Ch. 10 Services: The Intangible Product

service

intangible offering that involves an act, performance, or effort that cannot be possessed

customer service

refers to human or mechanical activities firms undertake to help satisfy their customers needs and wants

unique characteristics affecting service

• inseparable

• inconsistent

• inventory

• intangible

intangible

• cannot be touched, tasted, or seen

• requires using cues to aid customers

• atmosphere is important to convey value images are used to convey benefit of value

inconsistant

• training and standardization

• customized services to meet specific needs

• bundled packages

• replace people with machines

• self-service technology

• the internet

inventory

• services are perishable because they cannot be held in inventory or stored for use in the future

• unsold seats, or rooms, are lost revenue

• balancing the ups and downs of demand and capacity is challenging

inseparable production and consumption

• production and consumption are simultaneous

• little opportunity to test a service before use

• lower risk by offering guarantees or warranties

the gaps model

• knowledge gap

• standards gap

• delivery gap

• communication gap

knowledge gap

• the difference between customers expectations and the firm’s perception of those customer expectations

• firms can close this gap by matching customer expectations with actual service through research

to understand customer expectations, firms must recognize that expectations:

• are based on knowledge and experience

• vary according to the type of service

• vary depending on the situation

evaluate service quality

• customers often have trouble determining how well a service meets or exceeds their expectation

use market research to understand customers

• research provided a means to understand consumers service expectations and service quality perceptions

the standards gap

• the difference between the firm’s perceptions of customers expectations and the service standards it sets

• firms can narrow this gap by setting appropriate service standards and measuring service performance

the delivery gap

• the difference between the firm’s service standards and the actual service it provides to customers

• this gap can be closed by getting employees to meet or exceed service standards

  • provide support and incentives

  • use technology

the communication gap

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

• firms can close this gap if they are realistic about the services they can provide and manage customer expectations effectively

increasing service recovery

• listen to the customer

  • customers want to be heard, can be emotional

• resolve problems quickly

  • best interest to solve problems quickly

• provide a fair solution

  • distributive fairness refers to customers perceptions of the benefits they receive compared with the costs they must expend

  • fairness of process used to resolve complaints