Phillip Kevin Lane

Kotler • Keller
Marketing Management • 14e
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Designing and Managing Services

Discussion Questions
1. How do we define and classify services,
and how do they differ from goods?
2. What are the new services realities?
3. How can we achieve excellence in
services marketing?
4. How can we improve service quality?
5. How can goods marketers improve
customer-support services?

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The Nature of Services

2008 – 2018
Loss of 1.2 million jobs

2008 – 2018
Gain of 14.6 million jobs
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Service Sectors
Private nonprofit

Business

Government
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 ed
fin
De Service
An act or performance one party can
offer to another that essentially
intangible and does not result in the
ownership of anything.

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Categories of Service Mix

Major service,
minor good

Pure Tangible Pure

Hybrid
Good Service

Tangible Good
minor service

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Fi Continuum of Evaluation for Products

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 Service Characteristics
Intangibility

Variability

Perishability Empty seats

Inseparability
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Intangibility
Intangibility - services cannot be seen, tasted, felt, heard, or smelled before
they are bought.
Physical Evidence & Presentation
• Place
• People
• Equipment
• Communication material
• Symbols
• Price

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 Inseparability
Inseparability - services are typically produced and consumed
simultaneously.
Work Faster

Work with Larger Groups

Add More Service Providers

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 Variability

Offer Guarantees

Monitor Satisfaction

Good Hiring and Training

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Fi g Overnight Hotel Stay Blueprint

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 Perishability

Empty seats
Nonpeak Demand

Complementary
Reservation Systems Differential Pricing
Services
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 New Services Realities
Customer Coproduction Customer Empowerment

United Breaks Guitar

Satisfying Employees
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Fi g Root Cause of Customer Failure

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 .3
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i gu Root Cause of Customer Failure
F
Solutions come in all forms, as these examples show:
1.Redesign processes and redefine customer roles to simplify
service encounters. One of the keys to Netflix’s success is
that it charges a flat fee and allows customers to return
DVDs by mail at their leisure, giving customers greater
control and flexibility.

2. Incorporate the right technology to aid employees and

customers. Comcast, the largest cable operator by
subscribers in the United States, introduced software to
identify network glitches before they affected service and to
better inform call-center operators about customer
problems. Repeat service calls dropped 30 percent as a
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Fi g Root Cause of Customer Failure
Solutions come in all forms, as these examples show:

3. Create high-performance customers by enhancing their

role clarity, motivation, and ability. USAA reminds enlisted
policyholders to suspend their car insurance when they are
stationed overseas.

4. Encourage “customer citizenship” so customers help

customers. At golf courses, players can not only follow the
rules by playing and behaving appropriately, they can
encourage others to do so.

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 Achieving Excellence in Services
Differentiating Services

Marketing Excellence

Best Practices
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Marketing Excellence

Preparing, pricing, distributing,

External promoting the service

Internal Training/motivating employees

Interactive Serving the client

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F Marketing in Service Industries

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Best Practices of Top Service Companies

Strategic
Management Concept
Commitment

Profit Tiers High

Standards
Satisfy
Customer
complaints Monitoring
Systems

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Fi g Importance-Performance Analysis

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 Differentiating Services
Primary and secondary service options

Innovation with services

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 Managing Service Quality

Bored Employees

Unresponsive Employees
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Why Customers Switch Services
Ethical Issues

Pricing

Service Failure

Response to Failure
Competition
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 What Customers Want from Providers

Knowledgeable employees 65%

Address needs on first contact 64%

Treat me like a valued customer 62%

Demonstrates desire to meet my needs 54%

Can quickly access information 49%

Good value for the money 49%

Courteous employees 45%

Is a company/brand I can trust 43%

Treats me fairly 38%

Provides relevant/personalized service 31%

0% 10% 20% 30% 40% 50% 60% 70%

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Managing Customer Expectations

Experience

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1. Gap between consumer

expectation and management
perception—Management does
not always correctly perceive
what customers want. Hospital
administrators may think
patients want better food, but
patients may be more
concerned with nurse
responsiveness.

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2. Gap between management perception

and service-quality specification
Management might correctly perceive
customers’ wants but not set a
performance standard. Hospital
administrators may tell the nurses to give
“fast” service without specifying it in
minutes.
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3. 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.

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4. Gap between service delivery and external

communications—Consumer expectations are
affected by statements made by company
representatives and ads. If a hospital brochure
shows a beautiful room but the patient finds it to
be cheap and tacky looking, external
communications have distorted the customer’s
expectations.

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5. Gap between perceived service

and expected service—This gap
occurs when the consumer
misperceives the service quality.

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Determinants of Service Quality
Reliability
Tangibles

Responsiv
e

Empathy
Assuranc
e
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Managing Product-Support Services
Customer Worries
• Failure frequency
• Downtime
• Out-of-pocket costs

Manufacturer Strategies
• Guarantees
• Service contracts
• Extended warranties

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