Bmgt 411 chapter_11

BMGT 411: Chapter 11 Designing and Managing Services


bmgt 411 marketing management fall 2014 chris lovett

Transcript of Bmgt 411 chapter_11

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BMGT 411: Chapter 11

Designing and Managing Services

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Chapter Questions?

• How do we define and classify services and how do they differ from goods?

• What are the new services realities?

• How can we improve service quality?

• How can goods marketers improve customer support services?

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What is a 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.

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Services are Everywhere

• Think of some companies that provide a service

• What do they provide?

• How is success measured?

• Where is the service delivered?

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Categories of Service Mix

• Pure tangible good: A tangible good with no accompanying service provided

• Ex: Toothpaste

• Good with accompanying services: A good that is accompanied by one or more service

• Ex. smartphone (good) with data plan (service)

• Hybrid: An offering with equal parts goods and services

• Ex. Restaurant or Grocery Store

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Categories of Service Mix

• Major Service with Accompanying minor Goods or Service: A major service with additional services or goods

• Ex. Airline Service with Drink Service during flight

• Pure Service: Primarily an intangible service being provided, with no goods included

• Ex. Dentists, Childcare, etc

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Figure 11.1 Continuum of Evaluation for Different Types of Products

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Qualities of Goods and Services

• Search Qualities: The buyer can usually evaluate even before purchases and compare

• Ex. Clothing, Food, etc

• Experience Qualities: Characteristics the buyer can evaluate after it is purchased

• Ex. Haircut, Vacations

• Credence Qualities: The buyer can find it hard to evaluate even after consumption

• Ex. Auto Repair, Dental Work, Medical

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Distinctive Characteristics of Services





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• Services cannot be seen, tasted, felt, heard, or smelled

• Service firms try to demonstrate their service by physical evidence

• Ex. Colleges will publish employment statistics, etc to make the intangible seem tangible

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• Services are usually produced and consumed simultaneously vs goods produced elsewhere

• Provider/Client interaction is a special feature of service marketing

• More training may be involved to make customer service outstanding since it is so visible

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• Services are highly variable because the quality depends on who provides them

• Good hiring and training (Starbucks)

• Standardize service performance (Zappos)

• Monitor customer satisfaction (Most retailers)

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• Services cannot be stored, so perishability can be a problem when demand fluctuates

• Off- Peak Pricing (Sonic Happy Hour)

• Cultivating non-peak demand (McDonald’s Breakfast)

• Offering complimentary services as alternatives (ATM Banking Vs. Tellers)

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New Service Realities

• Customer Empowerment: Social Media has enabled customers to broadcast a bad experience to a very wide audience

• Most companies have their customer service departments monitoring social media for negative feedback, and responding almost instantly

• Led by @comcastcares and @frankelliason

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Figure 11.2 Root Causes of Customer Failure

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• Redesign processes and redefine customer roles to simplify service encounters

• Incorporate the right technology to aid employees and customers

• Create high-performance customers by enhancing their role clarity, motivation, and ability

• Encourage customer citizenship where customers help customers

Solutions to Customer Failures

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Best Practices in Service Companies

• Strategic Concept: Customer service is behind everything the company does

• Top-Management Commitment: Management commitment to putting service performance along with financial performance as a quality metric

• High Standards: Setting very high quality standards to avoid the most customer disruptions

• Ex. a 98% errors rate with an electrical supplier would result in no electricity for 8 days

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Best Practices in Service Companies

• Self-Service (Better Options) Technologies: Providing customers with different levels of comfort to use technology to increase service (Airline self check in, grocery store self-checkout, ATMs, Online Banking)

• Profit Tiers: Customizing service levels based on profitability of the customers

• Ex. AMEX Black Card, Lincoln Concierge

• Monitoring Systems

• Satisfying Customer Complaints

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Figure 11.3: Service Quality Model

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• Gap between consumer expectation and management expectation

• The customer may want something entirely different than what is being delivered

• Gap between management perception and service quality specification

• Ex: Being very clear on specifications, speed in minutes, etc

• Gap between service quality specifications and service delivery

• Often a result of poor training

Managing Customer Expectations

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• Gap between service delivery and external communications

• Ex. Toys R Us Foursquare Check in Discount

• Gap between perceived service and expected service

• Occurs when the customer misperceives the service quality

Managing Customer Expectations

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Determinants of Service Quality