CH 12 Test
Describe the components of service quality and the gap model of service quality
Customers can evaluate service quality by the following 5 components: (RATER) 1. reliability- the ability to perform a service dependably, accurately and consistently. It is performing a service right the first time. This the most important to consumers. 2. Responsiveness- The ability to provide prompt service. EX: calling back customers immediately, serving lunch early to a customer who is in a hurry, or a business hiring people who can speak dozens of languages to call. 3. assurance- knowledge and courtesy of employees and their ability to convey trust. Ex; employees who can make customers trust the firm creates assurance. 4. empathy- caring, individualized attention to customers. Firms whose employees recognize customers and learn their specific requirements are providing empathy. This is anticipating and understanding consumers priorities. 5. tangibles- the physical evidence of service, including the physical facilities, tools, and equipment used to provide the service. -Service quality is measured by combining customers evaluation of all 5 components.
Develop marketing mixes for services
Elements of the marketing mix need to be adjusted to meet the special needs created by the characteristics of service Product (Service) strategy- include decisions on the type of process involved, core and supplementary services, standardization, or customization of the service product or the service mix. People and objects are two broad things that get processed in service orgs. Service processes can be placed into four categories: People processing- takes place when service is directed at customer. Ex: Transportation, health care. Possession processing- occurs when the service is directed at customers physical possessions. ex: lawn care, the vet. Mental stimulus processing- refers to services directed to peoples minds. Ex: Theatre, and education. Info processing- services that use technology or brainpower directed at customers assets. Ex: insurance, consulting. Marketing strategies for process each may differ. ex: People service require customer to enter the service factory. Core and supplementary service products- Service offerings can be viewed as a bundle of activities that include: Core service- the most basic benefit the consumer is buying. and supplementary service- a group of services that support/enhance the core service. Firms usually emphasize supplementary services to create competitive advantages. Customization and standardization- An important issue in developing a service offering is whether to customize or standardize. Customized services- are more flexible and respond to individuals needs, however, they are higher in price. Standardized services- are more efficient and cost less. A firm may incorporate both by adopting an emerging strategy called Mass Customization- uses technology to deliver customized services on a mass basis= result in giving what the customer wants. The service mix- Most service orgs market more than one service, however, each organizations service mix represents a set of opportunities, risks, and challenges. Each part of the service mix should make a different contribution in achieving the firm's goals and they may also need a different level of financial support. PLace (Distribution) Strategy- distributions strategies for services focus on convenience, a number of outlets, direct vs indirect distribution, location, and scheduling. A key factor in selecting a service provider is convenience. Ex: MAc and MIAs provide parents with hand-picked items and ship them to the parents for them to choose and keep the ones they like and send the ones they don't like back. The distribution objective for service firms is the number of outlets to use or the number of outlets to open during a certain time. The intensity of distribution should meet, not exceed, the target marketings needs and preferences. The intensity of distribution may also depend on the image desired. Ex: having few outlets may make the service seem more exclusive or selective. Because of the intangibility nature of services, many service firms have to use direct distribution or franchising. The most used form of direct distribution is the internet. this results in lower distribution costs. Partnering with technology firms allow service firms to have more options for distribution. Promotion strategy- four promotional strategies to promote service: Stressing tangible cues- is a concrete symbol of the service offering. Using personal information sources- is someone that consumers are familiar with (celebrity) or someone they admire and can relate to. Creating a strong organizational image- One way to create an image is to manage the evidence, including the physical environment of the service facility, the appearance of the service employees, and the tangible items associated with a service. EX: Mcdonald's arches are easily recognizable. Another way to create image is through branding. Engaging in post-purchase communication- refers to follow up activities that a firm might engage after a customer transaction such as a call, postcard surveys. Price strategy- the characteristics of services present 2 pricing challenges: Defining a unit of service consumption EX: should pricing be based on a service task, cutting hair, or time-based (how long does it take to cut hair) some services include consumption of goods Ex: restaurants. Second- some services are composed of multiple elements, which generates the question of whether pricing should be based on a bundle of elements. or whether each element should be priced separately. A bundle price is more acceptable because consumers do not like to pay for extra Marketers should set performance objectives when pricing each service. there are three categories: Revenue oriented- focuses on maximizing the surplus of income over costs. Operations-oriented- pricing seeks to match supply and demand by varying prices. Ex: Hotels raise their prices at peak times and vise versa. Patronage-oriented - Pricing tries to maximize the number of customers using the service. Ex: Discounts at movie theatres
Gap Model of Service Quality
Five gaps that can cause problems in service delivery and influence customer evaluations of service quality. Gap 1: the gap b/w what the customers want and what management thinks customers want. This gap happens due to a lack of understanding of the customer's needs, wants, or desires. Gap 2: the gap b/w what management thinks customers want and the quality specifications that management develops to provide the service. This gap results of management inability to translate customer's needs into delivery systems within the firm. Gap 3: the gap b/w the service quality specifications and the service that is actually provided. This results from the inability of management and employees to do what should be done. Management needs to ensure that employees have the skills and the proper tools to perform their jobs. To close this gap, management should train employees so they know what management expects and encourage teamwork. Gap 4: the gap b/w what the company provides and what the customer is told it provides. Communication gap. This gap may include misleading or deceptive advertising promising more than what the firm can offer. Gap 5: the gap b/w the service that customers receive and the service they want. This gap can be positive or negative. EX: customer expects to wait at doctors appointment 20 min but actually waits 10 min= positive. 3 core believes shared by companies who succeed in the service gap: Good service starts at the top, service is seen as continual challenge, and companies work best when people want to work for them.
