1. CHAPTER SERVICES: THE INTANGIBLE PRODUCT 12 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 12-2 LEARNING OBJECTIVES Services: The Intangible Product LO1 Describe how the marketing of services differs from the marketing of products. LO2Discuss the four gaps in the Service Gap Model. LO3 Examine the five service quality dimensions. LO4Explain the zone of tolerance concept. LO5Identify three service recovery strategies.

3. 12-3 Apple Genius Bar ©Andy Kropa 2006/Redux

4. 12-4 Service By providing good customer service, firms add value to their products and services. Lands’ End Website PhotoLink/Getty Images

5. 12-5 The Service Product Continuum Most offerings lie somewhere in the middle 1. Dynamic Graphics/Jupiter Images 2. ©Jose Fuste Raga/CORBIS 3. The McGraw-Hill Companies, Inc/Andrew esek, Photographer 4. John A Rizzo/Getty Images 5. ©Charles Bowman/Alamy 6. ©Photodisc 1 2 3 4 5 6

6. 12-6 Offering a service with your products ©General Mills

7. 12-7 Economic Importance of Service Household maintenance became more specialized High value placed on convenience and leisure Production was cheaper in other countries Developed economies are increasingly service oriented economies

8. 12-8 Services Marketing Differs from Product Marketing

9. 12-9 Intangible Requires using cues to aid customers Atmosphere is important to convey value Images are used to convey benefit of value

10. 12-10 Inseparable Production and Consumption Production and consumption are simultaneous Little opportunity to test a service before use Lower risk by offering guarantees or warranties FedEx Commercial Ryan McVay/Getty Images

11. 12-11 Variable TechnologyTrainingAutomation Courtesy Geek Housecalls, Inc.

12. 12-12 Perishable How are each of these perishable services? John Foxx/Getty ImagesPhotoLink/Getty ImagesCourtesy Geek Housecalls, Inc.

13. 12-13 1. What are the four marketing elements that distinguish services from products? 2. Why can’t we separate firms into just service or just product sellers? Check Yourself

14. 12-14 Providing Great Service: The Gaps Model

15. 12-15 The Knowledge Gap: Knowing What Customers WantKnowledge Gap Marketing research: understanding customers Evaluating service quality Understanding customer expectations The Knowledge Gap

16. 12-16 McDonald’s 24/7

17. 12-17 Filling the Knowledge Gap How does a college increase successful outcomes for its students? Photodisc Collection/Getty Images

18. 12-18 Understanding Customer Expectations Expectations are based on knowledge and experienceExpectations vary according to type of serviceExpectations vary depending on the situation versus Mel Curtis/Getty ImagesKim Steele/Getty Images

19. 12-19 Evaluating Service QualityService Quality

20. 12-20 Royalty-Free/CORBIS Marketing Research: Understanding Customers Voice-of-customer program YouTube Commercial The McGraw-Hill Companies, Inc/ Andrew Resek, photographer Liquidlibrary/Dynamic Graphics/Jupiter Images

21. 12-21 Zone of Tolerance What is the desired and expected level of service for each dimension? What are the customer’s perceptions of how well the focal service performs and how well a competitive service performs? What is the importance of each service quality dimension?

22. 12-22 Customer Evaluation of Service Quality

23. 12-23 The Standards Gap: Setting Service StandardsStandards Gap Developing systems to ensure high- quality service Developing systems to ensure high- quality service Setting standards for quality Royalty-Free/CORBIS

24. 12-24 The Delivery Gap: Delivering Service QualityDelivery Gap

25. 12-25 What Airline Workers Learn from NASCAR

26. 12-26 Empowering Service Providers Allowing employees to make decisions about how service is provided to customers Don Bishop/Getty Images

27. 12-27 Providing Support and Incentives Provide emotional support to service providers Provide support necessary to deliver service Consistent and coherent management Reward employees for excellent service Reducing delivery gap

28. 12-28 Use of Technology RFID (radio frequency identification device) Retail store assistant (RSA) Courtesy IBM Corporation

29. 12-29 The Communications Gap: Communicating the Service PromiseCommunications Gap Manage customer expectations Promise only what you can deliver Communicate service expectations J.D. Power and Associates Website Getty Images

30. 12-30 1. Explain the four service gaps identified by the Gaps Model. 2. List at least two ways to overcome each of the four service gaps. Check Yourself

31. 12-31 Service Recovery Increase Service Recovery Listen to the customer Resolve problems quickly Provide a fair solution

32. 12-32 Listening to the Customer Customers get emotional over a service failure Often customers just want someone to listen ©Digital Vision ©Digital Vision/Punchstock

33. 12-33 Finding a Fair Solution Distributive fairness Procedural fairness Royalty-Free/CORBIS

34. 12-34 Resolving Problems Quickly The longer it takes to resolve service failure the more irritated the customers It is in the firms best interest to solve problems quickly ©Michael Newman/PhotoEdit, Inc

35. 12-35 Check Yourself 1. Why is service recovery so important to companies? 2. What can companies do to recover from a service failure?

36. 12-36 Return to slide The communications gap refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises. Glossary

37. 12-37 Return to slide The delivery gap is the difference between the firm’s service standards and the actual service it provides to customers. Glossary

38. 12-38 Return to slide The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations. Glossary

39. 12-39 Return to slide A service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed. Glossary

40. 12-40 Return to slide Service quality is the customers’ perceptions of how well a service meets or exceeds their expectations. Glossary

41. 12-41 Return to slide The standards gap is the difference between the firm’s service standards and the actual service it provides to customers. Glossary

42. 12-42 Return to slide A voice-of-customer (VOC) program collects customer inputs and integrates them into managerial decisions. Glossary

43. 12-43 Return to slide A zone of tolerance is the area between customers’ expectations regarding their desired service and the minimum level of acceptable service. Glossary