Marketing of Services.

Nov 27th, 2009

This section covers: Services Marketing •Specific characteristics of Services •The Five Gap Model of Service Quality •The Servuction System Model •Defection Management and Customer Retention Management .

What is a Service vs Product?  Def. devices. compared with 26% in industry and 7% in agriculture.: Goods are objects. Over 2/3rds of the Irish work force is employed in the services sector (67%+). or things whereas services are deeds.(2007)* (Declined overall for the 18th month until Oct 2009)  . efforts or performances. the primary difference between goods and services is the property of intangibility = the lacking of physical substance. Ultimately.

Scale of Market Entities  The scale of market entities displays a range of products along a continuum based on their tangibility. Intangible Dominant Teaching Consulting Investment Airlines Advertising Fast food Tangibility Salt Soft Drinks Detergents Cars Cosmetics .

in contrast. Beauty . and see prior to their purchase decision. Services are.Search vs. Experience/Credence Attribute. Experience attributes can be evaluated only during and after consumption Theatre. characterised by their experience and credence attributes. hotel etc  Credence attributes cannot be evaluated confidently even immediately after consumption Car Servicing – Did you get ripped off?   . taste.  All goods possess physical properties called search attributes that customers can feel.

Intangibility is the primary source from which the other three characteristics emerge. Note: There may be some tangible aspects involved too. you buy an experience. For example when purchasing a theatre ticket.Differences b/w Service & Product  The majority of differences in how to market services and goods/products are attributed to four unique characteristics:     Intangibility Inseparability Heterogeneity Perishability 1. The play will be evaluated subjectively and compared to other people’s recommendations. .

Differences b/w Service & Product 2 2. You’re stuck with the waiter and other staff at the restaurant. Variability is another characteristic of service that reflects the variation in consistency from one service transaction to the next.  3. etc. the impact here can be negative due to bad press or positive due to laughter. why do people prefer some restaurants over others? . You can’t separate the service from the provider. also called: Service Provider Involvement  Customer Involvement  Other Customers’ Involvement. the customer receiving the service. Again. and other customers sharing the service experience. Inseparability is a distinguishing characteristic of service that reflects the interconnection among the service provider.

the marketing dept. Because in a service organisation all parts of the company are interconnected by a complex network of relationships. or their unused capacity cannot be reserved. Because of the effects of these 4 characteristics. must maintain a close relationship with the rest of the service organisation!  . and they cannot be inventoried.Differences b/w Service & Product 3 4. marketing plays a very different role in serviceoriented organisations than it does in pure goods companies. Perishability is the characteristic that embodies the fact that services cannot be saved.

The 3 Ps  As well as Product Price Place & promotion. we have the concepts of: .

1) Servicescape – Physical Evidence  Due to the intangibility of services. and other physical evidence (signs. Hence. inanimate objects (furnishings.  . the servicescape consists of ambient conditions (room temperature or music). symbols. consumers rely on the physical evidence that surrounds the service to help them form their evaluations. equipment). As a result. personal artifacts). customers often have trouble evaluating the quality of service objectively.

the public face of a service firm is its service providers.Robotism . They have a dramatic impact on the service experience Customer complaints fall into 7 categories:      Apathy Brush-Off Coldness Condescension . Simply.Runaround   Note: A Service provider’s personnel are the most important source of differentiation from competitors.Rulebook .People    The 2nd element of the service experience involves the personnel who provide the service.Open ended .2) Service Providers . Can I help you? – Closed Q Are you looking for anything in particular? .

(The staff) Example: Going on a cruise.3) Organisations & Systems (invisible). the customer is exposed to many of the company’s processes.Processes  A firm’s organisation & systems refer to the technical efficiency that modern systems provide but they also involve a human component. .

Conclusion: Service firms that are able to effectively mould the customer’s experience via the effective management of servicescape. organizations & systems have the means to develop compelling experiences which are the latest competitive weapon in the war against service commodification. . service providers.

The Standards Gap: gap between standards set for delivery of service and what management wants to give. The individual gaps that can occur are as follows:     The Knowledge Gap: management thinks that customers expect less or different from their services.The 5 Gap Model of Service Quality  The service gap is the gap between customer’s expectations of service and their perception of the service actually delivered. . The Delivery Gap: actual quality of service delivery is less than expected. The Communications Gap: the difference between the delivery of service promised and that delivered.

Servuction System Model      The production process of services has been called the “servuction” process (Eiglier and Langeard. 1977) It refers to the simultaneous production and consumption of services. The customer is present when the service is produced The customer plays a role in the servuction and the delivery process Customers interact with one another during the servuction process and may be affected (positively or negatively) by this interaction .

Servuction Framework .

 .Defection Management  Defection Management refers to a systematic process which actively attempts to retain customers before they defect. It involves tracking the reasons for defection and use this information to make changes to service delivery.

switch to products outside the industry . switch because of relocation or business failure Technological defectors. switch because of poor customer service Market defectors.Reasons for Defection 1. 4. switch to competitor for lower price Product defectors. 2. 3. 5. Price defectors. switch to competitors who offer superior goods and services Service defectors.

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