MARKETING 2 CHAPTER 12 SERVICES: THE INTANGIBLE PRODUCT

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SERVICE
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* Service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer. * The view of services should not be limmited to a pure sevice business but also viewed as businesses that uses service as a differentiating tool to help it sell physical products.
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CUSTOMER SERVICE
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* Customer Service specifically refers to human or machanical activities firms undertake to help satisfy their customers’ needs and wants. * By providing good customer service, firms add value to their products or service. * Even those firms that are engaged primarily in selling a product, like an apparel store, typically view service as a method to maintain a sustainable competitive advantage.
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How does the marketing of services differ from the marketing of products?
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* Services are intangible, which makes it difficult to describe their benefits or promote them, so service providers enhance their delivery with more tangible attributes. * Services are produced and consumed at the same time. * Services are more variable than products. * Marketers provide incentives to stagger demand over time because they can’t be stockpiled.
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What are the Core Differences between Sevices and Goods?
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* Intangible * Inseparable * Variable * Perishable
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INTANGIBLE
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* Intangible is a characteristic of a service; it cannot be touched, tasted, or seem like a pure product can. * Intangibility makes it difficult to convey the benefits of services. * Because of the intangibility of services, the images marketers use Reinforce the Benefit or value that a service provides. * Doctors, lawyers, accountants, and consultants, depend heavily on consumers’ perceptions of their integrity and trustworthiness.
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INSEPARABLE (inseparable production and consumption)
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* Inseparable is a characteristic of a service; it is produced and consumed at the same time; that is, service and consumption are inseparable. * Because service production can’t be separated from consumption, astute service marketers provide opportunities for their customers to get directly involved in the service. * Because the service is inseparable from its consumption, customers rarely have the opportunity to try the service before they purchase it. And after the service has been performed, it can’t be returned. * Because the purchase risk in these scenarios can be relatively high, service firms sometimes provide extended warranties and 100% satisfaction guarantees.
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VARIABILITY
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* Variability is a characteristic or a service; its quality may vary because it is provided by humans. * Some service providers tackle the variability issue by: company’s very specific service standards and exelent training programs, a micromarketing segmentation strategy can customize a service to meet customers needs “exactly”, personalize each service offering, replace people with machines, and Internet one-on -one interaction. * However, some customers do not embrace the idea of replacing a human with a machine for business interactions or have problems using the technology.
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PERISHABLE
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* Services are perishable in that they cannot be stored for use in the future. * You can’t stockpile your membership at Gold’s Gym like you could a six- pack of Bud. * The perishability of services provides both challenges and opportunities to marketers in terms of the critical task or matching demand and supply. * As long as the demand for and supply of the service match closely, there is no problem, but unfortunately, this perfect matching rarely occurs. (A ski trip) * Providing a great service is not easy and it requires a diligent effort to analyze the service process piece by piece.
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What are the four marketing elements that distinguish services from products?
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Why can’t we separate firms into just service or just product sellers?
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What are some of the ethical issues associated with markering professional services?
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Why is it important that service marketers know what customers expect?
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* Marketers might not be providing enough or the right service, which can lead to disappointed customers. * Marketers analyze service quality through comprehensive studies and by interacting with others.
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PROVIDING GREAT SERVICE: THE GAPS MODEL
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* Knowledge gap * Standards gap * Delivery gap * Communication gap ** Customers have certain expectations about how a service should be delivered. When the delivery of that service fails to meet those expectations, a service gap results. The Gaps Model is designed to encourage the systematic examination of all aspects of the service delivery process and prescribe the steps needed to develop an optional service strategy.
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THE KNOWLEDGE GAP: KNOWING WHAT CUSTOMERS WANT
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* The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations. Firms can close this gap by matching customer expectations with actual service through research. * An early important step in providing good service is knowing what the customer wants. * To reduce the knowledge gap, firms must understand the customers’ expectations. To understand those expectations, firms undertake customer research and increase the interaction and communication between managers and employees.
