Different Perspectives SERVICES: All economic activities whose output is not a physical product Service industries (e.g., transportation, shipping, lodging, health care, etc.) Services as “products” (IT consulting by IBM/Dell/HP, service insurance by Sony, etc.) Customer service (answering questions, handling complaints, taking orders, etc. Typically no charge)

Examples of Service Industries Health Care hospital, medical practice, dentistry, eye care Professional Services accounting, legal, architectural Financial Services banking, investment advising, insurance Hospitality restaurant, hotel/motel, bed & breakfast ski resort, rafting Travel airline, travel agency, theme park Others hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design

Tangibility Spectrum             Intangible Dominant Figure 1.2 Salt  Soft Drinks  Detergents  Automobiles  Cosmetics  Fast-food Outlets  Intangible Dominant Tangible Dominant   Fast-food Outlets  Advertising Agencies  Airlines  Investment Management  Consulting Teaching

What is Service? The New View Service includes every interaction between any customer and anyone representing the company, including: Dealers Salespeople Receptionists and Schedulers Management and Executives Service Employees Billing and Accounting Personnel Web site and any e-channel Interaction Customer 4

Service Can Mean all of These Directory Academic Areas Centers & Institutes The Kenan Institute Contact Us   Kenan-Flagler Gear Service Can Mean all of These Service as a product Customer service Services as value add for goods Service embedded in a tangible product   UNC |    UNC Directory  Site Map   Equal Opportunity Policy   Terms of Use & Privacy Policy   Webmaster

Characteristics of Services Compared to Goods Intangibility Heterogeneity Simultaneous Production and Consumption Perishability

Implications of Intangibility Services can not be inventoried Services can not be easily patented Services can not be readily displayed or communicated (quality) Pricing is difficult

Implications of Heterogeneity Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

Implications of Simultaneous Production and Consumption Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

Implications of Perishability It is difficult to synchronize supply and demand with services Services can not be returned or resold Services can not be put in inventory

Consumer Evaluation Processes for Services Search Qualities attributes a consumer can determine prior to purchase of a product Experience Qualities attributes a consumer can determine after purchase (or during consumption) of a product Credence Qualities characteristics that may be impossible to evaluate even after purchase and consumption

Continuum of Evaluation for Different Types of Products Clothing Jewelry Furniture Houses Automobiles Restaurant meals Vacations Haircuts Child care Television repair Legal services Root canals Auto repair Medical diagnosis Most Goods Most Services Easy to evaluate Difficult to evaluate High in search qualities High in experience qualities High in credence qualities

Traditional Marketing Mix All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services: Product Price Place Promotion

Add to the Mix More than the conventional marketing mix People All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. Physical Evidence The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service. Process The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.

Expanded Marketing Mix for Services

Think about a service you receive. Is there a gap between your expectations and perceptions of that service? What do you expect that you do not receive?

Think about a service you receive. Is there a gap between your expectations and perceptions of that service? What do you expect that you do not receive? I wish my oil change service could be done at my home, or where I work, so that I would not have to drive to a specific location and wait in line. I wish my bank would …. I wish my dry cleaning service would pick up clothes from my home and deliver them to my home.

Gaps Model of Service Quality Expected Service CUSTOMER Customer Gap Perceived Service COMPANY External Communications to Customers Service Delivery Gap 4 Gap 3 Gap 1 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations

The Customer Gap Expected service Customer Gap Perceived service

Gaps Model of Service Quality Customer Gap: difference between customer expectations and perceptions Provider Gap 1 (The Knowledge Gap): not knowing what customers expect, want, need Provider Gap 2 (The Service Design & Standards Gap): not having the right service designs and standards Provider Gap 3 (The Service Performance Gap): not delivering to service standards Provider Gap 4 (The Communication Gap): not matching performance to promises

Gaps Model of Service Quality Expected Service CUSTOMER Customer Gap Perceived Service COMPANY External Communications to Customers Service Delivery Gap 4 Gap 3 Gap 1 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations

Key Factors Leading to the Customer Gap Customer Expectations Customer Perceptions

Gaps Model of Service Quality Expected Service CUSTOMER Customer Gap Perceived Service COMPANY External Communications to Customers Service Delivery Gap 4 Gap 3 Gap 1 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations

Key Factors Leading to Provider Gap 1 The Knowledge Gap Customer Expectations Company Perceptions of Customer Expectations

Key Factors Leading to Provider Gap 2 The Service Design & Standards Gap Company Perceptions of Customer Expectations Customer-Driven Service Designs and Standards

Key Factors Leading to Provider Gap 3 The Service Performance Gap Customer-Driven Service Designs and Standards Gap 3 Service Delivery

Key Factors Leading to Provider Gap 4 The Communication Gap Service Delivery External Communications to Customers

Gaps Model of Service Quality Expected Service CUSTOMER Customer Gap Perceived Service COMPANY External Communications to Customers Service Delivery Gap 4 Gap 3 Gap 1 Customer-Driven Service Designs and Standards Gap 2 Company Perceptions of Consumer Expectations