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Chapter 10

Management and Organizational Studies 2320A/B Chapter Notes - Chapter 10: Dry Cleaning


Department
Management and Organizational Studies
Course Code
MOS 2320A/B
Professor
Reyes
Chapter
10

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Chapter 10 Notes
Services: The Intangible Product
A service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed.
Whereas customer service specifically refers to human or mechanical activities that firm undertake to help satisfy their
customers’ needs and wants. By providing good customer service, firms add value to their products/services.
- Economies of developed countries such as Canada have become increasingly dependent on services
- The service sector makes up more than 70% of Canadas economy and is growing far faster than goods-producing
industries. This dependence and the growth of service-oriented economies in developed countries have emerged
for several reasons:
oIt is generally less expensive for firms to manufacture their products in less-developed countries. Even if
goods are finished in Canada, some of their components likely were produced elsewhere. In turn, the
proportion of service production to goods production in Canada has steadily increased overtime
oHousehold maintenance activities (food preparation, lawn maintenance, house cleaning, laundry & dry
cleaning, hair care etc.) which most people performed by themselves in the past have become specialized
services people now pay for
oPeople place a high value on convenience and leisure. Most houses have little time for household
maintenance tasks and are willing to pay others to do their chores.
Unique Services Characteristics (The Four I’s of Services)
Services are intangible, inseparable from their providers, inconsistent (variable) and cannot be held in inventory
- Intangible
oCannot be touched like a pure product can. When you get a physical from the doctor you can see and hear
the doctor but the service itself is intangible
- Inseparable (production & consumption)
oServices are products and consumed at the same time; whereas products are produced first and consumed
on a later date
oBecause the service is inseparable from its consumption, 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 is therefore higher, service industries tend to provide extended warranties and 100%
satisfaction guaranteed
- Inconsistent
oThe more humans that are needed to provide a service, the more likely that the services quality will be
inconsistent or variable
oSome marketers strive to reduce service inconsistency through training and standardization
oMarketers can use the inconsistent nature of services to their advantage, building on the idea that a
micromarketing segmentation strategy can customize a service to meet customers’ needs exactly
- Inventory
oServices are perishable because they cannot be held in inventory or stored for use in the future
oThe perishability of services provides challenges in terms of matching demand and supply
oDental hygienists, rent and other expenses still need to be paid even if customers forget their appointments,
so dental offices maximize capacity by making advance reminder calls to patients or by charging
cancellation fees to clients who do not show up for their appointments without adequate notice
Providing Great Service: Gaps Model
- Gaps Model is designed to highlight areas where customers believe they are getting less or poorer services than
they expect and how these gaps can be closed
- Example of Maria who booked a stay at a Motel advertising amenities that were not up to par
- Knowledge Gap: Knowing What the Customers Want
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