Chapter Nine Services Marketing

Chapter Objectives Discuss impact of the services sector. Identify unique characteristics of services. Explain components of the purchasing process. Identify factors that impact the purchase decision. Discuss relevant elements of the service encounter. Describe the post-purchase evaluation of services. Discuss how service quality is measured. Describe an effective service recovery process. Explain the importance of the customer value package.

The Service Sector Pure Services Pure Goods Accounts for 79% ($6.95 trillion) of U.S. GDP Accounts for 77% of total U.S. employment Reasons for growth - Aging population - Longer life expectancy - Increased leisure time - Higher per-capita income - Increased time pressure – More women in workforce – Sedentary life style – Advanced technology – Changing social and cultural values

Characteristics of Services Inventory*

IntangibilityIntangibility Patent Protection –Continuous Innovation –Rapid recoup of R & D investment –Promote the “Original” (Strong corporate image) Pricing –Roles of costing, forecasting Quality Perception –Word of Mouth –Tangible (Extrinsic) Cues Patent Protection –Continuous Innovation –Rapid recoup of R & D investment –Promote the “Original” (Strong corporate image) Pricing –Roles of costing, forecasting Quality Perception –Word of Mouth –Tangible (Extrinsic) Cues Issues and Strategies* In order to address intangibility, fast- food restaurants may stress extrinsic attribute cues, such as the quality of the food, prices, or the restaurant’s location.

Perishability (Inventory), Inseparability and Variability (Inconsistency) Perishability (Inventory) –Managing Supply –Managing Demand Inseparability –Distribution, Operations Management Variability (Inconsistency) –Computerization and technology –Standardization of processes, training Perishability (Inventory) –Managing Supply –Managing Demand Inseparability –Distribution, Operations Management Variability (Inconsistency) –Computerization and technology –Standardization of processes, training Issues and Strategies* Cool Hunting #3 Cool Hunting #3

The Purchase Process for Services 1.Pre-purchase phase: Consumers evaluate alternatives and make purchase decision. (Evaluate and reduce risk) 2.Service encounter: Actual interaction between the customer and the service provider. (Note “Blueprinting”) 3.Post-purchase phase: Consumers will evaluate the quality (technical and functional) of service, and their level of satisfaction.

Service Quality Internal measures Gap theory Service quality dimensions –Tangibles – Reliability – Responsiveness – Empathy – Assurance

Service Failure and Recovery Service failures are defined as instances where a service is either not performed at all or is poorly performed. Firm switching behavior Negative word of mouth Service recovery program Why Customers Switch Firms Companies should always have a plan to handle service failures. Attitude of indifference (69%) Dissatisfied with service (14%) Competitive reasons (9%) Developed relationships with competitors (5%) No reason (3%)