Chapter 13 - Services: the intangible product

inseparable

A characteristic of a service: it is PRODUCED and CONSUMED at the SAME TIME; that is, service and consumption are inseparable. - it is made and used at the same time (unlike chocolates that have been made halfway around the world six months prior to their purchase);

Why does the marketing of services differ from product marketing? (factors differentiating services from goods)

Because of the four fundamental differences involved in services: Services are INTANGIBLE, INSEPARABLE, HETEROGENEOUS, and PERISHABLE.

empowerment

employees are SUPPORTED in their efforts to do their jobs effectively (by managers allowing them to give free dessert etc., they empower them to do these things)

reliability

employees making and keeping promises to customers; when an employee makes a promise, he or she keeps that promise (hence, being RELIABLE)

the zone of tolerance:

how much a customer is willing to tolerate (before they no longer use the service and go elsewhere)(view exhibit 13.5 on page 282)

empathy

one approach used to demonstrate empathy is PERSONALIZING communications (for example, addressing a guest by name)

customer service

refers to human or mechanical activities firms undertake to help satisfy their customers' needs and wants;

The five distinct service dimensions that CUSTOMERS use to determine overall service quality are:

reliability, responsiveness, assurance, empathy, and tangibles

perishable

services are perishable in that they CANNOT be stored for use in the future (typically a one time thing: for example, one get the massage once, only get the haircut once, can not use it over and over again in the future, can only repeat the service when needed but have to purchase it all over again). Another example: you can't stockpile your membership with Planet Fitness like you could a six-pack of V8 juice;

when service providers fail to meet customer expectations, it is best to 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

true

pure service businesses (such as Twitter) to businesses that use service as a differentiating tool to help it sell physical goods

true (can view exhibit 13.1 on page 274 to see the service - product continuum: doctor is service dominant, a pure service, and a grocery store is product dominant - using service to sell a pure good);

even firms that are engaged primarily in selling a good, such as an apparel store, typically view service as a method to maintain a sustainable competitive advantage

true (customer service and such)

technological advances that help close the delivery gap are expanding

true (example: Macy's Look Book displays, Panera bread's program that allows customers to order from its website and have their take-out meal ready when they arrive - this allows people to pay readily and ensure that their orders are prepared correctly)

to consistently deliver service that meets customers' expectations, firms must set specific, measurable goals

true (example: having SPECIFIC times rooms get cleaned in hotel that is earlier enough for customers but also late enough for them to sleep in - based on the customers expectations of when the room should be cleaned by)

it is difficult to SHOW service

true; it is easy to SHOW a product but there is a physical product shown

people are generally reasonable when they are warned that some aspect of the service may be below their expectations; they just don't like surprises

true; this is why it's good to let customers. know how many minutes they may have to wait on the customer service line or to get something quick because it is limited stock (yes, because customers know what to expect)

even firms with the best formal research mechanisms in place must put managers on the frontlines occasionally to interact directly with the customers

true; unless the managers who make the service quality decisions know what their service providers are facing on a day-to-day basis, and unless they can talk directly to the customers with whom those service providers interact, any customer service program they create will not be as good as it could be (have to know the environment + customers in order to fix things etc.)

because the service is inseparable from its consumption, 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

true; you can't trial a haircut, you just get one; it is purchased and consumed at the same time; you also can't return the haircut, you just get it and that's it, no going back

a service gap

when a service fails to meet the expectations that customers have about how it should be delivered, a service gap results (when they experience service they consider bad or poor or not to their expectations)

the most FUNDAMENTAL difference between a product and a service is that services are

INTANGIBLE (no physical product)

The Service Gaps model

is designed to encourage the systematic examination of ALL aspects of the service delivery process and prescribes the steps needed to develop an optimal service strategy (analyzes the service process step by step to develop an optimal service strategy, to make a way to have better service, to improve retail service quality) - can view this model on page 279)

distributive fairness

pertains to a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure; COSTS VS. BENEFITS; customers want to be compensated a fair amount for a perceived loss that resulted from a service failure; WANT TO BE COMPENSATED BASED ON WHAT THEY LOST (such as inconvenience, etc.)(may want more of a compensation when the situation is worse); the key to distributive fairness is listening to the customer (varies from customer to customer on what they think is fair based on their situation, etc.); customers want a 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 reoccurring;

the communications gap: communicating the service promise

poor communication between marketers and their customers can result in a mismatch between an ad campaign's or a salesperson's promises and the service the firm can actually offer; firms have CONSTANT control over how they COMMUNICATE their service package to their customers and should do so by not promising more than it can deliver; the communications gap can be reduced by managing customer expectations and by promising ONLY what you can deliver, or possibly even a little less;

