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Lecture 5

2320 Lecture 5: Chapter10

5 Pages
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Department
Business Administration
Course Code
Business Administration 3301K
Professor
Angela White

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Services: The intangible Product
Customer Service: Specifically refers to human or mechanical activities that firms
undertake to help satisfy their customers needs and wants
-By providing good customer service, firms add value to their products and
services
-The service sector makes up more than 70% of Canadas economy and is
growing faster than the goods producing industries
It is less expensive for firms to manufacture their products in less-
developed countries
Household maintenance activities, which people performed
themselves, have become quite specialized
People place high value on convenience and leisure
Services Marketing Differs From Product Marketing:
These differences make marketing services more challenging than marketing
products
Intangible:
Intangible: A characteristic of a service: it cannot be touch, tasted, or seen like a
pure product can
-The most fundamental difference between a product and a service is that
services are intangible
-Makes it difficult to convey the benefits of the service
-A service is also difficult to promote because it can’t be shown directly to
potential customers
Marketing must creatively employ symbols and images to promote
and sell services
The image marketers use reinforce the value that the service
provides
Inseparable Production and Consumption:
Inseparable: A characteristic of a service; it is produced and consumed at the same
time- that is service and consumption are inseparable
-Customers rarely have the opportunity to try the service before they
purchase it and after the service has been performed, it can’t be returned
-Because the purchase risk can be high, services will provide extended
warranties and 100% satisfaction guarantees
Inconsistent:
Inconsistent: A characteristic of a serve; its quality may vary because it is
provided by humans
Marketers use the inconsistent nature of services to their advantage
-Can customize a service to meet customers need exactly
Service provides usually bundle their services into one pacakage and charge a
single price
Some service providers tackle the inconsistency issue by replacing people with
machines
-Machines don’t have to be trained; nor do they come to work late; or with
a bad attitude; thereby reducing service inconsistency
-The technological delivery of services sometimes causes additional
problems
Customers may not embrace the idea of replacing a human with a
machine for business interactions or have problems using the
technology
Inventory
Inventory: A characteristic of a service; it is perishable and cannot be stored for
future use
-Ex. A ski area can be open as long as there is snow but demand peaks on
weekends and holidays so ski areas often offer less expensive tickets
during off –peak periods to stimulate demand
-Balancing the up’s and downs of demand and capacity is challenging
Providing Great Service: The Gaps Model
The Gaps Model, which is designed to highlight those areas where customers
believe they are getting less or poorer services than they expect and hose these
gable can be closed
Service Gap: Results when a service fails t meet the expectations that customers
have about how it should be delivered
-Knowledge Gap: Reflects 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
-Standards Gap: Pertains to the difference between the firm’s perceptions
of customers expectations and the service standards it sets
Firms can narrow this gab, by setting appropriate service standards
and measuring service performance
-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
-Communication Gap: Refers to 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 more realistic about the
services they can provide and manage customer expectations
effectively

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Description
Services: The intangible Product Customer Service: Specifically refers to human or mechanical activities that firms undertake to help satisfy their customers needs and wants By providing good customer service, firms add value to their products and services The service sector makes up more than 70 of Canadas economy and is growing faster than the goods producing industries It is less expensive for firms to manufacture their products in less developed countries Household maintenance activities, which people performed themselves, have become quite specialized People place high value on convenience and leisure Services Marketing Differs From Product Marketing: These differences make marketing services more challenging than marketing products Intangible: Intangible: A characteristic of a service: it cannot be touch, tasted, or seen like a pure product can The most fundamental difference between a product and a service is that services are intangible Makes it difficult to convey the benefits of the service A service is also difficult to promote because it cant be shown directly to potential customers Marketing must creatively employ symbols and images to promote and sell services The image marketers use reinforce the value that the service provides Inseparable Production and Consumption: Inseparable: A characteristic of a service; it is produced and consumed at the same time that is service and consumption are inseparable Customers rarely have the opportunity to try the service before they purchase it and after the service has been performed, it cant be returned Because the purchase risk can be high, services will provide extended warranties and 100 satisfaction guarantees Inconsistent: Inconsistent: A characteristic of a serve; its quality may vary because it is provided by humans Marketers use the inconsistent nature of services to their advantage
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