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Understanding customer expectations
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* Costomers’ expectations are based on their knowledge and experiences. * Expectations vary according to type of service, type of situation, and the type of occasion of service usage. * Thus, the service provider needs to not only know and understand the expectations of the customers in its target market, but also have some idea of the occasion of service usage.( one night stand or honey-moon)
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Evaluating service quality using well-established marketing metrics.
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* SERVICE QUALITY-customers’ perceptions of how well a service meets or exceeds their expectations. * VOICE-OF-CUSTOMER PROGRAM-an ongoing marketing research system that collects customer inputs and integrates them into managerial decisions. * ZONE OF TOLERANCE-the area between customers’expectations regarding their desired service and the minimum level of acceptable service–that is, the differencebetween what the customerreally wants and what he or she will accept before going elswhere.
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BUILDING BLOCKS OF SERVICE QUALITY
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* RELIABILITY: the ability to perform the service dependably and accuratly. * RESPONSIVENESS: the willingness to help customers and provide prompt service. * ASSURANCE: the knowledge of and courtesy by employees and their ability to convey trust and confidence. * EMPATHY: the caring, individualized attention provided to customers. * TANGIBLES: the appearance of physical facilities, equipment, personnel, and communication materials.
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THE STANDARDS GAP: SETTING SERVICE STANDARDS
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* The Standards Gap pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets. By setting appriopriate service standards and measuring service performance, firms can attempt to close this gap. * This step is used to set its service standards and develop systems to ensure high-quality service.
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Achieving service goals through training
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* To deliver consistently high-quality service, firms must set specific, measurable goals based on customers’ expextations; to help ensure that quality, the employees should be involved in the goal setting. * Service providers generally want to do a good job, as long as they know what is expected of them. Employees should be shown exactly how and what specific tasks they are responsible for preforming. * More employees will buy into a quality oriented process if they are involved in setting the goals.
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Commitment to service quality
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* Service providers take their cues from managment. If managers strive for excellent service, treat their customers well, and demand the same attitudes from everyone in the organization, it is likly employees will do the same.
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WHAT CAN FIRMS DO TO HELP EMPLOYEES PROVIDE BETTER SERVICE?
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* Firms should provide training to employees. * Firms should lead through example. * Firms can empower their employees to solve service issues and problems and can offer emotional support and tools to do a good job. * A firm’s service program should be consistent. * Service providers need incentives to encourage them to do a good job.
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THE DELIVERY GAP: DELIVERING SERVICE QUALITY
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* 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. * The delivery gap is where the customer directly interacts with the service provider. * Delivery gaps can be reduced when employees are enpowered to act in the customers’ and the firm’s best interests and supported in their efforts so thy can do their jobs effectivly.
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METHODS TO REDUCE DELIVERY GAPS
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* Empowering employees * Provide support and incentives- emotional support and instrumental support * Use of technology
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Empowering service providers
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* EMPOWERMENT- in context of service delivery, means allowing employees to make decisions about how service is provided to customers. * When frontline employees are authorized to make secisions to help their customers, service quality generally improves, * However, empowering service providers also can be difficult and costly. * Empowerment becomes more important when the service is more individualized.
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Providing Support and Incentives
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* A service provider’s job can be difficult, especially when customers are unpleasent or less than reasonable * But the service provider cannot be rude or offensive just because the customer is.
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The ways managementneeds to support the service providers to ensure that service is delivered properly.
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* First, managers and co-workers should provide emotional support to service providers by demonstrating a concern for their well-being and standing behind their decisions. * Second, service providers require instrumental support–the system and equipment–to deliver the service properly. Many retailers provide state-of-the-art instrumental support for their service providers.( Kiosks help salesmen) * Third, support that manegers provide must be considtent and coherent throughout the organization.Managers must provide clear guidance and oversight in attending to the expectations of customers. * Fourth, a key part of any customer service program is providing rewards to employees for exellent service.
