Lecture 1 - IHIP

Question 1

What is a service defined as?

Answer 1

• ‘Anything that can’t be dropped on your foot’ (The economist)
• “The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need.”(Palmer, 2005, p2)

Question 2

What are the 7ps of the marketing mix?

Answer 2

Product (Service)
Place
Price
Promotion 
People
Processes
Physical evidence

Question 3

What is a core service?

Answer 3

The substantive service meaning the primary purpose of a transaction that provides ‘peace of mind’
e.g A phones would be communication

Question 4

What is the secondary Service?

Answer 4

The different bases of differentiation that brands focus on over the core service in order to stand out against competition e.g packaging, branding, people and quality

Question 5

What are the characteristics of a good?

Answer 5

• Tangible
• Transfer of ownership is possible
• Can be stores
• Defined as Objectives, devices of things (Berry 1980)

Question 6

What is a service?

Answer 6

Deeds, efforts or performances

Question 7

What is meant by tangible dominant?

Answer 7

Goods that possess physical properties that can be felt, tasted and seen prior to the consumers purchase decision

Question 8

What is meant by intangible dominant?

Answer 8

These lack physical possession of a product and can only be experienced e.g airline customer doesn’t physically possess the place, they experience the flight

Question 9

What is meant by Marketing myopia ?

Answer 9

This is when firms define their business too narrowly

Question 10

What makes up IHIP?

Answer 10

Intangibility
Inseparability
Heterogeneity
Perishability

Question 11

What is intangibility?

Answer 11

• They cannot be seen or touched, prices are difficult to set as the service can only be assessed after the service is consumer e.g a cinema ticket
• Services cannot be stores e.g Doctors can’t produce + store physical check ups to be used at a later date
• Service purchases may be perceived as more risky than goods

Question 12

What is a product?

Answer 12

Either a good or a service

Question 13

What is the goods-services continuum?

Answer 13

This is a model that enables marketers to see the relative goods/services composition of total products.

• A product’s position on the continuum, in turn, enables marketers to spot opportunities. -At the pure goods end of the continuum, goods that have no related services are positioned.
• At the pure services end are services that are not associated with physical products.

Question 14

What are example of intangible domination services?

Answer 14

• Education

- Health care

Question 15

What are example of good tangible domination?

Answer 15

• Salt

- Clothes

Question 16

What are the marketing problems caused by intangibility?

Answer 16

1) Lack of service inventories
2) Lack of patent protection or copyright
4) Difficulties involved in displaying and communicating the attributes of the service to its intended market
5) The special challenges involved in the pricing of services

Question 17

What is meant by lack of service inventories?

Answer 17

• This means that suppliers of services cannot be stored e.g during high periods of demand
• e.g theatre seats that aren’t sold can’t be put onto the next day
• Consequently customers are commonly forced to wait for desired services

Question 18

What is meant by lack of patent protection or copyright?

Answer 18

• New or existing services may easily be copied , so difficult to maintain a firms differential service advantage
• Types of property protection include copyright, designs (protect visual appearance)

Question 19

What is meant by difficulty displaying or communicating services?

Answer 19

How do you get customers to take to take note of a product they cannot see?
- E.g an insurance company struggles to show the benefits of what it can offer

Question 20

What is meant by difficulty in pricing services?

Answer 20

E.g how much should a tutor charge? - typically have to look at other tutor prices

• For a product, it is typically the cost of producing plus a predetermined figure
• Cant answer how the competitive based price was calculated

Question 21

What are the marketing startegies to overcome intangibility?

Answer 21

1) The use of intangible cues
2) The use of personal sources of information
3) Creation of strong organisational image

Question 22

How can the use of intangible cues be used to overcome intangibility?

Answer 22

• This is when tangible cues or physical evidence assist in making service evaluations
• Tangible cues may include the quality of furniture in a lawyers office or quality of paper used in insurance policy
• They should provide tangible clues that are easily understood by the public that directly relate to the bundle of benefits that services provide

Question 23

How can the use of personal sources of information be used to overcome intangibility?

Answer 23

Personal sources of information refers to talking to friends, family and other opinion leaders that consumers use to gather info about a service

• One way companies can use this is offering incentives to existing customers to tell friends about a service (WOM)
  e. g Sky offers a month free service if their friends take out a subscription
• Mass advertising can also be used e.g law firms including former clients stories
• Use of real like customers can add credibility to the promotional message and tangibility of the service

Question 24

How can the creation of a strong organisational image be used to overcome intangibility?

Answer 24

• Usually a well known and respected corporate image lowers the level of perceived risk experienced by potential customers
• E.g large chain ma have developed subsequent brand awareness and a differential advantage over smaller businesses

Question 25

What is inseparability?

Answer 25

• Production of a service cannot be separated from its consumption
• Consumers are co-producers of a service
• For example dentist and patient must interact if service is to be produced

Question 26

What is a critical incident?

