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Definining Services “A service is any act or performance that one party offers to another, that is essentially intangible, does not result in the ownership.

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Presentation on theme: "Definining Services “A service is any act or performance that one party offers to another, that is essentially intangible, does not result in the ownership."— Presentation transcript:

1 Definining Services “A service is any act or performance that one party offers to another, that is essentially intangible, does not result in the ownership of anything. Its production may or may not be tied to any physical product.” Philip Kotler.

2 Goods Service Continuum

3 CHARACTERISTICS OF SERVICES: INTANGIBILITY INSEPARABILITY HETEROGENITY PERISHABILITY

4 Marketing problems caused by intangibility Services are subjectively evaluated Services are difficult to sample before purchase Services cannot be stored Patent problems are there Difficulty in pricing services Difficulty in displaying or communicating services.

5 Possible solutions to Intangibility problems: Use of Tangible clues. Use of personal sources of information Creation of strong organizational image.

6 Marketing problems caused by inseparability Service provider is physically connected to the service being provided Involvement of customers and other customers in the service production process:  To start and stop  For processing  Mental involvement Heterogeneity and Quality issues Uncertainity in scheduling Catering to individual customer demand is difficult Arrivals are not under control Mass production is diff.

7 Possible solutions to inseparability problems: Employee selection, training, and motivation. Consumer management  seggregating customers  home delivery  Prohibit customer entry in certain areas Use of multisite location

8 Marketing problems caused by Heterogeneity: Service standardization and Quality Control are difficult. Many errors in service operations are one time events.

9 Possible solutions to Heterogeneity problems: Customization  takes extra time  adds to cost  uncertanity associated with customised services Standardization  Use of machines  Training

10 SOME COMPANIES STANDARDISE THE CORE PRODUCT ALLOW CUSTOMERS TO SEMI CUSTOMISE THE FINAL OUTCOME

11 Marketing problems caused by Perishability: Inventoring problem Problem of Demand – Supply Management  Higher demand than supply  lower demand than supply

12 Possible solutions to Perishability problems: Creative Pricing  attract customers in off peak hours  attract another segment  separate diverse target markets Reservation Systems Development of Complementary Services Capacity Sharing Part –Time Employee Utilization Increase in Customer Participation

13 CLASSIFICATION OF SERVICES On the basis of degree of Tangibility On the basis of Labor Intensiveness On the basis of Degree of Customer Contact On the basis of skill level of the Service Provider On the basis of Goal of Service Provider

14 Service Process Matrix Given By Roger Schmenner Low Degree Of Interaction and customisation and Low degree of Labor Intensity: Service Factory Airlines,Hotels Low Degree Of Interaction & Cus and High degree of Labor Intensity: Mass Service, Schools, Retailing High Degree Of Interaction & Cus and Low degree of Labor Intensity: Service Shops, Hospitals High Degree Of Interaction & Cus and High degree of Labor Intensity: Professional Service, Physicians, Lawyers

15 Nature of the service act and the recipient of the service Services where tangible actions are directed at peoples’ bodies: Health care, beauty saloons Services where tangible actions are directed at Physical goods: laundry, repair &maintenance Services where intangible actions are directed at peoples’ bodies: education, information Services where intangible actions are directed at Physical goods: banking legal services

16 Nature of Service delivery and type of relationship between Service Organization and its Customers Continuous delivery of service and membership relationship: electric utility Discrete transactions and membership relationship:Transit pass, buying club Continuous delivery of service and No formal relationship:Radio station, Police protection Discrete transactions service and No formal relationship: movie theater, Restaurant

17 Customization & Judgment In service Delivery High Extent of judgement and High customization : Surgery,Taxi. High Extent of judgement and Low customization :Education, Preventive Health Programme Low Extent of judgement and Low customization :Public Transport. Low Extent of judgement and High customization: Retail Banking

18 Nature of Demand &Supply Wide Demand Fluctuations but peak demand can be met without delay: electricity, telephone Wide Demand Fluctuations and peak demand cannot be met without delay: Tax preparations, hotels. Narrow Demand Fluctuations and peak demand can be met without delay: Insurance,banking Narrow Demand Fluctuations but peak demand cannot be met without delay: Fast food, Movie theater

19 On the basis of Nature of Interaction between Customer & Service Organisation and Availability of service outlets Single site location where customer travels to service firm: Theater, Barber shop Single site location where service provider travels to customer :Taxi Single site location where transaction is at arm’s length: Local TV Station Multiple site location where customer travels to service firm: Bus service Multiple site location where service provider travels to customer: Mail Delivery Multiple site location where transaction is at arm’s length: Telephone company


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