MARKETING
Real People, Real Choices
Fourth Edition
CHAPTER 10
Services and Other Intangibles:
Marketing the Product
That Isn’t There
Marketing an experience (not a
product)
• Are all products just tangibles or are
their elements of intangibles attached to
them?
– Selling a car
– Selling toothpaste
– Selling a college education
• Selling a product is a short-sighted
perspective; selling an experience is an
enlightened perspective
10-2
What is a Service?
• Services are acts, efforts, or
performances exchanged from producer
to user without ownership rights
– Consumer services
– Business services
• In 2004, service industry jobs – 835 of
all employment and over 67% of US
GDP
10-3
Characteristics of Services
• Intangibility
– Cannot see, touch, smell service
– Physical cues to service
• Perishability
– Cannot store a service for later use
– Performance = consumption
– Pricing adjustment to influence
demand
10-4
Characteristics of Services
• Variability
– Same service rendered by the same
person at two different times may vary
– Marketing response – standardize,
service guarantees
• Inseparability
– Production = consumption
– Focus on the service encounter
• Bad service encounters are avoided
by disintermediation
10-5
The Goods/ Services Continuum
• Good-Dominated Products - tangible
products accompanied by supporting
services
– automobiles, home appliances,
electronics
• Equipment or Facility-Based Services heavy reliance on both equipment and
personnel
– hospitals, tanning salons, health clubs
• People-Based Services
– wardrobe consultants, decorators,
realtors
10-6
Core and Augmented Services
• Core service is a benefit that a customer
gets from the service
• Augmented services are additional
offerings that differentiate the firm
• Example: Airline transportation
– Core: travel
– Augmented services: frequent flier
miles, sky caps, in-flight entertainment
services and Internet access
10-7
Services on the Internet
• Banking/
brokerages
• Software
• Music
• Travel
• Dating
• Career
development
• Distance learning
• Medical care
10-8
The Service Encounter
• Consumer comes into contact with the
organization
– The “moment of truth”
• Two dimensions
– Quality of the social contact
– “Servicescapes” – physical evidence
of service quality
10-9
Service Quality
• Subjective assessment based on
customer’s expectations
• Expectations > delivery = disservice
• Expectations < delivery = excellent
service E.g. Jet Blue and expectations
from a low – cost airline
10-10
Dimensions of Service Quality
• Search qualities - characteristics of a
product that the consumer can examine
prior to purchase
• Experience qualities - characteristics
that customers can determine during or
after consumption
• Credence qualities - attributes we find
difficult to evaluate even after we’ve
experienced them
10-11
Measuring Service Quality
• Gap Analysis - measurement tool that
gauges the difference between a
customer’s expectation of service
quality and what actually occurred
• Critical Incident Technique - company
collects and closely analyzes very
specific customer complaints to identify
critical incidents
– CI are those complaints that are most
likely to result in dissatisfaction
10-12
Gap Analysis
• Gap between consumer expectations and
management perceptions
• Gap between management perception and
quality standards set by the firm
• Gap between established quality
standards and service delivery
• Gap between service quality standards
and consumer expectations
• Gap between expected service and
perceived service
10-13
Service Failure and Recovery
• When services do fail, recover fast!
– Apologize
– Resolve the problem
– Do not further inconvenience the
customer
• Analyze what happened to eliminate
future failures
• Front line employees empowerment
10-14
Strategies for Services
• Targeting: Defining the Service
Customer or Audience
• Positioning: Defining the Service to
Customers
10-15
The Future of Services
• Increasing service component in
products
– Marketing experiences not products
• Greater use of the internet in marketing
• Increasing globalization – logistical and
transportation services have a great
future
• Outsourcing services
• Information exchange
10-16
Strategies for Marketing People
• Pure selling approach – an agent
presents a client’s qualifications to
potential “buyers” until he finds one who
is willing to buy
• Product improvement approach – the
agent works with the client to modify
certain characteristics that will increase
market value; person’s image changes
to conform to what is currently in
demand (e.g. Madonna, Paris Hilton)
10-17
Strategies for Marketing People
• Market fulfillment approach – agent
scans the market to identify unmet
needs. Then agent finds a person that
meets qualifications and develops
product
– “manufactured stars”
– N-Sync, The Spice Girls, New Kids on
the Block
10-18
Marketing Places
• Place marketing strategies treat a city,
state, country, or other locale as a brand
and attempt to position this location so
that consumers choose to visit
• Example:
– Mauritius & Grey Advertising
10-19
Marketing Ideas
• Idea marketing is about gaining market
share for a concept, philosophy, belief or
issue
• Examples:
– Do churches market their faith and
philosophy?
– Do consultants peddle their ideas?
– “Anti-smoking”, “Anti-drug”,
“Responsible drinking and driving”
campaigns
10-20