case Study & Essay
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chap012_slide.pptxSERVICES: THE INTANGIBLE PRODUCT
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McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
CHAPTER
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Chapter 12 – Services: The Intangible Product
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Services: The Intangible Product
LO1 Describe how the marketing of services differs from the marketing of products.
LO2 Discuss the four gaps in the Service Gap Model.
LO3 Examine the five service quality dimensions.
LO4 Explain the zone of tolerance concept.
LO5 Identify three service recovery strategies.
LEARNING OBJECTIVES
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These are the learning objectives for this chapter.
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Services Marketing Differs from Product Marketing
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This graph sets up the following discussion; if you wish to shorten this presentation, simply review these differences. The next slides go into greater detail.
Intangible
Requires using cues to aid customers
Atmosphere is important to convey value
Images are used to convey benefit of value
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Consumers use cues to judge the service quality of dentists, including the quality of the furnishings, whether magazines are current, and diplomas on the wall.
Group activity: Think about the cues you use to assess the quality of a service. Choose a particular service (e.g., auto repair, medical care, insurance) and list several cues the provider could use to indicate quality.
Inseparable Production and Consumption
Production and consumption are simultaneous
Little opportunity to test a service before use
Lower risk by offering guarantees or warranties
FedEx Commercial
Ryan McVay/Getty Images
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When staying at a hotel, you can’t test it out before you stay. Some hotels offer satisfaction guarantees to lower risk. Ask students what other kinds of products can they not test before? Some of them might say delivery in which case it is funny to show this YouTube ad. The ad (always check before class) is for FedEx and was one of their best superbowl ads ever.
Variable
Courtesy Geek Housecalls, Inc.
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Many students work in service professions. Ask students: How have your employers attempted to reduce service variability? Do these programs work? What else could your employer do to reduce variability?
Technology
Training
Automation
Perishable
How are each of these perishable services?
John Foxx/Getty Images
PhotoLink/Getty Images
Courtesy Geek Housecalls, Inc.
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Each of the pictured services are perishable, because as soon as the plane/ship departs, the date ends, or the meal is served, there is no possibility of changing. Unsold seats or rooms are lost revenue.
What are the four marketing elements that distinguish services from products?
Why can’t we separate firms into just service or just product sellers?
Check Yourself
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Services are intangible, inseparable, variable, and perishable.
Many of them are a blend and fall within the product-service continuum
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Many doctors believe they should be evaluated on the basis of their credentials and find consumers’ interest in wait times, friendliness of staff, and waiting room décor frustrating. Ask students: What can doctors do to close this knowledge gap?
Marketing research: understanding customers
Evaluating service quality
Understanding customer expectations
Understanding Customer Expectations
versus
Mel Curtis/Getty Images
Kim Steele/Getty Images
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Ask students: What are your expectations of the service provided by these two businesses. Will there be price differences? In what circumstances would you stay at each property?
Expectations are based on knowledge and experience
Expectations vary according to type of service
Expectations vary depending on the situation
Evaluating Service Quality
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Class activity. Tell students: Assume you are expecting an important package from UPS. A delivery attempt was made, but you didn't hear the door bell, and missed it. You call the customer service line and they tell you not to worry, and that one of your options is to pick up the package at the terminal that evening. You tell them that you need the package before noon. So, they arrange for you to meet the delivery truck close to your house. You are delighted when you spot the clean brown UPS truck exactly where it is supposed to be. The friendly driver greets you by name, gets your package and you are on your way.
Ask the students: which of the service building blocks of customer service applies to each aspect of this scenario
The Standards Gap: Setting Service Standards
Developing systems to ensure high-quality service
Setting standards for quality
Royalty-Free/CORBIS
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Quality service requires constant investments in training and monitoring. Similar to any other strategic element, service quality flows from the top down. Rewards and incentives must be in place to support service quality commitments.
Ask students: What types of incentives work best to make service employees buy in to their firm’s service standards? Some will say good working conditions and salaries and others might mention contests and prizes.
The Delivery Gap: Delivering Service Quality
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This slide again sets up the following discussion, which you may omit if you prefer to focus just on these dimensions.
Empowering Service Providers
Don Bishop/Getty Images
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Frontline employees must be able to solve customer problems. Ask students: The last time you returned something to a store, did the person waiting on you process the return, or did he or she need to get a manager’s approval? Which do you prefer?
Allowing employees to make decisions about how service is provided to customers
Providing Support and Incentives
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If the firm has just a paper commitment to service quality, it will not happen. Systems must support the service providers and allow them to do their job and exceed customer expectations.
Ask students: What types of incentives do you believe would best motivate UPS delivery drivers?
Of course they will say money. This could lead to an interesting discussion about how intrinsic rewards like recognition plaques can mean as much or more than money
Reducing delivery gap
Provide support necessary to deliver service
Consistent and coherent management
Reward employees for excellent service
Provide emotional support to service providers
Use of Technology
RFID (radio frequency identification device)
Retail store assistant (RSA)
Courtesy IBM Corporation
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Technology has become an increasingly important method for facilitating the delivery of services. RFIDs (radio frequency identification devices) are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products. Another way to use technology in the service delivery process is with a retail store assistant (RSA). An RSA can be a kiosk or a device attached to the customer’s shopping cart. Instead of bringing a shopping list to the store, a customer can swipe a loyalty card or enter a phone number at an RSA. Any information the customer has entered online from home will show up on the customer’s profile. Ask Students what new technologies they have seen at retailers?
The Communications Gap: Communicating the Service Promise
J.D. Power and Associates Website
Getty Images
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Many people have never stayed in a five-star hotel, but they know what level of service quality they expect. Often, such expectations develop in response to the promises made in promotional materials provided by the firm.
Many firms over promise and under deliver; Southwest Airlines attributes its success to under promising and over delivering instead.
This web link is for J.D. Power and Associates. Clicking through will show you the different industries that they rate, many of them service industries. Ask students what it means for a company to win this? How should they use this in their communication?
Manage customer expectations
Promise only what you can deliver
Communicate service expectations
Explain the four service gaps identified by the Gaps Model.
List at least two ways to overcome each of the four service gaps.
Check Yourself
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Answer to both questions:
The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations. Firms can understand consumer expectations and evaluate service quality
The standards gap pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets. Firms can set appropriate service standards and measure service performance
The delivery gap is 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 by providing incentives and support.
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 and manage customer expectations effectively, they generally can close this gap.
Service Recovery
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This slide sets up the following discussion and can be used instead of the more detailed discussion that follows.
Increase Service Recovery
Listen to the customer
Resolve problems quickly
Provide a fair solution
Check Yourself
Why is service recovery so important to companies?
What can companies do to recover from a service failure?
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Despite a firm’s best efforts, sometimes service providers fail to meet customer expectations. 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 failure.
Distributive Fairness and Procedural Fairness.
The communications gap refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.
Glossary
Return to slide
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The communications gap refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises.
The delivery gap is the difference between the firm’s service standards and the actual service it provides to customers.
Glossary
Return to slide
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The delivery gap is the difference between the firm’s service standards and the actual service it provides to customers.
The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations.
Glossary
Return to slide
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The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations.
Service quality is the customers’ perceptions of how well a service meets or exceeds their expectations.
Glossary
Return to slide
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Service quality is the customers’ perceptions of how well a service meets or exceeds their expectations.
The standards gap is the difference between the firm’s service standards and the actual service it provides to customers.
Glossary
Return to slide
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The standards gap is the difference between the firm’s service standards and the actual service it provides to customers.
