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14 Services Marketing. Copyright © Houghton Mifflin Company. All rights reserved.14 | 2 Agenda The Nature and Importance of Services Characteristics of.

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Presentation on theme: "14 Services Marketing. Copyright © Houghton Mifflin Company. All rights reserved.14 | 2 Agenda The Nature and Importance of Services Characteristics of."— Presentation transcript:

1 14 Services Marketing

2 Copyright © Houghton Mifflin Company. All rights reserved.14 | 2 Agenda The Nature and Importance of Services Characteristics of Services Developing and Managing Marketing Mixes for Services Service Quality

3 Copyright © Houghton Mifflin Company. All rights reserved.14 | 3 The Nature and Importance of Services Service –An intangible product involving a deed, performance, or effort that cannot be physically possessed –Application of human and/or mechanical efforts directed at people or objects

4 Copyright © Houghton Mifflin Company. All rights reserved.14 | 4 The Nature and Importance of Services (cont’d) Service Facts (U.S.) –Service industries account for over 50% of GDP. –Service industries employ 80% of nonfarm workers. –More than half of new businesses are service firms. –Services have increased in tandem with the long-term growth of the U.S. economy.

5 Copyright © Houghton Mifflin Company. All rights reserved.14 | 5 Characteristics of Services Intangibility –Services are actions that have no permanent physical qualities as opposed to goods which can be touched and possessed over time. Inseparability of Production and Consumption –The production of a service cannot be separated from its consumption by the customer. Services are produced, sold, and consumed all at the same time.

6 Copyright © Houghton Mifflin Company. All rights reserved.14 | 6 The Tangibility Continuum FIGURE 14.1

7 Copyright © Houghton Mifflin Company. All rights reserved.14 | 7 How Do the Service Characteristics of Intangibility and Inseparability Affect the Marketing Strategy of Universities Like Bentley? Reprinted with permission of Bentley College.

8 Copyright © Houghton Mifflin Company. All rights reserved.14 | 8 Characteristics of Services (cont’d) Perishability –Services cannot be produced ahead of time and stored until needed. Heterogeneity –Variation in the quality of services delivered by individuals and organizations Client-Based Relationships –Interactions that result in satisfied customers who use a service repeatedly over time

9 Copyright © Houghton Mifflin Company. All rights reserved.14 | 9 Characteristics of Services (cont’d) Customer Contact –The level of interaction between the service provider and the customer necessary to deliver the service High-contact services require the customer to be present during the production of the service. High-contact services require well-trained and motivated service personnel. Low-contact services do not require the customer’s continuous presence while the service is carried out.

10 Copyright © Houghton Mifflin Company. All rights reserved.14 | 10 Question Does Domino’s Pizza sell a service or a good?

11 Copyright © Houghton Mifflin Company. All rights reserved.14 | 11 Exercise The St. Louis Cardinals baseball organization is owned by Anheuser-Busch, which also operates Busch stadium, home of the Cardinals. Despite being located in a relatively small market, the Cardinals have set attendance records. Much of this success is the result of effective services marketing at the ballpark, which makes attending games an enjoyable experience for fans, whether the Cardinals win or lose.

12 Copyright © Houghton Mifflin Company. All rights reserved.14 | 12 Exercise (cont’d) 1.What part of your experience at a baseball game is primarily intangible? What are you paying for when you go to a ballgame? 2.Consumers have difficulty separating the producer (the Cardinals and Busch Stadium) from the consumption experience (which includes fan behavior, food vending, seats, or bleachers). Why would this be important for the management at Busch Stadium to understand? In other words, can you go see a winning team play but not enjoy the game, or vice-versa?

13 Copyright © Houghton Mifflin Company. All rights reserved.14 | 13 Exercise (cont’d) 3.Busch Stadium holds around 55,000 fans. What difference does it make that services are highly perishable? How would this influence sales promotion activity? 4.What aspects of the baseball game experience are susceptible to heterogeneity? What does this say about the importance of employing high-quality personnel?

14 Copyright © Houghton Mifflin Company. All rights reserved.14 | 14 Developing and Managing Marketing Mixes for Services Development of Services –Package or bundle of services consists of core services that are the expected basic service experience. supplementary services that differentiate the service bundle from those of other competitors. “Basic,” “Standard,” and “Deluxe” service combinations are custom-tailored to consumers’ specific needs.

15 Copyright © Houghton Mifflin Company. All rights reserved.14 | 15 How Would an Online Brokerage Service Provider Use This Information? Source: comScore Media Matrix as reported in American Demographics, April 2004, p.30. Visitors to Online Trading Sites by Age

16 Copyright © Houghton Mifflin Company. All rights reserved.14 | 16 Developing and Managing Marketing Mixes for Services (cont’d) Promotion of Services—Overcoming the Intangibility of Services –Providing tangible (symbolic) cues/images –Promoting price, guarantees, availability, personnel –Using concrete, specific language in advertising –Using personal selling and word-of-mouth advertising –Offering services on a trial basis

17 Copyright © Houghton Mifflin Company. All rights reserved.14 | 17 Developing and Managing Marketing Mixes for Services (cont’d) Pricing of Services –Performance of specific tasks—car washing –Amount of time to complete the service— babysitting –Variable pricing based on the level of demand; high price at peak demand, lower prices when demand slackens—airline seats –Bundling of services requires decisions on unit, combination, or separate pricing—telephone services –Pricing as an indicator of quality is used when consumers have no other cues to indicate quality.

18 Copyright © Houghton Mifflin Company. All rights reserved.14 | 18 Service Quality Customers’ perception of how well a service meets or exceeds their expectations Service quality is judged from the customer’s viewpoint.

19 Copyright © Houghton Mifflin Company. All rights reserved.14 | 19 Service Quality Model FIGURE 14.2 Source: Adapted from A. Parasuraman, Leonard L. Berry, and Valarie A. Zeithaml, “An Empirical Examination of Relationships in an Extended Service Quality Model,” Marketing Science Institute Working Paper Series, Report no (Cambridge, MA: Marketing Science Institute, 1990). Used with permission.

20 Copyright © Houghton Mifflin Company. All rights reserved.14 | 20 Delivering Exceptional Service Quality Analysis of Customer Expectations –Levels of customer service expectations Desired: if met, customer is very satisfied Acceptable: if met, customer is not dissatisfied –Conduct marketing research Focus groups Comment cards Phone surveys Asking employees Desired Service Acceptable Service Zone of Tolerance

21 Copyright © Houghton Mifflin Company. All rights reserved.14 | 21 Delivering Exceptional Service Quality (cont’d) Service Quality Specifications –Establish goals for service delivery –Secure management’s commitment to service quality Employee Performance –Train customer-contact employees at all levels –Incorporate service quality into employee evaluation and compensation systems

22 Copyright © Houghton Mifflin Company. All rights reserved.14 | 22 Delivering Exceptional Service Quality (cont’d) Management of Service Expectations –Conduct advertising campaigns that make realistic promises of service –Establish good internal communications to inform employees and ensure promises are kept

23 Copyright © Houghton Mifflin Company. All rights reserved.14 | 23 Which Dimension(s) of Service Quality Does This Advertisement for Liberty Mutual Address? Reprinted with permission of Liberty Mutual Insurance Company.


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