Designing and Managing Services - A Framework for Marketing Management

1. Chapter 12 Designing and Managing Services PowerPoint by Karen E. James Louisiana State University - Shreveport To accompany A Framework for Marketing Management, 2nd Edition

2. Objectives • Learn how services are defined and classified. • Understand how service firms improve their competitive differentiation, service quality, and productivity. • Identify how goods-producing companies can improve their customer support services. To accompany A Framework for Marketing Management, 2nd Edition

3. Nature of Services • The Service Industry includes the: • Government sector • Private nonprofit sector • Business sector • Manufacturing sector To accompany A Framework for Marketing Management, 2nd Edition

4. Nature of Services • Service Mix Categories: • Pure tangible good: no services • Tangible good with accompanying services • Hybrid: equal parts service and goods • Major service with accompanying minor goods and services • Pure service To accompany A Framework for Marketing Management, 2nd Edition

5. Characteristics Intangibility Inseparability Variability Perishability Cannot be touched, seen, tasted, heard, or smelled before purchase Lack of trial means higher consumer risk Consumers rely on cues to draw quality inferences Marketers must try to “tangibilize the intangible” Nature of Services To accompany A Framework for Marketing Management, 2nd Edition

6. Characteristics Intangibility Inseparability Variability Perishability Services are produced and consumed at the same time (air travel) Service providers and sometimes other customers become part of the service (restaurant) Strong preferences for service providers exist Nature of Services To accompany A Framework for Marketing Management, 2nd Edition

7. Characteristics Intangibility Inseparability Variability Perishability Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day. Quality control is critical: Hiring the right people Standardizing service Monitoring satisfaction Nature of Services To accompany A Framework for Marketing Management, 2nd Edition

8. Characteristics Intangibility Inseparability Variability Perishability Services can not be inventoried or otherwise stored Capacity / demand management is critical: Demand side strategies Supply side strategies Nature of Services To accompany A Framework for Marketing Management, 2nd Edition

9. Demand-side strategies Use differential pricing Cultivate nonpeak demand Develop complementary services Install reservation systems Supply-side strategies Hire part-time employees Introduce peak-time efficiency routines Increase consumer participation Plan facilities for future expansion Share services Nature of Services To accompany A Framework for Marketing Management, 2nd Edition

10. Marketing Strategies • People, physical evidence, and process must be considered in addition to the 4 “P’s” when creating external marketing plans. • Successfully delivering a service often depends on staff being trained via internal marketing efforts. To accompany A Framework for Marketing Management, 2nd Edition

11. Marketing Strategies • Interactive marketing refers to the employees’ skill in serving the client. • Customers judge a service by its: • Technical quality • Functional quality • Search qualities, experience qualities and credence qualities are evaluated by customers. To accompany A Framework for Marketing Management, 2nd Edition

12. Marketing Tasks Managing differentiation Managing service quality Managing productivity Can not differentiate on price alone Innovative features Delivery system Reliability Resilience Innovativeness Image and branding Marketing Strategies To accompany A Framework for Marketing Management, 2nd Edition

13. Marketing Tasks Managing differentiation Managing service quality Managing productivity The service quality model identifies five gaps that can cause service delivery failure Service companies that successfully address these gaps follow common practices Marketing Strategies To accompany A Framework for Marketing Management, 2nd Edition

14. Consumer expectations and management perceptions Management perception and service-quality specification Service-quality specifications and service delivery Service delivery and external communications Marketing Strategies Service Delivery Failure Results from Gaps Between: • Service-quality specifications and service delivery To accompany A Framework for Marketing Management, 2nd Edition

15. A strategic concept Commitment from top-management High standards Firm and customer monitoring systems Marketing Strategies Well-Managed Service Firms Share These Characteristics • Satisfaction of employees and customers To accompany A Framework for Marketing Management, 2nd Edition

16. Marketing Tasks Managing differentiation Managing service quality Managing productivity Have service providers work more skillfully Decrease service quality, increase service quantity Industrialize the service Reduce need for service Design a more effective service Give customers incentives to serve themselves Use technology Marketing Strategies To accompany A Framework for Marketing Management, 2nd Edition

17. Managing Product Support Services • Product support services are often sources of competitive advantage • When designing service support programs, marketers must consider key customer concerns: • Failure frequency • Downtime duration • Out-of-pocket expenses To accompany A Framework for Marketing Management, 2nd Edition

18. Managing Product Support Services • Marketers must design appealing and competitive service offerings that will attract customers. Service offerings should include: • Facilitating services • Value-augmenting services • Optional service contracts To accompany A Framework for Marketing Management, 2nd Edition