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Chapter 10

Chapter 10 BU352.docx

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Dave Ashberry

BU352 Chapter 10 – Services: The Intangible Product Week 11 Introduction -Customer service – specifically refers to human or mechanical activities firms undertake to help satisfy their customers’ needs and wants Services Marketing Differs from Product Marketing Intangible -Intangible – a characteristic or a service; it cannot be touched, tasted, or seen like a pure product can -It makes it difficult to convey the benefits of services -A service is also difficult to promote because it can’t be shown directly to potential customers -Marketers must therefore creatively employ symbols and images to promote and sell services -Because of the intangibility of services, the images marketers use reinforce the benefit or value that a service provides Inseparable Production and Consumption -Services are produced and consumed at the same time – that is, service and consumption are inseparable -Inseparable – a characteristic of a service: it is produced and consumed at the same time – that is, service and consumption are inseparable -Consumers rarely have the opportunity to try the service before they purchase it -After the service has been performed, it can’t be returned Inconsistent -Inconsistent – a characteristic of a service: its quality may vary because it is provided by humans -Ex. A hair stylist can give you a bad haircut because she went out the night before -Some marketers of services strive to reduce service inconsistency through training and standardization -Marketers also can use the inconsistent nature of services to their advantage – a micromarketing segmentation strategy can customize a service to meet customers’ needs exactly -In an alternate approach, some service providers tackle the inconsistency issue by replacing people with machines – Ex. ATMs for getting cash -The Internet has reduced service inconsistency in several areas – ex. Purchasing travel tickets online -The Internet has reduced service inconsistency Inventory -Inventory – a characteristic of a service: it is perishable and cannot be stored for future use -The perishability of services provides both challenges and opportunities to marketers in terms of the critical task of matching demand and supply -As long as the demand for and the supply of the service match closely, there is no problem -Excess demand results in having to turn customers away in peak periods, while excess capacity may mean less desirable expense to revenue ratios Providing Great Service: The Gaps Model -Service gap – results when a service fails to meet the expectations that customers have about how it should be delivered -There are four service gaps: 1. Knowledge gap – reflects the difference between customers’ expectations and the firm’s perception of those expectations 2. Standards gap – pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets BU352 Chapter 10 – Services: The Intangible Product Week 11 3. Delivery gap – the difference between the firm’s service standards and the actual service it provides to customers 4. Communication gap – refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises The Knowledge Gap: Knowing what Customers Want -Firms must understand the customers’ expectations, which can be accomplished through customer research and by increasing the interaction and communication between managers and employees Understanding Customer Expectations -Customers’ expectations are based on their knowledge and experiences -Expectations vary according to the type of service -People’s expectations also vary depending on the situation Evaluating Service Quality by Using Well-Established Marketing Metrics -To meet or exceed customers’ expectations, marketers must determine what those expectations are -Service quality – customers’ perceptions of how well a service meets or exceeds their expectations -Customers generally use five distinct service dimensions to determine overall service quality: reliability, responsiveness, assurance, empathy, and tangibles -Marketing research provides a means to better understand consumers’ service expectations and their perceptions of service quality -Reliability – the ability to perform the service dependably and accurately -Responsiveness – the willingness to help customers and provide prompt service -Assurance – the knowledge of and courtesy by employees and their ability to convey trust and confidence -Empathy – the caring, individualized attention provided to customers -Tangibles – the appearance of physical facilities, equipment, personnel, and communication materials -Voice-of-customer (VOC) program – an ongoing marketing research system that collects customer insights and intelligence to influence and drive business decisions -Zone of tolerance – the areas between customer’s expectations regarding their desired service and the minimum level of acceptable service – that is, the difference between what the customer really wants and what he or she will accept before going elsewhere -To define the zone of tolerance, firms ask a series of questions that relate to: -the desired and expected level of service for each dimension, from low to high -customers’ perceptions of how well the focal service performs and how well a competitive service performs, from low to high -the importance of each service quality d
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