Intangibles: services and other experience based products that cannot be touched.
Objective 1: describe the four characteristics of services.
Services: acts, efforts, or performances exchanged from producer to user without ownership rights. A
service satisfies needs by providing pleasure, information or convenience.
The market for business services has grown rapidly because it is often more cost efficient for
organizations to hire outside firms that specialize in these services than to try to hire a workforce and
handle the service themselves.
Services come in many forms. All services share four characteristics:
• Intangibility; service cannot be seen, touched or smelled. We cant inspect them before we
buy them.
• Perishability: service is impossible to store for later sale or consumption. Use it or lose it.
o Capacity management: the process by which organizations adjust their service in an
attempt to match supply with demand.
• Variability: the same service performed by the same individual can vary. One solution to the
problem of variability is implementing TQM.
• Inseparability: it is impossible to separate the production of a service from its consumption.
o Service encounter: interaction between customer and service provider.
o Disintermediation: removing the ‘middleman’ and thus eliminating the need for
customers to interact with people at all.
Objective 2: understand how services differ from goods.
Most products are a combination of goods and services.
Goods-dominated products: Firms that sell tangible products still provide support services
(warranties).
Equipment- or facility-based services: Services in which machinery or equipment plays a significant
role in delivering; for example, automatic telling machines play a significant role in the delivery of
banking services. Facility-driven services should concern with these factors:
• Operational factors: clear signs and other guidelines must show customers how to use the
service. Firms need to minimize waiting signs.
• Locational factors: marketers have to make sure their service sites are convenient and in
places that are attractive to prospective customers.
• Environmental factors: create an attractive environment to lure customers.
People-based services: services in which people, rather than equipment or machinery, play the major
role in delivery.
When we buy a service we may in fact be buying a set of services. The core service is a benefit that a
customer gets from the service.
To attract customers a firm often tries to offer augmented services: additional service offerings that
differentiate the firm form the competition.
As the provision of services is largely an intangible process, the traditional marketing mix (price,
product, place, promotion) has been expanded upon to incorporate the marketing of services. Three
subsequent Ps consisting of People, Process and Physical Evidence have been added.
• People: the management and motivation of people is crucial in service marketing as this can
help influence consumer satisfaction and repeat custom.
• Process: much of this stems from the company’s ethos and its emphasis on employee
training in order to maintain effective processes.
• Physical evidence: environment where the service is delivered and can also include any
tangible cues relating to the service on offer.
o Servicescape; where firm and consumer interact.
Objective 3: explain marketing strategies for services.
The service encounter occurs when the customer comes into contact with the organization. It has
several dimensions of importance to marketers.
1. Social contact dimension: 1 person interacting with another one
2. Physical dimension: environment where service is delivered.
3. Interactive contact
Objective 4: explain how marketers create and measure service quality.
When a service experience isn’t positive it can turn into a disservice with nasty consequences.
Quality service ensures that customers are satisfied with what they have paid for. Providing
customers with logical explanations for service failures and compensating them in some way can
substantially reduce dissatisfaction.
It is difficult to estimate how good a service will be until you buy it.
Search qualities: product attributes that the consumer can examine prior to purchase.
o Attention to detail makes a different
Experience qualities: product attributes that customers can determine during or after consumption.
Credence qualities: product attributes we find difficult to evaluate even after we experience them.
Because consumer experience of a service is crucial to determining future patronage, service
marketers feel that measuring positive and negative service experiences is the ‘Holy Gail’ for the
services industry. Marketers gather the information in a variety of ways.
• Mystery shoppers.
SERVQUAL scale is a popular instrument to measure consumers expectations and perceptions of
service quality.
• Tangibles: physical facilities and equipment and professional appearance of personnel.
, • Reliability: ability to provide dependably and accurately what was promised.
• Responsiveness: willingness to help customers and provide prompt service.
• Assurance: knowledge and courtesy of employees.
• Empathy: degree of caring and individual attention provided to customers.
Gap analysis: measurement approach that gauges the difference between a customer’s expectation
of service quality and what actually occurred.
• Gap between consumer expectation and management perceptions
• Gap between management’s perception and quality standards that the firm sets
• Gap between service quality standards and consumer expectations
• Gap between established quality standards and service delivery
• Gap between expected service and perceived service.
Critical incident technique: company collects and closely analyses very specific customer complaints.
Quick action: problem (hopefully) won’t happen again and that the customers complaint will be
resolved.
Dominant logic for marketing: redefines service as the core deliverable and the actual physical
products purveyed as somewhat incidental to the business proposition.
Important trends:
• Changing demographics: populations age
• Globalization: will increase the need for logistics and distribution services
• Technological advances: will provide opportunities for growth and innovation
• Shift to flow information: increase in importance of obtaining, manipulating, reporting and
using information
Objective 5: explain the marketing of people, places and ideas.
People are products too. There are 3 strategies to ‘sell’ a celebrity:
1. Pure selling approach: an agent presents a client’s qualifications to potential buyers until he
finds one who is willing to act as an intermediary.
2. Product improvement approach: agent works with client to modify certain characteristics
that will increase market value.
3. Market fulfillment approach: agent scans market to identify unmet needs→ develop
product.
Place marketing: city, country or location as brand. They attempt to position it so that consumers
select this over competing destinations when they plan their travel.
Marketing of ideas can be even more difficult. Consumers often do not perceive that the value they
receive is worth the cost.
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