Chapter 12 Services and Non Profit Organization Marketing LO1 The Importance of Services o Service the result of applying human or mechanical efforts to people or objects Involve a deed a performance or an effort that cannot be physically possessed o Difficult to distinguish clearly between manufacturing and service firms because many manufacturing firms can point to service as a major factor in their success Ex Apple computers maintenance and repair service LO2 How Services Differ from Good o Services have 4 Unique Characteristics Intangibility the inability for services to be touched seen tasted heard or felt in the same manner that goods can be sense Tend to exhibit few search qualities characteristics that can be easily assessed before purchase for ex the color of a car Exhibit more experience qualities characteristics that can be assessed after use for ex the quality of a meal in a restaurant Medical and Consulting services exhibit credence qualities characteristics that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience Marketers often rely on tangible cues to communicate benefits Ex Traveler s Insurance Co s symbol is an umbrella to symbolize protection Facilities also offer a critical tangible message Inseparability because consumers must be present during the production of services like haircuts or surgery they are actually involved in the production of the services they buy services are often sold produced and consumed at the same time Services cannot be produced in centralized locations and consumed in decentralized locations as good are Services are also inseparable from the service provider quality of service that firms are able to deliver depends on the quality of employees Heterogeneity variability of inputs and outputs tend to be less standardized and uniform than goods Ex Barber s differ within a barber shop Standardization and training help increase consistency and reliability Perishability services cannot be stored warehoused or inventoried LO3 Service Quality o Because of the 4 unique characteristics of services service quality is more difficult to define and measure than is the quality of tangible goods o Customers evaluate service quality on Reliability perform service dependably accurate and consistently Most important to consumers Responsiveness prompt service Assurance the knowledge and courtesy of employees and their ability to convey trust Empathy caring individualized attention to customers Tangibles the physical evidence of the service Physical facilities tools and equipment used to provide the service and appearance of personnel o Gap Model of Service Quality Identifies 5 gaps that can cause problems in service delivery and influence customer evaluations of service quality Gap 1 gap between what customer want and what management thinks customers want Results from lack of understanding or misinterpretation of the customer s wants needs desires Gap 2 gap between what management thinks customers want and the quality specifications that management develops to provide the service Results from management s inability to translate customer s needs into delivery systems within the firm Gap 3 gap between the service quality specifications and the service that is actually provided If both gaps 1 and 2 have been closed gap 3 is due to the inability of management and employees to do what should be done Fix by training employees Gap 4 gap between what the company provides and what the customer is told it provides Gap 5 gap between the service that customers receive and the service they want Can be Communication gap positive or negative LO4 Marketing Mix for Services o Product Service Strategy Service as a Process People Processing takes place when the service is directed at a customer Ex transportation and healthcare Possession Processing lawn care dry cleaning Mental Stimulus Processing theatre performance education Information Processing services that use technology or brainpower directs at a customer s assets Ex Insurance consulting Core and Supplementary Service Products Core Service most basic benefit the customer is buying Supplementary Services support or enhance the core service o Firms usually emphasize supplementary services to create a competitive advantage Customization Standardization customized services are more flexible and respond to individual customer s needs Usually command a higher price Standardized service are more efficient and cost less Mass Customization a strategy that uses technology to deliver customized services on a mass basis which results in giving each customer what they want Ex Land s End offers swimsuit advice mix and match The Service Mix most service organizations market more than 1 service Each part of the service mix should make a different contribution to achieving the firm s goal Ex TruGreen offers lawncare scrub care carpet cleaning industrial lawn services o Place Distribution Strategies Distribution strategies for service organizations must focus on such issues as convenience number of outlets direct versus indirect distribution location and scheduling A key factor influencing the selection of a service provider is convenience Important distribution objective is number of outlets to use or number of outlets to open during a certain time The intensity of distribution should meet but not exceed the target market s needs and preferences Decide whether to distribute services to end users directly or indirectly through other firms Ex using online service to sell airline tickets results in lower distribution costs for airlines Location of a service most clearly reveals the relationship between its target market strategy and distribution strategy For time dependant service providers such as airline physicians and dentists scheduling is often a more important factor o Promotion Strategy Stressing Tangible Cues concrete symbol of offering Ex mints on pillows at hotels Using Personal Information Sources someone consumers are familiar with such as a celeb or someone they can admire or relate to personally Stimulate positive word of mouth communication among present and prospective customers by using real customers in ads o Price Strategy Creating a strong organizational Image manage the evidence including the environment of the service facility the appearance of service employees and the tangible items associated with the business Ex Business cards Engaging
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