Designing and Managing Services

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Definition
A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

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Services are everywhere.. 
  

Government sector Private nonprofit sector Business sector Manufacturing sector

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Categories of Service Mix 
   

Pure tangible good Tangible good with accompanying services Hybrid Major service with accompanying minor goods and services Pure service 4
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Evaluation Continuum for Different Types of Products

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Distinctive Characteristics of Services
Characteristics 
   

Intangibility Inseparability Variability Perishability   

Cannot be touched, seen, tasted, heard, or smelled before purchase Marketers must try to tangibilize the intangible Lack of trial means higher consumer risk Consumers rely on cues to draw quality inferences

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Distinctive Characteristics of Services
Characteristics 
   

Intangibility Inseparability Variability Perishability  

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

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Distinctive Characteristics of Services
Characteristics 
   

Intangibility Inseparability Variability Perishability 

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

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Distinctive Characteristics of Services
Characteristics 
   

Intangibility Inseparability Variability Perishability 

Services can not be inventoried or otherwise stored Capacity / demand management is critical: 


Demand side strategies Supply side strategies

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Distinctive Characteristics of Services 

Demand-side strategies 
  

Supply-side strategies 
   

Use differential pricing Cultivate nonpeak demand Develop complementary services Install reservation systems 

Hire part-time employees Introduce peak-time efficiency routines Increase consumer participation Plan facilities for future expansion Share services

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Holistic Marketing - Services
Company

Internal marketing

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External marketing

Cleaning/ maintenance services Employees

Financial/ banking Restaurant services industry Interactive marketing Customers

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Managing Service Quality
Service quality represents a formalization of the measurement of customer expectations of a service compared to their perceptions of actual service performance Parasuraman, Zeithaml and Berry formulated a service-quality model that highlights the main requirements for delivering high service quality. The model identifies five gaps that cause unsuccessful delivery.

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Service-Quality Model

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GAP ANALYSIS
Gap 1
Management s Perceptions of Customer Service Expectations versus Actual Customer Expectations of Service

Gap 2
Management s Perceptions of Customer Service Expectations versus the Actual Service Quality Specifications Developed

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GAP ANALYSIS

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Determinants of Service Quality
Tangibles

Empathy

Reliability

Five dimensions of service quality

Assurance

Responsiven ess

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