CHAPTER 10: Services: The Intangible Product

The Standards Gap: Setting Service Standards

- achieving service goals through training - commitment to service quality

inseparable

services are produced and consumed at the same time—service & consumption are inseparable - astute service marketers provide opportunities for their customers to get directly involved in the service (e.g. health care providers have found that the more control they allow their patients in determining their course of treatment, the more satisfied those patients are) - customers rarely have the opportunity to try the service before they purchase it and after the service has been performed, it can't be returned => high purchase risk => services sometimes provide extended warranties and 100 percent satisfaction guarantees

The Delivery Gap: Delivering Service Quality

- empowering service providers - providing support and incentives - using technology

four fundamental differences unique to services (4 I's)

- intangible - inseparable - inconsistent (variable) - inventory (perishable)

four types of service gaps

- knowledge gap - standards gap - delivery gap - communication gap

technology

- method for facilitating the delivery of services - enabled customers to buy more quickly, more easily, and with more information

five distinct service dimensions to determine overall service quality

- reliability - responsiveness - assurance - empathy - tangibles

inventory (perishable)

cannot be held in inventory or stored for use in the future

closing the communication gap

firms can close the communication gap if they are more realistic about the services they can provide and manage customer expectations effectively

empathy

the caring individualized attention provided to customers

The Communication Gap: Communicating the Service Promise

- Although firms have difficulty controlling service quality because it can vary from day to day and from provider to provider, they have nearly constant control over how they communicate their service package to their customers - If a firm promises more than it can deliver, customers' expectations won't be met - Dissatisfied customers also are likely to tell others about the underperforming service - Promising only what you can deliver, or possibly even a little less, is an important way to control the communication gap - Expectations typically are created through promotions - if the salesperson co-ordinates the work with those responsible for the service delivery, the client's expectations likely will be met - People are generally reasonable when they are warned that some aspect of the service may be below their expectations

understanding customer expectations

- customers' expectations are based on their knowledge and experiences (e.g. expectations might have been higher, for instance, if she were staying at a Fairmont rather than the Paradise Motel) - expectations also vary depending on the situation (e.g. if travelling on business, the Paradise Motel might be fine, but if she were celebrating her tenth wedding anniversary, she probably would prefer the Fairmont)

listening to the customer

- firms often don't find out about service failures until a customer complains. - when the company and the customer work together, the outcome is often better than either could achieve on their own

dependence and the growth of service-oriented economies in developed countries have emerged for several reasons

- generally less expensive for firms to manufacture their products in less-developed countries (e.g. even if the goods are finished in Canada, some of their components likely were produced elsewhere... in turn, the proportion of service production to goods production in Canada has steadily increased over time) - household maintenance activities, which many people performed by themselves in the past, have become quite specialized (e.g. food preparation, lawn maintenance, house cleaning, laundry and dry cleaning, hair care, and automobile maintenance) - people place a high value on convenience and leisure... little time for the household maintenance tasks and willing to pay others to do their chores (e.g. plumbers, personal trainers, massage therapists, tax specialists, lawyers, travel and leisure specialists)

effective service recovery entails

- listening to the customer - providing a fair solution - resolving the problem quickly

support and incentives

- managers and coworkers should provide emotional support to service providers by demonstrating a concern for their well-being and by standing behind their decisions - service providers require instrumental support—the systems and equipment to deliver the service properly - the support that managers provide must be consistent and coherent throughout the organization - providing rewards to employees for excellent service

resolving the problem quickly

- the longer it takes to resolve a service failure, the more irritated the customer will become and the more people he or she is likely to tell about the problem - firms need clear policies, adequate training for their employees, and empowered employees - companies should welcome complaints, make it easy for customers to provide feedback, and listen carefully to what customers have to say - firms must not only listen to the customers' complaints but also act on them

inconsistent (variable)

- the more humans that are needed to provide a service, the more likely that the service's quality will be inconsistent/variable - an inferior service can't be recalled; by the time the firm recognizes a problem, the damage has been done (products can be replaced, remade, destroyed, or, if it is already in the supply chain, recalled) - micromarketing segmentation strategy can customize a service to meet customers' needs exactly, although can be expensive and consumers may get confused or irritated if they must pay for each little service

reducing service inconsistency

- training and standardization - replacing people with machines (customers may not embrace the idea of replacing a human with a machine for business interactions or have problems using the technology... in addition, the technology may not perform adequately)

