MKTG Chp 13 - 14 Services and Pricing

Service

Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed.

• Services account for nearly 77% of US GDP

• We’ve become more reliant on services

  • Manufacturing has moved to lower-cost countries

  • People value convenience more than before

  • The world has become more specialized

  • TECHNOLOGY

Customer service

Refers to human or mechanical activities firms take to satisfy customers’ needs and wants

4 key differences

1. Variability

2. Inseparability

3. Intangibility

4. Perishability

Presentation

The physical environment and atmosphere where the service takes place

personnel

The employees who interact with customers and deliver the service

Their behavior and attitude strongly affect the customer experience

processes

The steps customers go through top receive the service

efficient and smooth processes make the service experience better

The seven P’s

Price

Product

Place

Promotion

Presentation

Personnel

Processes

Service gap

The result when the delivery of a service fails to meet the expectations of the customer

Knowledge gap

when the company doesn’t understand what their customer wants

close the gap through:

surveys, reviews, social listening, interviews, and research

Standards gap

management knows what customers expect but doesn’t build clear systems or standards to deliver it

close the gap through:

clear service standards, ensure you have clear processes

Turn customer expectations into clear rules for employees

Delivery gap

Employees fail to deliver the service the company promised or designed

Close the gap through:

employee training, adequate staffing, technology systems, incentives or motivations, empower employees

Give employees the tools and training to deliver good service

Communication gap

The company promises more than it can actually deliver

Close the gap through:

honest advertising, accurate descriptions, clear communication, marketing / ops coordination

don’t overpromise and underdeliver

service quality

a customer’s perception of how well a service meets or exceeds their expectations

5 distinct service dimensions

• tangibles - physical evidence

• empathy - individualized care

• assurance - employee knowledge

• responsiveness - hearing what the customer says and responding accordingly in a timely manner

• reliability -

marketing research tools

voice of customer (VOC) programs

Zone of tolerance program

Zone of tolerance programs

The area between customers’ expectations regarding their desired service and the minimum level of acceptable service - that is, the difference between what the customer really wants and what he or she will accept before going elsewhere.

Voice of customer programs

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

service recovery methods

• listen to customers and involve them in recovery efforts

• Find a fair solution

• Resolve problems as quickly as possible

The 5 C’s of pricing

1. Company Objectives

2. Customers

3. Costs

4. Competition

5. Channel members

Company objectives

Profit-oriented

Sales-oriented

Competitor-oriented

Customer-oriented

Profit orientation

a company objective that can be implemented by focusing on target profit pricing, maximizing profits, or target return pricing.

target profit pricing

a pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit

maximizing profits

a profit strategy that relies primarily on economic theory

if a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized

target return pricing

a pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of sales

sales orientation

a company objective based on the belief that increasing sales will help the firm more than increasing profits

setting prices with the goal of selling more, not necessarily making the most profit per product.

competitor orientation

a company objective based on the premise that the firm should measure itself primarily against the competition

a pricing strategy where a company sets its prices based on what competitors are charging

customer orientation

a company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers’ needs