Chapter 1 Overheads

Chapter 12Services and Non-profit Marketing 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinServices DefinedA service is the .............of applying human or mechanical efforts to .................

A service involves a .........., ............or ...........that can not be physically possessed. 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinServices DefinedA service is the result of applying human or mechanical efforts to people or objects.

A service involves a deed, performance or effort that can not be physically possessed. 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinServices contribute to our economy- GREATLY

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin01020304050607080192919481969197719841999Percent of U.S. Labor ForceSource: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S. Economy, Scientific American, 244,3 (1981): 31-39. Year Services Manufacturing Mining & Agriculture

Percent of U.S. Labor Force by Industry 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin5Why the changeThe Service Product ContinuumMost offerings lie somewhere in the middle

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin6Services Marketing Differs from Product Marketing

Heterogeneous 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin7Implications of IntangibilityServices cannot be _________________

Services cannot be easily ___________

Services cannot be _________________

Pricing is _________________ 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinImplications of HeterogeneityService delivery and customer satisfaction depend on _________________

Service quality depends on many _________________

There is no sure knowledge that the service delivered matches what was planned and promoted 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinImplications of Simultaneous Production and ConsumptionCustomers participate in and affect the transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

_________________ is difficult 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinImplications of PerishabilityIt is difficult to synchronize supply and demand with services

Services cannot be _________________ 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinService Quality is more difficult to determine than goods quality: we need:Ability to perform the promised service dependably and accurately.

Knowledge and courtesy of employees and their ability to inspire trust and confidence.

Physical facilities, equipment, and appearance of personnel. Caring, individualized attention the firm provides its customers.

Willingness to help customers and provide prompt service.TangiblesReliabilityRA..E.. 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinService FailuresWhat are your experiences of horrible customer service? 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin13Service recovery paradox

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinProblems with this approach?A vast majority do not complain thus no service recoveryIts expensiveIts ludicrous to encourage failureBad imageNo guarantee of the result

Dependent on the situation

Good when its not a bad failure

14PerceivedServiceExpected ServiceCUSTOMERCOMPANYCustomerGapGap 1Gap 2Gap 3External Communications to CustomersGap 4ServiceDeliveryCustomer-Driven Service Designs and StandardsCompany Perceptions of Consumer Expectations

Gaps Model of Service Quality/Extra 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinHow to Give Horrible Service(Service Gaps)Dont listen to what your customers want (i.e., only listen to your CEO or wallet)- customer gapDont act on customers wantsHire people without skills or a care, and dont train themTell the customer whatever they want to hear (i.e., overpromise and underdeliver)Dont meet (or barely meet) customers expectations (i.e., ignore people and insult their intelligence)=Customer Gap 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin16Expanded Mix for Services --The 7 PsProductPricePlacePromotionPeopleAll human actors who play a part in service delivery and thus influence the buyers perceptions: namely, the firms personnel, the customer, and other customers in the service environment.Physical EvidenceThe environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.ProcessThe actual procedures, mechanisms, and flow of activities by which the service is deliveredthe service delivery and operating systems. 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

ACSI and Annual Percentage Growthin S&P 500 Earnings

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinCustomer Satisfaction and Customer LoyaltySource: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinExcellentservice and value1. Financial bonds2.Socialbonds4. Structural bonds3. CustomizationBondsVolume and frequency rewardsBundling and cross sellingStable pricingSocial bonds among customersPersonal relationshipsContinuous relationshipsCustomer intimacyMass customizationAnticipation/ innovationSharedprocesses and equipmentJoint investmentsIntegrated information systems How to create relationships (loyalty) in Services 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinServices and ProfitNot all services are for profitNon profit services and organizations are a large part of societyWhat nonprofits can you think of? 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin21Non-Profit Marketing

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin22Non-Profit MarketingNon-profits are over 20% of U.S. economic activityGovernment taxes> housing, healthcare, or food costsHard to service someone who doesnt want it (e.g., AA, gambling help)Must complement (vs. compete with) for profit businesses

2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin23Questions? 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin