Managing Services

What is a Service? Any intangible activity or benefit that an organization provides to customers in exchange for money or something else of value Examples: –Airline trips –Financial advice –Auto repair

Services 40% of US GDP comes from services One of the few areas where the US has a trade surplus

Services – The Four I’s Intangibility Inconsistency Inseparability Inventory

Services can’t be held, touched, or seen before the purchase Performance based, hard to evaluate Have to show tangibility by showing benefits Examples –Predators Frequent Fang Club –Red Roof Inn points system Services – The Four I’s Intangibility

Service quality is often inconsistent –Service employees can have bad days –Makes service development, price, promotion, and service delivery difficult –Decrease inconsistency by standardization and training –Examples Tim McGraw concert Air Jamaica flights Services – The Four I’s Inconsistency

Difficult to separate the service from the service provider –Treasure Island Service – The Four I’s Inseparability

Service inventories are not perishable, makes costs very subjective Idle production capacity –When the service provider is available but there is no demand for the service Costs include paying service providers and equipment needed to provide the service Service – The Four I’s Inventory

The range from the tangible to the intangible or good-dominate to service- dominate offerings available to the marketplace Service Continuum

With some companies, it’s hard to tell if they are service-based or good-based Theatre is service oriented, so the 4 I’s are very relevant to their marketing efforts Dog food is good-based, 4 I’s are not relevant to marketing efforts Pet Smart is both service-based and goods-based Service Continuum

Core services –Main offering by a company Supplementary services –Support services Supplementary services are a way to differentiate from competition Service Continuum

Sports as a Service Can’t control how a team is going to perform during the season Want to create entertainment value –NASCAR –NHL

Classifying Services Is the service delivered by people or equipment? Is the service profit or non-profit? Is the service government sponsored?

If the service is delivered by people, then inconsistency is an issue. Equipment delivered services do not have inconsistency issues Marketing efforts are different for each Classifying Services Delivery?

Non-profits excess revenue are not taxed or given to shareholders, just helps to continue service Classifying Services Profit or Non-profit?

Government services are not non-profit, but there is not a direct ownership either. US Post Office Classifying Services Government Sponsored?

Purchase Process for Services Consumers perception of a service can change with each purchase Services have experience properties –Can’t evaluate until after purchase or during consumption

Purchase Process for Services Tangible goods have search properties –Can determine some characteristics before purchase Services have credence properties –Can’t evaluate even after purchase (medical diagnosis, legal services)

Purchase Process for Services How can service provider reduce uncertainty? –By reaching early adopters, opinion leaders, and reference group positive opinions

Assessing Service Quality Evaluating services is done by comparing customer expectations to actual experiences Gap analysis –Difference between expectations and actual experiences

Word of mouth, personal needs, previous experiences, promotional activities are all influences of expectations How the service is delivered is how actual experiences are determined Assessing Service Quality

Relationship Marketing Customer contact with service providers influence customer evaluation of the service State parks –Lodging staff, restaurant staff, lifeguards, golf shop employees Want to create bonds with customers Loyalty incentives –Frequent flyer miles

Marketing Services Internal marketing is based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers –Recruitment, training, communication, coaching, management, leadership

Exclusivity –Services can’t be patented like products –Need to set your core service apart from others with great supplementary services Marketing Services – Product

Branding –Brand name or logo is really important to services because they are harder to describe than products Marketing Services – Product

Capacity Management Integrating the service component of the marketing mix with the efforts to influence consumer demand Service capacity is lost if not used –ER Marketing Services – Product

Capacity Management Schedule services so that –Demand matches capacity over duration of the demand cycle –Assets are utilized so that they maximize ROI Marketing Services – Product

Fees, charges, rates, fares Role of price –Consumer Perception Plastic surgery Haircuts –Capacity Management Off-peak pricing is where different prices are charged during different times of day or days of the week to reflect variations in service demand Hotels, movies Marketing Services – Price

Needs to be convenient because of increased competition –ATMs –McDonald’s vs. Dairy Queen Marketing Services – Place

Focus on service availability, location, consistency, and efficient courteous service Marketing Services – Promotion

Publicity –A nonpersonal, indirectly paid presentation of an organization, good, or service –Nashville Ballet, Nashville Symphony –PSA (public service announcement) Free form of publicity for non-profits Organization has no control over where/when message is delivered Marketing Services – Promotion