Listening to the Customers and Involving Them in the Service Recovery

the customer must have the opportunity to air the complaint completely, and the firm must listen carefully to what he or she is saying; in many cases, the customer may just want to be heard: services providers should therefore welcome the opportunity to be that sympathetic ear, listen carefully, and appear (and actually be) eager to rectify the situation to ensure it doesn't happen again; when the company and the customer work together, the outcome is often better than either could achieve on their own "cocreate a great solution to the service failure"

assurance:

the knowledge of and courtesy by employees and their ability to convey trust and confidence (I assure you this will not happen again, etc.)

a very straightforward and inexpensive method of collecting consumers' perceptions of service quality it to gather them at the time of the sale (may ask customers how they liked the service - though customers are often not willing to provide negative feedback directly to the person who provided the service - may also distribute a simple questionnaire);

true

because of their intangibility, SERVICE QUALITY, is often difficult for customers to evaluate

true

because the purchase risk in these scenarios can be relatively high, service firms sometimes provide extended warranties and 100 percent satisfaction guarantees (to reduce the risk customers feel from getting the service without really truly knowing what they are getting until they experience it);

true

by providing good customer service, firms add value to their products

true

customers have certain expectations about how a service should be delivered

true

customers want to be treated fairly, with either distributive or procedural fairness

true

expectations typically are created through promotions, advertising, or personal selling

true

friendly associates are really important for defining customer-oriented metrics

true

good service quality leads to satisfied and loyal customers

true

regardless of how information is collected, companies must take care not to lose it

true

service providers also require INSTRUMENTAL SUPPORT

true

services marketing differs from product marketing

true

to ensure that service is delivered properly, management needs to support the service providers (employees in service profession) in several ways and give them incentives

true

the 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 supply of the service match closely, there is no problem, however, this rarely occurs;

true, for example, a ski area can be open as long as there is snow, but demand peaks on weekends and holidays, so ski areas often offer less expensive tickers during off-peak periods to stimulate demand;

managers and coworkers should provide EMOTIONAL SUPPORT to service providers by demonstrating a concern for their well-being and standing behind their decisions

true, for example, being there for server who is treated bad during the experience and such support can extend to empowering the server to rectify the situation by offering free dessert, in which case the manager must understand the server's decision and not punish them for giving away too much (managers providing emotional support to the service provider)

if customers will accept more limited things and behavior, may be able to save costs

true, it may not add any further value because they will accept less; if its not as important to them; it is all based on what they will accept

customers have a fairly narrow zone of tolerance for service dimensions that are fairly important to them and a wider range of tolerance for those service dimensions that are less important

true, won't tolerate as much with things that are important to them but will tolerate more when its not as important to them

heterogeneous

DELIVERY OR QUALITY OF SERVICES IS MORE VARIABLE; the MORE humans are needed to provide a service, the more likely there is to be heterogeneity (or variability in the service's quality). If a service is popular, you have to hire more workers, and you can't guarantee that all these workers will perform the same way or give the same quality of service - for example, one eyebrow threader might be better than another eyebrow threader, but if the eyebrow company is popular, they are going to have to hire a lot of these eyebrow ladies and some will be better or worse than others); if a consumer has a problem with a product, it can be replaced, redone, destroyed, or recalled (maybe even before the product gets into the customers hands). BUT an inferior SERVICE can NOT be recalled; by the time the firm recognizes a problem, the damage has already been done - if a server is a terrible server and treats their customer with disrespect, that damage has already been done: how can a firm fix bad service?

using technology to facilitate service delivery can provide many benefits such as:

access to. a wider variety of services, a greater. degree of control by the customer over the services, and the ability to obtain information; it also improves the service provider's efficiency and reduces servicing costs (in some cases, it can lead to a competitive advantage over less service-oriented competitors)

in the service context, empowerment means

allowing employees to make decisions about HOW service is provided to customers; when frontline employees are AUTHORIZED to make decisions and help their customers, service quality generally improves; empowerment becomes more important when the service is more individualized (but can not allow employees with TOO much say that it may cause chaos, need to train them on these things)

the knowledge gap: understanding customer expectations

an important early step in providing good service is knowing what the customer wants (it doesn't pay to invest in services that don't improve customer satisfaction - we want to invest in things that DO improve customer satisfaction); so, to reduce the knowledge gap, firms must understand customers expectations. To understand these expectations, firms undertake CUSTOMER RESEARCH and INCREASE the INTERACTION and communication between managers and employees; customers expectations are based on their knowledge and experiences; if a service never understands the customers expectations, they probably would never be able to meet them

a service

any intangible offering that involves a deed, performance, or effort that cannot be physically possessed; (NOT A PHYSICAL PRODUCT: examples, getting eyebrows done, dog walking, babysitting, etc.)

