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Services

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deeds, process, and performances provided or coproduced by one entity or person for another entity or person 1. all economic activity whose output is not a physical product or construction 2. generally consumed at the time it is produced 3. provides added value in form that are essentially intangible concerns

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Service Industries and Companies

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core product is a service

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Service as a Product

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wide range of intangible product offerings sold by service and nonservice companies

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Customer Service

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service provided in support of a company's core product not services provided for sale by the company

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Derived Service

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value derived from physical goods is the service provided by good

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Tangibility Spectrum

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services tend to be less tangible than manufactured Spectrum illustrates the tangibility of the product/service

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Service-Based Economics

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developed in response to the growth of service industries world wide

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Why be service oriented in a goods business?

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1. commoditization of products-> price and margin pressures. Services customize offerings to add value 2. Customers demand a solution to their problem or challenge that involves multiple products/services 3. higher profit margins b/c customer loyalty and satisfaction are driven by service quality and offerings 4. Can be a differentiator

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Characteristics of Service

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SHIP Simultaneous Production and Consumption Heterogeneity Intangibility Perishability

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Intangibility

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Characteristic of Service cannot be seen, felt, tasted, or touched cannot be inventoried demand fluctuations are difficult to measure cannot be easily patented easily copied by competitors quality difficult to assess, communicate and display Difficult to price b/c "unit of service" costs are hard to determine price/quality relationship is complex

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Heterogenity

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Characteristic of Service no two services will be precisely alike customer behavior introduces variability and uncertainties result of human interaction and behaviors ensuring consistent service quality is hard depends on factors that cannot be controlled

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Perishability

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Characteristic of Service cannot be saved, stored, resold, returned cannot be inventory hard demand forecasting and creative planning for capacity utilization strong recovery strategies when things do go wrong

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Simultaneous Production and Consumption

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Characteristic of Service sold first and then produced and consumed @ same time producers are playing a role as a part of the product and are an essential in the experience mass production is difficult dependent on what happens in "real time" not usually possible to gain significant economies of scale customer involved in and observes the production process and thus may affect outcome

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Search Qualities

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Attributes that a customer can determine before purchasing a product

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Experience Qualities

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attributes that can be discerned only after purchase or during consumption

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Credence Qualities

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Characteristics that the consumer may find impossible to evaluate even after purchase and consumption (medical, auto, etc)

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Service Marketing Mix

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elements an organization controls that can be used to signify or communicate with customers Product Place Promotion Price People Physical Evidence Process

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People

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Service Marketing Mix All human actors who play a part in service delivery and thus influence buyers perceptions

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Physical Evidence

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Environment in which the services is delivered, where firm/customer interact, tangible comp

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Process

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Procedures, mechanisms, flow of activities by which the service is delivered

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Customer Gap

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difference between customer expectations and perceptions

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Customer Expectations

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standard/reference pts brought to the service experiences beliefs about service delivery that serve as standards or reference points against which performance in judged

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Customer Perceptions

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Subjective assessments of actual service experiences

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Where does Quality Service begin?

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A clear understanding of the customers

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Service Gaps

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Listening Gap The Service Design and Standards Gap Service Performance Gap Communication Gap

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Listening Gap

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difference between customer expectations of service and company understanding of those expectations Causes: Inadequate customer research orientation Lack of Upward Communication Insufficient relationship focus Inadequate service recovery

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The Service Design and Standards Gap

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Difficulty experienced in translating customer expectations into service quality specifications that employees can understand execute Causes: Poor Service Design Absence of Customer-Driven Standards Inappropriate Physical evidence and service scrape

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Service Performance Gap

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discrepancy between the development of customer driven service standards and actual service performance by employees Causes: Deficiencies in HR policies Failure to match Supply/Demand Customers not fulfilling roles Problems with service intermediaries

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Communication Gap

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difference between service delivery and service providers external communications Causes: Lack of integrated services marketing communications Ineffective management of customer expectations Overpromising Inadequate horizontal communications Inappropriate price

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Desired Service

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level of service the customer hopes to receive

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Adequate Service

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Minimum level of service the customer will accept

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Zone of Tolerance

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extent to which customers will recognize and are willing to accept variation. Range in which customers do not particularly notice service performance. Can expand/contract mostly due to adequate service. different customer have different standards

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Sources of Desire Expectations

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Personal Need Personal Service Philosophy Derived Service Expectations

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Personal Needs

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Source of Desire Expectations states or conditions essential to physical/psychological well-being of customer

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Personal Service Philosophy

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Source of Desire Expectations underlying generic attitude about service and proper conduct

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Derived Service Expectations

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Source of Desire Expectations expectations are driven by another person of group of people

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Sources of adequate Service Expectations

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short term and tend to fluctuate more than the factors that influence desired service Perceived Service Alternatives Situational factors Personal situational factors

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Perceived Service Alternatives

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other providers from whom the customer can obtain service customer's perception that service alternatives exist raises the level of adequate service and narrows the zone of tolerance

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Situational factors

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service performance conditions that customers view as beyond the control of the service provider customers who recognize that situational factors are not the fault of the service company may accept lower levels of adequate service, given the context. often temporarily lower the level of adequate service widening the zone of tolerance

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Personal situational factors

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consist of short-term, individual facts that make a customer more aware of the need for service when urgency is needed raise the love of adequate service

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Predicted Service

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level of service that customers believe they are likely to get predict good service leads to higher adequate service than if they predicted poor service an estimate or a calculation of the service that a customer will receiver in an individual transaction rather than in the overall relationship with a service provider while desired and adequate are global assessments

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Sources of both desired and predicted service expectations

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Explicit service promises Implicit Service Promises Word of Mouth Communication Past Experience

