ECON 344 Chapter 10: BU_352_Chapter10

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4 Aug 2016
CHAPTER 10 Services: The Intangible Product
BU 352 Spring 2016
SERVICE: intangible offering that involves deed, performance or effort that cannot be physically possessed
CUSTOMER SERVICE: human or mechanical activities to help satisfy customers’ needs and wants. Adds value
1. Intangible makes it hard to market. Showing the benefits is
challenging, and promotion is often done with symbols and signs.
2. Inseparable purchase and consumption. There is no waiting, no
sampling, and a lot of risks. Health care industries try to give you
some options, and some services make guarantees.
3. Inconsistent. Haircuts from different barbers or on different
days can vary. You can’t return a haircut, the damage has been
Target this by switching to computers, create company standards,
or micromarketing for individual customers.
4. Inventory. Services are perishable; therefore the matching of
supply and demand is crucial.
1. Knowledge: difference between customers’ expectation and firms perception of those expectations
2. Standards: difference between the perception of the customers’ expectation and the firm’s standards
3. Delivery: difference between the firm’s standards and the actual service delivered
4. Communication: difference between actual service delivered and the service promoted/promised
Knowledge Gap:
customers’ perception of how well
a service meets or exceeds their expectations.
between customers’ desired performance and
minimum accepted performance.
Standards Gap:
Train workforce to achieve service
goals defined by the company
Entire management committed to
service quality
Delivery Gap:
Empower Employees: allow employees to make some decisions of how the service is provided
Provide Support & Incentives: give employees emotional support, tools for service, consistency, and rewards
Use Technology: increases efficiency and offers a wider variety of service and information to customer
Communication Gap:
Promise only what you can deliver - Manager customer expectations
1. Listen to the customer, they are emotional and want to be heard
2. Find a fair solution (Distributive Fairness = customer perceived costs v. benefits) (Procedural Fairness = how fair
was the procedure process)
3. Resolve problems quickly
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