Chapter 12Managing the Organization’s Offerings

Chapter 12 – Part II

By Justin Vollmer

Services Marketing

A large amount of nonprofit organizations are in the business of providing services. (p.317)– Service defined – “A service is any activity or

benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product” (p.317)

Services Marketing (Cont.)

Services tend to have five important characteristics.– Intangible– Inseparable from its producer– Variable in its characteristics– Perishable– Dependent on the involvement of the customer and its

production.

(p.317)

Intangible Services

Services that cannot be seen, tasted, felt, heard or smelled prior to being rendered or purchased.

A consumer must make the purchase of the service based on secondary cues and his/her confidence in the service provider.

(p.317)

Inseparable Services

“A service is inseparable from the source that provides it.”

This means that the production and the consumption of the service will usually happen simultaneously.

(p.317)

Variable Services

Services vary by the source and time it is being offered.– Consumers of these services must be aware of

this fact and engage in “risk reducing behavior,” by doing research to learn the best provider. (p.318)

Perishable Service and Customer Involvement

Services can’t be stored and revenue is lost when there is no demand for services.– When demand is up, “…the perishability of

services is not a problem.” (p.319) Customer Involvement

– Customers can be partial to producers and consumers. (p. 319)

– The quality of a service is relative to the experience of the consumer.

Five Major Challenges in the Design of Service Offerings.

Making the Intangible Tangible Making a Virtue of Inseparability Managing Variability Managing Perishability Helping Consumers Consume

(p. 319-323)

Making the Intangible Tangible

Since services are difficult to evaluate because of a lacking tangible product, consumers must look for signs of quality. (p.319)– Andreasen and Kotler give examples of this on

page 319. Diplomas can indicate quality of an instuctor Plaques and awards Recognizable Brand Names (Red Cross, Salvation

Army)

Making the Intangible Tangible (cont.)

Because evaluating services is more difficult, service providers must concentrate on and be aware of their appearance. (p. 319)

Service marketers may make parts of their service tangible. (p. 319)– T-shirts given out for a charity race– Customer service survey

Making a Virtue of Inseparability

Since services are typically produced by people, it is important for service marketers to properly train its personnel with customer service. (p. 320)

Internal Marketing – an organization must realize that every encounter with a customer is “the moment of truth” (p. 320).

User Friendliness – become increasingly important to customer satisfaction. (p.320)

The bottom line here is how important customer service and ultimately customer satisfaction is to an organization. Since people generally provide services, these people should be properly trained deal with customers.

Managing Variability

An organization must understand how a bad experience for a consumer can damage a service provider’s position. (p. 322)

Controlling variability (p. 322)– Hire and train good personnel– Routinize or automate parts of a service– Develop good customer satisfaction monitoring

Surveys, comparison shopping etc.

Managing Perishability

Important for service managers to bring supply and demand into a balance. (p. 322)

Sasser has provided several ways for managing supply and demand (p. 322)– Demand

Differential pricing- changing prices based on the need for a service

Nonpeak demand- can change through marketing campaigns by an organization

Managing Perishability (cont.)

– Demand (cont.) Complimentary Services – provides diversions and alternative to

waiting customers Reservations- preselling services, prevents customer from waiting by

understanding how much service is needed ahead of time.– Supply

Part-time employees – help with peak demand Peak-time efficiency routines- strategies used by an organization to

deal with peak times Customer Participation – can cut down time and resources by having

customers be responsible for some aspect. Shared Services – create a deal with other organizations to help each

other deal with peak time. Expandable facilities- planned strategies to expand infrastructure

during peak times

Helping Consumers Consume

Must either change marketers or change consumers. Service Marketing may have to, “adapt his or her

own service as much as possible to the individual customer’s ability to consume and appreciate it.” (p. 323)

This can be done by studying the needs and wants of the consumer or teaching the consumer to be appreciate of a service- i.e. art appreciation classes.

(p. 323-324)