13 1 The Growth and Importance of Services Chapter 13 Services Marketing Service an intangible product that involves a deed a performance or an effort that cannot be physically possessed o Education decorating janitorial mechanical landscaping performances etc o Do not confuse with customer service which adds value to a physical product Homesourcing customer contact jobs especially at call centers are outsourced into the homes of workers 13 2 Characteristics of Services Services have six basic characteristics 1 Intangibility 13 2A A service is not physical and therefore cannot be perceived by the senses Services cannot be physically possessed 2 Inseparability of Production and Consumption 13 2B The production of a service cannot be separated from its consumption by customers Customers must be present at the production of a service ie surgery 3 Perishability 13 2C 4 Heterogeneity 13 2D The unused service capacity of one time period cannot be stored for future use ie empty plane seats cannot be saved for a future flight Variation in quality Quality of manufactured goods is easier to control with standardized procedures and mistakes are easier to isolate and correct Employee training and establishment of standard procedures can help increase consistency and reliability Heterogeneity usually increases as the degree of labor intensiveness increases Equipment based services are affected less by heterogeneity than people based services are 5 Client Based Relationships 13 2E Interactions that result in satisfied customers who use a service repeatedly over time Many service providers allow consumers to offer feedback after the service is completed to maintain the relationship Social media has made it easier for clients to communicate about their satisfaction or dissatisfaction about services 6 Customer Contact 13 2F The level of interaction between the service provider and the customer necessary to deliver the service High contact services include health care real estate legal and spa services Usually involve performing the service on the customer directly Low contact services include tax preparation auto repair travel reservations and dry cleaning The appearance of the business facility is important often more so in high contact services ie inviting dental offices doctors offices etc 13 3A Development of Services Core Service the basic service experience or commodity that a customer expects to receive Supplementary Service often bundled with core services that add value to the experience Services are often bundled in a standardized manner Premium services or packages can be offered at higher prices Intangibility requires service marketers to market promises to customers since there is no way to try the service before buying it 13 3B Distribution of Services Services can be provided at the service provider s facility health care office spa service dry cleaning etc Some services are provided at the customer s home or business lawn care AC repair carpet cleaning etc Service marketers may use reservations and appointments as approaches for scheduling delivery of services To cut costs some service providers have replaced personnel with equipment automated phone services etc 13 3C Promotion of Services Service marketers will use symbols and representations of their services instead of ads covering statistics of a product Ads for services more often show pictures of facilities equipment and service personnel Service providers are more likely to promote price guarantees performance documentation availability and training certification of contact personnel Word of mouth is often one of the largest factors that help or hurt promotion 13 3D Pricing Services Services should be priced with consumer price sensitivity the nature of the transaction and its costs in mind Some services are based on performance carpet cleaning health consultations etc while others are based on time attorneys consultants counselors piano teachers etc Some customers desire certain services during a specific time period This point in time is called peak demand Businesses may offer better prices at non peak hours Due to the intangible nature of services customers sometimes rely heavily on price as an indicator of quality For some services consumers may choose lower prices insurance coverage but for other services where quality is very important customers may choose higher prices surgery etc 13 4 Service Quality Service Quality customers perceptions of how well a service meets or exceeds their expectations People are twice as likely to tell others about a bad experience with services as a good one Customers NOT businesses evaluate service quality 13 4A Customer Evaluation of Service Quality Search Qualities tangible attributes like color style size feel or fit that can be evaluated prior to purchase Services do not have search qualities Experience Qualities attributes such as taste satisfaction or pleasure than can be assessed only during the purchase and consumption of a service ie restaurants and vacations are services that are high in experience qualities Credence Qualities attributes that customers may be unable to evaluate even after the purchase and consumption of that service ie surgical operations automobile repairs and legal representation Service quality may be the only way customers can choose one service over another and therefore service marketers must understand how consumers judge service quality There are five dimensions by which consumers can judge service quality 1 Tangibles elements such as the appearance of facilities employees etc Employees with visible tattoos have been shown to affect the consumer s opinions and expectations of the service 2 Reliability 3 Responsiveness 4 Assurance 5 Empathy 13 4B Delivering Exceptional Service Quality There are four factors that affect service quality 1 Analysis of Customer Expectations a Providers need to understand consumer expectations so that they can meet or exceed those expectations b Consumers have two levels of expectations desired and acceptable The difference between these two levels is called the customer s zone of tolerance c Data can be acquired by customer surveys comment note drop boxes etc a The goals of a service provider that are formed after analysis of customer b Service managers who are committed to quality become role models for all 2 Service Quality Specifications expectations employees in the organization 3 Employee Performance a Contact
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