You are on page 1of 17

CHAPTER 15

Designing & Managing
Services

NOTION OF A PRODUCT • What is a product? • A product is that which is offered to the market (consumer) to meet an identified need. • Products can be classified as: – Goods (tangibles) – Services (intangibles) .

OTHER WAYS OF CLASSIFYING PRODUCTS • Convenience goods • Shopping goods • Specialty • Unsought goods • Consumer Goods • Industrial Goods • Type I versus Type II Products .

WHY CLASSIFY GOODS • Why do marketers classify goods? .

DEFINING SERVICES • What is a service? • An act or performance offered by one person to another. It tends to be intangible and does not result in ownership of any of the factors of production (Lovelock 2001) • Economic activities that create value and provide benefits. Services can be bought and sold but cannot be held. .

Benefits come from nature of performance (cannot be touched. Goods are tangible things – ownership possible • 2. Services are intangible performances and represent an effort – no customer ownership possible. wrapped or taken away). . Services are time bound. Goods can be produced and stored • 2.   Customer Involvement in Production: • 1. DIFFERENCE BETWEEN GOODS AND SERVICES  Nature of the Product: • 1. experiential with lasting consequences • 3.

DISTINCTIVE ASPECT OF SERVICES • To distinguish between goods and services use scale from “Tangible Dominant” to “Intangible-Dominant.” • Pure Tangible goods (soap) • Tangible good with some services (cars) • Hybrid – combination of equal parts (restaurant) • Major Service with minor aspects of goods (air travel) • Pure service (baby sitting) .

Services produced as they are being consumed -. • 3. Training is therefore essential.GOODS vs SERVICES (Cont’d)  Quality Control Problems: • 1. Goods are produces before they are consumer and quality can be checked • 2. . Service personnel and customer interact in the product therefore quality is difficult to control.in real-time.

This produces waste if there is no demand for the service. • 2. GOODS vs SERVICES (Cont’d)  Inventory Issues: • 1. the person stocking the grocery shelves may be trained to also work at the checkout register. Because they are intangible. services cannot be moved or stored. can be produced.g. because they are tangible. . To overcome this firms use cross training so that personnel can do something else if demand is low e. Services produced in real-time. Service personnel may be hard to keep… marketer must set-up facilities and hold labor in readiness to create service (just like in a production facility).. moved and stored until needed. Goods.

• 3. . Goods distributed through identified channels determined by the market coverage the marketer desires. marketers often make use of middlemen. The major task is managing customers’ consumption behavior.GOODS vs SERVICES (Cont’d)  Distribution Channels: • 1. There is little on no use of intermediaries (middlemen) in service industries. Service firms tend to depend on electronic rather than physical distribution channels. Service firms also combine service factory and point of consumption into one to manage customer and personnel contact. • 2. Hence in distributing goods.

CHARACTERISTICS OF SERVICES  Intangibility  Inseparability  Variability  Perishability (Time Factor) .

(c) be less standardized and uniform than goods. (b) simultaneously produced and consumed. . CHARACTERISTICS OF SERVICES (Cont’d) • Services tend to be (a) more intangible than tangible – consumed not possessed.

. • The quality of the service is inseparable from the quality of the service provider. • Performance shapes the service and becomes part of the service. CHARACTERISTICS OF SERVICES (Cont’d) • Personnel is key in marketing services. • There is much room for customization. because production and consumption tends to be simultaneous. • Marketer must do a good job of marketing to the internal customers (the employees).

Because consumers cannot assess the quality of an intangible. • In producing services. and goods that go with the services. pay attention to those aspects of the service that are tangible (equipment and surroundings for example). This tends to make the service tangible and helps the customers perceived judgment of the service. pricing. appearance of service providers. Marketers can manage the tangibles to convey quality signals. they look at and for tangible cues. . View such things as physical environment. CHARACTERISTICS OF SERVICES (Cont’d) • Goods are easier to evaluate than services.

cross train employees. CHARACTERISTICS OF SERVICES (Cont’d) • Since services cannot be inventories. .g. have employees on call) or reshaping demand (e. pricing incentives). use part-time employees.g. marketers must synchronize supply and demand. This can be done by reshaping supply (e. use of differential pricing.

perishability) require other strategic elements • Hence the Integrated Services Management Model – 8 P’s . SERVICES MARKETING MIX • When marketing goods marketers focus on the 4P’s – Product. customer involvement. Promotion. Place. • Distinctive nature of services (intangibility. Price.

sensory experiences . Integrated Services Management Model – 8 P’s • Product – core features of goods & services • Place & Time – delivery method & channel • Process – effective design & implementation • Productivity & Quality – transformation of inputs & satisfaction derived by customer. effort. This is a key differentiation factor • People – personal interactions affect perceived quality hence attention to recruit. train & motivate personnel • Promotion & Education – effective communication (info. and persuasion) • Physical Evidence – appearance/atmosphere • Price & Other User Costs – time. advice.