MKTG 301 1st Edition Lecture 19 12 1 Discuss the importance of services to the economy The service sector plays a crucial role in the U S economy the U S Census s Service Survey found that service industries accounted for 68 percent of U S GDP in 2012 Services have unique characteristics that distinguish them from goods and marketing strategies need to be adjusted for these characteristics 12 2 Discuss the differences between services and goods Services are distinguished by four characteristics Services are intangible performances in that they lack clearly identifiable physical characteristics making it difficult for marketers to communicate their specific benefits to potential customers The production and consumption of services occurs simultaneously Services are heterogeneous because their quality depends on such elements as the service provider individual consumer location and the like Finally services are perishable in the sense that they cannot be stored or saved As a result synchronizing supply with demand is particularly challenging in the service industry 12 3 Describe the components of service quality and the gap model of service quality Service quality has five components reliability ability to perform the service dependably accurately and consistently responsiveness providing prompt service assurance knowledge and courtesy of employees and their ability to convey trust empathy caring individualized attention and tangibles physical evidence of the service The gap model identifies five key discrepancies that can influence customer evaluations of service quality When the gaps are large service quality is low As the gaps shrink service quality improves Gap 1 is found between customers expectations and management s perceptions of those expectations Gap 2 is found between management s perception of what the customer wants and specifications for service quality Gap 3 is found between service quality specifications and delivery of the service Gap 4 is found between service delivery and what the company promises to the customer through external communication Gap 5 is found between customers service expectations and their perceptions of service performance 12 4 Develop marketing mixes for services Product service strategy issues include what is being processed people possessions mental stimulus information core and supplementary services customization versus standardization and the service mix Distribution place decisions involve convenience number of outlets direct versus indirect distribution and scheduling Stressing tangible cues using personal sources of information creating strong organizational images and engaging in postpurchase communication are effective promotion strategies Pricing objectives for services can be revenue oriented operations oriented patronage oriented or any combination of the three 12 5 Discuss relationship marketing in services Relationship marketing in services involves attracting developing and retaining customer relationships There are three levels of relationship marketing Level 1 focuses on pricing These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute incentives Level 2 uses pricing incentives and social bonds with customers and Level 3 uses pricing social bonds and structural bonds to build long term relationships 12 6 Explain internal marketing in services Internal marketing means treating employees as customers and developing systems and benefits that satisfy their needs Employees who like their jobs and are happy with the firm they work for are more likely to deliver good service 12 7 Describe nonprofit organization marketing Nonprofit organizations pursue goals other than profit market share and return on investment Nonprofit organization marketing facilitates mutually satisfying exchanges between nonprofit organizations and their target markets Several unique characteristics distinguish nonbusiness marketing strategy including a concern with services and social behaviors rather than manufactured goods and profit a difficult undifferentiated and in some ways marginal target market a complex product that may have only indirect benefits and elicit very low involvement distribution that may or may not require special facilities depending on the service provided a relative lack of resources for promotion and prices only indirectly related to the exchange between the producer and the consumer of services