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Designing and Managing Services

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Definition

A service is any act or performance thatone party can offer to another that isessentially intangible and does not resultin the ownership of anything.

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Services are everywhere..

Government sector Private nonprofit sector

Business sector

Manufacturing sector

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Categories of Service Mix

Pure tangible good Tangible good with accompanying

services

Hybrid

Major service with accompanying minorgoods and services

Pure service

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Evaluation Continuum for Different Types of Products

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Characteristics

Intangibility

Inseparability

Variability

Perishability

Cannot be touched, seen,tasted, heard, or smelled beforepurchase

Marketers must try totangibilize the intangible

Lack of trial means higherconsumer risk

Consumers rely on cues to drawquality inferences

Distinctive Characteristics of Services

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Distinctive Characteristics of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Services are produced andconsumed at the same time (airtravel)

Service providers andsometimes other customersbecome part of the service(restaurant)

Strong preferences for serviceproviders exist

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Distinctive Characteristics of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Service providers vary withrespect to attitudes, skills,mood, etc. Even the sameprovider may give differentservice on a different day.

Quality control is critical:

Hiring the right people

Standardizing service

Monitoring satisfaction

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Distinctive Characteristics of Services

Characteristics

Intangibility

Inseparability

Variability

Perishability

Services can not be

inventoried or otherwisestored

Capacity / demandmanagement is critical:

Demand side strategies

Supply side strategies

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Distinctive Characteristics of Services

Demand-side

strategies Use differential pricing

Cultivate nonpeakdemand

Develop

complementaryservices

Install reservationsystems

Supply-side strategies

Hire part-time employees Introduce peak-time

efficiency routines

Increase consumerparticipation

Share services

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Holistic Marketing - ServicesCompany

Customers

Externalmarketing

Internalmarketing

Employees Interactivemarketing

Cleaning/maintenance

services

Financial/bankingservices

Restaurantindustry

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Managing Service Quality

Service quality represents a formalization of themeasurement of customer expectations of aservice compared to their perceptions of actualservice performance

Parasuraman, Zeithaml and Berry formulated a

service-quality model that highlights the mainrequirements for delivering high service quality.

The model identifies five gaps that causeunsuccessful delivery.

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Service-Quality Model

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GAP ANALYSISGap 1

Managements Perceptions ofCustomer Service Expectations

versus Actual CustomerExpectations of Service

Gap 2Managements Perceptions ofCustomer Service Expectationsversus the Actual Service QualitySpecifications Developed

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GAP ANALYSIS

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Determinants of Service Quality

Fivedimensionsof service

quality

Tangibles

Reliability

Responsiveness

Assurance

Empathy