SEGMENT 10: SERVICES MARKETING
(Related chapter in text: 12)
LEARNING OBJECTIVES
1. Describe four important characteristics of services (the 4 “I”s) that distinguish them
from products
2. Understand how consumers perceive and evaluate services - search, experience,
and credence attributes
3. Describe the five key dimensions of service quality (R.A.T.E.R.)
4. Describe the“gap”model of service quality
5. Understand the value of customer retention
6. Describe various approaches used in relationship marketing
CHARACTERISTICS OF SERVICES (THE 4 "I"s)
· INTANGIBILITY- can’t reach out and touch, less tangible than products (service continuum mcdonalds has a service but you get a burger while insurance broker has no tangibility)
· INCONSISTENCY-don’t have same quality control, human driven right there with the consumer, resturaunt service-human element, combat with industrializing services by lessening error with technology
· INSEPARABILITY-inseperatality between the service provider and service recipitant-intermeshed with server provider (restaurant, barber) lack of quality control
· INVENTORY-can’t inventory service, manage inventory of service with demand (adequate servers and cooks at restaurant at certain times of day)
GREATER DISSATISFACTION WITH SERVICES THAN PRODUCTS
HARDER TO EVALUATE SERVICES THAN PRODUCTS because of intangibility lies in the attributes
· Search attributes-gather realiable information before purchasing service
· Experience attributes-gather information through purchase and use of product, objective (services dominated)
· Credence attributes-never have realiable information, expect it to work as its said to (life insurance) (services dominated)
·
Not providing better service because they don’t have selection or fashion, they don’t care if people are nice, but whether they have the clothes you want to wear
DEFINING RETAIL SERVICE
Core Service:
“The right product, at the right place, at the right price, at the right time”
Expected Service:
Customer expectations regarding dependability, courtesy, etc.
Augmented Service:
J.C. Penney: “...it is the service the customer doesn’t expect that endears...” how we go beyond what the consumers expect from us (offering dog wash and internet while car is getting washed)
Potential Service:
Whatever! - e.g. “Just looking” buttons, offering new augmentations in service
Work inside out (core, expected, then augemented)
DIMENSIONS OF SERVICE QUALITY
RELIABILITY-dependablilty, delivering on what you promise to deliver (big mac)
ASSURANCE-attitudinal reponse of person in touch with consumer, making sure they feel like we know what we are doing. Competent,
TANGIBLES-any tangible representiveness of ourservice, appearance of employees, clean, professional, modern
EMPATHY-attitudinal aspect of service provider, I care about you, want this service to be good to you.. manners compassionate, etc
RESPONSIVENESS
THE "GAP MODEL" OF SERVICE QUALITY
CUSTOMER EXPECTATIONS
QUALITY GAP
CUSTOMER PERCEPTIONS
THE EXTENDED GAP MODEL: SOURCES OF POOR QUALITY SERVICE
CUSTOMER EXPECTATIONS
KNOWLEDGE GAP
MANAGEMENT PERCEPTIONS
STANDARDS GAP
SERVICE SPECIFICATIONS
DELIVERY GAP
IMPLEMENTATION
COMMUNICATIONS GAP
COMMUNICATIONS
CUSTOMER PERCEPTIONS
CUSTOMER RETENTION
WHY CUSTOMERS ARE MORE PROFITABLE OVER TIME
EXAMPLE: PROFIT FROM CUSTOMERS OVER TIME
$
42 44 49 55
30
(51)
Year 1 2 3 4 5 6
PROFIT FROM...
· LARGER/MORE PURCHASES
· REDUCED OPERATIONS COSTS
· REFERRALS
· PRICE PREMIUM
RELATIONSHIP MARKETING: AN EFFORT TO DEVELOP A LONG-TERM, COST-EFFECTIVE LINK WITH INDIVIDUAL CUSTOMERS FOR THE MUTUAL BENEFIT OF THE CUSTOMER AND THE ORGANIZATION.
SOME RELATIONSHIP MARKETING APPROACHES
· FREQUENCY MARKETING
· DATABASE MARKETING
· INTERACTIVE MARKETING
BEYOND DELIVERING SERVICES TO STAGING EXPERIENCES: THE "EXPERIENCE ECONOMY"
LEVELS OF MARKET OFFERING
· COMMODITY
· GOOD (PRODUCT)
· SERVICE
· EXPERIENCE
EXAMPLE: Price of Coffee Offerings
$5.00
$3.00
$1.00
Commodity Good Service Experience