Marketing of Services.
Nov 27th, 2009
This section covers:
Services Marketing
•Specific characteristics of Services
•The Five Gap Model of Service Quality
•The Servuction System Model
•Defection Management and Customer Retention
Management
What is a Service vs Product?
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Def.: Goods are objects, devices, or things
whereas services are deeds, efforts or
performances. Ultimately, the primary
difference between goods and services is the
property of intangibility = the lacking of
physical substance.
Over 2/3rds of the Irish work force is employed in
the services sector (67%+), compared with 26% in
industry and 7% in agriculture.(2007)*
(Declined overall for the 18th month until Oct 2009)
Scale of Market Entities
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The scale of market entities displays a range of
products along a continuum based on their
tangibility.
Tangibility
Salt
Soft Drinks
Detergents
Cars
Cosmetics
Intangible
Dominant
Teaching
Consulting
Investment
Airlines
Advertising
Fast food
Search vs. Experience/Credence Attribute.
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All goods possess physical properties called
search attributes that customers can feel,
taste, and see prior to their purchase decision.
Services are, in contrast, characterised by their
experience and credence attributes.
Experience attributes can be evaluated only during
and after consumption
Theatre, Beauty , hotel etc
 Credence attributes cannot be evaluated
confidently even immediately after consumption
Car Servicing – Did you get ripped off?
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Differences b/w Service & Product
The majority of differences in how to market
services and goods/products are attributed to
four unique characteristics:
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1.
Intangibility
Inseparability
Heterogeneity
Perishability
Intangibility is the primary source from which
the other three characteristics emerge. For
example when purchasing a theatre ticket, you
buy an experience. The play will be evaluated
subjectively and compared to other people’s
recommendations. Note: There may be some
tangible aspects involved too.
Differences b/w Service & Product 2
Inseparability is a distinguishing characteristic of service
that reflects the interconnection among the service
provider, the customer receiving the service, and other
customers sharing the service experience, also called:
2.
Service Provider Involvement
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Customer Involvement
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Other Customers’ Involvement, the impact here can be
negative due to bad press or positive due to laughter, etc.
You can’t separate the service from the provider. You’re stuck
with the waiter and other staff at the restaurant.
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3.
Variability is another characteristic of service that
reflects the variation in consistency from one service
transaction to the next.
Again, why do people prefer some restaurants over others?
Differences b/w Service & Product 3
4.
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Perishability is the characteristic that embodies
the fact that services cannot be saved, or their
unused capacity cannot be reserved, and they
cannot be inventoried.
Because of the effects of these 4 characteristics,
marketing plays a very different role in serviceoriented organisations than it does in pure goods
companies. Because in a service organisation all
parts of the company are interconnected by a
complex network of relationships, the marketing
dept. must maintain a close relationship with the
rest of the service organisation!
The 3 Ps
 As
well as Product Price
Place & promotion, we have
the concepts of:
1) Servicescape – Physical Evidence
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Due to the intangibility of services, customers often
have trouble evaluating the quality of service
objectively. As a result, consumers rely on the
physical evidence that surrounds the service to
help them form their evaluations.
Hence, the servicescape consists of ambient
conditions (room temperature or music),
inanimate objects (furnishings, equipment), and
other physical evidence (signs, symbols, personal
artifacts).
2) Service Providers - People
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The 2nd element of the service experience involves
the personnel who provide the service.
Simply, the public face of a service firm is its
service providers. They have a dramatic impact on
the service experience
Customer complaints fall into 7 categories:
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Apathy
Brush-Off
Coldness
Condescension
- Robotism
- Rulebook
- Runaround
Note: A Service provider’s personnel are the most important source
of differentiation from competitors.
Can I help you? – Closed Q
Are you looking for anything in particular? - Open ended
3) Organisations & Systems (invisible)- Processes
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A firm’s organisation & systems refer to
the technical efficiency that modern
systems provide but they also involve a
human component. (The staff)
Example: Going on a cruise, the customer is exposed to many
of the company’s processes.
Conclusion:
Service firms that are able to effectively mould
the customer’s experience via the effective
management of servicescape, service providers,
organizations & systems have the means to
develop compelling experiences which are
the latest competitive weapon in the war against
service commodification.
The 5 Gap Model of Service Quality
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The service gap is the gap between customer’s
expectations of service and their perception of the
service actually delivered. The individual gaps that
can occur are as follows:
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The Knowledge Gap: management thinks that
customers expect less or different from their services.
The Standards Gap: gap between standards set for
delivery of service and what management wants to give.
The Delivery Gap: actual quality of service delivery is
less than expected.
The Communications Gap: the difference between the
delivery of service promised and that delivered.
Servuction System Model
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The production process of services has been
called the “servuction” process (Eiglier and
Langeard, 1977)
It refers to the simultaneous production and
consumption of services.
The customer is present when the service is
produced
The customer plays a role in the servuction and
the delivery process
Customers interact with one another during the
servuction process and may be affected
(positively or negatively) by this interaction
Servuction Framework
Defection Management
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Defection Management refers to a
systematic process which actively
attempts to retain customers before they
defect.
It involves tracking the reasons for
defection and use this information to
make changes to service delivery.
Reasons for Defection
1.
2.
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4.
5.
Price defectors; switch to competitor for
lower price
Product defectors; switch to competitors
who offer superior goods and services
Service defectors; switch because of
poor customer service
Market defectors; switch because of
relocation or business failure
Technological defectors; switch to
products outside the industry