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Service Products, Services, Intangibility, Inseparability, Service Products, Services, Intangibility, Inseparability, Perishability, Off Peak Pricing, Client Relationship, Customer Perishability, Off Peak Pricing, Client Relationship, Customer

Effort, Uniformity, Tangibles, Reliability, Responsiveness, Effort, Uniformity, Tangibles, Reliability, Responsiveness, Assurance, Empathy, Internal Marketing, ContinualAssurance, Empathy, Internal Marketing, Continual

The Marketing of ServicesThe Marketing of Services

Chapter 12Chapter 12

Key TermsKey Terms

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ServicesServices

Service Products – A bank loan or home security Service Products – A bank loan or home security that are intangiblethat are intangible

Services – Activities by sellers and others that Services – Activities by sellers and others that accompany the sale of a product and that aid in its accompany the sale of a product and that aid in its exchange or its utilizationexchange or its utilization

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Important Characteristics of Important Characteristics of ServicesServices

Intangibility – Without physical dimensions or Intangibility – Without physical dimensions or characteristicscharacteristics

Inseparability – Service and seller are inseparableInseparability – Service and seller are inseparable Perishability and Fluctuating demand – Seasonal, Perishability and Fluctuating demand – Seasonal,

days, time of day, vacant seats, waiting time on days, time of day, vacant seats, waiting time on phonephone Off-peak pricingOff-peak pricing

Client Relationship – Similar to customer Client Relationship – Similar to customer relationship but typically more intenserelationship but typically more intense

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Important Characteristics of Important Characteristics of ServicesServices

Customer Effort – Customer involvement is at a Customer Effort – Customer involvement is at a greater degree in production of many types of greater degree in production of many types of servicesservices

Uniformity – Quality of services can vary more than Uniformity – Quality of services can vary more than the quality of goodsthe quality of goods

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Unique Characteristics Unique Characteristics Distinguishing Services from GoodsDistinguishing Services from Goods

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Quality ServiceQuality Service

Quality service generally suffers due to the gap Quality service generally suffers due to the gap betweenbetween Consumer expectations and management Consumer expectations and management

perceptions of the consumer expectationsperceptions of the consumer expectations Management perceptions of consumer expectations Management perceptions of consumer expectations

and firm’s service quality specificationsand firm’s service quality specifications Service quality specifications and actual service Service quality specifications and actual service

qualityquality Actual service delivery and external communications Actual service delivery and external communications

about the serviceabout the service

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Quality ServiceQuality Service

Determinants of service quality includeDeterminants of service quality include TangiblesTangibles ReliabilityReliability ResponsivenessResponsiveness AssuranceAssurance EmpathyEmpathy

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Customer Satisfaction MeasurementCustomer Satisfaction Measurement

Understand the expectations and requirements of the Understand the expectations and requirements of the customer customer

Determine how well your company and its major Determine how well your company and its major competitors are delivering these expectations and competitors are delivering these expectations and requirementsrequirements

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Customer Satisfaction Customer Satisfaction Measurement (CSM) – ResearchMeasurement (CSM) – Research

Common aspectsCommon aspects Marketing and sales personnel primarily responsible for Marketing and sales personnel primarily responsible for

designing CSM programsdesigning CSM programs Top management and the marketing function championed Top management and the marketing function championed

the programsthe programs Combination of qualitative and quantitative research Combination of qualitative and quantitative research

methodsmethods Evaluations included both the company’s and Evaluations included both the company’s and

competitor’s satisfaction performancecompetitor’s satisfaction performance

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Customer Satisfaction Customer Satisfaction Measurement (CSM) – ResearchMeasurement (CSM) – Research

Results of all research were made available to Results of all research were made available to employees, but not to customersemployees, but not to customers

Research was performed on continual basisResearch was performed on continual basis Customer satisfaction was incorporated into the Customer satisfaction was incorporated into the

strategic focus of the companystrategic focus of the company Commitment to increasing service quality and customer Commitment to increasing service quality and customer

satisfaction from employees at all levels within the satisfaction from employees at all levels within the organizationorganization

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The Importance of Internal MarketingThe Importance of Internal Marketing

Critical componentsCritical components Careful selection process in hiring frontline employeesCareful selection process in hiring frontline employees Clear and concrete message conveying a particular Clear and concrete message conveying a particular

service strategyservice strategy Significant modeling by managersSignificant modeling by managers Energetic follow-through processEnergetic follow-through process Emphasis on teaching employees to have good Emphasis on teaching employees to have good

attitudesattitudes Emphasis should be placed on the word continualEmphasis should be placed on the word continual

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Obstacles in Service MarketingObstacles in Service Marketing

Four reasons for the lack of innovative marketing on Four reasons for the lack of innovative marketing on the part of service marketersthe part of service marketers Limited view of marketingLimited view of marketing Lack of strong competitionLack of strong competition Lack of creative managementLack of creative management No obsolescenceNo obsolescence

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Service ChallengeService Challenge

Constantly develop new services that will better meet Constantly develop new services that will better meet customer needscustomer needs

Improve on quality and variety of existing servicesImprove on quality and variety of existing services Provide and distribute services in a manner that best Provide and distribute services in a manner that best

serves the customerserves the customer

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BankingBanking

Banking is becoming an increasingly technology-Banking is becoming an increasingly technology-driven businessdriven business Home baking systemsHome baking systems

Banks have also learnt the value of bundling servicesBanks have also learnt the value of bundling services ATM transactionsATM transactions Interest bearing checking accountsInterest bearing checking accounts

Most banks target some marketing activities towards Most banks target some marketing activities towards senior citizenssenior citizens

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Health CareHealth Care

Health Maintenance Organization – Alternative Health Maintenance Organization – Alternative delivery systems delivery systems BenefitsBenefits

Ability to have all ailments treated at one facilityAbility to have all ailments treated at one facility Payment of fixed fees for servicesPayment of fixed fees for services Encouragement of preventive versus remedial treatmentsEncouragement of preventive versus remedial treatments

Success of HMO has inspired similar programs for Success of HMO has inspired similar programs for dental and eye caredental and eye care

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InsuranceInsurance

Insurance industry offers several new products and Insurance industry offers several new products and servicesservices

Distribution of insurance services have increasedDistribution of insurance services have increased Availability of travel auto insurance through AAAAvailability of travel auto insurance through AAA Group insurance written through employers and labor Group insurance written through employers and labor

unionsunions

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TravelTravel

Airline industries have been the leaders in the use of Airline industries have been the leaders in the use of technologytechnology Use of Internet sites to dispense flight and fare Use of Internet sites to dispense flight and fare

informationinformation Technology helps airlines to make strategic pricing Technology helps airlines to make strategic pricing

decisions through the use of yield managementdecisions through the use of yield management Use of elaborate computer programs enable Use of elaborate computer programs enable

managers to determine customer segmentsmanagers to determine customer segments

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Implications for Service MarketersImplications for Service Marketers

Sum total of marketing mix elements represents the Sum total of marketing mix elements represents the total impact of the firm’s marketing strategytotal impact of the firm’s marketing strategy

Services must be made available to prospective usersServices must be made available to prospective users Varying service bundles, new technology, and Varying service bundles, new technology, and

alternative means of distributing the service enable alternative means of distributing the service enable targeted marketingtargeted marketing