voice-of-customer (VOC) program

collects customer inputs and integrates them into managerial decisions (find out what people think and integrate it into decisions)

emotional support

concern for others' well-being and support of their decisions in a job setting

assurance

conveys trust (by empowering employees); For example, if a guest problem arises, employees are given discretionary resources to rectify the problem or present the customer with something special to help mollify them (such as free dessert for a bad meal); ASSURE to customers that it will never happen again

Evaluating Service Quality Using Well-Established Marketing Metrics:

customers generally use five distinct service dimensions to determine overall service quality

service quality

customers' perceptions of how well a service meets or exceeds their expectations

reasons for the dependence and growth of service-oriented economies in developed countries (for its growth and increasing emergence)

first, it is generally less expensive for firms to manufacture their products in LESS developed countries, so, the proportion of service production to goods production in the US and other similar economics has steadily increased over time (BECAUSE THESE PRODUCTS ARE BEING CREATED ELSEWHERE AND THEN SHIPPED INTO THE US, SO PRODUCT PRODUCTION MOSTLY HAPPENS OUTSIDE U.S. AND THEREFORE SERVICE PRODUCTION IS MORE PROMINENT); second, people place a high value on convenience and leisure (house cleaning, hair care, and automobile maintenance are all often performed by SPECIALISTS); third, as the world becomes more complicated, people are demanding more specialized services (personal trainers, massage therapists, lawyers, plumbers, health care specialists, etc.);

tangibles

for example, with a hotel, updating and renovating rooms or adding a new outdoor pool complex (the tangibles are nice and are in good shape)

The Standards Gap: Setting Service Standards

have to set service standards according to knowledge developed about about the customers' service expectations; They need to develop systems to meet these customers' service expectations; have to make STANDARDS of service to match EXPECTATIONS of customers and what they want;

responsiveness

hear what a guest has to say, emphasize with them, apologize for the situation, and respond to the guest's needs by taking action and following up

the standards gap

pertains to the difference between the firm's perceptions of customers' expectations and the service standards it sets; by setting appropriate service standards, training employees to meet and exceed those standards, and measuring service performance, firms can attempt to close this gap;

the communication gap

refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises; if firms are more REALISTIC about the services they can provide (do not make promises can't keep) and at the same time manage customer expectations effectively, they generally can close this gap

procedural fairness

refers to 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 (for example, the process the company uses to resolve their complaint is relatively fair and simple, procedures company uses to handle a return are good ones and does not overshadow any potential positive outcomes, isn't annoying to the customer; therefore, service providers should be empowered with some procedural flexibility to solve customer complaints (procedure will be different in different situations) "fair return policies and such" - if the customer things these polices are fair

the knowledge gap

reflects the difference between customers' expectations and the firm's perception of those customer expectations; firms can close this gap by determine what customers REALLY want (have knowledge of what they want) by doing research using marketing metrics such as service quality and the zone of tolerance (CAN FIX KNOWLEDGE GAP BY HAVING KNOWLEDGE OF WHAT THE CUSTOMER EXPECTS OUT OF THE SERVICE AND WHAT THEY FEEL THEY AREN'T GETTING)

evaluation after purchase may produce three outcomes:

satisfaction, dissonance, and loyalty; dissonance may just be a passing emotion that is overcome, satisfaction often leads to loyalty

reliability:

the ability to perform the service dependably and accurately

tangibles:

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

empathy:

the caring, individualized attention provided to customers

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

the delivery gap

the difference between the firm's service standards and the actual service it provides to customers; this gap can be closed by getting employees to meet or exceed service standards when the service is being delivered by empowering service providers, providing support and incentives, and using technology where appropriate;

instrumental support

the systems and equipment to deliver the service properly (service providers need the equipment in order to deliver the service correctly)

responsiveness:

the willingness to help customers and provide prompt service (respond)

an important marketing metric to evaluate HOW WELL firms perform on the five service quality dimensions is

the zone of tolerance

a quality goal such be specific such as: Greet every customer you encounter with "Good morning/afternoon/evening, Sir or Ma'am" etc.

