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MGMA01H3 (184)
Chapter 12

Chapter 12

5 Pages
131 Views

Department
Management (MGM)
Course Code
MGMA01H3
Professor
Ingrid L.Stefanovic

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INTRODUCTION
Service is a type of product
Service marketers are really selling experiences
SERVICES VERSUS GOODS
Service is a product without physical characteristics – a bundle of performance and symbolic
attributes designed to produce consumer want satisfaction
Goods businesses sell things, services businesses sell performances
oGoods are produced, services are performed
Tangible attributes are those attributes that can be experienced by the physical senses, such as
sight, tough, and smell
Intangible attributes are those attributes that cannot be experienced by the physical senses
Products can offer both attributes
Buying Promises
Consumers are basically buying promises (because there is no physical properties, they cannot
conceptualize then service product), there is no product trial or return possible
Three type of product properties are attached to every good or service
oSearch Qualities are physical qualities that enable products to be examined and compared.
This eases the task of choosing among them
Household furniture is high in search qualities
oExperience Qualities are characteristics of products that can be assessed mainly through
using them
A meal at a fine restaurant or a musical performance is high on experience qualities
oCredence Qualities are qualities for which, even after purchasing, the buyer must simply
trust that the supplier has performed the correct service
Car repairs, medical procedures are high in credence qualities
CHARACTERISTICS OF SERVICES
There are four unique characteristics of services that distinguish them from goods
oIntangibility
oInseparability of production and consumption
oHeterogeneity
oPerishability
Intangibility
Services cannot be seen, smelled, or touched
Has no physical substance
Services can also be mentally intangible, because it is sometimes hard for human minds to grasp
them
Marketing problems created from intangibility of services
oServices cannot be stored
Revenue from empty seats in Airplanes are lost forever
www.notesolution.com
oServices cannot be protected through patents
Patents apply to physical objects
Services can be easily copied
oIt is hard to readily display or communicate services
A purchaser must purchase the service in order to experience it
oPrices are difficult to set
Costing out, say, an accountants services proves to be much more complex
oA very high proportion of the cost of some services is fixed
oDifficulty facing the marketer is to find a price that is low enough to encourage near-
maximum usage but high enough to cover all costs over time
Marketing Strategies to Solve the Problems of Intangibility
Because services are so intangible, many marketers stress tangible cues in advertising and selling
Marketing messages should also use personal sources more than nonpersonal sources
oThus, a recommendation for life insurance would likely be more persuasive if it came from
a person than a company
oAdds tangibility to the service
Service marketers also have found that it is helpful to stimulate word-of-mouth communications
oIf a purchaser can be induced to speak to friends positively about a service, the service will
tend to be purchased by those people
Engaging in postpurchase communications is a useful strategy
Service marketers might also try to create a strong image of their organization
oSince purchasers cannot physically evaluate the product, they may be reassured to purchase
a service from a well-known organization
It has been found useful to develop a strong cost accounting system
oEnables an accurate and realistic analysis of various costs involved in the operation
oProvides a strong foundation on setting the ultimate price
Inseparability of Production and Consumption
Services are first sold, then produced and consumed simultaneously
oProduction and consumption are therefore inseparable
Customer has an active role during production of the service
Inseparability of a production and consumption also results in marketing problems
oConsumers are involved in production
Performance depends on the quality of input from the customer
oOther consumers are involved in production
Many services are offered in a setting with other people present
The presence of others can distract a server, or create so much pressure that service
is negatively affected
oCentralized mass production of services is difficult
Services are normally provided where the people are
www.notesolution.com

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Description
INTRODUCTION Service is a type of product Service marketers are really selling experiences SERVICES VERSUS GOODS Service is a product without physical characteristics a bundle of performance and symbolic attributes designed to produce consumer want satisfaction Goods businesses sell things, services businesses sell performances o Goods are produced, services are performed Tangible attributes are those attributes that can be experienced by the physical senses, such as sight, tough, and smell Intangible attributes are those attributes that cannot be experienced by the physical senses Products can offer both attributes Buying Promises Consumers are basically buying promises (because there is no physical properties, they cannot conceptualize then service product), there is no product trial or return possible Three type of product properties are attached to every good or service o Search Qualities are physical qualities that enable products to be examined and compared. This eases the task of choosing among them Household furniture is high in search qualities o Experience Qualities are characteristics of products that can be assessed mainly through using them A meal at a fine restaurant or a musical performance is high on experience qualities o Credence Qualities are qualities for which, even after purchasing, the buyer must simply trust that the supplier has performed the correct service Car repairs, medical procedures are high in credence qualities CHARACTERISTICS OF SERVICES There are four unique characteristics of services that distinguish them from goods o Intangibility o Inseparability of production and consumption o Heterogeneity o Perishability Intangibility Services cannot be seen, smelled, or touched Has no physical substance Services can also be mentally intangible, because it is sometimes hard for human minds to grasp them Marketing problems created from intangibility of services o Services cannot be stored Revenue from empty seats in Airplanes are lost forever www.notesolution.com
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