© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Marketing Management, 8e Chapter Twelve Marketing in Special Fields Key Words / Outline Intangible, Off peak pricing, Tangibles, Reliability, Responsiveness, Assurance, Continual

Services Service Products: Such as a bank loan or home security, they are intangible or at least substantially so Services: Activities by sellers and others that accompany the sale of a product and that aid in its exchange or its utilization

Service Features Intangibility: Without physical dimensions or characteristics Inseparability: Service and seller are inseparable Perishability and Fluctuating Demand: Seasonal, days, time of day, vacant seats, waiting time on phone, etc Client Relationship: Similar to customer relationship but typically more intense

Service Features Customer Effort: Customers are often involved to a relatively great degree in production of many types of services Uniformity: The quality of services can vary more than the quality of goods. Producers of goods have procedures to prevent, identify and correct defects

Differences Between Products and Services Products -The customer owns an object -The goal of producing a product is uniformity -A product can be put into inventory -The customer is the end user -Quality control conducted by comparing output to the specifications -If improperly produced the product line can be recalled -The morale of the production employees is important -Comparison of products in order to determine quality level -Low level of collaboration between the buyer and the seller -Greater number and variety of product brands available to the customer

Differences Between Products and Services Services -Customer owns a memory; the experience cannot be sold or passed on to a third party -Goal of service is uniqueness -A service happens at the moment -The customer is a co producer who is a partner in creating the service -Customer conducts quality control by comparing expectations to experience -If improperly performed, apology and reparations through out the delivery of the service -The morale of the service employees is critical -Customer can determine the level of quality throughout the delivery of the service -High levels of collaboration between the buyer and seller -Fewer brands of service are available to the customer

Quality Service Quality service generally suffers due to the gap between -Consumer expectations and management perceptions of the consumer expectations -Management perceptions of consumer expectations and firm’s service quality specifications -Service quality specifications and actual service quality -Actual service delivery and external communications about the service

Quality Service Determinants of service quality include -Tangibles -Reliability -Responsiveness -Assurance -Empathy

Measure Customer Satisfaction Understand the expectations and requirements of the customer and your firm’s ability to meet them Determine how well your company and its major competitors are succeeding in satisfying these expectations and requirements

Customer Satisfaction Measurement (CSM) - Research Marketing and sales personnel primarily responsible for designing CSM programs Top management and the marketing function championed the programs Combination of qualitative and quantitative research methods Evaluations included both the company’s and competitor’s satisfaction performance

Customer Satisfaction Measurement (CSM) - Research Results of all research were made available to employees but not to customers Research was performed on continual basis Customer satisfaction was incorporated into the strategic focus of the company There was commitment to increasing service quality and customer satisfaction from employees at all levels within the organization

Internal Marketing For employee commitment to customer service, management must develop programs possessing the following critical components -Careful selection and hiring of frontline employees -Particular service strategy that frontline people need to act on -Managers need to be role models -Training, support and incentives to be provided to employees with capacity -An emphasis on teaching employees to have good attitudes

Obstacles In Service Marketing Four reasons connected to past practices for the lack of innovative marketing on the part of service marketers -Limited view of marketing -Lack of strong competition -Lack of creative management -No obsolescence

Service Challenge Constantly develop new services that will better meet customer needs Improve on the quality and variety of existing services Provide and distribute these services in a manner that best serves the customer

Banking Banking is becoming an increasingly technology-driven business To prevent loss of customer base, many large banks are developing home baking systems Banks have also learnt the value of bundling services Benefits to the customers such as ATM transactions, interest bearing checking accounts Most banks target some marketing activities towards senior citizens

Health Care Recently several alternative delivery systems such as HMO have been developed HMO: Health Maintenance Organization benefits -The ability to have all ailments treated at one facility -Payment of fixed fees for services -Encouragement of preventive versus remedial treatments The success of HMO has inspired similar programs for dental and eye care

Insurance In recent years the insurance industry has exploded with new products and services offerings Distribution of insurance services has also been growing Travel auto insurance is now available in may motel chains and through AAA Group insurance written through employers and labor unions also has been extremely successful

Travel The travel industry, mostly the airline has been the leader in the use of technology Nearly all airlines are using internet sites to dispense flight and fare information Technology has also allowed airlines to make strategic pricing decisions through the use of yield management Through the use of elaborate computer programs, managers are able to determine who their customer segments are and who is likely to purchase airline tickets, when, and to where

Ten Lessons in Good Services Marketing Customers do not buy your services – they buy solutions to their problems Change of customer behavior only under two conditions -Matter of life and death -Only if they want to The most important parts of employees’ contributions to the goals of your organization are being made at their discretion Management and leadership exercised outside not inside the office Quality service means never having to say “that is not my job” How your employees feel eventually is how your customers feel

Ten Lessons in Good Services Marketing Customers should not be allowed to restate their requests or complaints to several employees before having it solved If you establish negative expectations for your customers, you will always meet them The delivery of quality service is never a customer’s job Use discretion and compete in market segments where you have or can develop strengths

Implications For Service Marketers The sum total of the marketing mix elements represents the total impact of the firm’s marketing strategy Services must be made available to prospective users The problem of making services more widely available must not be ignored With the use of varying service bundles, new technology and alternative means of distributing the service, companies are now able to practice targeted marketing