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THE COMMUNICATION GAP: COMMUNICATING THE SERVICE PROMISE
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* 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 realistic about the services they can provide and at the same time manage customer expectations effectively, they generally can close this gap. * Poor communications between marketers and their customers can result in a mismatch between an add campaign’s or a salesperson’s promises and the service the firm can actually offer. * Although firms have difficulty controlling service quality because it can vary from day to fay and provider to provider, they do have control over how they communicate their service package to their customers. * If a firm promised more than it can deliver, customers’ expectations won’t be met– the customer will never return and are likly to tell others about the underperforming service. * Promising only what yor can deliver, or possibly even a little less, is an important way to control the communications gap. * A relatively easy way to manage customer expectations is to coordinate the mechanism through which the expectation is created and the means by which the service is provided. Expectations are created through promos, ads, or personal selling.
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Explain the four service gaps identified by the Gaps Model.
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*
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List at least two ways to overcome each of the four service gaps.
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*
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What should firms do when a service fails?
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*
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SERVICE RECOVERY
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* Listening to the customer. * Resolving Problems quickly * The Crest Method of Resolving Failures ** Sometimes service providers fail to meet customer expectations. Wheen this happens, the best course of action is attempt to make amends with the customer and learn from the experience.
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The continuum of businesses from pure service and pure product at either end demonstrates:
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A. few businesses are purely products. B. few businesses are purely services. C. most business use some elements of service to help build sustainable competitive advantages. D. most service dominant businesses still offer some sort of products or demonstrate elements of product marketing. E. ALL OF THE ABOVE.
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The marketing of services differs from product marketing because services are:
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A. INTANGIBLE, INSEPARABLE, VARIABLE AND PERISHABLE.
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Many hotels use satisfaction guarantees to overcome the problem of _____ of services.
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A. intangibility. B. INSEPARABILITY. C. perishability. D. varability. e. zone of tolerance.
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Because services like airline flights and hotel beds are perishable, many, marketers attempt to match demand with supply using:
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A. television ads. B. Internet ads. C. billboard ads. D. PRICING STRATEGIES. E. economis modeling.
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Services can be difficult to evaluate, but marketers can use all of the following EXCEPT _____ to measure customers’ expectations and service quality:
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A. marketing research B. complaint tracking systems. C. voice of the computer programs. D. zone of tolerance analyses. E. FEDERAL CUSTOMER SERVICE TEMPLATES.
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Which of the following is NOT one of the five dimensions used by consumers to determine overall service quality?
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A. assurance. B. reliability. C. empathy. D. responsiveness. E. REPEATABILITY
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Zone of tolerance identifies ______ along the five dimenions of service quality.
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A. THE DIFFERENCE BETWEEN WHAT THE CUSTOMER REALY WANTS AND WHAT HE OR SHE IS WILLING TO ACCEPT.
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Firms can attempt to close service gaps by:
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A. explaining to the dissatisfied customers where he or she is confused. B. educating consumers as to what is acceptable performance. C. SETTING APPROPRIATE SERVICE STANDARDS AND MEASURING SERVICE PERFORMANCE. D. using Internet-based production scheduling to increase service quality. E. developing and promoting socially responsible service policies.
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Empowerment:
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A. means allowing frontline employees to make decisions about how service is delivered to employees. B. can be more effective with clear guidlines, expectations, and training. C. means that employees know when they need to call on managers or others to help resolve a problem. D. is especially important when service is individualized. E. ALL OF THE ABOVE.
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Technology offers marketers new tools like using RFIDs and RSAs to help improve service delivery and to meet customer expectation, but technology also has its limits. Among these limits, marketers must consider that:
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A. not all customers understand how to use technology. B. many customers prefer human interfaces, even if it is not as exact otr unfailing. C. sometimes use of technology introduces problems that were not there before. D. technology does not always preform the way it is suposed to. E. ALL OF THE ABOVE.
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In order to be effective, service recovery must:
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A. be seen as prompt. B. be seen as fair. C. include listeningto the customer before jumping to predetermined solutions. D. be easy, if not painless, for the dissatisfied customer. E. ALL OF THE ABOVE.
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If service recovery is handled well, once-dissatisfied customers ________.
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A. MAY INCREASE PURCHASE INTENTIONS. B. UNLESS THEY ARE LOSING MONEY. AS A RESULT, THEY WILL STABB YOU IN THE BACK.

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