Designing and Managing

Services

© Peter Dazeley/Photographer’s Choice/Getty Images

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1
 Aravind Eye Hospital provides
comprehensive eye care services

Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2

 Service?
A service is any act of performance that one
party can offer another that is essentially
intangible and does not result in the
ownership of anything;

Its production may or may not be tied to a

physical product.

Simply put, it is not a thing , but a process

 Examples

• Bottle of coke – Served

• Ride in Jan Shatabdi
• Service in a restaurant
• Service rendered by a teacher
• Room service in a hotel
• Services rendered by a doctor
 Examples by sector

• Government Sector : Courts, employment

services, hospitals, military services,
police and fire dept., postal service,
schools..etc.
• Business/Private sector: Airlines, banks,
insurance companies, law firms, medical
practices, real estate firms, s/w
professionals, cs representatives..etc.
 Discuss the
importance of
services to the
economy
 The Importance
of Services
Deed
Services Performance
Effort

Services as a percentage of employment

(Projected by 2018)
10 20 30 40 50 60 70 80 90 100
80%
 Narayan Hrudaylaya- Compassion
with Care
• 8% of the world population can afford a heart surgery
• 2.5 million in India require – Only 80-90k operations
per year
• 0.7 beds / 1000 people in India
• Cardiac care to the masses
• 150 major surgeries in a day
• 76 countries
• Rich go for world class cardiac care, poor for
affordable
• US – $50000, here $3000 or even less.
• Daily accounting, special rooms, process innovation,
higher volumes & expansion plans, Insurance with
the help of state govt etc.
Continuum of Evaluation for
Different Types of Products
 Discuss the
differences between
services and goods
 How Services
Differ from Products?
Cant be seen,touched, held.No ownership of
Intangible “experience or time.Cannot be patented

Production and consumption are

Inseparable simultaneous. (ATM, Salon, education,
healthcare)

Services depend on their employees for

Heterogeneous quality, which makes consistency difficult to
achieve. (hotels, legal advice)

Services cannot be saved, and it is

challenging to synchronize supply and
Perishable demand.(airlines, off season hotels). Cannot
be returned/resold, no mass prod.)
 When Services are Assessed

• Search Quality—more often applied to

goods, assessed before purchase
• Experience quality—assessed after
purchase
• Credence quality—assessed only with
appropriate knowledge.

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2
 Describe the
components
of service quality
and the gap model
of service quality

3
© 2013 by Cengage Learning Inc. All Rights Reserved. 13
 Components of Service Quality
The ability to perform the
Reliability
service right the first time.

The ability to provide

Responsiveness
prompt service.

The knowledge and courtesy

Assurance
of employees.

Caring, individualized
Empathy
attention to customers.

The physical evidence

Tangibles
of the service.

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3
15
 Develop marketing
mixes for services

4
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 Product Strategies
for Services

Core and
Process
Supplementary

Customization
Service
or
Mix
Standardization

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4
 Service as a Process

People
Processing

Possession
Processing

Mental Stimulus
Processing

Information
Processing

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4
 The Service Offering

Core The most basic benefit the

Service consumer is buying.

Supplementary A group of services that support

Service or enhance the core service.

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4
 SOURCE: Lovelock,
Christopher H.; Wirtz,
Jochen, Services Marketing,
6th, ©2007. Electronically
reproduced by permission of
Pearson Education, Inc.,
Upper Saddle River, New
Jersey

20 © 2013 by Cengage Learning Inc. All Rights Reserved.

 Customization/Standardization

Mass
Customization
A strategy that uses
technology to deliver
customized services
on a mass basis.

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Figure 13.3 A Blueprint for
Overnight Hotel Stay

Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd.

13-22
 The Service Mix

u Determine what new services to

introduce

u Determine target market

u Decide what existing services to

maintain and to eliminate

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4
 Place (Distribution) Strategy

Convenience

Number of outlets

Direct or indirect
distribution

Location

Scheduling

24
4
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 Promotion Strategy
Stress tangible cues

Use personal information

sources

Create a strong
organizational image

Engage in postpurchase
communication

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4
 Price Strategy

Pricing Challenges for Services

u Define the unit of service

consumption

u Determine if multiple elements

are “bundled” or priced
separately
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4
 Pricing Objectives

Revenue-Oriented Maximize the surplus of income

Pricing over costs

Operations-Oriented Match supply and demand by

Pricing varying price

Patronage-Oriented Maximize the number of

Pricing customers by varying price

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4
 Discuss relationship
marketing in services

5
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 Relationship
Marketing in Services

3 Creating value-added
Structural services not available
Social elsewhere
Financial
2 Design services to
Social meet customer needs
Financial
1 Pricing incentives
Financial

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5
 Explain internal
marketing in services

6
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 Internal Marketing

Internal
Marketing

Treating employees as
customers and
developing systems and
benefits that satisfy their
needs.

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6
 Discuss global
issues
in services
marketing

7
© 2013 by Cengage Learning Inc. All Rights Reserved. 32
 Global Issues in
Services Marketing
• The U.S. is the world’s largest
exporter of services
• The marketing mix must reflect each
country’s cultural, technological, and
political environment

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7
Describe nonprofit
organization
marketing

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 Nonprofit Organization

An organization that exists to achieve some

goal other than the usual business goals of
profit, market share, or return on investment.
• Government
• Museums
• Theaters
• Schools
• Churches

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 Nonprofit Organization
Marketing
Market intangible products

Shared Production requires

Characteristics customer’s presence
with
Service
Services vary greatly
Organizations

Services cannot be stored

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8
 Nonprofit Organization
Marketing Activities

Identify desired customers

Specify objectives

Develop, manage, eliminate programs and services

Decide on prices

Schedule events or programs

Communicate their availability

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 Unique Aspects of Nonprofit
Organization Marketing Strategies

• Setting of marketing objectives

• Selection of target markets

• Development of marketing mixes

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 Objectives
Provide services that respond to the wants of :

u Users u Appointed
u Payers officials

u Donors u Media

u Politicians u General Public

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 Target Markets
Apathetic or
strongly opposed
targets

Pressure to adopt Unique Issues

undifferentiated of Nonprofit
segmentation Organizations

Complementary
positioning

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 Product Decisions
Distinctions between
Business and Nonprofit Organizations
u Benefit complexity

u Weak or indirect benefit strength

u Low involvement

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 Promotion Decisions

Professional volunteers

Sales promotion activities

Public service advertising

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 Pricing Decisions
Pricing objectives

Nonfinancial prices
Characteristics
Distinguishing
Pricing Decisions Indirect payment
of Nonprofit
Organizations
Separation between
payers and users

Below-cost pricing

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 Chapter 12 Videos
Kodak – Services and Nonprofit
Organization Marketing
Would you describe Kodak’s services as customized or
standardized? Why?

http://www.cengage.com/marketing/book_content
/9781133190110_lamb/videos/ch12.html

© Cengage Learning Inc. 2013. All Rights Reserved.

44
 Part 3 Video
Rogue Sheep—Product Decisions
This video focuses on Rogue Sheep and their
iPhone app Postage. Brad and Chris discuss what
goes into developing, marketing, and keeping an
iPhone application fresh and new.

http://www.cengage.com/marketing/boo
k_content/1439039429_lamb/part_videos
/part03.html
© Cengage Learning Inc. 2013. All Rights Reserved.

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