1. Introducing Services

2. Goods-Services Continuum 1
Early definitions
good as thing, service as an act
where does utility lie: in physical characteristics or in the act?
Most goods are a complex of goods and facilitating services
Most services are a complex of services and facilitating goods

3. Goods-Services Continuum 2
Food
Tobacco
Public
Transportation
Medical
Care
Social
Clubs
100 50
Personal Consumption Expenditure Related to Services Rathmell (1966)

4. Goods-Services Continuum 3
Teaching
Advertising
Television
Fast
Food
Tailored
suit
Necktie
Salt

5. Marketing Services: the 3 Ps
People
service personnel and customers (appearance, attitude, social skills, etc.)
Physical Evidence
appearance, design, layout of service setting, brochures, promotional materials, etc.
Process
policies, procedures, mechanization, flow of activities, employee discretion, customer involvement

6. Characteristics of Services
Intangibility
Inseparability
Variability
Perishability

7. Intangibility
Difficult to know what an offer is before, during or even after receipt
Measurement helps the consumer understand the service
Providing some tangible evidence helps the consumer to judge the service
prospectus
written customer evaluations

8. Inseparability Products: Production-Storage-Sold- Consumed
Services: Sold-Produced & Consumed at Same Time
The customer is involved in production and delivery
The method of production and delivery is more important for services than for products
Implication: stay close to the customer

9. Variability
Can be between firms, within firm, or even within an employee over time
Training and standardization of procedures can help reduce variation
Too much emphasis on “increased productivity” may mean that varying customer needs are not being met

10. Perishability Cannot be stored for later sale or use
If supply exceeds demand, the value of the service is lost
If demand exceeds supply, backup cannot be taken from a warehouse
Fluctuations in demand present greater problems for services than for products

11. A Classification Framework
Tangible actions directed at people’s bodies
health care, passenger transportation, restaurants, health clubs
Tangible actions directed at goods and other physical possessions
freight transport, landscaping, dry cleaning
Intangible actions directed at people’s minds
education, broadcasting, museums
Intangible actions directed at intangible assets
banking, legal services, accounting, insurance

12. Advantages of this Framework
Highlights an important service characteristic
Focuses on whom or what the service is directed at
Categories are clearly distinct and collectively exhaustive

13. Characteristics of the Interface
The customer is physically present
The service and the delivery processes are interdependent
The customer is in the interface when he is visiting the factory

14. Questions Raised Regarding Interface
How much physical presence of the customer is necessary for the delivery of the service to take place?
What is the nature of the customer contact and the implications for service management?
What is the ‘size’ of the interface?
physical space, amount of time, # of activities

15. Uncertainty Before During After
customer uncertainty regarding readiness for the service (education, fitness program)
service provider does not fully understand customer inputs
During
Customers failing to comply with procedures
Unrealistic demands or expectations
After
What has been obtained from the service?

16. Tangible Elements Items bought Items whose status is altered
repaired, improved
Items that are peripheral
admission ticket, appointment card
Items that are central to the service
ie. car of a rental company
Items that form part of the process
computers, ATMs

17. Intangible Elements Personal contact with the service personnel
The atmosphere generated by the service environment
Emotions felt by the customer

18. Core Service What needs are we meeting?
public transportation: safe, reliable transportation
CPA: peace of mind
Hotel: hospitality, rest
Health club: improve appearance, health

19. Satisfaction Satisfaction = Performance - Expectations
Performance < Expectations = Dissatisfaction
Performance > Expectations = Satisfaction
Caution: performance and expectations cannot be too low.
What are your expectations for the speed of communications today? (what were they 20 years ago?)

20. Perceived Risk
Perceived risk is greater for services than for products. Why?
Intangibility
cannot see before purchase
Variability
production machines are consistent, not humans
Guarantees
traditionally, services have not provided guarantees
Complexity

21. Typology of Risks Performance Risks Physical Risk Financial Risk
Psychological Risk
Social Risk
Time Loss
Jacoby and Kaplan (1972)

22. Discussion Questions What makes products and services different?
Do you work in a product or a service? Explain.
How can we classify different services?
Why are perceived risks greater for services than for products?
Why is the interface important?