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To accompany A Framework for Marketing Management, 2 nd Edition Slide 1 in Chapter 12 ©2003 Prentice Hall, Inc. Chapter 12 Chapter 12 Designing and Managing Designing and Managing Services Services PowerPoint by Karen E. James PowerPoint by Karen E. James Louisiana State University - Shreveport Louisiana State University - Shreveport

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Page 1: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 12©2003 Prentice Hall, Inc.

Chapter 12Chapter 12

Designing and Managing Designing and Managing ServicesServices

PowerPoint by Karen E. JamesPowerPoint by Karen E. JamesLouisiana State University - ShreveportLouisiana State University - Shreveport

Page 2: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 12©2003 Prentice Hall, Inc.

ObjectivesObjectives

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.

Page 3: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature of Services

The Service Industry includes the:

– Government sector– Private nonprofit sector– Business sector– Manufacturing sector

Page 4: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature 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

Page 5: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature of Services

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”

Page 6: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature of Services

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

Page 7: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature of Services

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

Page 8: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Services can not be inventoried or otherwise stored

Capacity / demand management is critical:

– Demand side strategies

– Supply side strategies

Page 9: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 12©2003 Prentice Hall, Inc.

Nature of ServicesNature of Services

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

Page 10: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing 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.

Page 11: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing 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.

Page 12: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing Strategies

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

Page 13: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing Strategies

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

Page 14: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing Strategies

Consumer expectations and management perceptions

Management perception and service-quality specification

Service-quality specifications and service delivery

Service delivery and external communications

Service Delivery Failure Results from Gaps Between:

Service-quality specifications and service delivery

Page 15: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing Strategies

A strategic concept

Commitment from top-management

High standards

Firm and customer monitoring systems

Well-Managed Service Firms Share These Characteristics

Satisfaction of employees and customers

Page 16: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 12©2003 Prentice Hall, Inc.

Marketing StrategiesMarketing Strategies

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

Page 17: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 12©2003 Prentice Hall, Inc.

Managing Product Support Managing Product Support ServicesServices

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

Page 18: Designing and Managing Services

To accompany A Framework for Marketing Management, 2nd Edition Slide 18 in Chapter 12©2003 Prentice Hall, Inc.

Managing Product Support Managing Product Support ServicesServices

Marketers must design appealing and competitive service offerings that will attract customers. Service offerings should include:

– Facilitating services– Value-augmenting services– Optional service contracts