ADHM 141 Lecture Notes - Lecture 15: Product Differentiation
Trends in U.S. employment by sector
-Service industry: increase
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-Manufacturing: Steady, slow decrease
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-Agriculture: Steady fast decease
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Commodity
Materials extracted from natural world (ex: animal, mineral, vegetable.)
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Cannot be differentiated, commodity traders sell them largely to large
markets
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Goods
Using Commodities as raw materials, companies make tangible inventory
goods.
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Cost is based of production as well as product differentiation
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Services
Intangible activities customized to the individual request of known clients.
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Services accomplish specific task a customer wants done
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Goods are the means for services
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Experience
experience economy (beyond merely providing services) businesses stage
memorable experiences for customers/guests
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experiences affect individuals in an inherently personal way.
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each experiences derives from interaction b/w staged event and individuals
prior state Of mind.
ex: Macy’s magic mirror in London
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WHY IS TOURISM SO DIFFERENT? S.H.I.P
Simultaneity: Services are produced and consumed at the same time
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Heterogeneity: Potential for high variability
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Intangibility: Services cannot be tasted/seen/patented
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Perishability: Services cannot be stored and carried forward to a future time
period.
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> Implications of Simultaneity:
Customers participate in and effect transaction
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customers affect each other
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employees affect the service outcome and quality
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mass production is hard to be achieved
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> Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee
actions.
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Service quality depends of many uncontrollable factors
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Can be considered as the opportunity to provide a degree of
flexibility and customization of the service
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> Implications of Intangibility:
Services cannot be tasted/seen/patented
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Pricing is difficult
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Customers rely on reputation of there service firm
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> Implications of Perishability:
Cannot be returned/resold
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difficult to synchronize supply and demand with service
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consumers only become aware of the issue when there is
insufficient supply and they have to wait for service.
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You’ll have to sell it right now or you will lose it.
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NATURE OF SERVICES
Friday, January 13, 2017
8:30 AM