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Chapter1 075853
Chapter1 075853
Characteristics of services
Characteristics of services
Marketing service products are not exactly the same with marketing physical goods. To understand these differences, it is first necessary to understand the distinguishing characteristics of services. Services have FOUR characteristics;
1. 2. 3. 4.
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Intangibility : it is impossible for the service users to taste, feel, see, smell or possess a service before they buy it. Heterogeneity: people based services are susceptible to heterogeneity, or variation in quality. It is difficult to deliver service consistently. Perishability: unused service capacity of one time period cannot be stored for use in future time periods. Inseparability: the production of a service cannot be separated from its consumption by customers. Services are produced and consumed simultaneously.
Intangibility
Inseparability (production and consumption of service cannot be separated. This mean customer must be physically present)
Inseparability (production and consumption of service cannot be separated. This mean customer must be physically present)
Price and other user costs (time and effort) Changing product element Modifying the place and time of delivery
Varying the time when service is available to reflect customer preference by day or week, by season. Offering the service to customers at a new location (I.e. operate the mobile unit that take the service to the customers)
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Level of Product
1. Product Expected service
Core service
Core service satisfies the needs or solves the problem. E.g. hairdressing Expected service reflect standards required or expected by customers to satisfy their needs. E.g. qualified stylists, range of treatment Augmented service (supplementary service) fine tune the marketing mix to differentiate from competitors. E.g. refreshment, beauty therapy, etc
Augmented service
Does the nature of the service or the firms positioning strategy require customers to be in direct physical contact with its personnel, equipment, and facilities? Should it maintain just a single outlet or offer to serve customers through multiple outlets at different locations?
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Electronic Channels
1. 2. 3. 4.
Locational constraint: e.g. airport Ministores: to maximise coverage. E.g. ATM Locating in multipurpose facilities where customer live or work
Benefits: Consistent delivery for standardized services Low cost Customer choice and ability to customize Quick customer feedback
Service intermediaries
Service intermediaries perform many important functions for the service principal. Coproduce the service, fulfilling service principals promises to customers and make service locally available, providing time and place convenience for the customer.
Key intermediaries
Franchising service outlets licensed by a principal to deliver a unique service concept it has created or popularised. E.g. McDonalds, Blockbuster (video store), Holiday Inn. Agents act on behalf of a service principal and is authorised to make agreements between customers and the principal. Generally work for principals continuously rather than for a single deal. E.g. travel agent Brokers brokers bring buyer and seller together while assisting in negotiation. E.g. real estate brokers.
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2. Customer service
Employees in customer service positions usually creating and delivering the service in the customer presence as well as providing information, taking reservations and receiving payment, and solving problems. When a customer has the potential to buy several different products from the same supplier, firm encourage their customercontact staff to cross sell additional services.
3) Training Many companies, especially those selling complex business-to-business services offer training courses for their customers. The purpose is to familiarize users with the products potential and educate them on how to use the service to best advantage. 4) Word of mouth The comments and recommendations that customers make about their service experiences can have a powerful influence on other peoples decisions.
b) Advertising The role of advertising in service setting: To create awareness Stimulate interest Educate customer about service features and education To establish and redefine competitive position To help tangibilise the intangible Consumers may rely more on information provided by advertising for services because they find them more difficult to evaluate than goods
Advertising media: Broadcast (TV and radio) Print (magazine and newspaper) Outdoor (posters, billboard, electronic message boards, exteriors of vehicles such as buses) Direct marketing (direct mail, telemarketing, fax or email) Internet Retail display
C.
Publicity/Public relations
Involves efforts to stimulate positive interest in and organization and its products and services by sending out News releases Holding press conferences Special events Sponsoring newsworthy activities put on by third parties Obtain testimonial from public figures Fundraising
D.
Sales Promotion
Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products and services by consumers or the trade.
e) Instructional material The role of instructional material is to educate customers the benefit of using the service and how to use the service. Materials used such as; Brochures Video / CD-Rom Website
d) Corporate design To create a unified and distinctive visual appearance for all tangible elements that contribute to the corporate image. Such as stationery and promotional literature, retail signage, uniforms, and color schemes for painting vehicles, equipment, and building interiors. These elements are created by using distinctive colors, symbols, lettering, and layout to provide a unifying and recognizing theme linking all the firms operations in a branded service experience.
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Variable pricing more relevant in industrial and business to business markets where individual contracts are priced according to specification or complexity of the work. Marginal pricing based on the concept of marginal cost and anything over the marginal cost is the contribution to the companys profit. Some companies rather sell at discounted price at last minute rather than empty seat.
Promotional pricing Discounts, special offer, vouchers, rebates, and even buy now pay later schemes, interest free credit, and loss leaders Differential pricing different prices are charged for the same service at different times or to different customers. This tactics is used to attract more business in slack periods.
