed performance, or effort that cannot be physically possessed

What is the Hierarchy of Value?

1. Commodities
2. products
3. services
4. experiences

How has the Hierarchy of value changed over time?

there has been a fundamental shift in how we experience the world by going from primarily functional (commodities) to primarily emotional (experiences)

What does the Progression of Value show?

shows how over time, small, generalized products go from commodities to experience (e.g. coffee → Starbucks)

What two factors does the Progression of Value measure?

1. competitive position (how differentiated it is from other products)
2. value (market → pricing → premium)

What are the factors that differentiate services from goods?

1. intangible
2. inseparable
3. heterogenous
4. perishable

intangible:

services that cannot be touched, tasted, or seen (e.g. haircut)

inseparable:

services that are produced and consumed at the same time

heterogenous:

the quality of the service is varied and can range from good or bad

perishable:

services cannot be stored for future usage

What are the 7 Ps to develop a marketing strategy?

1. product
2. price
3. place
4. promotion
5. presentation
6. personnel
7. processes

presentation:

making sure the service is somewhere that looks nice

personnel:

having great workers will make the experience more enjoyable for customers and this is more important for services that goods

processes:

the actions required to get the good or service to the customer

How does the process int he 7 Ps differentiate from services to products ?

for products, this part focuses more on efficiency and effectiveness of transporting the items but for services, this focuses more on the ease and ability to communicate the process to customers

What is the Service Gaps Model?

managerial tool used to evaluate the aspects of the service delivery process and how to develop an optimal service strategy

What are the different types of Service Gaps?

1. knowledge gap
2. standards gap
3. delivery gap
4. communication gap

knowledge gap:

differences between customers’ expectations and the firm’s perception of customer expectations

How do you close the knowledge gap?

by understanding customer expecations

What are factors that determine service quality?

1. tangibles
2. empathy
3. assurance
4. responsiveness
5. reliability

tangibles:

the appearance of physical facilities, equipment, personnel, and communication materials

empathy:

the caring, individualized attention provided to customers

assurance:

the knowledge and courtesy by employees and their ability to convey trust and confidence

responsiveness:

the willingness to help customers and provide prompt service

reliability:

the ability to perform the service dependently an accurately

How can we understand customer expecations?

through marketing research such as VOC Program and the Zone of Tolerance

Voice of Customer (VOC) Program:

a marketing research system that collects customer inputs and integrates them into managerial decisions

Zone of tolerance:

Used to access how well firms meet the 5 factors fo service quality

standards gap:

differences between firm’s perception of customers’ expecations and the service it sets

How do you close the standards gap?

by setting appropriate service standards and training employees to meet them

What is the delivery gap?

differences between the firm’s service standards and actual service provided by an employee

how do you close the delivery gap?

1. empowering service providers
2. providing support and incentives
3. using technology when appropriate

Communication gap:

difference between actual service provided and service that the firm’s promotion program promises

How do you close the communication gap?

by being realistic about the service you can provide and do NOT OVERPROMISE

What is the service recovery paradox?

customers who initially had an issue with a brand will become more loyal when the brand fixes the issue