Designing and Managing Services

Learning Objectives
1. How can services be defined and classified, and how do they differ from goods?
2. What are the new services realities?
3. How can companies achieve excellence in services marketing?
4. How can companies improve service quality?
5. How can goods marketers improve customer-support services?
The Nature of Services
Service
 Any act or performance one party can offer to another that is essentially
intangible and does not result in the ownership of anything
 Categories of Service Mix
A pure tangible good
A tangible good with accompanying services
A hybrid
A pure service
EVALUATION CONTINUUM FOR PRODUCT TYPES
Characteristics of Services
Intangibility

Inseparability

Variability

Perishability
Intangibility
Services cannot be seen, tasted, felt, heard, or smelled

Physical evidence and presentation tools:

 Place
 People
 Equipment
 Communication material
 Symbols
 Price
Intangibility
Inseparability
Services are typically produced and consumed simultaneously
 Variability
The quality of services depends
on who provides them, when and
where, and to whom
 As such, services are highly
variable
Perishability

Services cannot be stored

Strategies to match demand & supply
BLUEPRINT FOR OVERNIGHT HOTEL STAY
 New Services
Realities
 Customer empowerment :  Customers are becoming more sophisticated about
buying product-support services and are pressing for “unbundled services” so
they can select the elements they want. They increasingly dislike having to
deal with a multitude of service providers handling different types of products
or equipment
 Customer coproduction: The determination and willingness of a customer to.
participate actively in terms of his time and effort with the service provider in
the service inception and production stages.
 Satisfying employees as well as customers
 Customer Relationship Management
 Achieving Excellence In Services
Marketing
External marketing describes the normal
work of preparing, pricing, distributing,
and promoting the service to customers.
Internal marketing describes training and
motivating employees to serve customers
well.
Interactive marketing describes the
employees’ skill in serving the client.
Clients judge service not only by its
technical quality, but also by its functional
quality
Best Practices of Top Service
Companies
Top-
Strategic
management
concept
commitment

Satisfying High
customer standards
complaints

Monitoring
Profit tiers
systems
MANAGING SERVICE QUALITY
Customer switching behavior factors

 Pricing
 Inconvenience
 Core service failure
 Service encounter failures
 Response to service failure
 Competition
 Ethical problems
 Involuntary switching
SERVICE-QUALITY MODEL (SERVQUAL)
It identifies five gaps that prevent successful delivery:

1. Knowledge Gap: Gap between consumer expectation and management perception—Management

does not always correctly perceive what customers want.

2. Standard Gap: Gap between management perception and service-quality specification—Management

might correctly perceive customers’ wants but not set a performance standard.

3. Delivery Gap: Gap between service-quality specifications and service delivery—Employees might be
poorly trained or incapable of or unwilling to meet the standard; they may be held to conflicting
standards, such as taking time to listen to customers and serving them fast.

4. Communication Gap: Gap between service delivery and external communications—Consumer

expectations are affected by statements made by company representatives and ads.

5. Satisfaction Gap: Gap between perceived and expected service—The consumer may misperceive the
service quality.
Improving Service Quality
• Listening • Surprising customers
• Reliability • Fair play
• Basic service • Teamwork
• Service design • Employee research
• Recovery
SERVQUAL SCALE
Managing Product-Support
Services

Failure frequency

Downtime

Out-of-pocket costs
INCORPORATING SELF-SERVICE
TECHNOLOGIES (SST)
SSTs can:
 Make transactions more accurate
 Make transactions more convenient
 Make transactions faster
 Reduce costs