Managing
Services
Professor Chip Besio
● Cox School of Business
● Southern Methodist University
●
CONSUMER WANT AUTHENTIC
EXPERIENCES!
Services are now a larger part of the U.S.
gross domestic product (GDP)
THE UNIQENESS OF SERVICES
THE FOUR I’S OF SERVICES

Four I’s of Services
• Intangibility – Cannot perceive
with 5 senses
• Inseparability – cannot separate from
provider
• Inconsistency – can vary with each occasion
• Inventory – in people based services,
inventory goes home each night
 The result - Idle Production Capacity
Singapore Airlines, American Express, and Allstate
What 4 I’s of services element?
Inventory carrying costs of services depend
on the cost of employees and equipment
THE UNIQENESS OF SERVICES
THE CONTINUUM & CLASSIFICATION OF SERVICES

Service Continuum

Classifying Services
• Delivery by People or Equipment
• Profit or Nonprofit Organizations
• Government Sponsored
The service continuum shows how offerings
can vary in their balance of goods and
services
Services can be classified as equipmentbased or people-based
Red Cross, Unicef, and
Susan G. Komen Race for the Cure
What is the classification of each service?
HOW CONSUMERS
PURCHASE SERVICES

The Purchase Process
• Search Properties
• Experience Properties
• Credence Properties
Consumers use search, experience, and
credence properties to evaluate services
The five dimensions of service quality
HOW CONSUMERS
PURCHASE SERVICES

Customer Contact and
Relationship Management
• Service Encounters
• Customer Contact Audit
• A Customer’s Car Rental Activities
• Relationship Marketing
Customer contact audit for a car rental
agency (green boxes = customer activity;
orange boxes = employee activity)
MANAGING THE MARKETING OF SERVICES
THE EIGHT Ps OF SERVICES

Eight Ps of Services Marketing

Product (Service)
• Branding

Price
• Off-Peak Pricing
MANAGING THE MARKETING OF SERVICES
THE EIGHT Ps OF SERVICES

Place (Distribution)

Promotion
• Publicity
• Public Service Announcements (PSAs)
MANAGING THE MARKETING
OF SERVICES

People
• Internal Marketing
• Customer Experience Management (CEM)

Physical Environment

Process

Productivity
• Capacity Management
Different prices and packages help match
demand to capacity
MANAGING THE MARKETING
OF SERVICES -PRICING
● Price plays two essential roles regarding
the pricing of services:
1. To affect consumer perceptions and
2. To be used in capacity management.
●
Off-peak pricing consists of charging different
prices during different times of the day or days
of the week to reflect variations in demand for
the service.
MANAGING THE MARKETING
OF SERVICES -PLACE
● Place
or distribution is a major factor in
developing a service marketing strategy
because of the inseparability of services from
the producer.
● As competition grows, the value of convenient
location becomes more important.
● The availability of electronic distribution
through the World Wide Web now provides
global coverage for travel services, banking,
entertainment, and many other informationbased services.
MANAGING THE MARKETING
OF SERVICES -PROMOTION
● In
most cases promotional concerns of
services are similar to those of products.
value of promotion (advertising) is to
stress:
Heart by-pass
● availability
Surgery
20% discount for
● location
weekend
● consistent quality
procedures
● and efficient, courteous
● service
● The
MANAGING THE MARKETING
OF SERVICES -PROMOTION
PROFESSIONAL SERVICES
● A Supreme Court case in 1976 struck down
constraints by professional organizations to
constrain the advertising of professional services,
specifically the American Medical Association and
the American Bar Association.
● Although opposition to advertising still remains in
some professional groups, the barriers to
promotion are being broken down, mostly
in response to competitive pressures.
MANAGING THE MARKETING
OF SERVICES -PROMOTION
● Publicity
has played a major role in the
promotional strategies of nonprofit services and
some professional services.
● Many nonprofit groups have relied on Public
Service Announcements (PSAs) as the
foundation of their media plan because they are
free.
LO6
USING MARKETING DASHBOARDS
Are JetBlue’s Flights Profitably Loaded?
Airline Operating Income (Loss) per Available Seat Flown One Mile (ASM)
Operating Income (Loss)
=  Yield  Load Factor  Š Operating Expense
Flown ASM
SERVICES IN THE FUTURE


Technological Advances
• Mobility
• Personalization
• Convergence
• Collaboration
Expanding Global Economy