1. Services and Other Tangibles: Marketing the Product that Isn’t There Chapter Ten © 2012 Pearson Education, Inc. publishing as Prentice-Hall.

2. 10-2 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

3. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-3 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 1: Phase in a CRM database Option 2: Send out surveys to season ticket holders annually Option 2: Send out surveys to season ticket holders annually Option 3: Analyze the lifetime value of customers Option 3: Analyze the lifetime value of customers

4. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-4 Marketing What Isn’t There  Intangibles: Services and other experience-based products that cannot be touched Example: concerts, tax preparation, haircuts, medical diagnosis, etc. Example: concerts, tax preparation, haircuts, medical diagnosis, etc.  Does marketing work for intangibles? Yes!

5. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-5 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

6. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-6 Characteristics of Services  Intangibility: Can’t see, touch, or smell a service Can’t see, touch, or smell a service  Perishability: Can’t be stored for later sale or use Can’t be stored for later sale or use  Variability: Even the same service performed by the same person will vary Even the same service performed by the same person will vary  Inseparability: It is impossible to separate the production of a service from its consumption It is impossible to separate the production of a service from its consumption

7. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-7 Characteristics of Services  Service encounter: The interaction between the customer and the service provider  Service encounter dimensions: Social contact dimension Social contact dimension Physical dimension Physical dimension  The quality of service is only as good as its worst employee

8. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-8 The Service Continuum  The service continuum classifies services based on: Whether the service is performed directly on the customer or on some possession that the customer owns Whether the service is performed directly on the customer or on some possession that the customer owns Whether the service consists of tangible or intangible actions Whether the service consists of tangible or intangible actions

9. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-9 The Services Continuum  Most products are a combination of goods and services  Products vary in their level of tangibility: Tangible: salt, necktie, dog food Tangible: salt, necktie, dog food Intangible: teaching, nursing, theater Intangible: teaching, nursing, theater Balanced products: fast food, television Balanced products: fast food, television

10. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-10 The Services Continuum  Goods-dominated products include: Firms that sell tangible products still provide support services Firms that sell tangible products still provide support services  Equipment- or facility-based services include: Operational factors, locational factors, and environmental factors are important Operational factors, locational factors, and environmental factors are important  People-based services include: Increasing in importance as people lack the time or expertise to do on their own Increasing in importance as people lack the time or expertise to do on their own

11. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-11  Core service: The benefit a customer gets from the service The benefit a customer gets from the service  Augmented service: Core service plus additional services that enhance value Core service plus additional services that enhance value Augmented services help to differentiate businesses from one another Augmented services help to differentiate businesses from one another Core and Augmented Services

12. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-12 The Service Encounter  Physical elements of the service encounter Servicescape: Environment in which the service is delivered and where the firm and customer interact 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 Servicescapes influence purchase decisions, service quality evaluations, and customer satisfaction

13. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-13 The Service Encounter  Web sites influence customer perceptions First stop for many potential customers First stop for many potential customers Poor navigation, unattractive sites offer negative first impressions Poor navigation, unattractive sites offer negative first impressions SEO (search engine optimization) is critical for getting noticed SEO (search engine optimization) is critical for getting noticed

14. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-14 Providing Quality Service  Quality service ensures that customers are satisfied with that for which they have paid  Satisfaction is based on customer expectations  Not all customers expect the same level of service  Not all customers can be satisfied

15. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-15 Service Quality Attributes  Search qualities: Characteristics that the consumer can examine before purchase Characteristics that the consumer can examine before purchase  Experience qualities: Characteristics that buyers can determine during or after consumption Characteristics that buyers can determine during or after consumption  Credence qualities: Characteristics that are difficult to evaluate even after they have been experienced Characteristics that are difficult to evaluate even after they have been experienced

16. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-16 Measuring Service Quality  Several methods of measuring service quality exist: Mystery shoppers Mystery shoppers Lost customers Lost customers SERVQUAL scale SERVQUAL scale Gap analysis Gap analysis Critical incident technique Critical incident technique

17. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-17 Measuring Service Quality  SERVQUAL scale (questionnaire) measures customer perceptions of five key dimensions as follows: Tangibles Tangibles Reliability Reliability Responsiveness Responsiveness Assurance Assurance Empathy Empathy

18. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-18 Measuring Service Quality  Additional methods of measuring service quality: Gap analysis measures the difference between actual and expected service quality Gap analysis measures the difference between actual and expected service quality Critical incident technique uses customers’ complaints to identify problems that lead to dissatisfaction Critical incident technique uses customers’ complaints to identify problems that lead to dissatisfaction

19. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-19 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 Development of effective marketing strategies Fast and appropriate responses to service failures Fast and appropriate responses to service failures

20. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-20 The Future of Services  New dominant logic for marketing: Argues that service is the central core deliverable in every exchange Argues that service is the central core deliverable in every exchange  Services will continue to grow due to several factors: Changing demographics Changing demographics Globalization Globalization Technological advances Technological advances Proliferation of information Proliferation of information

21. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-21  Politicians and celebrities are commonly marketed as follows: Consultants “package” candidates or celebrities Consultants “package” candidates or celebrities Celebrities often rename themselves to craft a “brand identity” Celebrities often rename themselves to craft a “brand identity” Other techniques for selling celebrities: Other techniques for selling celebrities:  The pure selling approach  The product improvement approach  The market fulfillment approach Marketing People, Places, and Ideas

22. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-22 Marketing People, Places, and Ideas  Place marketing strategies treat a city, state, country, or other locale as a brand  The marketing mix creates an identity Example: Shreveport-Bossier shares more characteristics with East Texas than it does with New Orleans, and now markets itself using the “Louisiana’s Other Side" campaign Example: Shreveport-Bossier shares more characteristics with East Texas than it does with New Orleans, and now markets itself using the “Louisiana’s Other Side" campaign

23. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-23 Marketing People, Places, and Ideas  Marketing ideas include: Gaining market share for a concept, philosophy, belief, or issue 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 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

24. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-24 Real People, Real Choices: Decision Made at the Philadelphia 76ers  Lara chose option 1 Why do you think Lara chose to implement a CRM database? Why do you think Lara chose to implement a CRM database?

25. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-25 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.

26. © 2012 Pearson Education, Inc. publishing as Prentice-Hall.10-26 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