MAR3023 Lecture Notes Part 1 and 2 from Feb 20th 2014 Lecture 2 20 14 Services Marketing She opens the lecture talking about how Facebook is about to buy WhatsApp for 19 billion The reasoning behind this large purchase is Facebook s sight of eliminating a competitor and acquiring all of WhatsApp s users to further expand its user base Outline Characteristics of services Service Dimensions and Quality Service Recovery From Services to Experiences Still talking about PRODUCT aspect What is service Providing customers with intangible benefits a company offers to its consumers EX Banking airlines hotels etc Services operate on a continuum Pure goods soap something tangible is delivered Pure service Restaurants mix of tangible intangible because they offer product but also provide services being waited and sat down by host Services are a significant part of the economy If fact up to 79 of the economy s GDP comes from service Will eventually account for 80 of jobs in the US Can be classified like products Convenience buy quickly and often fast food Shopping compare things before you make a purchase hotels airlines Specialty make a special effort to seek out one thing medical specialist Might travel to find it Unsought unaware don t know much about life insurance Characteristics of Services 4 I s Intangibility can t touch or hold until you buy it don t know exactly what you re going to get until you try it Company should try to make their service more tangible ex Instructor shows Prudential Real Estate commercial which says they are your rock to make customers feel like they can rely on their service Inconsistency more human based want customer s experience to be the same every time Inseparability issue of not being able to separate product from service they re wrapped up in each other ex banking buying toothpaste Inventory if service goes unused it s lost ex if Delta doesn t sell all the seats on a plane can t be used again Dimensions of Service Core Service Expected Service Augmented Service what is expected based on the element you must deliver ex bank must keep your money secure toothpaste must clean your teeth promises the company makes what you do above and beyond what people expect ex restaurant comes out with free dessert on birthdays problem what is augmented might eventually become expected enhance service even more ideas on how to do even better and Potential Service The Service Profit Chain in order of bullets Your customers and employees interact in for a service Need to focus on both employee and customer behind the scenes hiring 1 Internal service quality the right employees and providing them with good training support and good working environment will lead to more loyal and satisfied employees 2 Satisfied and productive employees 3 Greater service value 4 Satisfied and loyal customers 5 Healthy service profits and growth Need to take care of the people who take care of customers can do this if you put your employees first Service Marketing Requires External marketing marketing product to general public but also Internal marketing marketing to employees motivating employees to work together hiring the right people skills and attitude Interactive marketing training employees how to interact with the customers train to satisfy customer s needs bad service can affect the whole company Overall the company is shooting for Service Quality Harder to define and measure than product quality because of disagreement amongst consumers Greater dissatisfaction with services than products ACSI American customer satisfaction index which scores companies on their services out of 100 Publix has a very high ACSI rating because of its consistent good service What makes for good service quality How it s determined if the service is good or bad Dimensions of Service Quality Remember R A T E R 1 Reliability most important factor are you dependable FedEx delivering products on time 2 Assurance does the provider show confidence when taking care of customer 3 Tangibles aspects everyone can relate to influence customer s perception of the service quality 4 Empathy does the company make you feel valued and special Will the company listen you and take you seriously Act like the company can relate to a customer s needs 5 Responsiveness being there when a customer wants service or has questions ex restaurant stacking up employees at a busy time When there is a break down the company needs to react quickly Instructor shows clip of bad service quality United Airlines song of employees throwing around he customer s bags showing disrespect and liable for broken belongings Dave Carrol United breaks guitars Company should have been more empathetic towards his broken luggage System error lead to poor customer experience even though it was not the entire airline s fault but the fault of its employees Delta eventually bought two new guitars and sent them to Dave as compensation for bad service Lecture 2 20 14 Part 2 Service Quality Continued Gap Model of Service Quality trying to make you see where things go wrong between what customers hope to get and actually get If there is a negative difference and customer expected more there is a gap Extended Gap model Sources of the Quality Gap 1 Customer Expectations Knowledge gap firm does not know what the consumers want expect different perception of what customer expects and what management thinks they expect Management perceptions management need to set standards at a certain level how you are going to deliver the service to the customer this shows a standards gap Might be too quick of a service Service specifications delivery gap gap between services that are specified and what are delivered tell employee to not be rude Implementation communications gap the gap between what you actually deliver vs what you tell people you are delivering saying you have a luxury hotel if it isn t Communications 2 Customer Perceptions Service Recovery Disney s Model showing problem severity high vs low and the company responsibility high vs low if a kid has an accident Disney tried to fix it by giving them new pants Disney is known for having good service because they know how to recover from their problems Fair solutions distributive fairness get benefits off a customer s loss Procedural fairness all customers should go through the same process ex video of bank giving a kid a fake vs real pony Services and Competition Service differentiation try to offer something more different