SERVICES MARKETING Introduction to Services MKTG009 VILLARBA CLASS Learning Objectives At the end of the lesson, the student will be able to: a) Know the meaning of services, types, and its characteristics b) c) Explain the gaps model of service quality Assess the service marketing mix a) Identify some ethical service issues and determine how to control it INTRODUCTORY ANECDOTE What are services? • Are deeds, processes and performances provided or coproduced by one entity or person for another entity or person. Service Industries and companies – core product is service Service as a product – wide range of intangible product offerings that customers value and pay for the marketplace. Example – IBM and HP offer information technology consulting services Derived Service – all products and physical goods are valued for the services they provide. Difference of Products - Services Classification of Services based on Max-Neef’s Fundamental Human Needs Why Service Marketing? • Service-Based Economies • First, service marketing concepts and strategies have developed in response to the tremendous growth of service industries, resulting their increased importance to the world economies. • Second, trade in services is growing worldwide. • Third, there is a growing market for services and increasing dominance of services in economies worldwide • Service as Business Imperative in Goods-Focused Businesses • Ex. Xerox provide a document management service • Services can help firm customize their offerings, adding value for customers. • Customers are demanding service and solutions, b2b markets • Service can be differentiator in a crowded market • Professional Service Needs • Service Equals Profits Characteristics of Services Search, Experience and Credence Qualities • Search qualities- attributes that a customer can determine before purchasing a product • include color, style, price, fit, feel, hardness and smell • Clothing, furniture, and jewelry • Experience qualities – attributes that can be discerned only after purchase or during consumption. • Includes taste, wearability, and comfort. • Vacations, restaurants • Credence qualities – characteristics that the consumer may find impossible to evaluate even after consumption. • Computer software updates Service Marketing Mix Gaps Model of Service Quality Provider Gaps • GAP 1: The Listening gaps • GAP 2: The Service design and standards gap • GAP 3: The service performance gap • GAP 4: The communication gap GAP 1:The Listening Gaps • the difference between consumer expectations and management perceptions of consumer expectations. Research shows that financial service organizations often treat issues of privacy as relatively unimportant, whilst consumers consider them very important. • Firms lack an accurate understanding of exactly what those expectations are. • Key factors leading to provider gap: • Inadequate customer research orientation – not focus on service quality • Lack of upward communication – insufficient communication • Insufficient relationship focuses – focus on transactions rather than relationships • Inadequate service recovery – failure to make amends GAP 2: the service design and standards gap • is the difference between the management perceptions of consumer expectations and service quality specifications. Managers will set specifications for service quality based on what they believe the consumer requires. However, this is not necessarily accurate. Hence many service companies have put much emphasis on technical quality, when in fact the quality issues associated with service delivery are perceived by clients as more important. • Key factors leading: • Poor Service design - unsystematic • Absence of customer-driven standards • Inappropriate physical evidence and servicescape – inadequate maintenance and updating the servicescape GAP 3: the service performance gap • the difference between service quality specification and the service actually delivered. This is of great importance to service where the delivery system relies heavily on people. It is extremely hard to ensure that quality specifications are when a service involves immediate performance and delivery in the presence of the client. This is the case in many service industries: for example, a medical practice is depending on all the administrative, clerical and medical staff performing their tasks according to certain standards. • Key factors leading to gap 3: • Deficiencies in human resource policies – ineffective recruitment • Failure to match supply and demand – inappropriate customer mix • Customers not fulfilling roles – customers lack knowledge of their roles and responsibilities • Problems with service intermediaries - tension GAP 4: the communication gap • the difference between service delivery intention and what is communicated about the service to customers. These established expectations within the customer may not be met. Often this is the result of inadequate communication by the service provider. • Key factors leading to provider gap 4: • Lack of integrated services marketing communications • Ineffective management of customer expectations • Overpromising • Inadequate horizontal communications • Inappropriate pricing ETHICAL CONSIDERATIONS Business ethics comprises moral principles and standards that guide behavior in the world of business. ethical vigilance Paying close attention to whether one’s actions are “right” or “wrong,” and if ethically “wrong,” asking why you are behaving in that manner. Ethical Misconduct in Services • Services are characterized by few search attributes. • Services are often specialized and/or technical. • Some services have a significant time lapse between performance and evaluation. • Many services are sold without guarantees and warranties. • Services are often provided by boundary-spanning personnel. • Variability in service performance is somewhat accepted. • Reward systems are often outcomebased as opposed to behavior-based. • Customers are active participants in the production process Issues that create Ethical Conflict Controlling Ethical Decision Making Employee socialization • Standards of conduct • Service/product knowledge • Corrective control • Monitoring of employee performance • Leadership training • Building longterm customer relationships THANK YOU!
