Chapter 12 Services Marketing I Introduction a Ruby Tuesday Blows Up Wrong Restaurant i The point of sameness 1 In services marketing the casual dining segment has become a sea 2 The industry is not longer providing customers with value II Services are a major factor in the United States economy in dollars and in jobs a Over 5 5 trillion and 116 million jobs i Casual dining representing 75 billion III Services defined a Services are the intangible activities or benefits that an organization provides to consumers in exchange money or something else of value IV Increase in services are influenced by a Organizations focus on productivity and profits b Consumers poverty of time i Personal shoppers ii Takeout food iii House and lawn care V Affecting virtually all industries a Location i ATMs ii Branch outlets iii Branch warehouses iv JIT delivery b Longer business hours c Better trained sales and service people d One stop shopping e Improved customer service systems i Personal ii Phone iii On line f More information available i Before during and after the sale g Adds value beyond issues of price and product quality VI The uniqueness of services a The 4 I s of services Intangibility 1 Services cannot be seen touched tasted felt etc 2 It is harder to communicate service features and quality i 1 3 Communications must make these tangible by relating to familiar situations ii 4 Setting price can be hard Inconsistency 1 Lack of standardization 2 Inconsistent delivery and quality depending on the person performing 3 Minimize by employee selection training and service performance standards iii Inseparability 1 Simultaneous production and consumption means a Consumers are a part of the service process b We must manage the interaction for customer satisfaction c Educate consumers about the service process and their role in it iv Inventory perishability 1 Services cannot be inventoried so it is hard to balance capacity and 2 Cannot return service for credit or exchange 3 Need to manage demand in peak periods and use capacity in off 4 Idle production capacity a Occurs when the service provider is available but there is no demand periods demand VII Inventory carrying costs of services depend on the cost of employees and equipment VIII Levels of service a Core primary services and sell stocks b Ancillary services i The major activity of a business or nonprofit organization ii Example 1 Investment services provide the use of a brokerage account to buy i Expected or optional supplements to the primary purchase 1 Supermarket carryout 2 Convenient free parking ii Ancillary services expected in B2B marketing 1 Prompt delivery 2 Favorable credit terms 3 Responsive customer service 2 IX Service as value a Things consumers and organizational buyers want i Quality products ii Right price iii Qualified sales service personnel iv Maximum benefits v Minimum effort vi Low wait times vii In other words they demand value 1 Example a The casual dining industry stopped providing value i Casual dining restaurants provide full service alcoholic beverages and check averages from 10 to 23 per person ii Competition from fast casual chains are stealing customers iii Fast casual chains have no waiters and higher quality food than fast food chains X Value a An intangible concept often defined in terms of i Exceptional customer service ii Exceptional product quality iii Value based prices 1 Example a Casual chains learn from recession i During the recession many consumers pulled back on their discretionary spending which meant eating out at restaurants less frequently if at all ii While economic conditions have begun to improve in the United States many consumers are still watching their wallets 1 Preferring to eat at less expensive casual dining chains over pricier upscale restaurants iii Restaurant operators were poorly positioned heading into the recession in 2008 because they had too restaurants iv Dining chains learned 1 30 000 restaurants have closed since then and companies focused more on improving their menus service and the atmosphere at their storefronts v In 2007 the industry s mentality was build it and they will come but today successful restaurant companies are driven by a guest centric planning process vi That is casual chains are returning to a value service proposition XI Competitive positioning a Service image is conveyed by the firm s service products 3 i The dimensions used should be those valued by the customers 1 Example a What do consumers want in casual dining i Stand for something unique 1 Cheesecake factory a Large portions 2 Outback a High quality grilled steak 3 Olive Garden a Italian Tuscan like ambience b Lower prices c Better food slowly i Casual dining was initially successful because it provided better food quality than fast food at a very reasonable price ii Recently fast food s quality has gone UP with prices rising only iii Casual dining s price have risen while food quality and innovation has stagnated iv Ruby Tuesday is upgrading its food but it prices are still pretty high d Improved service 1 Slow service 2 Discourteous staff 3 Are not what consumers are looking for a Chili s is trying to cut 15 minutes from its 45 minute lunch by testing BlackBerry s that connect directly from the server to the kitchen b Chili s is also improving its employee hiring practices c And the staff is wearing more professional looking aprons e Better looking stores i Most stores are 20 years old 1 Ruby Tuesday has redesigned all of its company owned stores with contemporary designs and lighter colors 2 Lone Star is replacing concrete floor with wood and is installing oak tables ii Get kid friendly market video games 1 Families are a big part of the casual dining industry s 2 Could restaurants have kid playgrounds Loaner hand held XII Service leadership or follow the leader a Will one set the service standard or wait for competitors to set the standard and then follow their lead i Example 4 1 Who is more innovative in their services Apple or Microsoft XIII Benefits of exceptional customer service a Exceptional customer service can differentiate from competitors i Services attract and keep customers ii Services and recover lost sales iii Service quality is related to customer satisfaction iv Customer service usually leads to a profitable ROI in the long term XIV How consumers purchase evaluate services a The purchase process i Search properties 1 What consumers can judge prior to the purchase a Price b
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