W10 Services Flashcards
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?
