Material from Topic Questions p 237 243 Ch 8 Services Marketing Ch 9 Product Management 5 16 Ch 15 Advertising Videos 2 Powerpoint notes you are responsible for Monday s midterm are 134 172 7 DONE Services Marketing service industry has grown in the US it now accounts for 65 of the GDP and 64 in the world Government services examples include police military courts hospitals private non profit ones include colleges charities churches The Nature and characteristics of a service companies must consider 4 things when trying to market services 1 service intangibility means that services cannot be seen heard tasted or smelled before they are bought ex buying an airplane ticket so consumers draw conclusions on the place price people communications and equipment they can see 2 service inseparability how services are first sold then produced and consumed at the same time services cannot be separated from their providers The provider customer interaction becomes very important 3 services variability a quality control problem the quality of the service a customer gets can vary greatly ex the customer service at the hotel desk might be great one day or the person could be in a bad mood the next day 4 Service perishability the idea that services cannot be stored for later use ex Dr charge patients if they miss an appointment the service value existed only at that point and disappeared when they didn t show up Firms struggle when demand fluctuates they always seek constant demand ex hotels charging lower rates during non peak periods we talked about ABC appearances behavior credentials convenience comfort and clientele Marketing Strategies for Service Firms 239 Successful companies understand the Service Profit Chain 5 links Internal service quality choosing quality employees quality training etc Satisfied and productive service employees the only way employees do their best work which results in Greater service value delivering a better product better services which results in Satisfied and Loyal Customers they remain loyal and even refer other customers which results in Healthy service Profits and Growth superior service firm performance Example of a big service marketing company Zappos They spend 4 weeks training their employees and at the end of their training they offer them 4 000 cash to leave the company as a way to thin out the heard Unlike typical marketing service marketing requires Internal Marketing orienting and motivating customer contact employees to work as a team to provide customer service basically starting by making your employees happy and it also requires Interactive marketing training service employees in the fine art of interacting with customers to satisfy their needs The 3 tasks of service companies service differentiation service quality and service productivity Managing service differentiation companies do it through service delivery methods like how some grocery stores have online shopping banks have all their stuff online another way is through imaging and branding ex the aflac duck Managing service quality service quality is harder to define than product quality ex quality of a haircut vs hair dryer Customer retention is the best measure also large divisions of companies have been devoted to making sure when something goes wrong theres a remedy ex southwest with Adam and Marriott hotel s monitor social media Managing Service productivity companies can hire or train workers to be more productive they could sacrifice some quality Chapter 9 New Product Development New product development strategy can happen through acquisition or through a firm s own new product development strategy The odds are against new products 67 of new products for established companies fail 90 for new companies they fail for various reasons priced to high overestimate market size poorly advertised or competitors fight back harder than expected The process Idea Generation Idea Screening Concept development testing Marketing strategy development Business Analysis Product development Test Marketing Commercialization Idea generation company typically generates hundreds or even thousands of new ideas They can be from internal sources ex twitter hack week or from external sources ex suppliers and distributors and even competitors and customers Lego has a site where customers submit ideas and ones that get 10 000 votes are reviewed and if they choose it the customer gets 1 of total sales Idea Screening screening the new product ideas to spot the good ones and drop the poor ones as soon as possible Concept development and testing start here with a product concept a detailed version of an idea put into consumer terms then comes testing to see if the product has customer appeal Market Strategy development designing an internal marketing strategy for introducing the car typically 3 parts first part describes the target market ie whos buying the product second part is the price distribution and marketing budget ie xx spend on ads car dealers get the car at x discount etc third part is the long run sales plans and profit and product mix goals ie we plan to capture x of total market share Business Analysis review of the sales costs and profit projections if they look good it moves to the next stage product development Product development where the concept is developed into a physical product this is the big jump in investment Test Marketing the stage at which the product and its proposed marketing program are introduced into realistic market settings it gives management the information needed to make a final decision whether or not to launch a new product Managing new product development customer centered new product development finding new ways to solve customer problems and create more customer satisfying experiences team based people from different departments working together on a product can make it simpler with everyone working together but sometimes it can create tension and confusion Product Life Cycle Strategies PLC the course of a product s sales and profits over its lifetime 5 distinct stages 1 product development when the company finds and develops a new product 2 idea sales are zero and the companies investment costs mount Introduction a period of slow sales growth as the product is introduced profits are nonexistant bc of heavy expenses 3 Growth rapid market acceptance and increasing profits 4 Maturity period of slowdown in sales growth because the product has achieved acceptance by more
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