Chap 1

Services are all the economic activities whose output is not a physical product or
construction, is generally consumed at the time it is produced, and provides added value in
forms that are essentially intangible concerns of its first purchaser
Service industries and companies are those classified within the service sector where the
core product is a service
Service as a product represents a wide range of intangible product offerings that customers
value and pay for in the marketplace (not necessary core product)
Customer service is the service provided in support of a company’s core products (typically
do not charge)
Derived service: những service nhận đc khi sử dụng sản phầm (vd: thuốc cung cấp dịch vụ
chữa bệnh)
Service is now becoming a trend as it can help make more profit than traditional products
and the development of technology makes it easier to deliver service. Both customers and
producers are having benefits from this and they can communicate with each other better
than ever.
1. Characteristics of service
- Intangibility: services are performances or actions rather than objects, they
cannot be seen, felt, touched
 Fluctuation in demand is difficult to manage because of capacity constraints
(Ex: hotel)
Cannot be easily patented (can be copied)
Cannot be displayed or easily communicated to customers
- Heterogeneity: no two services will be the alike
 Hard to ensure consistent service quality
- Simultaneous production and consumption:
 Mass production is difficult
- Perishability: services cannot be stored, saved, resold or returned
 Demand forecasting and creative planning for capacity utilization is important
Strong recovery strategies when things go wrong is necessary as services
cannot be returned or resold
Search qualities: attributes that a customer can determine before purchasing a product
Experience qualities: attributes that can be discerned only after purchase or during
consumption
Credence qualities: consumer may find impossible to evaluate even after purchase and
consumption
2. Service marketing mix
Traditional mix (marketing mix): the elements an organization controls that can be used to
satisfy or communicate with customers
- Product
- Place
- Promotion
- Price
 Expanded mix for services: exists because the production and consumption of
service is normally simultaneous so the customers will play a role in the production
process as well. Besides, because service is intangible customers will look for
something tangible like staffs, design, certificate,…
- People: all human actors who play a part in the service delivery and thus
influence the buyer’s perception
- Physical evidence: the environment in which the service is delivered and where
the firm and customer interact, as well as any tangible components that facilitate
performance or communication of the service (ex: website, brochures, business
cards,…)
- Process: the procedures, mechanisms and flow of activities by which the service
is delivered, consumed and cocreated -the service delivery and operating
systems
Chap 2: The gaps model of service quality
1. The customer gap: the difference between customer expectations and perceptions
- Customer expectation: are standards or reference points that customers bring
into the service experience (often consists of what a customer believes should or
will happen)
- Customer perceptions are the subjective assessment of actual service
experiences
The sources of customer expectations are marketed-controlled factors (ad, price,…) as well
as factors that the marketers has limited ability to affect (word-of-mouth, competitive
offering,…)

Customer
expectation

Customer
gap

Customer
perception

2. The provider gaps

To close the all-important customer gap, 4 other gaps (the provider gaps need to be closed
- The listening gap: the difference between customer expectation of service and
company understanding of those expectations
+ Inadequate customer research orientation (most important)
 Insufficient customer research
 Research not focused on service quality
 Inadequate use of market research
 + Lack of upward communication: frontline employees often know a great deal
about customers -> has to communicate with them
 Lack of interaction between management and customers
 Insufficient communication between contact employees and managers
 Too many layers between contact personnel and top management
+ Insufficient relationship focus: lack of company strategies to retain customers
and strengthen relationships with them (relationship marketing)
 Lack of market segmentation
 Focus on transactions rather than relationships
 Focus on new customers rather than relationship customers
+ Inadequate service recovery
 Lack of encouragement to listen to customer complaints
 Failure to make amends when things go wrong
 No appropriate recovery mechanisms in place for service failures
- The service design and standards gap: the difference between company
understanding of customer expectations and the development of customer-driven
service designs and standards
 Customer-driven standards are different from the conventional performance
standards that companies establish for service in that they are based on
pivotal customer requirements that are visible to and measured by customers.
+ Poor service design: because management sometimes believes that
customers’ expectations are unrealistic.

 Unsystematic new service development process

 Vague, undefined service designs
 Failure to connect service design to service positioning
+ Absence of customer-driven standards
 Absence of process management to focus on customer requirements
 Absence of formal process for setting service quality goals
+ Inappropriate physical evidence and servicescape (the physical setting where
the service is delivered)
 Failure to develop tangibles in line with customer expectations
 Servicescape design that does not meet customer and employee
needs
 Inadequate maintenance and updating of the servicescape
- The service performance gap: the discrepancy between the development of
customer-driven service standards and actual service performance by company
employees
+ Deficiencies in human resource policies
 Ineffective recruitment
 Role ambiguity and role distinct
 Poor employee-technology job fit
 Inappropriate evaluation and compensation systems
 Lack of empowerment, perceived control and teamwork
+ Customers not fulfilling roles
 Customers lack knowledge of their roles and responsibilities
 Customers negatively impact each other
+ Problems with service intermediaries
 Channel conflict over objectives and performance
  Channel conflict over costs and rewards
 Difficulty controlling quality and consistency
 Tension between empowerment and control
+ Failure to match supply and demand
 Failure to smooth peaks and valleys of demand
 Inappropriate customer mix
 Overreliance on price to smooth demand
- The communication gap: the difference between service delivery and the service
provider’s external communication (the discrepancy between actual and
promised service)
+ Lack of integrated services marketing communications
 Tendency to view each external communication as independent
 Not including interactive marketing in communications plan
 Absence of strong internal marketing programs
+ Ineffective management of customer expectations
 Not managing customer expectation through all forms of
communication
 Not adequately educating customers
+ Overpromising
 Overpromising in advertising
 Overpromising in personal selling
 Overpromising through physical evidence cues
+ Inadequate horizontal communications
 Insufficient communication between sales and operations
 Insufficient communication between advertising and operations
 Differences in policies and procedures across branches or units
+ Inappropriate pricing
 High prices that raise customer expectations
 Prices that are not tied to customer perceptions of value