Marketing: Chapters 9 & 10 Services - The Intangible Product

what is a service?

a process that creates benefits by facilitating a desired change in customers themselves, physical possessions, or intangible assets

what is the importance of services in our economy?

employment opportunities, contributions to economic stability, source of economic leadering

how are services different from goods?

the 4 Is!

Intangible

Inconsistent

Inseperable

Inventory

Intangible

services cannot be touched, seen, tasted, or felt in the same way as goods

Inconsistent (Variable/Heterogeneous)

services are less standardized and uniform than goods

labor-intensive, so consistency and quality control can be hard to achieve

*however, allows for customization to fit customers' needs

Inseperable

consumer cannot easily distinguish between the service provider and the service experience itself

Investory (Perishable)

services cannot be stored or inventoried

if supply > demand = revenue is lost

demand > supply = lost opportunity

7 P's of Services Marketing

4 Original Ps

Product

Place

Promotion

Price

3 New Ps

People

Process

Physical Environment

Product

services cannot be patented

branding becomes very important!

place

convenience (location and timing) is important

promotion

communicating image, educating customers, using tangible imagery

price

impacts consumer perceptions

used in capacity management

people

the "right" employees performing tasks well

for many firms, their people are their product

employees = customer experience

process

number and sequence of actions for customers and service providers

this impacts productivity and quality

physical environment

appearances of the "servicescape" and other tangibles

how do we measure service quality?

1. service quality scale

2. gap model

service quality model

Reliability = dependable, accurate, consistent (do it right the 1st time)

assurance = trust, knowledge, skill

empathy = caring and individualized attention

responsiveness = promptness

tangibles = physical evidence

RAERT

the gap model

Knowledge Gap

Standards Gap

Delivery Gap

Communication Gap

*the larger the gaps, the worse the service quality

knowledge gap

customer's expectations are not accurately understood by firm

standards gap

service firm does not set service standards to deliver to perceived customer expectations

delivery gap

actual service delivered is different than expectations

communication gap

actual service delivered is different than what is promised in communications

what is the importance of physical elements (servicescapes) in marketing services?

it provides tangible or physical evidence of service performances

it brings in the external environment into the overall service - creates impressions

customer's expectations when services fail:

1. outcome fairness

2. procedural fairness

3. interaction fairness

outcome fairness

the judgement that the results people receive are fair compared to others

"is restoring the product or service fair?"

procedural fairness

fairness of the processes, policies, and procedures a company uses when interating with customers, rather than the final outcome

"is process to complain fair?"

interaction fairness

the quality of interpersonal treament a consumer receives during an interaction

"am I treated with respect during the complaint/resolution process?"

how do we resolve the problem when services fail?

apologize

resolve the problem

listen to the customer

involve them in service recovery