1. McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2. Describe four unique elements of services. LO1 Recognize how services differ and how they can be classified. Explain how consumers purchase and evaluate services. LO3 LO2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 12, YOU SHOULD BE ABLE TO: Develop a customer contact audit to identify service advantages. LO4 12-2

3. Discuss the important roles of internal marketing and customer experience management. LO5 Explain the role of the four Ps in the services marketing mix. LO6 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 12, YOU SHOULD BE ABLE TO: 12-3

4. SPACE TOURISM TAKES OFF! 12-4

5. FIGURE 12-1 FIGURE 12-1 Services are now a larger part of the U.S. gross domestic product (GDP) 12-5

6. THE UNIQENESS OF SERVICES THE FOUR I’S OF SERVICES LO1  Services Services  Four I’s of Services Four I’s of Services Intangibility Inseparability Inconsistency Inventory  Idle Production Capacity Idle Production Capacity 12-6

7. FIGURE 12-A FIGURE 12-A The 4 I’s of services 12-7

8. Lufthansa, American Express, and Allstate What 4 I’s of services element? LO1 12-8

9. FIGURE 12-2 FIGURE 12-2 Inventory carrying costs of services depend on the cost of employees and equipment 12-9

10. THE UNIQENESS OF SERVICES THE CONTINUUM & CLASSIFICATION OF SERVICES LO2  Service Continuum Service Continuum  Classifying Services Delivery by People or Equipment Profit or Nonprofit Organizations Government Sponsored 12-10

11. FIGURE 12-3 FIGURE 12-3 The service continuum shows how offerings can vary in their balance of goods and services 12-11

12. FIGURE 12-4 FIGURE 12-4 Services can be classified as equipment-based or people-based 12-12

13. Red Cross, U.S. Postal Service, and Susan G. Komen Race for the Cure What is the classification of each service? LO2 12-13

14. HOW CONSUMERS PURCHASE SERVICES LO3  The Purchase Process Search Properties Experience Properties Credence Properties 12-14

15. FIGURE 12-5 FIGURE 12-5 Consumers use search, experience, and credence properties to evaluate services 12-15

16. HOW CONSUMERS PURCHASE SERVICES LO3  Assessing Service Quality Gap Analysis Monitoring Service Failure 12-16

17. FIGURE 12-6 FIGURE 12-6 The five dimensions of service quality 12-17

18. HOW CONSUMERS PURCHASE SERVICES LO4  Customer Contact and Relationship Management Customer Contact Audit Service Encounters A Customer’s Car Rental Activities Relationship Marketing 12-18

19. FIGURE 12-7 FIGURE 12-7 Customer contact audit for a car rental agency (green boxes = customer activity; orange boxes = employee activity) 12-19

20. MANAGING THE MARKETING OF SERVICES LO5  Internal Marketing Internal Marketing  Customer Experience Management (CEM) Customer Experience Management (CEM) 12-20

21. MANAGING THE MARKETING OF SERVICES LO5 Exclusivity  Product (Service)  Patent Branding Capacity Management  Load Factor 12-21

22. FIGURE 12-8 FIGURE 12-8 Different prices and packages help match demand to capacity 12-22

23. USING MARKETING DASHBOARDS Are JetBlue’s Flights Profitably Loaded? Airline Operating Income (Loss) per Available Seat Flown One Mile (ASM) 12-23

24. MANAGING THE MARKETING OF SERVICES LO5  Price  Off-Peak Pricing Off-Peak Pricing Affects Consumer Perceptions Is Used in Capacity Management 12-24

25. MANAGING THE MARKETING OF SERVICES LO5  Place (Distribution) Multiple Locations Electronic  Promotion 12-25

26.  Technological Development Mobility Convergence  Expanding Global Economy SERVICES IN THE FUTURE LO5 Personalization Collaboration 12-26

27. PHILADELPHIA PHILLIES, INC.: SPORTS MARKETING 101 VIDEO CASE 12 12-27

28. VIDEO CASE 12 PHILADELPHIA PHILLIES 12-28

29. VIDEO CASE 12 PHILADELPHIA PHILLIES 1. (a) What is the “product” that the Phillies market? (b) What “products” are the Phillies careful not to market? 12-29

30. VIDEO CASE 12 PHILADELPHIA PHILLIES 2. How does the “quality” dimension in marketing the Philadelphia Phillies as an entertainment service differ from that in marketing a consumer product such as a breakfast cereal? 12-30

31. VIDEO CASE 12 PHILADELPHIA PHILLIES 3. When David Montgomery talks about reducing the “inventory of seats” in the new versus old stadium, what does he recognize as (a) advantages and (b) disadvantages? 12-31

32. VIDEO CASE 12 PHILADELPHIA PHILLIES 4. Considering all five elements of the promotional mix (advertising, personal selling, public relations, sales promotion, and direct marketing), what specific promotional activities should the Phillies use? Which should be used off-season? During the season? 12-32

33. VIDEO CASE 12 PHILADELPHIA PHILLIES 5. What kind of special promotion gift days (with premiums) and event days (no premiums) can the Phillies use to increase attendance by targeting these fan segments: (a) 14 and under, (b) 15 and over, (c) other special fan segments, and (d) all fans? 12-33

34. HOW TO MANAGE YOUR CUSTOMER’S EXPERIENCE SUPPLEMENTAL LECTURE NOTE 12-1 12-34

35. SPORTS MARKETING SURPRISES SUPPLEMENTAL LECTURE NOTE 12-2 12-35

36. CUSTOMER CONTACT AUDIT FOR A SERVICE IN-CLASS ACTIVITY 12-1 12-36

37. FIGURE 12-B FIGURE 12-B Customer contact audit for Hertz car rental (green boxes = customer activity; orange boxes = employee activity) 12-37

38. 12-38

39. MARKETING A LOCAL WOMEN’S COLLEGIATE SPORTS TEAM IN-CLASS ACTIVITY 12-2 12-39

40. 12-40

41. 12-41

42. Services Services are the intangible activities or benefits that an organization provides to consumers in exchange money or something else of value. 12-42

43. Four I’s of Services The four I’s of services consists of the four unique elements to services: intangibility, inconsistency, inseparability, and inventory. 12-43

44. Idle Production Capacity Idle production capacity occurs when the service provider is available but there is no demand. 12-44

45. Service Continuum The service continuum consists of the range of offerings companies bring to the market, from the tangible to the intangible or good-dominant to service- dominant offerings. 12-45

46. Gap Analysis Gap analysis is a type of analysis that identifies the differences between a consumer’s expectations about and experiences with a service based on dimensions of service quality. 12-46

47. Customer Contact Audit A customer contact audit is a flowchart of the points of interaction between consumers and a service provider. 12-47

48. Internal Marketing Internal marketing is the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers. 12-48

49. Customer Experience Management (CEM) Customer experience management (CEM) is the process of managing the entire customer experience within the company. 12-49

50. Capacity Management Capacity management integrates the service component of the marketing mix with efforts to influence consumer demand. 12-50

51. Off-Peak Pricing Off-peak pricing involves charging different prices during different times of the day or days of the week to reflect variations in demand for the service. 12-51