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Canada (162,159)
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BU352 (267)
Chapter 10

Chapter 10 - Services The Intangible Product

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Dave Ashberry

Chapter 10 - Services: The Intangible Product  Services = intangible offering that involves a deed, performance, or effort that can’t be physically possessed  Customer Service = refers to human/mechanical activities firms undertake to help satisfy their customers’ needs & wants  Providing good Customer Service adds value  Service sector in Canada accounts for 70% of economy o (1) because it’s generally less expensive for firms to manufacture their products in less-developed countries, thus increases the proportion of service production o (2) household maintenance activities have become quite specialized o (3) people place a high value on convenience and leisure Services Marketing Differs from Product Marketing 4 I’s of services  Intangible o Cannot be touched, tasted, or seen like a pure product can o Makes it difficult to convey the benefits o Can’t be shown directly to customers = hard to promote o Images marketers use reinforce the benefits or value the service provides  Inseparable o It is produced and consumed at the same time o Give customers opportunity to be involved directly with service o Can’t try service before purchasing & can’t return it if not satisfied o High purchase risk  Provide extended warranties or 100-percent satisfaction guarantees  Inconsistent (Variable) o Performed by humans who are more variable than machines o By the time the firm recognizes the problem, the damage has already been done; can’t recall a service o Advantage: micromanage individual customers; cater to needs (expensive) o Reduced service inconsistency through training and standardization o Replace humans with machines; downsides = technological problems  Inventory (Perishable) o Cannot be held in inventory or stored for use in the future o Excess demand = turning customers away o Excess supply = less desirable expense-to-revenue ratios Providing Great Service: The Gaps Model  Customers have certain expectations of how service should be delivered; failed service deliver = service gap  Knowledge Gap o Difference between actual customer expectations & perceived customer expectations by the firm o Accomplished through customer research & communication with managers & employees to close the gap o Understand customer expectations and matching it with service– vary according to service & situation o Evaluating Service Quality – how well company meets or exceeds expectation  Overall service quality: reliability, responsiveness, assurance, empathy, tangibles o Marketing research = understanding the customer tolerance; Voice of Customer programs (ex) o Voice-of-customer program: an ongoing marketing research system that collects customer insights and intelligence to influence and drive business decisions o Zone of tolerance: the area between customers’ expectations regarding their desired service and the minimum level of acceptable service – that is, the difference between what the customer really wants
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