Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-2 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

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-3 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

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-4 Marketing What Isn’t There  Intangibles: Services and other experience-based products that cannot be touched –Example: concerts, tax preparation, haircuts, medical diagnosis, etc.  Does marketing work for intangibles? Yes!

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-5 What Is a Service?  Services: –Are acts, efforts, or performances exchanged from producer to user without ownership rights  Services share several characteristics: –Intangibility –Perishability –Variability –Inseparability

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-6 Characteristics of Services  Intangibility: –Can’t see, touch, or smell a service  Perishability: –Services can’t be stored for later sale or consumption Capacity management allows firms to adjust their services to match supply with demand  Variability: –Even the same service performed by the same person will vary

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-7 Marketing Intangibles Marketers often use vivid imagery in advertising to help market intangibles Consumers often make decisions about intangibles based on observable aspects such as employee uniforms, facility appearance, and internal furnishings

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-8 Characteristics of Services  Inseparability: –It is impossible to separate the production of a service from its consumption –Service encounter: The interaction between the customer and the service provider –Disintermediation: Eliminating the interaction between customers and salespeople Scottrade

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-9 Figure 10-1 Classification of Services

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-10 Figure 10-2 The Service Continuum

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-11 The Services Continuum  Goods-dominated products –Firms that sell tangible products still provide support services, such as warranties, Web sites with FAQs, and numbers  Equipment- or facility-based services –Operational factors, locational factors, and environmental factors are important  People-based services

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-12 People-based Services Marketing efforts geared toward recruitment are essential for people-based services such as the Military that depends upon soldiers to carry out its objectives Examples of other people- based services include image consultants, personal shoppers, daycare providers and more

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-13 Core and Augmented Services  Core service: –The benefit a customer gets from the service Example: airline transportation from Dallas to Chicago  Augmented service: –Core service plus additional services that enhance value Example: frequent flyer miles, in-flight movie

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-14 It’s Debatable Class Discussion Question Some universities are criticized 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?

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-15 Services on the Internet  Anything that can be delivered can be sold on the Web –Banking and brokerage services –Software –Music –Travel services –Dating sites –Career-related services –Medical care Flatdoor.com is a freelance auction service that offers access to over 850 categories of servicesFlatdoor.com

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-16 The Service Encounter  Several elements of the service encounter are important: –Social elements, including employees and customers Service quality is only as good as the employee –Physical elements, including the servicescape, or actual physical facility where the service is performed, delivered, or consumed Servicescapes influence quality perceptions

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-17 Importance of Servicescapes Servicescapes—the physical environment in which a service is consumed— strongly influence consumer perceptions of service quality. Restaurant and hotel marketers take special care to develop servicescapes that promote the correct image to their clientele.

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-18 Providing Quality Service: Service Quality Attributes  Search qualities: –Product characteristics that the consumer can examine before purchase  Experience qualities: –Product characteristics that buyers can determine during or after consumption  Credence qualities: –Product characteristics that are difficult to evaluate even after experiencing them

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-19 Figure 10-3 Service Experience Blueprint

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-20 Providing Quality Service: Measuring Service Quality  Several methods of measuring service quality exist: –SERVQUAL scale (questionnaire) measures customer perceptions of five key dimensions Tangibles Reliability Responsiveness Assurance Empathy

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-21 Providing Quality Service: Measuring Service Quality  Several methods of measuring service quality exist: –Gap analysis measures the difference between actual and expected service quality –Critical incident technique uses customers complaints to identify problems that lead to dissatisfaction.

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-22 The Future of Services  Services will continue to grow in the United States and global economies due to several factors: –Changing demographics –Globalization –Technological advances –Shift to flow of information

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-23 The Future of Services  New dominant logic for marketing: –Argues that service is the central core deliverable, while actual physical products are relatively incidental to the value proposition

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-24 Marketing People, Places,and Ideas: Marketing People  Politicians and celebrities are commonly marketed by agents or others –Celebrities often rename themselves to craft a “brand identity” –Brand identities can be extended to new areas

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-25 Figure 10-5 Strategies to Sell a Celebrity

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-26 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? For example, what specific actions might an agent undertake when Michael Vick, former Atlanta Falcons quarterback, is released from prison?

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-27 Marketing Places  Marketing places – Attempting to position a city, state, country, or other locale so consumers choose the brand over competing destinations Shreveport-Bossier shares more characteristics with East Texas than it does with New Orleans, and now markets itself using the “Louisiana’s Other Side”campaignShreveport-Bossier Tourism Vancouver Video

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-28 Marketing Ideas  Marketing ideas –Gaining market share for a concept, philosophy, belief, or issue Example: Religious institutions market ideas about faith Example: Not-for-profit organizations or governmental agencies market ideas about proper or improper behavior, such as drinking and driving MADDTheTruth

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-29 What Ideas Are Being Marketed?

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-30 Real People, Real Choices: Decision Made at the Philadelphia 76ers  Lara chose option 1 and implemented a CRM database –Implementation: A Web-based firm was hired to provide a data warehouse and to develop CRM software. The 76ers realized a 150-to-1 ROI due to more targeted marketing efforts –Measuring success: The 76ers used click- through and other metrics, and compared these rates to industry standards

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-31 Keeping It Real: Fast-Forward to Next Class Decision Time at Taco Bell  Meet Danielle Blugrind, Director of Consumer and Brand Insights at Taco Bell  Taco Bell is a national fast-food firm  The decision to be made: What price points should Taco Bell use in pricing Taco Bells items?

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-32 Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.