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Designing and
Managing Services
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Contents.
1. The Nature of Services
2. Marketing Strategies for Services Firms
3. Managing Services Quality4. Managing Services Brands
5. Managing Product Support Services
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1. The Nature of Services
What is a Service?
A service is any act of performancethat one party can offer another that is
essentially intangible and does notresult in the ownership of anything; its
production may or may not be tied to aphysical product.
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Service Sectors
Government
Private nonprofit Business
Manufacturing
Retail
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% of U.S. GDP by Industry
0
10
20
30
40
50
60
70
80
1948 1959 1967 1977 1987 1999
PercentofGDP
Year
Servic es
Manufacturing
Mining & Agriculture
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100.006,149,432
3.66225,360Import duty
50.829.41578,778COMMUNITY, SOCIAL AND PERSONAL SERVICES
2.20135,079HEALTH AND SOCIAL WORKS
2.53155,871EDUCATION2.67164,203PUBLIC ADMINISTRATION AND DEFENCE
6.77416,038REAL ESTATE, RENTING AND BU SINESS ACTIVITIES
1.65101,721FINANCIAL INTERMEDIATIONS
10.61652,500TRANSPORT, STORAGE & COMMUNICATION
0.7244,372HOTEL AND RESTAURANTS
14.26876,766WHOLESALE AND RETAIL TRADE
8.14500,849CONSTRUCTION
1.0564,520ELECTRICITY, GAS AND W ATER SUPPLY
17.221,058,902MANUFACTURING
1.1470,320MINING AND QUARRYING
3.55218,138FISHING
14.41886,015AGRICULTURE AND FORESTRY
%2008-2009
(Million Tk.)Gross Domestic Product of Bangladesh at Current Prices
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Categories of Service Mix
Pure tangible good
Good with accompanying services
Hybrid
Service with accompany goods Pure service
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Tangibility Spectrum
Tangible
Dominant
IntangibleDominant
Salt
Soft Drinks
DetergentsAu to mo bi les
Cosmetics
Ad ver ti si ngAg enc ies
Air l in esInvestment
Management
ConsultingTeaching
Fast-foodOutlets
Fast-foodOutlets
Slider/Track Control
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Service Distinctions
Equipment-based or people-based
Service processes (Restaurants: caf,fast-food, Buffet)
Clients presence required or not Personal needs or business needs
Objectives (Profit/Non-profit) &ownership (Private/Public)
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Distinctive Characteristicsof Services
Intangibility
Inseparability
Variability
Perishability
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Physical Evidence & Presentation
Place
People
Equipment
Communication material Symbols
Price
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Variability
How to Increase Quality Control
Invest in good hiring & training procedures
Standardize the service-performance process
Monitor customer satisfaction
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Perishability
Matching Demand & Supply
Demand side
Differential pricing
Nonpeak demand
Complementary
services
Reservation
systems
Supply side
Part-time employees
Peak-time efficiency
Increased consumer
participation
Shared services
Facilities for future
expansion
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Inseparability
?
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2. Marketing Strategies for Services Firms
A Shifting Customer Relationship
BusinessWeek, Oct 23, 2000, issues over story called"Why Service Stinks ," based in part on the fact that from1994 to 2000, customer satisfaction in USA dropped
12.5 % for airlines,8.1 % for banks,
6.5 % for stores, &
4 % for hotels.
Rachet/ Ratchet Effect
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Factors Leading to CustomerSwitching Behavior
Pricing
Inconvenience
Core Service Failure
Service Encounter Failures
Response to Service Failure
Competition
Ethical Problems
Involuntary Switching
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Holistic Marketing for Services
The Services Marketing Triangle
Internal Marketing
Interactive Marketing
External Marketing
Company(Management)
CustomersEmployees
Enab ling the promise
Delivering the promise
Making the promise
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3. Managing Services Quality
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Determinants of Service Quality
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Determinants of Service Quality
Reliability
Responsiveness
Assurance
Empathy Tangibles
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1.Reliability: Ability to perform the promisedservice dependably and accurately.
Examples of Customers Questions:
Did Pizza Hut deliver the pizza within 30minutes?
2.Responsiveness: Willingness to help customersand provide prompt service.
Example of Customers Question:
Is my stockbroker willing to answer myquestions?
Determinants of Service Quality
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3.Assurance: Employees knowledge and courtesy andtheir ability to inspire trust and confidence.
Examples of Customers Questions:
Does the Dentist appear competent?
Does the flight attendant have a pleasant manner?4.Empathy: Caring and Individualized attention to thecustomers.
Examples of Customers Questions:
Is the Bank manager listening to my financialobjectives?
Determinants of Service Quality (Contd.)
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5.Tangibles: The appearance of physicalfacilities, equipment, personnel and
communication materials like reports, letters.
Examples of Customers Questions:
Is my accountant dressed appropriately?
Is my bank statement easy to understand?
Are the hotels facilities attractive?
Determinants of Service Quality
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Improving Service Quality
Listening
Reliability
Basic service
Service design
Recovery
Surprising customers
Fair play
Teamwork
Employee research
Servant leadership
(Jesus urged his
followers to be
servants first.)
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Best Practices of Service QualityManagement
Strategic Concept
Top-Management Commitment
High Standards
Self-Service Technologies (SSTs)
Monitoring Systems
Satisfying Customer Complaints
Satisfying Employees
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A) Identifying & Satisfying Customer
Needs Failure frequency
Downtime
Out-of-pocket costs
B) Postsale Service Strategy
Product take back
4. Managing Product Support Services
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