Mark 3000 1st Edition Lecture 20Outline of Last Lecture I. Supply chain management II. Elements of Logistics III. Trends in supply chain management IV. Relationships of logistics to marketing mix Outline of Current LectureI. Service Marketing II. Dimensions of service quality III. Gaps Model IV. Marketing mix for services Current Lecture Service MarketingA product is a physical good, idea, or service Service: intangible offering that involves a deed, performance, or effort that cannot be physically possessed. Customer service: mechanical activities that firms undertake to help satisfy their customer’s needs and wants The service product Continuum: Goes from a pure service to a pure good Most offerings lie somewhere in the middle and include some service and some good Even firms that primarily sell a good (ex. Grocery stores) view service as a method to maintain sustainable competitive advantage Services are very popular in the US and account for 76% of the US GDP - Most fortune 500 companies are service companies Ways in which Service marketing is different fro Product marketing 1. Intangible: services cannot be touched, tasted or seen like a pure product a. Proves to be very challenging for marketing, Requires using cues to make more tangible 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.b. Atmosphere: can be set by having a waiting room filled with comfortable chairs, TV etc. c. Images: marketers must creatively employ symbols and images to promote and sell services i. Ex. Six Flags showing pictures of happy families and friends 2. Inseparable production and consumption: a. Production and consumption are simultaneous (at the same time) i. Cannot inspect out defects ahead of timeii. Consumer cannot try it out or return it iii. Consumer is part of the service iv. Lower the businesses risk by offering guarantees or warrantees 3. Heterogeneous: Different from time to time a. More humans needed to provide a service, more variability in service’s quality b. Technology/ automation: ensures that the service is delivered the same to every customer i. Ex. Automatic fountain drink machines that fill the cup up to a certain linec. Can also use a micromarketing segmentation strategy to customize a service to meet customers need exactly d. Can also develop training and scripts in order to train employees to give all customers the same service i. Ex. At Chick-fila, Servers are required to say “It will be my pleasure to serve you” to each customer 4. Perishable: Services cannot be stored for use in the future a. Gives marketers the challenge of matching demand and supply i. Ex. Ski resorts have cheaper tickets on off days ii. Movie tickets during the day are cheap b. If not consumed revenue potential is lost How consumers view service quality: Dimensions of quality 1. Reliability: The ability to perform the service dependably and accurately a. Performed correctly b. Does this flight take me from point A to Point B?c. Very hard for services such as Health care: hard to prove how accurate a physical is 2. Responsiveness: willingness to help customers and provide prompt service a. Performed on timeb. Does my flight get me from point A to Point B on time? c. Relatively easy to measure 3. Assurance: The ability of employees to convey trust and confidence a. Performed like you know what you doing b. If an employee is giving assurance, It does not necessarily mean that the service is good or that they are knowledgeable 4. Empathy: caring, individualized attention is provided to customer a. Performed the service with care 5. Tangibles: appearance of physical facilities, equipment, personnel, and communication materials a. Performed in a nice environment VOC program: Voice of customer program, ongoing marketing research system that collects customer inputs and integrates them into management decisions Zone of tolerance: Area between customers’ expectations regarding desired service and minimum level of acceptable service Providing great service: Gaps Model Service gap: When the delivery of service fails to meet expectations of customers Model is designed to encourage examination of all aspects of service delivery process 1. Knowledge gap: Difference between customers’ expectations and firm’s perception of those customers expectations a. Firms need to understand consumers’ needs b. Dissatisfied customers leave therefore if you hear no complains you should not assume that all customers are happy 2. Standards gap: difference between firms’ perceptions of customers’ expectations and the service standards it sets a. Need to establish policies, and performance standards based on consumer needsb. Need to educate employees 3. Delivery Gap: Differences between firm’s service standards and actual service it provides to customers a. Occurs when employees do not perform correctly b. Can hire well, train, monitor and reward the employees c. Can also use technology d. Can empower employees: allow them to make decisions e. Give emotional support and instrumental support: the equipment needed to perform the job4. Communication gap: Refers to difference between actual service provided to customers and service that the firm’s promotion program promises a. Occurs when commercial, and comments from sales people are misleading i. Ex. When you are renting a hotel room, You see that it looks great in picture, but when you get there it is horrible b. The promotion must reflect the actual service Marketing Services: The Basic marketing mix with the 4Ps along with Physical evidence Processes and People 1. People: Includes employees, the customer and other customers that influence quality ofexperience 2. Physical evidence: tangible part of the service a. Serviscape 3. Processes: activities which lead up to and are part of the service 4. Product: emphasize the service process and also build brand image 5. Place: generally no intermediates a. Convenience is very important 6. Price: Harder to set and justify to customers for many services a. Ex. Handyman charges $200 for 5 minutes of work b. Have to adjust demand to supply i. Ex. Cheaper movies on days 7. Promotion: Focus on making services seem intangible a. Like a good neighbor State Farm is there i. Giving the feeling that State Farm is always there for you b. Share good performance ratings i. As you walk into five guys all you see is