Services and Other Intangibles:
Marketing the Product that Isn’t there
Chapter
Chapter 10 Ten
Chapter Objectives
 Describe the characteristics of services and
the ways marketers classify services
 Appreciate the importance of service quality
to marketers
 Explain the marketing of people, places, and
ideas
10-2
Marketing What Isn’t There
 Intangibles:
Services and other experience-based products that
cannot be touched
 Examples: concerts, movies, tax preparation, hair
styling, college education, online banking, etc.
 Does marketing work for intangibles? Yes!
10-3
What is a Service?
 Services:
Acts, efforts, or performances exchanged from
producer to user without ownership rights
 Services accounted for 75% of US employment in 2010
 Services may target consumers and/or businesses
10-4
Figure 10.1
Characteristics of Services
10-5
How Services Differ from Goods
Intangible
No physical object makes it hard to
communicate benefits.
Perishable
Services cannot be saved, and it is
challenging to synchronize supply
and demand.
Heterogeneous
or Variable
Inseparable
Services depend on their employees
for quality, which makes consistency
difficult to achieve.
Production and consumption are
simultaneous, meaning the
consumer takes part in production.
2
Table 10.1
Marketing Strategies for Different Service
Characteristics
10-7
Marketing Services
Marketers often use vivid
imagery in advertising to
help market intangibles
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Marketing Services
 Disintermediation occurs when the Internet or other
technology can be used to “cut-out the middleman”
 Capacity management allows firms to adjust their
services to match supply with demand
a
How do hotels or airlines manage capacity?
10-9
Characteristics of Services
 Service encounter:
Interaction between the customer and service provider
 Service encounter dimensions:
 Social contact dimension
 Physical dimension
 The quality of service is only as good as its worst
employee
10-10
Classifying Services
10-11
Classifying Services
 Goods-dominated products
 Firms that sell tangible products still provide support
services
 Equipment- or facility-based services
 Operational factors, locational factors, and
environmental factors are important (amusement parks)
 People-based services
 Increasing in importance as people lack the time or
expertise to do on their own
10-12
Core and Augmented Services
 Core service:
 The benefit a customer gets from the service
 Augmented service:
 Additional services that enhance value
 Augmented services help to differentiate businesses
from one another
10-13
The Service Encounter
 Physical elements of the service encounter
 Servicescape:
Environment in which the
service is delivered and where
the firm and customer interact
 Servicescapes influence purchase
decisions, service quality evaluations
and customer satisfaction
10-14
The Service Encounter
 Web sites influence customer perceptions
 First stop for many potential customers
 Poor navigation, unattractive sites offer negative
first impressions
 SEO (search engine optimization) is critical for
getting noticed
 Also consider paid search advertising
10-15
Providing Quality Service
 Quality service ensures that customers are satisfied
with what they have paid for
 Satisfaction is based on customer expectations
 Not all customers expect the same level of service
 Not all customers can be satisfied
10-16
Service Quality Attributes
 Search qualities:
 Characteristics that the consumer can examine before
purchase
 Experience qualities:
 Characteristics that buyers can determine during or after
consumption
 Credence qualities:
 Characteristics that are difficult to evaluate even after
they have been experienced
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When Services are Assessed
 Search Quality: Before the purchase
 What does the shop look like? Is it clean?
 Experience Quality: After the purchase
 How was the meal? How was your stay?
 Credence Quality: Requires knowledge
 Web MD
 Vidal Sassoon-If you don’t look good…
http://www.youtube.com/watch?v=m7SqJY5rIv4
2
Measuring Service Quality
 Several methods of measuring service quality exist:
 Mystery shoppers
 Lost customers
 SERVQUAL scale
 Gap analysis
 Critical incident technique
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Measuring Service Quality
 SERVQUAL scale (questionnaire) measures customer
perceptions of five key dimensions
 Tangibles
 Reliability
 Responsiveness
 Assurance
 Empathy
10-20
Figure 10.2
The Gap Model of Service Delivery
10-21
Strategic Issues in Delivering Service Quality
 Additional methods of measuring service quality:
 Critical incident technique uses customers’ complaints
to identify problems that lead to dissatisfaction
 Maximizing the likelihood that a customer will use a
service and become a loyal user requires:
 Development of effective marketing strategies
 Fast and appropriate responses to service failures
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Table 10.2
Marketing Strategies for Service Organizations
10-23
Marketing People, Places, and Ideas
 Politicians and
celebrities are
commonly marketed
 Consultants “package”
celebrities
 Name changes are
common
10-24
Table 10.3
Strategies to Sell Celebrities
10-25
Marketing People, Places, and Ideas
 Place marketing strategies treat a city, state, country,
or other locale as a brand (Epcot, Florida)
10-26
Marketing People, Places, and Ideas
 Marketing ideas
 Gaining market share for a concept, philosophy, belief,
or issue

Example: Religious institutions market ideas about faith
 Consumers often do not perceive the value they receive
when they conform with an idea or fail to believe an idea
is worth its ultimate cost
Joel Osteen
10-27
The Future of Services
 New dominant logic for marketing:
 Service is the central core deliverable in every exchange
 Services will continue to grow due to several factors:
 Changing demographics
 Globalization
 Technological advances
 Proliferation of information
10-28