Exam 2 Review Outline Chapter 13 Services Marketing Contributions of Service Industries to U S Gross Domestic Product We have a service based economy o of US GDP by Industry 75 services account for GDP o Trend of Services in a global context Factors Contributing to Service Growth o Aging population Baby Boomers o Increased leisure time o Higher Per Capita Income o Changing social and cultural values What is Service Old versus new definition Longer life expectancies so certain services become more relevant o Old customer service center service wrench time plumber o New the application of specialized competences skills and knowledge through deeds processes and performances for the benefit of another entity or the entity itself Service includes every interaction between any customer and anyone representing the company including dealers salespeople receptionists and schedulers management and executives service employees billing and accounting and website and any e channel interaction Every interaction between a customer and any part of your company is a Goods versus Services service interaction o Goods objects devices or things o Services deeds efforts or performances Intangibility o Services lack physical substance primary difference between goods and services o In Tangibility Spectrum o Evaluation Spectrum Search attributes a consumer can determine prior to purchase e g color style price feel hardness smell Experience attributes a customer can only determine after purchase or during consumption taste wearability Credence characteristics that may be impossible to evaluate even after purchase consumption e g medical and legal services o Lack of physical substance Heterogeneity o The variation in consistency from one service transaction to the nest o Real time little no chance to intercept problems o Sources of Variation Location variance starbucks on Tennessee vs in Dirac different levels Employee variance Jane the barista vs John the barista Jane on Tuesday of service vs Jane on Friday Customer variance high maintenance customers vs low maintenance o Implications of Heterogeneity Service quality depends on many uncontrollable factors Service delivery and customer satisfaction depend on employee customer actions There is no sure knowledge that the service delivered matches what was planned and promoted It is impossible for a service operation to achieve 100 perfect quality on an ongoing basis which underlines the specific importance of management approaches e g recruiting training quality assurance tools Inseparability Simultaneous Production and Consumption o The service provider s physical connection to the service being provided Often Provider must be physically present to deliver service Employee satisfaction and customer satisfaction are directly related o The customer s involvement in a the service production and b service consumption process o The involvement of other customers in the service production process Perishability o A service cannot be saved its unused capacity cannot be reserved and it cannot Difficult to synchronize supply and demand with services long term be inventoried o Implications of Perishability short term Services cannot be returned or resold o Examples If a airline can t sell a seat it s not like it can save it for next time that opportunity is already lost The same for hotel rooms if John doe doesn t stay in room X then no one stays and is lost that night Some companies like priceline and expedia work to connect those losses with customers because better marking down a hotel room from 300 to 150 then have no revenue come in at all Win win win situation How is Services Marketing Different Comparison of Goods and Services Expanded Mkt Mgt Mix for Services The 4 3 7 Ps o People all human actors who play a part in service delivery and thus influence buyer s perceptions namely the firm s personnel the customer and other customers in the service environment o Physical Evidence the environment in which the service is delivered and where the firm and customer interact and any tangible components that facilitate performance or communication of the service o Process the actual procedures mechanisms and flow of activities by which the service is delivered the service delivery and operating systems Customer Perceptions of Quality and Customer Satisfaction Why Should Managers YOU Care o Because of the Outcomes of Customer Satisfaction o Increased customer retention o Positive word of mouth communications o Increased revenues Relationship between Customer Satisfaction and Loyalty in Competitive Industries o Market research in 1980s Xerox customers who scored 5 on the satisfaction scale were 6 times more likely to repurchase from Xerox than customers who gave a 4 Five Dimensions o Reliability Ability to perform the promised service dependably and accurately Providing service as promised at the promised time o Assurance knowledge and courtesy of employees and their ability to inspire trust and confidence towards in the firm Employees who have the knowledge to answer customer questions Making customers feel safe in their transactions o Empathy caring individualized attention the firm provides to its customers Employees who understand the needs of their customers Employees who deal with customers in a caring fashion o Responsiveness willingness to help customers and provide prompt service Readiness to respond to customer s requests o Tangibles Appearance of physical facilities equipment written materials and appearance of personnel Modern equipment visually appealing facilities Employees appearance Visually appealing materials associated with the service Chapter 6 Understanding Buyer Behavior What is Consumer Behavior What does Consumer Behavior reflect The totality of decisions about the consumption of an offering by decision making units over time What is Conspicuous Consumption Visual consumption in order to show off one s status Keeping up with the Joneses expensive items like designer handbags starbucks vs mcdonalds expensive cars Why do people engage in conspicuous consumption Social needs signal wealth and status that comes with wealth Because we live in a social society we want to prove something to society with what we buy do Rich people tend to be perceived as more competent but cold Successful intelligent but less friendly Poor people perceived as warm but less competent Less successful friendly honest What about Conspicuous Sellers depends on the
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