People Refers to the service providers the employees of the firm. E.g. receptionist in hotel, hairstylist in hair saloon, nurse in hospital, etc. Many services depend on direct, personal interaction between customers and a firms employees, and these interactions strongly influence the customers perceptions of service quality.
External Marketing
Making promises
Providers
Interactive Marketing
Keeping promises
Customers
quality
Train for technical and interactive skills technical skills and knowledge operational rules of the company Interactive skills that allow them to provide courteous, caring, responsive, and empathetic service. Empower employees to be truly responsive to customer needs, front-line providers need to be empowered to accommodate customer requests and to recover on the spot when things go wrong. Promote teamwork The nature of many service jobs suggests that customer satisfaction will be enhanced when employees work as teams.
Physical evidence and the servicescape Visual or other tangible clues that provide evidence of service quality. E.g. facility design, equipment, signage, employee appearance, printed materials. As service is intangible, it is hard for customers to judge the service quality before use it. Therefore, customers will base on the tangible objects to evaluate service quality. Servicescape describe the style and appearance of the physical environment where customers and service provider interact.
essentially wrap the service and convey an external image of what is inside to consumers. This packaging role is particularly important in creating expectations for new customers and for newly established service organisation that are trying to build a particular image.
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Facilitator how the setting is designed can enhance or inhibit the efficient flow of activities in the service setting,making it easier or harder for customers and employees to accomplish their goals. A well-designed, functional facility can make the service a pleasure to ecperienc from the customers point of view and a pleasure to perform from the employees. For example, an international air traveler who finds himself in a poorly designed airport with few signs, poor ventilation, and a few places to sit or eat will find the experience quite dissatisfying, and employees who work there will probably be unmotivated as well.
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Socializer the design of the servicescape aids in the socialisation of both employees and customers in the sense that it helps to convey expected roles, behaviours, and relationships. The design of the facility can also suggest to customers what their role is relative to employees, what parts of the servicescape they are welcome in and which are for employees only, how they should behave while in the environment, and what types of interactions are encouraged.
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Differentiator the design of the physical facility can differentiate a firm from its competitors and signal the market segment the service is intended for. Given its power as a differentiator, changes in the physical environment can be used to reposition a firm and/or to attract new market segments. Price differentiation is also often partially achieved through variations in physical setting. Larger seats with more leg room are more expensive on an airplane.
Process
A particular method of operations or series of action, typically involving steps that need to occur in a defined sequence. I.e. flow of activities by which the service is delivered. Customers are often involved in the service production. Badly designed processes are likely to annoy customers when the latter experience slow, bureaucratic, and ineffective service delivery. Similarly, poor processes make it difficult for frontline staff to do their jobs well, result in low productivity, and increase the likelihood of service failure.
The purpose of setting down clear outlines or blueprints for service delivery is as follow;
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To enable service quality to be monitored and benchmarks to be put in place thus allowing accurate measurement of both quality and productivity To facilitate staff training and enable individuals to carry responsibility for individual stages of the service transaction and delivery To reduce the amount of divergence thus enabling accurate budgeting and manpower planning etc. to take place.
Productivity measures the amount of output produced by an organisation relative to the amount of inputs required. Quality- refers to the degree to which a service satisfies customers by meeting their needs, wants, and expectations.
Output?
No of customers served Customers satisfaction
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Improving productivity is essential to keep costs under control, but managers must beware of making inappropriate cuts in service levels that are resented by customers.
Profitability
Productivity
Work faster and more efficiently to reduce cost
Quality
Improve customer satisfaction
Hence, productivity and quality improvement strategies need to be considered jointly rather than in isolation from one another.
Modify customer-service interaction Changing how customers and service providers interact can often enhance productivity. Most customers now conduct business over the telephone, by fax, or through the internet rather than in person. Separate customer contact and support functions By physically separating the support and customer contact components, the quality and efficiency of both can be improved. The support personnel can work more efficiently without interruptions from customers and can normally perform a better job. Freeing customer contact personnel from service performance can enhance the level of communication with the customer and improve the quality of that interaction.
Increasing self-service options Firms can improve productivity by shifting some of the service operation to customers. E.g. petrol station, ATM, self service restaurant. Reduce staff and increase the number of customers per hour that could be served. Using subcontracting or outsourcing A service consists of four primary components: information, reservations, payments,and consumption. Outsourcing with third parties or subcontractors can be used for any of these four components. For example, airlines use travel agent to perform information, reservations and payments functions. Airlines can reduce labour force and productivity is improved because potential customers can deal with a travel agent in an area where they live.
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Further reading;
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Christopher Lovelock, Services Marketing. 4th edition. - Chapter 1, distinctive aspects of service management - Ch 10, customer education and service promotion pg.296-306 - Ch 11, creating delivery system in place, cyberspace, and time David L.K/Kenneth E.C (1998), Services Marketing. - Ch.11 Pg.363-369 enhancing productivity Valerie A. Zeithaml and Mary Jo Bitner (2003), Services marketing: integrating customer focus across the firm. 3rd edition.
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