CH #13: Services

Importance of Service

Importance of Service

Adding a service to product increases the value of the product

Service as a Product (Productization)

Attempts to treat service as product by:

• Standardizing services into modularized products

• Creating a name/logo/identity for the service

Purpose of Productization

• To capture more brand equity

• To reduce costs and increase margin

• To maintain consistent performance

Product as a Service (Servicization)

You should consider “something” as a service if:

• Your product is one time purchase good (software)

• Your product is expensive to purchase for many

• Your product requires maintenance and after-services frequently

Services are Intangible

• No physical presence, we can’t see it or touch it

  • Brand association is low

• It is difficult to convey the benefits of services.

• Therefore, offer cues to help customers experience and perceived their service more positively, waiting rooms with large TVs, beverages, and comfortable chairs

  • Memory aids (logos, tagline) are more important for service

Word of Mouth

• With the rise of social media, the rate at which information move has increased exponentially

  • Consumers are consistently asked to provide rating of everything

  • Marketers of services must manage their digital reputation emphasizing positive experience

• More important for services than for hard goods

Service are Perishable, and cannot be Inventorized

• Service cannot be inspected the same as inventory checking for a physical product

  • we cannot hold inventory for fluctuation for demand

Planning for Demand Fluctuations

1. Offload Demand

2. Boost low-period demand

Offload Demand

Method to stall work flow during peak periods/times of the day

• I.E. Customer are more willing to wait to sit down to dinner at 9:30 PM instead of 8 PM if they are provided a comfortable bar and lounge area to socialize while waiting

Boost Low-Period Demand

To increase productive to support the fixed and labor costs necessary to meet peak demand, occurs in “slower” periods/time of the day

• I.E. A resturant may offer a 5 PM dinner special or happy hour to generate increased revenue during a common slow period

Service Gaps

When delivery of a service fails to meet customer expectations

Providing Great Service: Service Gap Model

• Knowledge gap

• Standards gap

• The delivery gap

• The communication gap

Knowledge Gap

• Exist when management misunderstands customer expectation for service quality

• Important early step in providing good service is knowing what customers want

• Ongoing marketing research is needed to understand customers’ changing expectations of service quality

Zone Tolerance

• Define service quality dimensions

• Ask question about each service quality dimension about

  • Desired level of service

  • Expected level of service

  • The importance

  • Customers’ perceptions of how well our service performs an how well a competitive service performs

Service Quality Dimensions

• Reliability

• Responsiveness

• Assurance

• Empathy

• Tangibles

Reliability

The ability to perform the service dependably and accurately

Responsiveness

The willingness to help customers and provide prompt service

Assurance

The knowledge of and courtesy by employees and their ability to convey trust and confidence

Empathy

The caring, individualized attention provided to customers

Tangibles

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

Ways to Understand Customer Expectations

• Ask customers how they liked the service

• Collect complaints and analyze them

• Put managers on the frontline occasionally

Standard Gap

Exist when the service standards differ from customer expectations for service quality

• By setting appropriate service standards, training employees, and measuring service performance, firms can close this gap

Delivery Gap

Where customer directly interact with the service providers

• Can be reduced when employees are empowered to spontaneously act in the customers’ and the firm’s best interest when problems or crises arises

Communication Gap

Promise only what you can deliver, communicate service expectations

• I.E. An advertisement may lure a customer into a service situation once, but if the service doesn’t deliver ton the promise, the customer will be dissatisfied and never return

Service Recovery

When service providers fail to meet customer expectations, the best course of action is to attempt to make amends with the customers and learn from the experience:

• By doing this, it can increase customer satisfaction and positive word of mouth

Qualities of Good Service Recovery

• Listening to the customers and involving them in service recovery

• Finding a fair solution

• Resolving problems quickly