The Knowledge Gap: Knowing What Customers Want

- understanding customer expectations - evaluating service quality using well-established marketing metric

closing the knowledge gap

Firms can close the knowledge gap by matching customer expectations with actual service through research

closing the standards gap

Firms can narrow the standards gap by setting appropriate service standards and measuring service performance

distributive fairness

a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss) - Customers want to be compensated a fair amount for a perceived loss that resulted from a service failure - The key to distributive fairness, of course, is listening carefully to the customer - customers typically want tangible restitution, not just an apology (if providing a tangible restitution isn't possible, the next best thing is to assure the customer that steps are being taken to prevent the failure from recurring)

empowerment

allowing employees to make decisions about how service is provided to customers - generally improves service quality - might be more efficient and easier for service providers to follow a few simple rules in cases in which the service is very repetitive and routine - becomes more important when price points edge higher and services are more individualized

service

any intangible offering that involves a deed, performance, or effort that cannot be physically possessed

perishability of services provides both challenges and opportunities to marketers in terms of the critical task of matching demand and supply

as long as the demand for and the supply of the service match closely, there is no problem e.g. a ski area can be open as long as there is snow, even at night, but demand peaks on weekends and holidays, so ski areas often offer less expensive tickets during off-peak periods to stimulate demand

service recovery

attempt to make amends with the customer and learn from the experience - effective service recovery efforts can significantly increase customer satisfaction, purchase intentions, and positive word-of-mouth, though customers' post-recovery satisfaction levels usually fall lower than their satisfaction level prior to the service

intangible

cannot be touched, tasted, or seen like a pure product can - the most fundamental difference between products and services - difficult to convey the benefits of services, the images marketers use reinforce the benefit or value that a service provides - marketers must therefore creatively employ symbols and images to promote and sell services - professional service providers (doctors, lawyers, accountants, consultants) depend on consumers' perceptions of their integrity and trustworthiness

providing a fair solution

customers' perception of "fair" is based on their previous experience with other firms, how they have seen other customers treated, material they have read, and stories recounted by their friends - distributive fairness - procedural fairness

service quality

customers' perceptions of how well a service meets or exceeds their expectations - difficult to determine due to intangibility

excess service demand

having to turn customers away in peak periods

customer service

human or mechanical activities that firms undertake to help satisfy their customers' needs and wants (by providing good customer service, firms add value to their products or services)

excess service capacity

less desirable expense to revenue ratios

Gaps model

model designed to - highlight those areas where customers believe they are getting less or poorer services than they expect (the gaps) and how these gaps can be closed - encourage the systematic examination of all aspects of the service delivery process and prescribe the steps needed to develop an optimal service strategy

service gap

results when a service fails to meet the expectations that customers have about how it should be delivered

voice-of-customer (VOC) program

systematic program that collects customer insights and intelligence to influence and drive business decisions.

reliability

the ability to perform the service dependably and accurately

tangibles

the appearance of physical facilities, equipment, personnel and communication materials

closing the delivery gap

the delivery gap can be closed by getting employees to meet or exceed service standards

knowledge gap

the difference between customers' expectations and the firm's perception of those customer expectations

communication gap

the difference between the actual service provided to customers and the service that the firm's promotion program promises

standards gap

the difference between the firm's perceptions of customers' expectations and the service standards it sets

delivery gap

the difference between the firm's service standards and the actual service it provides to customers

assurance

the knowledge of and courtesy by employees and their ability to convey trust and confidence

procedural fairness

the perceived fairness of the process used to resolve complaints - Customers want efficient complaint procedures over whose outcomes they have some influence - customers tend to believe they have been treated fairly if the service providers follow specific company guidelines, though rigid adherence to rules can have damaging effects

responsiveness

the willingness to help customers and provide prompt service

how do firms define the zone of tolerance

to define the zone of tolerance, firms ask a series of questions about each service quality dimension that relate to - the desired and expected level of service for each dimension, from low to high - customers' perceptions of how well the focal service performs and how well a competitive service performs, from low to high - the importance of each service quality dimension

evaluating service quality using well-established marketing metric

to meet or exceed customers' expectations, marketers must determine what those expectations are

zone of tolerance

to the area between customers' expectations regarding their desired service and the minimum level of acceptable service—the difference between what the customer really wants and what he or she will accept before going elsewhere