Managing Services ● Professor Chip Besio ● Cox School of Business ● Southern Methodist University

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Services are now a larger part of the U.S. gross domestic product (GDP)

THE UNIQENESS OF SERVICES THE FOUR I’S OF SERVICES  Four I’s of Services Intangibility – Cannot perceive with 5 senses Inseparability – cannot separate from provider Inconsistency – can vary with each occasion Inventory – in people based services, inventory goes home each night  The result - Idle Production Capacity

Singapore Airlines, American Express, and Allstate What 4 I’s of services element?

Inventory carrying costs of services depend on the cost of employees and equipment

THE UNIQENESS OF SERVICES THE CONTINUUM & CLASSIFICATION OF SERVICES  Service Continuum  Classifying Services Delivery by People or Equipment Profit or Nonprofit Organizations Government Sponsored

The service continuum shows how offerings can vary in their balance of goods and services

Services can be classified as equipment- based or people-based

Red Cross, Unicef, and Susan G. Komen Race for the Cure What is the classification of each service?

HOW CONSUMERS PURCHASE SERVICES  The Purchase Process Search Properties Experience Properties Credence Properties

Consumers use search, experience, and credence properties to evaluate services

The five dimensions of service quality

HOW CONSUMERS PURCHASE SERVICES  Customer Contact and Relationship Management Customer Contact Audit Service Encounters A Customer’s Car Rental Activities Relationship Marketing

Customer contact audit for a car rental agency (green boxes = customer activity; orange boxes = employee activity)

MANAGING THE MARKETING OF SERVICES THE EIGHT Ps OF SERVICES  Eight Ps of Services Marketing  Product (Service) Branding  Price Off-Peak Pricing

MANAGING THE MARKETING OF SERVICES THE EIGHT Ps OF SERVICES  Place (Distribution)  Promotion Publicity Public Service Announcements (PSAs)

MANAGING THE MARKETING OF SERVICES  People Internal Marketing Customer Experience Management (CEM)  Physical Environment  Process  Productivity Capacity Management

Different prices and packages help match demand to capacity

● Price plays two essential roles regarding the pricing of services: 1. To affect consumer perceptions and 2. To be used in capacity management. ● Off-peak pricing consists of charging different prices during different times of the day or days of the week to reflect variations in demand for the service. MANAGING THE MARKETING OF SERVICES -PRICING

● Place or distribution is a major factor in developing a service marketing strategy because of the inseparability of services from the producer. ● As competition grows, the value of convenient location becomes more important. ● The availability of electronic distribution through the World Wide Web now provides global coverage for travel services, banking, entertainment, and many other information- based services. MANAGING THE MARKETING OF SERVICES -PLACE

● In most cases promotional concerns of services are similar to those of products. ● The value of promotion (advertising) is to stress: ● availability ● location ● consistent quality ● and efficient, courteous ● service Heart by-pass Surgery 20% discount for weekend procedures MANAGING THE MARKETING OF SERVICES -PROMOTION

PROFESSIONAL SERVICES ● A Supreme Court case in 1976 struck down constraints by professional organizations to constrain the advertising of professional services, specifically the American Medical Association and the American Bar Association. ● Although opposition to advertising still remains in some professional groups, the barriers to promotion are being broken down, mostly in response to competitive pressures.

MANAGING THE MARKETING OF SERVICES -PROMOTION ● Publicity has played a major role in the promotional strategies of nonprofit services and some professional services. ● Many nonprofit groups have relied on Public Service Announcements (PSAs) as the foundation of their media plan because they are free.

USING MARKETING DASHBOARDS Are JetBlue’s Flights Profitably Loaded? Airline Operating Income (Loss) per Available Seat Flown One Mile (ASM) LO6

 Technological Advances Mobility Convergence  Expanding Global Economy SERVICES IN THE FUTURE Personalization Collaboration