Discuss relationship marketing in services
Many services involve ongoing interaction between the service organization and the cutomer. Services that customers receive on a continuing base such as cable, television, banking, insurance can be considered membership services which naturally lends itself to relationship marketing. If the service involves discrete transactions such as a movie theatre, public transportation, it may be more difficult to build a membership type relationship with customers, however, they can be transformed into membership relationships using marketing tools like a movie subscription or a computer pass on public transportation. or the firm can offer a customer special benefits if they choose to register with the firm, EX: loyalty programs for hotels and airlines. Relationship marketing can be practiced at four levels: Financial- uses pricing incentives to encourage customers to continue doing business. Social- also uses price incentives but seeks to build social bonds with customers. Frim stays in touch with customers, learns about their needs and designs services to meet those needs. Ex: firm sending birthday cards to its customers. Customization- this encourages customer loyalty through intimate knowledge of individual customers (customer intimacy) and the development of one-to-one solutions to fit customers needs. Structural-Here the firm uses financial and social bonds again but adds structural bonds to the formula. Structural bonds are developed by offering value-added services that are not readily available from other firms. Ex: Hotels creating a signature experience based on their location.
Explain internal marketing in services
Services are performances so the quality of a firms employees is an important part of building long term relationships with customers. Customer retainment depends on the quality of employees, thus, firms have to make their employees happy. Service firms practice internal marketing- which means treating employees as customers and developing systems and benefits that satisfy their needs.
Discuss the difference between services and goods.
Services have 4 characteristics that differ from goods. they include: Intangibility- services cannot be seen, touched, tasted, heard, or felt. Evaluating services is harder because compared to goods, services tend to exhibit fewer search qualities. Search Quality- is a characteristic that can be easily assessed before purchase. EX: the color of a car. Service also tends to exhibit more experience and credence qualities. Experience quality- a characteristic that can be assessed only after use. and Credence Quality- is a characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience. Ex: medical services exhibit credence qualities. Inseparability- Services are often sold, produced, and consumed at the same time. Their production and consumption are inseparable activities. Inseparability means- the inability of the production and consumption of a service to be separated; consumers must be present during production. EX: haircuts, surgery. Services cannot be produced in a centralized location and consumed in a decentralized location. Services are also inseparable from the perspective of the service provider, meaning the quality of service depends on quality employees. Heterogeneity- The variability of the inputs and outputs of services, which causes services to tend to be less standardized and uniform than goods. Services tend to be labor intensive and production and consumption are inseparable, consistency and quality control can be hard to achieve, however, standardization and training help increase consistency and reliability. Ex: a number of certificate programs are offered to ensure consistency of knowledge and ability among those who pass the certificate programs exams. Perishability- refers to the inability of services to be stored, warehoused, or inventoried.
Discuss the importance of services to the economy
a service is the result of applying human or mechanical efforts to people or objects. It involves a deed, performance, or an effort that cannot be physically possessed. Service influences the us economy with about 80% of the country's economic output. Technology, financial services, health care, and retail all contribute to this economic output. a comparison of goods and services marketing can be beneficial, but in reality, it is hard to distinguish clearly between manufacturing and service firms. Many firms point to service as being a major factor of success. Ex: service and repair offered by a company can be important to consumers. Services have unique characteristics that distinguish them from goods and marketing strategies need to be adjusted for these characteristics.
