M A R K E T I N G Real People, Real Choices Fourth Edition CHAPTER 10 Services and Other Intangibles: Marketing the Product That Isn’t There

Marketing an experience (not a product) Are all products just tangibles or are their elements of intangibles attached to them? Selling a car Selling toothpaste Selling a college education Selling a product is a short-sighted perspective; selling an experience is an enlightened perspective

What is a Service? Services are acts, efforts, or performances exchanged from producer to user without ownership rights Consumer services Business services In 2004, service industry jobs – 835 of all employment and over 67% of US GDP

Characteristics of Services Intangibility Cannot see, touch, smell service Physical cues to service Perishability Cannot store a service for later use Performance = consumption Pricing adjustment to influence demand

Characteristics of Services Variability Same service rendered by the same person at two different times may vary Marketing response – standardize, service guarantees Inseparability Production = consumption Focus on the service encounter Bad service encounters are avoided by disintermediation

The Goods/ Services Continuum Good-Dominated Products - tangible products accompanied by supporting services automobiles, home appliances, electronics Equipment or Facility-Based Services - heavy reliance on both equipment and personnel hospitals, tanning salons, health clubs People-Based Services wardrobe consultants, decorators, realtors

Core and Augmented Services Core service is a benefit that a customer gets from the service Augmented services are additional offerings that differentiate the firm Example: Airline transportation Core: travel Augmented services: frequent flier miles, sky caps, in-flight entertainment services and Internet access

Services on the Internet Banking/ brokerages Software Music Travel Dating Career development Distance learning Medical care

The Service Encounter Consumer comes into contact with the organization The “moment of truth” Two dimensions Quality of the social contact “Servicescapes” – physical evidence of service quality

Service Quality Subjective assessment based on customer’s expectations Expectations > delivery = disservice Expectations < delivery = excellent service E.g. Jet Blue and expectations from a low – cost airline

Dimensions of Service Quality Search qualities - characteristics of a product that the consumer can examine prior to purchase Experience qualities - characteristics that customers can determine during or after consumption Credence qualities - attributes we find difficult to evaluate even after we’ve experienced them

Measuring Service Quality Gap Analysis - measurement tool that gauges the difference between a customer’s expectation of service quality and what actually occurred Critical Incident Technique - company collects and closely analyzes very specific customer complaints to identify critical incidents CI are those complaints that are most likely to result in dissatisfaction

Gap Analysis Gap between consumer expectations and management perceptions Gap between management perception and quality standards set by the firm Gap between established quality standards and service delivery Gap between service quality standards and consumer expectations Gap between expected service and perceived service

Service Failure and Recovery When services do fail, recover fast! Apologize Resolve the problem Do not further inconvenience the customer Analyze what happened to eliminate future failures Front line employees empowerment

Strategies for Services Targeting: Defining the Service Customer or Audience Positioning: Defining the Service to Customers

The Future of Services Increasing service component in products Marketing experiences not products Greater use of the internet in marketing Increasing globalization – logistical and transportation services have a great future Outsourcing services Information exchange

Strategies for Marketing People Pure selling approach – an agent presents a client’s qualifications to potential “buyers” until he finds one who is willing to buy Product improvement approach – the agent works with the client to modify certain characteristics that will increase market value; person’s image changes to conform to what is currently in demand (e.g. Madonna, Paris Hilton)

Strategies for Marketing People Market fulfillment approach – agent scans the market to identify unmet needs. Then agent finds a person that meets qualifications and develops product “manufactured stars” N-Sync, The Spice Girls, New Kids on the Block

Marketing Places Place marketing strategies treat a city, state, country, or other locale as a brand and attempt to position this location so that consumers choose to visit Example: Mauritius & Grey Advertising

Marketing Ideas Idea marketing is about gaining market share for a concept, philosophy, belief or issue Examples: Do churches market their faith and philosophy? Do consultants peddle their ideas? “Anti-smoking”, “Anti-drug”, “Responsible drinking and driving” campaigns