true

specialized services like personal training are thriving

true

support that managers provide must be consistent and coherent throughout the organization

true

technology can be employed to reduce delivery gaps, and has become an increasingly important facilitator of the delivery of services

true

today, most service firms have developed voice-of-customer programs and employ ongoing marketing research to assess how well they are meeting their customers' expectations

true

some service providers tackle the variability issue by replacing people with machines

true (for example, ATMs, kiosks in retail stores); less variable and less risk; will mostly be the same experience every time;

the terms and names that marketers use to describe their offerings are often critically important

true (for example, Pepsi the word "kola" to market their products by opening a Kola restaurant not directly marketing their product (soda))

in some cases, customers can not effectively evaluate the service until several days or weeks later

true (for example, automobile dealers may call a customer a week after to see how the oil change they did is working to assess service quality)

expectations vary according to the type of service

true (for example, expectations may be higher staying at a 5 star hotel vs a 2 star hotel)

technological advances can also help with the delivery gap by improving supply chain efficiency

true (for example, grocery store chain Cisco developing a shelf sensor that allows the retailer to determine the moment the supply of milk is low, which prompts the grocer to restock)

people's expectations also vary depending on the situation

true (for example, if celebrating 10th wedding anniversary, would want to stay at 5 star hotel and expect more from the stay, than if was just staying for a quick business trip: would expect MORE out of celebrating the 10th wedding anniversary)

service providers generally want to do a good job as long as they know what is expected of them

true (for example: motel employees should be shown the STANDARDS of how managers expect them to clean a room and what specific tasks they are responsible for performing);

another excellent method for assessing customers' expectations is making effective use of customer complaint behavior

true (management needs to find out about this complaints so they can make changes!!! or they will be for nothing)

a key part of any customer service program is providing rewards to employees for their excellent service

true (recognizing employees who are doing their job right)

economics of developed countries such as the United States has become increasingly dependent on services

true (services account for nearly 80 percent of the U.S. gross domestic product - GDP - a higher percentage than years ago); services are a strong market

technological delivery of services can cause problems too

true (technology may not perform adequately or people may not like technology replacing humans etc.)

if a firm not only minimizes but also eliminates any service gaps, customers are likely to exhibit significant loyalty to it

true, customers want to continue receiving such superior service and have no desire to go elsewhere for the offerings it provides them

employees must be thoroughly trained not only to complete their specific tasks but also how to treat guests, and the manager needs to set an example of high service standards!!!, which will permeate throughout the organization

true; STANDARDS FOR THE ORGANIZATION

however, marketers can use the variable nature of services to their advantage

true; a micromarketing segmentation strategy can CUSTOMIZE a service to meet customers' needs EXACTLY - since it is variable (for example: Planet Fitness providing all the same weights + equipment but offer a laidback, non-judgmental and non intense setting)

providing great service is not easy and it requires a diligent effort to analyze the service process piece by piece

true; firms will use the Service Gaps Model to highlight the areas where customers believe they are getting less or poorer service than they should (the gaps) and how these gaps can be closed;

intangibility can be highly challenging to marketers, especially if they are accustomed to selling physical products

true; it makes it difficult to convey the benefits of services (like trying to describe whether the experience of visiting your dentist was good or bad and why). This is why service providers (physicians, dentists, etc.) offer cues to help their customers experience and perceive their service more positively, such as a waiting room stocked with television sets, beverages, and comfortable. chairs to create an atmosphere that appeals to the target market (just like massage envy does with their comfy couch waiting room)

a service that cannot be shown DIRECTLY to potential customers also is difficult to promote

true; therefore, marketers must creatively employ symbols and images to promote and sell services, as Six Flags does in using its advertising to evoke images of happy families and friends enjoying a roller coaster ride; professional medical services provide appropriate images of personnel doing their jobs in white coats surrounded by high-tech equipment;

intangible

(services) cannot be touched, tasted, or seen like a pure product can (for example, the service itself of getting an examination by a doctor is intangible)

The Delivery Gap: Delivering Service Quality

-the delivery gap is where the customer DIRECTLY interacts with the service provider. -Even if there are adequate standards in place, the employees are well-trained, and management is committed to meeting or exceeding customers' service expectations, there can still be delivery gaps. (reasons for bad service could be unusual or unforeseen and the customer may not know this; problems with the delivery of the service or how the service is delivered that isn't typical - but even so, the result is a lost customer); -Even if there are NO other gaps, a delivery gap ALWAYS results in a service failure. -Delivery gaps can be REDUCED when employees are EMPOWERED to spontaneously act in the customers' and the firm's best interests when problems or crises are experienced. (this is where offering free dessert and such comes in)

resolving problems 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. -To resolve service failures quickly, firms need clear policies, adequate training for their employees, and empowered employees.

effective service recovery demands

1) listening to the customers and involving them in the service recovery 2) providing a fair solution 3) resolving the problem quickly.

The four service gaps

1. knowledge gap 2. standards gap 3. delivery gap 4. communication gap

the zone of tolerance

The area between customers' expectations regarding their desired service and the minimum level of acceptable service—that is, the difference between what the customer really wants and what he or she will accept before going elsewhere. (how much a customer will except before no longer giving business to this service or firm)