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explicit service promises

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personal and non personal statements about the service made by the organization to customers personal are by the firm's sale people or service personnel non personal come from the company's webpage, ads, brochures, and other written publications influence the levels of both desired and predicted service

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Implicit Service Promises

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Service related cues, other than explicit promises, that lead to inferences about what the service should and will be like. dominated by price and the tangibles associated with the service

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Word of Mouth Communication

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made by parties other than the organization convey to customers what the service will be like and influence both predicted and desired service perceived as unbiased

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Past Experience

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previous exposure to service that is related to the focal service

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What does a service Marketer do if customer expectations are "unrealistic"

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one inhibitor to learn about customer expectation is management and employee's fear of asking belief that customer expectations will be extravagant and unrealistic and asking will set itself up for even loftier expectation levels main expectations and generally quite simple and basic company may not b able-and indeed does not always have to -deliver on expressed expectations and the reasons that desired service is not being provided at this time and describe efforts planned to deliver such service in future

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delight

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profoundly positive emotional state that results from having one's expectations exceeded to a surprising degree unexpected and surprisingly enjoyable

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musts

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attributes central to the basic function of the product or service

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satisfiers

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potential to further satisfaction beyond the basic function of the product

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Staying power

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how long a company can expect an experience of delight to maintain the consumer's attention

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Competitive implication

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impact on expectations of other firms in the same industry

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How does a company exceed customer service expectations?

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exceeding customer expectations on the basics is impossible developing customer relationship deliberately under promise the service to increase the likelihood of exceeding customer expectations backfires: people with whom the company interacts regularly are likely to notice the under promising and adjust their expectations reduced competitive appeal of an offering and must be tempered by what the company is offering position unusual service as unique rather than the standard

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Satisfaction

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broader concept, it is influenced by perceptions of service quality, product quality, and price, as well as situational factors and personal factors customer's evaluation of a product or service in terms of whether that product or service has met the customer's needs and expectations.

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Service Quality

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dimensions of service, focused evaluation that reflects the customer's perception of reliability, assurance, responsiveness, empathy, and tangibles

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dissatisfaction

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when you fail to meet satisfaction expectations

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fulfillment

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knowledge that one's needs have been met

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contentment

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passive response that customer's may associate with services they do not think a lot about or they receive routinely over time

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pleasure

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makes customer feel good or in a positive way

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relief

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removal of a negative leads to satisfaction

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ambivalence

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mix of positive and negative experiences

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What determine Customer Satisfaction?

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Product and service features Customer Emotions Attributions for Service Success or Failure Perceptions of Equity or Fairness Other customers, family members, and coworkers

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American Customer Satisfaction Index (ACSI)

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customer perceptions across 200 firms representing all major economic sectors 250 interviews/ company measured by customer perceptions of quality, value, satisfaction, expectations, complaints, and future loyalty

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Service Quality Dimensions

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• judge quality based on multiple factors relevant to the context • affected by culture RATER Reliability Responsiveness: Assurance Empathy Tangibles

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Reliability:

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Service Quality Dimensions ability to perform the promised service dependably and accurately

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Responsiveness:

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Service Quality Dimensions willingness to help customers and proves prompt service • attentiveness and promptness in dealing with customer requests, questions, complaints, and problems

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Assurance:

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Service Quality Dimensions employees' knowledge and courtesy and their ability to inspire trust and confidence • important for services that customers perceive as high risk or for services of which they feel uncertain about their ability to evaluate the outcomes

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Empathy:

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Service Quality Dimensions caring, individualized attention given to customers • personalized service • customers are unique and special and their needs are understood

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Tangibles:

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Service Quality Dimensions appearance of physical facilities, equipment, personnel, and communication materials • enhance their image, provide continuity, and signal quality to customers, most companies combine tangibles with another dimension to create service quality strategy for the firm

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E-service Quality Judgements

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• use to judge websites o Efficiency o Fulfillment o System Availability o Privacy o Responsiveness o Compensation o Contact

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Efficiency

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E-service Quality Judgements • the ease and speed of accessing and using the site

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Fulfillment

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E-service Quality Judgements • the extend to which the site's promises about order delivery and item availability are fulfilled

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System Availability

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E-service Quality Judgements • the correct technical functioning of the site

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Privacy

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E-service Quality Judgements • the degree to which the site is safe and protects customer info

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Responsiveness

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E-service Quality Judgements • the effective handling of problems and returns through the site

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Compensation

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E-service Quality Judgements • degree to which the site compensates customers for problems

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Contact

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E-service Quality Judgements • availability of assistance through telephone or online representatives

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Service Encounters / moments of truth

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• when the customer interacts with the service firm • any encounter can be critical in determine customer satisfaction and loyalty • each encounter with different people and departments representing the food service provider adds to or detracts from the potential for a continuing relationship • not all encounters are equally important in building relationships although the average quality of the individual events in a service encounter sequence are important, satisfaction can be enhanced by providing a positive peak experience within the sequence.

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Types of service encounters

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• remote encounter • technology mediated encounters • face-to-face encounters

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remote encounter

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o encounters can occur without any direct human contact o opportunity for firm to reinforce or establish quality perceptions in the customer o tangible evidence of the service and the quality of the technical processes and system become the primary bases for judging quality

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technology mediated encounters

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o allow technology based communication with a real person in real time o greater potential variability in the interaction o tone of voice, employee knowledge, and effectiveness/efficiency in handling customer issues become important criteria for judging quality

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face-to-face encounters

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o occurs between an employee and a customer in direct personal contact o verbal and non verbal behaviors o tangible cues like employee dress and other symbols of service o customer also plays a role in creating quality service for herself through her own behavior during the interaction

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Sources of Pleasure and Displeasure in Service Encounter

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Recovery Adaptability Spontaneity Coping

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