Services
Intangible products
Continuum of evaluation
Most goods are high in search attributes and easy to evaluate
Most services are high in credence attributes and difficult to evaluate
Products inbetween are high in experience attributes
Characteristics that distinguish services from goods
4Is Intangibility Inconsistency (variability) Inseparability Inventory (perishability)
Intangibility
- Services are a performance not an object, customers cannot see, touch or smell good service
- There is a core, intangible, service at play which is often supported by tangible and intangible elements
- Customers look for reassuring signs
How marketers reduce intangibility
- More brand building to reduce risk than goods, particularly communications that emphasise a sense of tangibility
- Ensure reassuring signs by providing physical clues, e.g. the look of the facility
Inconsistency (variability)
- There is variability in quality of services due to service heterogeneity, I.e. people cannot consistently deliver the same thing in the same way
- Often, organisations do not want standardised services, as some services operate based on addressing unique individual needs. Others want to specifically differentiate/stand out among competitors with unique advertising campaigns.
- An advantage of this is the ability to customise certain elements towards individual customer needs, which creates customer value, and then standardise the other components
Ways to reduce inconsistency
- Recruiting and training the right people
- Disintermediation (eliminating middle layers of the distribution channel) to minimise effects of bad service (e.g. self-checkouts), technology and the internet has provided many opportunities for this
- CARE training model (connect, appreciate, respond, empower)
- Standardise some elements to maintain customer value in individualised service while also reducing risk
- Service blueprints — plots out exactly what happens in all different stages of the service, who’s involved and the customer activities, flowchart to see if the stage should be standardised or customised
Inseparability
- It is difficult to separate services from the deliverer of serviceImpossible to detach the expertise, skill, personality of provider to the firm, so the service encounter (I.e. the actual interaction between the customer and the organisation, oft in form of the service provider) often determines whether the customer come away with a positive/negative impression of the service
- Social contact dimension — customer’s interaction with provider
- Physical dimension — customers pay attention to environment of service
- Customers and employees both participate in and affect transactions so the service quality depends on many uncontrollable factors
- Customers should provide accurate information, clear communications about their wants and needs
Service Process Matrix
High degree of labour intensity, low degree of customisation – mass services (school, retailing)
High degree of labour intensity, high degree of customisation – professional services (doctors, lawyers)
Low degree of labour intensity, high degree of customisation – Service shop (e.g. repairs)
Low degree of labour intensity, low degree of customisation – service factory (e.g. airlines)
Inventory
- Inventory (or perishability) is the cost of maintaining the ability to deliver a service — services cannot be stored, returned, or resold, so it is difficult to synchronise supply and demand
- This is especially problematic for services that are expensive to operate and maintain (e.g. airlines, amusement parks)
Ways to reduce perishability (inventory)
- Assume perishability and create strategies to synchronise supply and demand through capacity management during low season, adjusting product or price
- Adjusting product — a service should diversify their income from as many customer groups as possible (e.g. hotels focus on convention groups)
- Yield management pricing — changing prices to encourage demand (e.g. cheaper rooms)
7P Marketing Mix
Process
People – service encounter, service provider
Physical evidence – servicescape, tangibles
Why is satisfaction harder to evaluate for services?
Customers compare their experience with a prior set of expectations — marketers must identify expectations first and then work to exceed them
How to deal with disservice?
Disservice can have massive impact on the firm, the most important strategy when this occurs is speed — a timely and appropriate response signals that it will not occur again. Quick complaint response = more likely to repurchase.
What is the model that customers can evaluate quality of service on
RATER model
Reliability – dependable, accurate service?
Assurance – confident, knowledgeable, courteous? Trustworthy?
Tangibles – what is the physical evidence like?
Empathy – individualised, caring actions?
Responsiveness – speediness, promptness, willingness to help?
What are some tools managers can use the measure employee performance?
Human capital value added Revenue per employee Absenteeism Bradford factor Employee turnover rate Satisfaction index
What is the model service deliverers can follow to offer a great customer experience?
APPLE
Approach – first name, personalised and welcoming
Probe – politely ask about needs and wants
Present – solutions that customer can take home today
Listen – for concerns to resolve
End – polite farewell, invitation to return
What are retailers and what utility do they provide?
Retailers sell goods and services to consumers, it can provide time, palce, and ownership utility (saves time or money, provide assortment of goods, allow shoppers access to rare goods).
The wheel of-retailing hypothesis
Explains how retail firms change, becoming more upscale as the go through their life cycle.
- Entry phase - new retailers with low-end strategies offer lower-priced goods
- Trading-up phase - they gradually trade up, improving facilitates and upgrading merchandise
- Vulnerability phase - high-end strategy with added services, facilitates, value, making it vulnerable to new entrants and low prices
Factors affecting retailers
Changing economy
economic downturns drive retail sales down for upscale retailers whereas low-priced retailers thrived. Some stores change their merchandise to lower-priced products to meet consumer needs.
Changing demographics and consumer preferences
- Retailers can no longer assume their customer base remains the same as demographics age and get replaced by younger generations (e.g. who prefer online shopping)
- Workforce involvement creates time-challenged consumers demanding convenience, retailers adjust operating hours and services to meet their needs
- Experiential merchandising engages bored customers bored by turning shopping into an interactive activity (e.g. Build a Bear)
- Destination retailers have become a trend where stores are distinctive enough for consumers to specifically come to shop, perhaps emphasising an upscale strategy, convenience strategy, or curating a unique experience
Technology
- e.g. wearables, digital wallet, RFID tags
- Omnichannel marketing creates a seamless shopping experience (e.g. updated basket, web chat, instore purchase pickup)
- Point-of-sale systems collect sales and connect directly to inventory-control systems, creating perpetual inventory unit control (tallying total sales across different stores), developing automatic reordering systems
- Beacon marketing communicate with shoppers’ smartphones as they browse the store
Globalisation
triple-bottom line orientation trend where organisations consider their social bottom line, I.e. their contribution to communities esp. for operations in developing countries
Retailtainment
stores create experiences to engage experiential shoppers, creating excitement to encourage impulse purchases and form emotional connections
How does marketing people work?
What are the 3 approaches?
- Agents carefully package clients to achieve the image, exposure, communications they desire, e.g. celebrities, politicians, actors, athletes, socialites, cultural figures, models etc.
- Same strategies on products can be adapted to people: memorability, suitability, distinctiveness
- Pure selling approach — find buyers for a client
- Product involvement approach — modify the client to increase their value
- Market fulfilment approach — identify a market gap and find/develop a new client to meet the market needs
Marketing places
Marketing activities that seek to attract new businesses, residents, or visitors to a town, state, country, site etc.
Marketing ideas
- Marketing to gain support, awareness of a concept, philosophy, belief, or issue (e.g. religious, environmental)
- Low success rate as consumers do not perceive that the value is worth the cost, the extra effort necessary is not worth the satisfaction they receive
