1Marketing Exam 3Chapter 12: Services and NonProfits: Marketing the Intangible The Service Product Continuum: Service Dominant (doctors/hotel) vs. Product Dominant (Grocery Store/ Apparel specialty store), most offerings lie somewhere in the middle- Dependence and growth of service-orientated economics have emerged for several reasons1. less expensive for firms to manufacture products in less developed countries2. household maintenance activities, things people use to do on their own, have become specialized (lawn services, dry cleaning, hair care, housecleaning)3. people place a high value on convenience and leisure4. As population ages, need for health care professionals increases (doctors, assisted living)Difference Between Service and GoodService: providing good customer service, firms add value to their products and servicesProduction/ Consumption: characteristic of a service; it is produced and consumed at the same time; that is service and consumption are inseparable- because service production can’t be separated from consumption service marketers provide opportunities for customers to get directly involved with the service- customers rarely have the opportunity to try the service before they purchase itVariable: characteristic of a service: the more humans are needed to provide a service, the more likely there is to be variability. Inferior service cannot be recalled; damage is already donePerishable: characteristic of a service; cannot be stored for use in the futureProviding Great Service: the Gaps Model Service gap: results when a service fails to meet the expectations that customers have about how it should be delivered2Knowledge Gap: reflects the difference between customers’ expectations and the firm’s perception of those customer expectations. (can close by matching customer expectations with actual service; research)Standards Gap: pertains to the difference between the firm’s perception of customers expectations and the service standards it sets (close: set appropriate standards and measuring performance)Delivery Gap: difference between the firm’s service standards and the actual service it provides to customers - Where customer directly interacts with service provider… always results in a service failure.- reduce the gap by empowering employees, provide support and incentives, use of technology- Incentives: emotional support to service providers, support necessary to deliver service, consistent and coherent management, reward employees for excellent serviceCommunication Gap: difference between the actual service provided to customers and the service that the firm’s promotion program promises (close: become more realistic, manage customer expectations more effectively, promise what you can deliver)Evaluating Service Quality if a service is intangible how do we Evaluate its quality? (apply to local bank)Zone of Tolerance: refers to area between customers expectations regarding their desired service and the minimum level to acceptable service – The DIFFERENCE between that the customer really wants and what he or she will accept before going elsewhere1. desired and expected level of service (low to high)2. customers perceptions of how well the focal service performs and how well a competitive service performs (low to high)3. the importance of each service quality dimensionEmpowering Service Providers: allowing employees to make decisions about how service is provided to customers (apart of the delivery gap)Service Recovery: to increase service recovery31. listen to the customer 2. Resolve problems quickly 3. Provide fair solutionListening to Customer: customers get emotional over a service failure, often just want someone to listenCREST MethodC: calm customer R: Repeat the problem E: use empathy statementsS: solve the problem T: timely responseOther: Voice-of-Customer (VOC) program: collects customer inputs and integrates them into managerial decisions. Under knowledge gapChapter 13: Pricing ConceptsThe 5 C’s of Pricing 1. Company objectives: different goals for different company’s… different pricing strategyProfit orientation: company objective that can implemeted by focusing on 3 types of pricing1. target profit - implement when firm has a particular progit goal as their overriding concern. Firm must use price to stimulate a certain level of sales at a certain profit per unita. profits are satisfactory to stockholders and or owners2. Maximizing profits : setting prices so that total revenue is as large as possible relative to total cost.a. Coming up with accuarate model and gathering data is very difficult3. Target Return Pricing : less concerned with the absolute level of profit and more interested in the rate at which their profits are generated relative to their investmentsa. Pricing strategy designed to produce specific return on their investmentb. Expressed as a product of salesc. Net Profit after taxes divided by total assets ROI (divide)Sales Orientation: based on the belief that increasing sales will help the firm more than will increasing profits- EX: set prices very low to generate new sales and take sales away from competitors, even if profits suffer or visa versa. Premium shopping: deliberately prices a product above the prices set for competing products to capture theise consumers who always shop for the best… price doesn’t matter- Concerned with overall market share: a company’s product sales as a percentage of total sales for that industry- Sales Maximization: short term objective, ignores profits, competition, and marketing environment, may be used to sell off excess inventory4Competitor Oriented: strategize according to the premise that they should measure themselves primarily against their competition.1. Competitive parity : set prices that are similar to those of their major competitors2. Status Quo : changes prices only to meet those of the competitionValue is not apart of this pricing strategyCustomer Orientation: focus on customer expectations by matching prices to customer expectations. Invokes the concept of value. “no-haggle”: lowering overall price and ultimatley increasing value2. CustomerWith most products:- Demand increases with lower prices- Demand decreases with higher pricesThis does not apply to some products Demand Curves- not all are downward sloping- prestigious products or services have upwardsloping curvesConsumer Perceptions: some consumersAssociate quality with price-