Tuesday January 31 y Introductory Power Point Theodore Levitt 1925 2006 was a Harvard Business School Professor Emeritus Marketing There is no such thing as service industries There are only industries whose service components are greater or less than those of other indus tries Everybody is in service 1972 Product Goods Tangible Services intangible are interrelated Tuesday January 31 y Characteristics of Service Products Intangibility Inseparability Perishability Variability Intangibility Services cannot be seen tasted felt heard or smelled before ries to share with others tangibility in order to provide tangible providers have difficulty in assessing quality or objectively purchase Customers leave with experiences and memo To reduce uncertainty caused by services in cues and evidence Service value accurately and Perishability Services cannot be stored for later sale or use Exam and empty seats cannot be saved They create Tempo customers Because of Perishability hos ple Rooms rary ownership for pitality industries have developed Yield management Video of Yield Management Uses example of priceline com which will allow hotels to charge different prices for unsold rooms perish able item in order to balance out operation costs Definition the process of allocating the right type of capacity to the right type of customer at the right price and time to maximize rev enue or yield and in turn can make demand more predictable Issues with calculating Yield Management 1 Pricing structures must appear logical to the customer and justify the different prices 2 Han dling variability in arrival or stating times duration and time be tween customers 3 Managing the service process 4 Training work ers and managers to work in an environment where overbooking and price changes are standard occurrences American Airlines is an example of a company who successfully im plements Yield management They use 3 strategies Overbooking to Tuesday January 31 y counter cancelled tickets and no shows Discount Allocation balance between too many and too little offers for instance they less dis counts on private flights to account for customer who wait for last minute and Traffic management takes into consideration connecting flights when setting prices Inseparability Services cannot be separated from their providers contact employees are part of the product employee em are part of the product as well customer customers are co producing Customer powerment Customers participation Employees and the service product Variability Quality of services depends on who provides services and where they are provided Lack of consistency is a source of disappointment Unique and personalized service ex customer satisfaction where customiza when and customer perience is a source of tion is preferred to standardization Different type of Service Provider and Customer interactions Service provider NOT present customer NOT present Security sys services alarms cameras etc Service provider NOT present customer IS present Self Service Vending machines Service provider IS present customer IS present Auto repair Clean tems ATM ing service Service provider IS present customer NOT present Hospitality medi cal etc 3 components of Guest Experience Service product Service setting Service delivery systems Customer Expectations First time customers Have General ecxpectations advertisements referrals tangible cues proxy experiences Repeat Cus tomers have specific expectations such as their own experiences Meeting Customer s expectations and the relationship between service Per formance customer expectation Performance Expectation Raving Fans Performance Expectation Customer Satisfaction Performance Expectation Customer dissatisfaction Tuesday January 31 y Who defines Quality and Value Services are intangible and customer ex pectations are variable thus service providers cannot define and quality and value only the customer can Understanding the Customer and characteristics of customer centered orga nizations Understand the guest and their expectations Acknowledge that each guest is different Offer a personalized experience Treat employees as internal customers Tuesday January 31 y MODULE 1 Sustaining Services in Service Companies Things to know The Drivers of sustainable success Understand the Challenges in sustaining success Understand and be able to explain all module learning objectives Review the Individual companies people we covered in the text and PPT s and how they achieve sustainable success Power Point What is sustainable success Keeping customers and employees happy year by year and being financially successful Companies that model sustainable success show continued enthusiasm making efforts to improve and maintaining work ethics during period growth Values Driven Leadership Ex Strategic focus executional excellence con trol of destiny trust based relationships investment in employee success acting small brand cultivation generosity Service Success is Highly dependent on quality of service Quality of service is all about perception Perception equals reality not about the way things are but how they seem to be Key points on article about customer perceptions Service delivery Employee performance with customer How other customers perceive the service word of mouth Quality of products used in service coffee that starbucks uses Asks did they live up to the advertising then changes according to customer needs Tuesday January 31 y Challenge to Sustaining Success 1 Retaining the same initial entrepreneurial spirit as a younger smaller company Video on Starbucks CEO High level of innovation but aim to enhance expe making sure to enhance original values They are a growth consistency and seeking a balance between riences company but keep in mind profitability and social conscious Key Points SB has had significant levels of innovation Ex reinvention of coffee and they are in a phase of reinvention and self re instant newal 2 Operating effectively while competing on price Ex McDonalds Article 3 Operating Effectively while growing rapidly Ex Boston Market Article grew from 22 units to 200 units in one year Growth and Expansion 5 ways companies stay focused on executing quality service during time of rapid growth and expansion 1 Maintain high standards in hiring and training Ex FB video 2 Create value through performance Offer a service that is performed so customers find value in it Ex A business professional that cleaner to launder their clothes