1. Different Perspectives
SERVICES: All economic activities whose output is not a physical product
Service industries (e.g., transportation, shipping, lodging, health care, etc.)
Services as “products” (IT consulting by IBM/Dell/HP, service insurance by Sony, etc.)
Customer service (answering questions, handling complaints, taking orders, etc. Typically no charge)

2. Examples of Service Industries
Health Care
hospital, medical practice, dentistry, eye care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Hospitality
restaurant, hotel/motel, bed & breakfast
ski resort, rafting
Travel
airline, travel agency, theme park
Others
hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design

3. Tangibility Spectrum             Intangible Dominant
Figure 1.2
Salt 
Soft Drinks 
Detergents 
Automobiles 
Cosmetics 
Fast-food
Outlets 
Intangible
Dominant
Tangible
Dominant  
Fast-food
Outlets 
Advertising
Agencies 
Airlines 
Investment
Management 
Consulting
Teaching

4. What is Service? The New View
Service includes every interaction between any customer and anyone representing the company, including:
Dealers
Salespeople
Receptionists and Schedulers
Management and Executives
Service Employees
Billing and Accounting Personnel
Web site and any e-channel Interaction
Customer 4

5. Service Can Mean all of These
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Academic Areas
Centers & Institutes
The Kenan Institute
Contact Us
Kenan-Flagler Gear
Service Can Mean all of These
Service as a product
Customer service
Services as value add for goods
Service embedded in a tangible product
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6. Characteristics of Services Compared to Goods
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability

7. Implications of Intangibility
Services can not be inventoried
Services can not be easily patented
Services can not be readily displayed or communicated (quality)
Pricing is difficult

8. Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee and customer actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted

9. Implications of Simultaneous Production and Consumption
Customers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult

10. Implications of Perishability
It is difficult to synchronize supply and demand with services
Services can not be returned or resold
Services can not be put in inventory

11. Consumer Evaluation Processes for Services
Search Qualities
attributes a consumer can determine prior to purchase of a product
Experience Qualities
attributes a consumer can determine after purchase (or during consumption) of a product
Credence Qualities
characteristics that may be impossible to evaluate even after purchase and consumption

12. Continuum of Evaluation for Different Types of Products
Clothing
Jewelry
Furniture
Houses
Automobiles
Restaurant meals
Vacations
Haircuts
Child care
Television repair
Legal services
Root canals
Auto repair
Medical diagnosis
Most
Goods
Most
Services
Easy to evaluate
Difficult to evaluate
High in search
qualities
High in experience
qualities
High in credence
qualities

13. Traditional Marketing Mix
All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:
Product
Price
Place
Promotion

14. Add to the Mix More than the conventional marketing mix People
All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.
Physical Evidence
The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
Process
The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.

15. Expanded Marketing Mix for Services

16. Think about a service you receive.
Is there a gap between your expectations and perceptions of that service?
What do you expect that you do not receive?

17. Think about a service you receive.
Is there a gap between your expectations and perceptions of that service?
What do you expect that you do not receive?
I wish my oil change service could be done at my home, or where I work, so that I would not have to drive to a specific location and wait in line.
I wish my bank would ….
I wish my dry cleaning service would pick up clothes from my home and deliver them to my home.

18. Gaps Model of Service Quality
Expected Service
CUSTOMER
Customer
Gap
Perceived
Service
COMPANY
External Communications to Customers
Service
Delivery
Gap 4
Gap 3
Gap 1
Customer-Driven Service Designs and Standards
Gap 2
Company Perceptions of Consumer Expectations

19. The Customer Gap
Expected
service
Customer Gap
Perceived
service

20. Gaps Model of Service Quality
Customer Gap:
difference between customer expectations and perceptions
Provider Gap 1 (The Knowledge Gap):
not knowing what customers expect, want, need
Provider Gap 2 (The Service Design & Standards Gap):
not having the right service designs and standards
Provider Gap 3 (The Service Performance Gap):
not delivering to service standards
Provider Gap 4 (The Communication Gap):
not matching performance to promises

21. Gaps Model of Service Quality
Expected Service
CUSTOMER
Customer
Gap
Perceived
Service
COMPANY
External Communications to Customers
Service
Delivery
Gap 4
Gap 3
Gap 1
Customer-Driven Service Designs and Standards
Gap 2
Company Perceptions of Consumer Expectations

22. Key Factors Leading to the Customer Gap
Customer Expectations
Customer
Perceptions

23. Gaps Model of Service Quality
Expected Service
CUSTOMER
Customer
Gap
Perceived
Service
COMPANY
External Communications to Customers
Service
Delivery
Gap 4
Gap 3
Gap 1
Customer-Driven Service Designs and Standards
Gap 2
Company Perceptions of Consumer Expectations

24. Key Factors Leading to Provider Gap 1 The Knowledge Gap
Customer Expectations
Company Perceptions of Customer Expectations

25. Key Factors Leading to Provider Gap 2 The Service Design & Standards Gap
Company Perceptions of Customer Expectations
Customer-Driven Service Designs and Standards

26. Key Factors Leading to Provider Gap 3 The Service Performance Gap
Customer-Driven Service Designs and Standards
Gap 3
Service Delivery

27. Key Factors Leading to Provider Gap 4 The Communication Gap
Service Delivery
External Communications to Customers

28. Gaps Model of Service Quality
Expected Service
CUSTOMER
Customer
Gap
Perceived
Service
COMPANY
External Communications to Customers
Service
Delivery
Gap 4
Gap 3
Gap 1
Customer-Driven Service Designs and Standards
Gap 2
Company Perceptions of Consumer Expectations