MAR 3023, Exam 3 Ch3-4

Services definition:

A “deed, process, or performance.”

Some overlap because service exists in all physical goods:

• “Customer Service” in support of manufactured goods.

  • Ordering

• Distribution of Physical Goods 

  • even bulk goods have service

• Return of Defective Goods

As countries become more developed (like the US UK Austraila), _.

more services/service jobs are needed

What companies are exporting services from the US?

Fast food (McDonald’s, Burger King), financial services (AMEX), distribution services (FedEx, UPS), Education

The US _ more services than we _

exports ; imports

Customer churn/switching

one customer changed service provider

Why is service growing?

• aging population/longer lifes

• increased leisure time

• high per capita income

• changing social and cultural values

Intangibility definition:

lack of tangible assets which can be seen, touched, or smelled prior to purchased

Perishability definition:

inability of a service to be inventoried or stored

Inseparability definition:

simultaneous production and consumption of a service

Heterogeneity (Variability) definition:

unwanted or random levels of service quality customers receive when they patronize a service firm

goal of perishability:

To make sure that you can match supply with demand (so when customers are demanding your service, you’re able to meet that demand)

• EX: At fsu we have a campus, and we cannot admit more students than we can handle on our campus

No such thing as a:

‘pure’ service or ‘pure’ physical good

strategy implications for intangibility:

• companies will stress tangible cues

• Price-Quality relationship in services

• customer referrals

• michelin stars

companies will stress tangible cues by:

They'll take something that's intangible and they'll try and make it more tangible because people will understand it better.

michelin star story:

• Michelin Stars were created to sell tires, not rate restaurants. 

  • The Michelin brothers created a “guide book” for customers who bought their tires. It included information for people who didn’t know anything about cars (how to change a tire, a map of France). It also included a restaurant guide for people who were traveling through France

  • Restaurants could get one star if they were considered “fine dining” 

strategy implications for perishability:

manage supply and demand through the marketing mix/4Ps

• pricing: deals at certain times like happy hours

• promotions: frequent flier restrictions

You can’t separate production from consumption, meaning that:

customers have to come to the factory to be served.

Strategy Implications for inseparability:

• employees are key

• the physical environment matters

• the physical environment also matters

Strategy Implications for Heterogeneity:

• customize a physical good ; standardize a service

  • EX: self-service ordering kiosks at fast food companies reduce variation from incorrect order taking

Services Marketing Mix: 7 Ps

• Product

• Price

• Place

• Promotion

• People (Employees and Customers)

• Process

• Physical Evidence 

core vs peripheral:

• When people buy services, they're generally buying the peripheral aspect of the product, not the core service

  • EX: When you get to a hotel, if you think of what the core service is, it's a shelter for the night, however this is assumed.

  • What we are looking at is the kind of bed, the bellhop service, the maid service, the restaurants/bars. These are all peripheral to the core service.

(service) promotion definition:

it’s crucial to sell expertise to reduce risk and to manage customer expectations with the way you promote your service provider

• The key is to: manage their expectations, manage their sense of risk, and sell the idea that you're knowledgeable and an expert in whatever service you are providing

(service) price definition:

If it's priced higher and it's a service, we assume the quality is higher.

functional quality definition:

the quality of your interaction with employees and other customers

Servicescape definition:

the physical environment within the service

(service) people definition:

• People (i.e. managing people): 

  • functional quality

  • It matters how employees are dressed, how they treat customers, their appearance

  • Need to create a sense of belonging because we all have this idea that we’re more comfortable in environments where we feel like we belong

(service) process definition:

• the operational flow of the service

  • Southwest vs Delta; getting to pick your seat vs having it assigned

(service) physical evidence definition:

• the tangible aspects of a service

  • A good servicescape provides a competitive advantage

service recovery definition:

fixing the service failure

service failure definition:

when things go wrong

What can we do (to recover better)? Strategies:

• zero defects

• act quickly

• encourage complaints

• contingency planning

• empowerment

• learning from lost customers

recovery paradox definition:

“A good recovery can turn angry, frustrated customers into loyal ones. It can, in fact, create more goodwill than if things had gone smoothly in the first place.”

brand definition:

A name, term, design, symbol, or other feature that identifies the marketer’s product as distinct from those of other marketers.

brand mark definition:

The part of a brand that is not made up of words such as a symbol or design.

trademark definition:

A legal designation of exclusive use of a brand.

logos definition:

• something people recognize immediately

  • are sacred to loyal customers

  • Sometimes they can have clever hidden messages

levels of brand loyalty:

• (Basic/Bottom Level) Recognition:

  • Buyer is aware that a brand exists, and considers it as an alternative if the preferred brand is unavailable 

• Preference:

  • Buyer prefers product over competitive offerings

• (Highest Level) Insistence: 

  • Product is strongly preferred; buyer will accept no substitute

brand crises:

erode brand loyalty almost instantly

brand equity definition:

The marketing and financial value associated with a brand’s strength in a market.

companies can have lots of options with the way they want to present brands to consumers

• family brands: A line of brands based on a core brand

• individual brands: sells a particular product

• private label: brands that are associated with a particular retailer

brand extensions definition:

extending the brand into a different product category

• EX: Dove Soap releasing lotions and shampoo

brand stretching definition:

using an established brand in an unrelated market (i.e. stretching the brand name and consequently brand association too far)

• EX: Yamaha Piano is the same company that makes motorcycles and boat engines

co-branding definition:

when two brands are presented together

genericized brands definition:

a brand that is so omnipresent that they represent the whole product category

packaging definition:

the development of a container and graphic design for a product

• Gets attention and sends signals about product attributes and quality

Types of Packages:

• attention grabbers

• luxury appeal

• clever

• greenwashing

• utility

• safety

• space taking

shrink-flation definition:

refers to when retailers reduce the size of the package rather than raising prices