Services and Other Tangibles: Marketing the Product that Isn’t There Chapter Ten

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Chapter Objectives   Describe the characteristics of services and the ways marketers classify services   Appreciate the importance of service quality to marketers   Explain the marketing of people, places, and ideas

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Real People, Real Choices: Decision Time at the Philadelphia 76ers   What is the best way to compile more detailed information on the 76ers customer base? Option 1: Phase in a CRM database Option 2: Send out surveys to season ticket holders annually Option 3: Analyze the lifetime value of customers

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Marketing What Isn’t There   Intangibles: Services and other experience-based products that cannot be touched Examples: concerts, movies, tax preparation, hair styling, etc.   Does marketing work for intangibles? Yes! Etrade.com

© 2012 Pearson Education, Inc. publishing as Prentice-Hall What is a Service?   Services: Are acts, efforts, or performances exchanged from producer to user without ownership rights   Services accounted for 75% of US employment in 2010   Services may target consumers and/or businesses

© 2012 Pearson Education, Inc. publishing as Prentice-Hall © 2011 Pearson Education, Inc. publishing as Prentice-Hall. Figure 10.1 Characteristics of Services

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Marketing Services Marketers often use vivid imagery in advertising to help market intangibles

© 2012 Pearson Education, Inc. publishing as Prentice-Hall © 2011 Pearson Education, Inc. publishing as Prentice-Hall. 1-8 Table 10.1 Marketing Strategies for Different Service Characteristics

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Marketing Services   Disintermediation occurs when the Internet or other technology can be used to “cut-out the middleman”   Capacity management allows firms to adjust their services to match supply with demand How do hotels or casinos manage capacity?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Characteristics of Services   Service encounter: The interaction between the customer and the service provider   Service encounter dimensions: Social contact dimension Physical dimension   The quality of service is only as good as its worst employee

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Classifying Services

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Classifying Services   Goods-dominated products Firms that sell tangible products still provide support services   Equipment- or facility-based services Operational factors, locational factors, and environmental factors are important   People-based services Increasing in importance as people lack the time or expertise to do on their own

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Service Classification Amusement parks rely heavily upon facilities (water slides, stages for shows), and equipment (roller coasters and other rides) to deliver the actual service provided.

© 2012 Pearson Education, Inc. publishing as Prentice-Hall   Core service: The benefit a customer gets from the service   Augmented service: Additional services that enhance value Augmented services help to differentiate businesses from one another Core and Augmented Services

© 2012 Pearson Education, Inc. publishing as Prentice-Hall © 2011 Pearson Education, Inc. publishing as Prentice-Hall It’s Debatable Class Discussion Question Some people criticize universities for using student fee money to support athletic programs, recreational facilities, daycare and other augmented services not directly related to the education of students. Others argue that such services are essential to attract and retain students to the University. Where do you stand? Why?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Service Encounter   Physical elements of the service encounter Servicescape: Environment in which the service is delivered and where the firm and customer interact Servicescapes influence purchase decisions, service quality evaluations, and customer satisfaction

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Service Encounter   Web sites influence customer perceptions First stop for many potential customers Poor navigation, unattractive sites offer negative first impressions SEO (search engine optimization) is critical for getting noticed   Also consider paid search advertising

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Providing Quality Service   Quality service ensures that customers are satisfied with what they have paid for   Satisfaction is based on customer expectations   Not all customers expect the same level of service   Not all customers can be satisfied

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Service Quality Attributes   Search qualities: Characteristics that the consumer can examine before purchase   Experience qualities: Characteristics that buyers can determine during or after consumption   Credence qualities: Characteristics that are difficult to evaluate even after they have been experienced

© 2012 Pearson Education, Inc. publishing as Prentice-Hall © 2011 Pearson Education, Inc. publishing as Prentice-Hall It’s Debatable Class Discussion Question What are some of the search, experience, and credence qualities associated with higher education?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Measuring Service Quality   Several methods of measuring service quality exist: Mystery shoppers Lost customers SERVQUAL scale Gap analysis Critical incident technique

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Measuring Service Quality   SERVQUAL scale (questionnaire) measures customer perceptions of five key dimensions Tangibles Reliability Responsiveness Assurance Empathy

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Figure 10.2 The Gap Model of Service Delivery

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Meeting Service Standards Disney Parks and Resorts strive for consistency between standards and delivery

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Measuring Service Quality   Additional methods of measuring service quality: Critical incident technique uses customers’ complaints to identify problems that lead to dissatisfaction

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Strategic Issues in Delivering Service Quality   Maximizing the likelihood that a customer will use a service and become a loyal user requires: Development of effective marketing strategies Fast and appropriate responses to service failures

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Table 10.2 Marketing Strategies for Service Organizations

© 2012 Pearson Education, Inc. publishing as Prentice-Hall   Politicians and celebrities are commonly marketed Consultants “package” celebrities Name changes are common Marketing People, Places, and Ideas

© 2012 Pearson Education, Inc. publishing as Prentice-Hall © 2011 Pearson Education, Inc. publishing as Prentice-Hall Table 10.3 Strategies to Sell Celebrities

© 2012 Pearson Education, Inc. publishing as Prentice-Hall © 2011 Pearson Education, Inc. publishing as Prentice-Hall It’s Debatable Class Discussion Question Think about an athlete who has been “in trouble” lately due to poor performance or off-field behaviors. How can one or more of the strategies just discussed be adapted to “sell” that athlete, now or in the future?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Marketing People, Places, and Ideas   Place marketing strategies treat a city, state, country, or other locale as a brand Shreveport- Bossier

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Marketing People, Places, and Ideas   Marketing ideas Gaining market share for a concept, philosophy, belief, or issue   Example: Religious institutions market ideas about faith Consumers often do not perceive the value they receive when they conform with an idea or fail to believe an idea is worth its ultimate cost

© 2012 Pearson Education, Inc. publishing as Prentice-Hall What Ideas Are Being Marketed?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall The Future of Services   New dominant logic for marketing: Argues that service is the central core deliverable in every exchange   Services will continue to grow due to several factors: Changing demographics Globalization Technological advances Proliferation of information

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Real People, Real Choices: Decision Made at the Philadelphia 76ers   Why do you think that Lara and the 76ers chose option 1 and implemented a CRM database?

© 2012 Pearson Education, Inc. publishing as Prentice-Hall Keeping It Real: Fast-Forward to Next Class Decision Time at Taco Bell   Meet Cosmo Kapoor, Manager of Food & Beverage Operations at Disney’s Epcot theme park in Orlando, Florida   Cosmo’s goal is to consistently deliver immersive dining experiences for guests visiting any Epcot restaurant.   The decision to be made: How to maximize the number of guests attending Epcot’s International Food and Wine Festival in light of the gloomy economic climate.

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