Services and Other Intangibles: Marketing the Product That Isn’t There

2 Chapter Objectives Describe the four characteristics of services Understand how services can be classified along a service continuum Explain core and augmented services, marketing of services on the Internet, and the elements of the service encounter Appreciate the importance of the three attributes of service quality to marketers: search qualities, experience qualities, and credence qualities Discuss the concepts of SERVQUAL and gap analysis Explain the marketing of people, places, and ideas

3 Real People, Real Choices Universal’s Theme Parks in Orlando (Robyn Eichenholz) How to plan for anticipated record-breaking attendance at Donna Summer in concert  Option 1: don’t make any special plans for the event  Option 2: create a plan to accommodate extremely large crowds  Option 3: publicize the big expected turnout to let guests know the event might be exceptionally crowded

4 Marketing What Isn’t There Intangibles: services and other experience-based products that cannot be touched Does marketing work for intangibles? Yes!

5 What Are Services? Services are acts, efforts, or performances exchanged from producer to user without ownership rights.

6 Characteristics of Services Intangibility: can’t see, touch, or smell good service Perishability: can’t store a service for later sale or consumption  Capacity management: firms adjust their services to match supply with demand

7 Characteristics of Services (cont’d) Variability: can’t standardize the same service performed by the same individual Inseparability: can’t separate production from consumption  Service encounter: the interaction between the customer and the service provider  Disintermediation: eliminating the interaction between customers and salespeople

8 Classifying Services We can classify by  whether the service is performed directly on the customer or on something the customer owns  whether the service consists of tangible or intangible actions

9 The Services Continuum Most products are a combination of goods and services Products vary in their level of tangibility.  Tangible: salt, necktie, dog food  Intangible: teaching, nursing, theater  Balanced products: fast food, television

10 The Services Continuum (cont’d) Goods-dominated products Equipment- or facility-based services People-based services

11 Core and Augmented Services Core service: the benefit a customer gets from the service Augmented service: core service plus additional services that enhance value

12 Services on the Internet Anything that can be delivered can be sold on the Web  --Banking and brokerage services  --Software  --Music  --Travel services  --Dating services  --Career-related services  --Medical care

13 The Service Encounter Social elements: employees and customers Physical elements: servicescapes and other intangibles

14 Providing Quality Service: Service Quality Attributes Search qualities: examine before purchase Experience qualities: determine during or after consumption Credence qualities: evaluate after experiencing them (difficult to do)

15 Measuring Service Quality SERVQUAL Gap analysis Critical incident technique

16 Strategies for Developing and Managing Services Act fast to resolve a service failure. Identify potential failures and make recovery plans ahead of time. Train employees to listen for complaints and empower them to take action.

17 The Future of Services New dominant logic for marketing Changing demographics Globalization Technological advances Shift to flow of information

18 Marketing People Marketing people  Politicians  Celebrities

19 Marketing Places Marketing places  Attempting to position a city, state, country, or other locale so consumers choose the brand over competing destinations

20 Marketing Ideas Marketing ideas  Gaining market share for a concept, philosophy, belief, or issue

21 Real People, Real Choices Universal’s Theme Parks in Orlando (Robyn Eichenholz) Robyn selected a combination of options 2 and 3 to alleviate crowding concerns and enhance the guest experience.  In addition to enjoying themselves in the concert area, guests partied in the streets and had a great evening.

22 Marketing in Action Case: You Make the Call What is the decision facing XM Satellite Radio? What factors are important in understanding this decision situation? What are the alternatives? What decision(s) do you recommend? What are some ways to implement your recommendation?

23 Keeping It Real: Fast-Forward to Next Class Decision Time at Taco Bell Meet Danielle Blugrind, Director of Consumer and Brand Insights for Taco Bell. Competitors claimed they provided better fast-food value. The decision: How to update the Taco Bell value menu pricing.