CHAPTER SERVICES: THE INTANGIBLE PRODUCT 12 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

12-2 LEARNING OBJECTIVES Services: The Intangible Product LO1 Describe how the marketing of services differs from the marketing of products. LO2Discuss the four gaps in the Service Gap Model. LO3 Examine the five service quality dimensions. LO4Explain the zone of tolerance concept. LO5Identify three service recovery strategies.

12-3 Apple Genius Bar ©Andy Kropa 2006/Redux

12-4 Service By providing good customer service, firms add value to their products and services. Lands’ End Website PhotoLink/Getty Images

12-5 The Service Product Continuum Most offerings lie somewhere in the middle 1. Dynamic Graphics/Jupiter Images 2. ©Jose Fuste Raga/CORBIS 3. The McGraw-Hill Companies, Inc/Andrew esek, Photographer 4. John A Rizzo/Getty Images 5. ©Charles Bowman/Alamy 6. ©Photodisc

12-6 Offering a service with your products ©General Mills

12-7 Economic Importance of Service Household maintenance became more specialized High value placed on convenience and leisure Production was cheaper in other countries Developed economies are increasingly service oriented economies

12-8 Services Marketing Differs from Product Marketing

12-9 Intangible Requires using cues to aid customers Atmosphere is important to convey value Images are used to convey benefit of value

12-10 Inseparable Production and Consumption Production and consumption are simultaneous Little opportunity to test a service before use Lower risk by offering guarantees or warranties FedEx Commercial Ryan McVay/Getty Images

12-11 Variable TechnologyTrainingAutomation Courtesy Geek Housecalls, Inc.

12-12 Perishable How are each of these perishable services? John Foxx/Getty ImagesPhotoLink/Getty ImagesCourtesy Geek Housecalls, Inc.

What are the four marketing elements that distinguish services from products? 2. Why can’t we separate firms into just service or just product sellers? Check Yourself

12-14 Providing Great Service: The Gaps Model

12-15 The Knowledge Gap: Knowing What Customers WantKnowledge Gap Marketing research: understanding customers Evaluating service quality Understanding customer expectations The Knowledge Gap

12-16 McDonald’s 24/7

12-17 Filling the Knowledge Gap How does a college increase successful outcomes for its students? Photodisc Collection/Getty Images

12-18 Understanding Customer Expectations Expectations are based on knowledge and experienceExpectations vary according to type of serviceExpectations vary depending on the situation versus Mel Curtis/Getty ImagesKim Steele/Getty Images

12-19 Evaluating Service QualityService Quality

12-20 Royalty-Free/CORBIS Marketing Research: Understanding Customers Voice-of-customer program YouTube Commercial The McGraw-Hill Companies, Inc/ Andrew Resek, photographer Liquidlibrary/Dynamic Graphics/Jupiter Images

12-21 Zone of Tolerance What is the desired and expected level of service for each dimension? What are the customer’s perceptions of how well the focal service performs and how well a competitive service performs? What is the importance of each service quality dimension?

12-22 Customer Evaluation of Service Quality

12-23 The Standards Gap: Setting Service StandardsStandards Gap Developing systems to ensure high- quality service Developing systems to ensure high- quality service Setting standards for quality Royalty-Free/CORBIS

12-24 The Delivery Gap: Delivering Service QualityDelivery Gap

12-25 What Airline Workers Learn from NASCAR

12-26 Empowering Service Providers Allowing employees to make decisions about how service is provided to customers Don Bishop/Getty Images

12-27 Providing Support and Incentives Provide emotional support to service providers Provide support necessary to deliver service Consistent and coherent management Reward employees for excellent service Reducing delivery gap

12-28 Use of Technology RFID (radio frequency identification device) Retail store assistant (RSA) Courtesy IBM Corporation

12-29 The Communications Gap: Communicating the Service PromiseCommunications Gap Manage customer expectations Promise only what you can deliver Communicate service expectations J.D. Power and Associates Website Getty Images

Explain the four service gaps identified by the Gaps Model. 2. List at least two ways to overcome each of the four service gaps. Check Yourself

12-31 Service Recovery Increase Service Recovery Listen to the customer Resolve problems quickly Provide a fair solution

12-32 Listening to the Customer Customers get emotional over a service failure Often customers just want someone to listen ©Digital Vision ©Digital Vision/Punchstock

12-33 Finding a Fair Solution Distributive fairness Procedural fairness Royalty-Free/CORBIS

12-34 Resolving Problems Quickly The longer it takes to resolve service failure the more irritated the customers It is in the firms best interest to solve problems quickly ©Michael Newman/PhotoEdit, Inc

12-35 Check Yourself 1. Why is service recovery so important to companies? 2. What can companies do to recover from a service failure?

12-36 Return to slide The communications gap refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises. Glossary

12-37 Return to slide The delivery gap is the difference between the firm’s service standards and the actual service it provides to customers. Glossary

12-38 Return to slide The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations. Glossary

12-39 Return to slide A service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed. Glossary

12-40 Return to slide Service quality is the customers’ perceptions of how well a service meets or exceeds their expectations. Glossary

12-41 Return to slide The standards gap is the difference between the firm’s service standards and the actual service it provides to customers. Glossary

12-42 Return to slide A voice-of-customer (VOC) program collects customer inputs and integrates them into managerial decisions. Glossary

12-43 Return to slide A zone of tolerance is the area between customers’ expectations regarding their desired service and the minimum level of acceptable service. Glossary