Answer 26

A specific interaction between a customer and a service provider

Question 27

What are the marketing problems caused by inseparability ?

Answer 27

1) Physical connection of the service provider to the service
2) Involvement of the customer in the production process
3) Involvement of other customers in the production process
4) Special challenges in mass production of services

Question 28

What is meant by physical connection of the service provider to the service?

Answer 28

• As tangible cues, service providers are evaluated according to their body language, hygiene etc which all impact a firms overall evaluation
• Employees should be treated well in order to ensure the customers have the best possible experience

Question 29

What is meant by the involvement of the customer in the production process in regards to issues with inseparability?

Answer 29

• Service factories must be built with consumers presence in mind as a bade service factory will form poor customer perceptions
• ## Even when consumer needs are the same, some will ask more questions than others and so there length of demand will be longer, as a result fixed schedules are difficult to adhere to without delays

Question 30

What is meant by the involvement of other customers in the production process in regards to issues with inseparability?

Answer 30

• As production and consumption occur simultaneously, several customers often share a common service experience
• The marketing challenges presented by this could be for example young families disrupting a couples quiet dinner
• On the positive side however the laughter/reactions in a theatre could enhance an experience

Question 31

What is meant by the special challenges in mass production of services in regards to issues with inseparability?

Answer 31

• This is the issue with regards to mass producing services
• Challenges quality control as not everyone will get exactly the same experience
• Challenge of selling intangible products to a geographically widespread target market

Question 32

What are the possible solutions to Inseparability problems?

Answer 32

1) Selecting and training public contact personnel

2) Use of multi-site locations

Question 33

What is meant by selecting and training public contact personnel in regards to solving inseparability problems?

Answer 33

• Selection of service personnel with superior communication and interpersonal skills is a must as is training them once they are on the job
• They should be trained in a way that the customer service experience is positive and the employees are properly equipped to handle customer needs

Question 34

What is meant by consumer management in regards to solving inseparability problems?

Answer 34

• This is when management personnel can implement strategies to minimise the impact inseparability has - for example separating smokers and non smokers
• Sending check in directions before they arrive etc

Question 35

What is meant by ‘use of multi-site locations’ in regards to solving inseparability problems?

Answer 35

• To offset the effects of inseparability on mass production, service firms set up multiple locations e.g Mcdonals
• This limits the distance consumer must travel
• They allow for a global presence
• Allows staff to be done in each location and so they can cater to that specific market

Question 36

What is heterogeneity ?

Answer 36

This is the variation from one service transaction to the next
- Makes it impossible for a service operation to achieve perfect quality on an on going basis, they are one time events unlike a product where it can be sent back and the issue fixed

Question 37

What marketing problems are caused by heterogeneity?

Answer 37

• Standardisation and quality control are hard to achieve
• Each employee has different personality traits and interact differently with customers
• Each employee may act differently from one day to another
• A firm could produce the best product in the world but an employee having a bad day may mean a customers perceptions are affected

Question 38

What are the solutions to overcome heterogeneity?

Answer 38

1) Customisation - easier to customise the service to the individuals specific needs, however this will take longer to produce and the costs are likely to be higher

2) Standardisation - The goals is to produce a consistent service product from one transaction to the next
- This can be done through intense training, self service or through automation

Question 39

What is perishability?

Answer 39

• Services cannot be saved, their unused capacity can’t be reserved or inventoried

Question 40

What are the issues of perishability ?

Answer 40

1) Higher demand than maximum available supply- consumer demand may simply outpace what the firm can produce resulting in long waiting periods and unhappy customers may lose out to competitors
2) Lower demand than optimal supply - During time when the demand is below optimal capacity, resources are under-utilised and operating costs are needlessly increased
3) Demand and supply at optimal levels - As services cannot be stored the buffer to ease stock isn’t developed and so service demand and supply rarely balance meaning sometimes length waits etc

Question 41

What is creative pricing in regards to the possible solutions to perishability problems?

Answer 41

1) - Creative pricing e.g offering price reductions such as early bird offers, this makes operations more efficient and ensure better service during the typically busy periods
- By targeting specific groups they are also reduces the amount of potential conflict between groups

Question 42

What is the development of complementary services in regards to the possible solutions to perishability problems?

Answer 42

For example a lounge in a restaurant is a complementary service that provides an area for customers to go while they wait but also prove additional income
- Result is more satisfied customers

Question 43

What is part time employee utilisation in regards to the possible solutions to perishability problems?

Answer 43

• Use part time employees to assist during peak demand periods
• Part time have the benefit of low labour costs and a flexible labour force

Question 44

What is capacity sharing in regards to the possible solutions to perishability problems?

Answer 44

• This is providing a type of service co-op with other service providers which permits the co-op to expand its supply of service as a whole
• e.g may share cost of storage or expensive equipment