Chapter 12 Designing and Managing Services PowerPoint by Karen E.

Chapter 12 Designing and Managing Services PowerPoint by Karen E. James Louisiana State University - Shreveport 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 12

Objectives Learn how services are defined and classified. Understand how service firms improve their competitive differentiation, service quality, and productivity. Identify how goods-producing companies can improve their customer support services. 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 12

Nature of Services The Service Industry includes the: – Government sector – Private nonprofit sector – Business sector – Manufacturing sector 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 12

Nature of Services Service Mix Categories: – Pure tangible good: no services – Tangible good with accompanying services – Hybrid: equal parts service and goods – Major service with accompanying minor goods and services – Pure service 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 12

Nature of Services Characteristics Intangibility Inseparability Variability Perishability 2003 Prentice Hall, Inc. Cannot be touched, seen, tasted, heard, or smelled before purchase Lack of trial means higher consumer risk Consumers rely on cues to draw quality inferences Marketers must try to “tangibilize the intangible” To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 12

Nature of Services Characteristics Intangibility Inseparability Variability Perishability 2003 Prentice Hall, Inc. Services are produced and consumed at the same time (air travel) Service providers and sometimes other customers become part of the service (restaurant) Strong preferences for service providers exist To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 12

Nature of Services Characteristics Intangibility Inseparability Variability Perishability 2003 Prentice Hall, Inc. Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day. Quality control is critical: – Hiring the right people – Standardizing service – Monitoring satisfaction To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 12

Nature of Services Characteristics Intangibility Inseparability Variability Perishability 2003 Prentice Hall, Inc. Services can not be inventoried or otherwise stored Capacity / demand management is critical: – Demand side strategies – Supply side strategies To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 12

Nature of Services Demand-side strategies – Use differential pricing – Cultivate nonpeak demand – Develop complementary services – Install reservation systems 2003 Prentice Hall, Inc. Supply-side strategies – Hire part-time employees – Introduce peak-time efficiency routines – Increase consumer participation – Plan facilities for future expansion – Share services To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 12

Marketing Strategies People, physical evidence, and process must be considered in addition to the 4 “P’s” when creating external marketing plans. Successfully delivering a service often depends on staff being trained via internal marketing efforts. 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 12

Marketing Strategies Interactive marketing refers to the employees’ skill in serving the client. Customers judge a service by its: – Technical quality – Functional quality Search qualities, experience qualities and credence qualities are evaluated by customers. 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 12

Marketing Strategies Marketing Tasks Managing differentiation Managing service quality Managing productivity 2003 Prentice Hall, Inc. Can not differentiate on price alone Innovative features Delivery system – Reliability – Resilience – Innovativeness Image and branding To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 12

Marketing Strategies Marketing Tasks Managing differentiation Managing service quality Managing productivity 2003 Prentice Hall, Inc. The service quality model identifies five gaps that can cause service delivery failure Service companies that successfully address these gaps follow common practices To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 12

Marketing Strategies Service Delivery Failure Results from Gaps Between: Consumer expectations and management perceptions Service-quality specifications and service delivery Management perception and Service delivery and external service-quality specification communications Service-quality specifications and service delivery 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 12

Marketing Strategies Well-Managed Service Firms Share These Characteristics A strategic concept High standards Commitment from Firm and customer top-management monitoring systems Satisfaction of employees and customers 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 12

Marketing Strategies Marketing Tasks Managing differentiation Managing service quality Managing productivity 2003 Prentice Hall, Inc. Have service providers work more skillfully Decrease service quality, increase service quantity Industrialize the service Reduce need for service Design a more effective service Give customers incentives to serve themselves Use technology To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 12

Managing Product Support Services Product support services are often sources of competitive advantage When designing service support programs, marketers must consider key customer concerns: – Failure frequency – Downtime duration – Out-of-pocket expenses 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 12

Managing Product Support Services Marketers must design appealing and competitive service offerings that will attract customers. Service offerings should include: – Facilitating services – Value-augmenting services – Optional service contracts 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 18 in Chapter 12