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C hapter 2 F undamental D ifferences B etween G oods and S ervices. INTANGIBILITY: ASSOCIATED PROBLEMS. Lack the ability to be stored Not protected by patents Not easily displayed or communicated Pricing is difficult. INTANGIBILITY: SUGGESTED SOLUTIONS.
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INTANGIBILITY: ASSOCIATED PROBLEMS • Lack the ability to be stored • Not protected by patents • Not easily displayed or communicated • Pricing is difficult
INTANGIBILITY:SUGGESTED SOLUTIONS • Use tangible clues/physical evidence • Utilize personal sources of information • Create a strong organizational image
INSEPERABILITY:ASSOCIATED PROBLEMS • Service provider is involved in the production process • Other customers are involved in the production process (shared experience) • The mass production of services presents special challenges
INSEPARABILITY:ASSOCIATED PROBLMES • Customer is involved in the production process: • impact on the type of service desired • length of the delivery process • cycle of service demand • service factory must be built with the customer’s presence in mind
INSEPARABILITY:SUGGESTED SOLUTIONS • Focus on the training and selection of public contact personnel • Develop strategies to manage consumers • Develop multi-site locations
HETEROGENEITY:ASSOCIATED PROBLEMS • Standardization and quality control are difficult to achieve
HETEROGENEITY:SUGGESTED SOLUTIONS • Customization • Constructed to fit customer’s exact needs • Increased profit potential • Standardization • Faster • Less expensive • More consistent
PERISHABILITY:ASSOCIATED PROBLEMS • Services cannot be inventoried • Production and consumption cannot be separated by time and space • Statistical sampling techniques cannot be used • Marketing and production must work together
DEMAND AND SUPPLY SCENARIOS • Demand exceeds maximum available supply • Demand exceeds optimum supply level • Demand is below optimal levels of supply • Demand and supply are at optimal levels
STRATEGIES FOR ALTERING DEMAND AND SUPPLY DEMAND STRATEGIES: • Creative pricing strategies • Reservation systems • Complementary services • Developing nonpeak demand • utilizing nonpeak periods to prepare for peak periods • appeal to different market segments with different demand patterns
STRATEGIES FOR ALTERING DEMAND AND SUPPLY SUPPLY STRATEGIES: • Utilize part-time employees • Share capacity • Prepare in advance for expansion • Utilize third-parties
STRATEGIES FOR ALTERING DEMAND AND SUPPLY SUPPLY STRATEGIES: • Increase customer participation • Advantages: • convenience • price • customization • Disadvantages: • loss of control over service quality • may be perceived as an attempt to distance form from customer
THE ROLE OF MARKETING IN A SERVICE FIRM • Different functions are interwoven • Marketing must maintain closer relationships with other departments • Marketing, operations, and human resources should work together.