Managing Services

What is a Service?

• Any intangible activity or benefit that an organization provides to customers in exchange for money or something else of value

• Examples:– Airline trips– Financial advice– Auto repair

Services

• 40% of US GDP comes from services

• One of the few areas where the US has a trade surplus

Services – The Four I’s

• Intangibility

• Inconsistency

• Inseparability

• Inventory

• Services can’t be held, touched, or seen before the purchase

• Performance based, hard to evaluate

• Have to show tangibility by showing benefits

• Examples– Predators Frequent Fang Club– Red Roof Inn points system

Services – The Four I’sIntangibility

• Service quality is often inconsistent– Service employees can have bad days– Makes service development, price, promotion,

and service delivery difficult– Decrease inconsistency by standardization

and training– Examples

• Tim McGraw concert• Air Jamaica flights

Services – The Four I’sInconsistency

• Difficult to separate the service from the service provider– Treasure Island

Service – The Four I’sInseparability

• Service inventories are not perishable, makes costs very subjective

• Idle production capacity– When the service provider is available but

there is no demand for the service

• Costs include paying service providers and equipment needed to provide the service

Service – The Four I’sInventory

• The range from the tangible to the intangible or good-dominate to service-dominate offerings available to the marketplace

Service Continuum

• With some companies, it’s hard to tell if they are service-based or good-based

• Theatre is service oriented, so the 4 I’s are very relevant to their marketing efforts

• Dog food is good-based, 4 I’s are not relevant to marketing efforts

• Pet Smart is both service-based and goods-based

Service Continuum

• Core services– Main offering by a company

• Supplementary services– Support services

• Supplementary services are a way to differentiate from competition

Service Continuum

Sports as a Service

• Can’t control how a team is going to perform during the season

• Want to create entertainment value– NASCAR– NHL

Classifying Services

• Is the service delivered by people or equipment?

• Is the service profit or non-profit?

• Is the service government sponsored?

• If the service is delivered by people, then inconsistency is an issue.

• Equipment delivered services do not have inconsistency issues

• Marketing efforts are different for each

Classifying Services Delivery?

• Non-profits excess revenue are not taxed or given to shareholders, just helps to continue service

Classifying ServicesProfit or Non-profit?

• Government services are not non-profit, but there is not a direct ownership either.

• US Post Office

Classifying Services Government Sponsored?

Purchase Process for Services

• Consumers perception of a service can change with each purchase

• Services have experience properties– Can’t evaluate until after purchase or during

consumption

Purchase Process for Services

• Tangible goods have search properties– Can determine some characteristics before

purchase

• Services have credence properties– Can’t evaluate even after purchase (medical

diagnosis, legal services)

Purchase Process for Services

• How can service provider reduce uncertainty?– By reaching early adopters, opinion leaders,

and reference group positive opinions

Assessing Service Quality

• Evaluating services is done by comparing customer expectations to actual experiences

• Gap analysis– Difference between expectations and actual

experiences

• Word of mouth, personal needs, previous experiences, promotional activities are all influences of expectations

• How the service is delivered is how actual experiences are determined

Assessing Service Quality

Assessing Service Quality

Relationship Marketing

• Customer contact with service providers influence customer evaluation of the service

• State parks– Lodging staff, restaurant staff, lifeguards, golf

shop employees

• Want to create bonds with customers

• Loyalty incentives– Frequent flyer miles

Marketing Services

• Internal marketing is based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers– Recruitment, training, communication,

coaching, management, leadership

• Exclusivity– Services can’t be patented like products– Need to set your core service apart from

others with great supplementary services

Marketing Services – Product

• Branding– Brand name or logo is really important to

services because they are harder to describe than products

Marketing Services – Product

Capacity Management

• Integrating the service component of the marketing mix with the efforts to influence consumer demand

• Service capacity is lost if not used– ER

Marketing Services – Product

Capacity Management

• Schedule services so that– Demand matches capacity over duration of

the demand cycle– Assets are utilized so that they maximize ROI

Marketing Services – Product

• Fees, charges, rates, fares• Role of price

– Consumer Perception• Plastic surgery• Haircuts

– Capacity Management• Off-peak pricing is where different prices are charged

during different times of day or days of the week to reflect variations in service demand

• Hotels, movies

Marketing Services – Price

• Needs to be convenient because of increased competition– ATMs– McDonald’s vs. Dairy Queen

Marketing Services – Place

• Focus on service availability, location, consistency, and efficient courteous service

Marketing Services – Promotion

• Publicity– A nonpersonal, indirectly paid presentation of

an organization, good, or service– Nashville Ballet, Nashville Symphony– PSA (public service announcement)

• Free form of publicity for non-profits• Organization has no control over

where/when message is delivered

Marketing Services – Promotion