Chapter 13 Services

1
Chapter 13 Services
Text by William M. Pride O. C. Ferrell Multimedia
Slides by Milton M. Pressley Univ. of New Orleans
MARKETING
2000e
2
Objectives

• To Understand the Nature and Importance of
  Services
• To Become Familiar with the Characteristics of
  Services that Differentiate Them from Goods
• To Gain an Understanding of How the
  Characteristics of Services Influence the
  Development of Marketing Mixes for Services
• To Become Aware of the Importance of Service
  Quality and Be Able to Explain How to Deliver
  Exceptional Service Quality
• To Explore the Nature of Nonprofit Marketing

3
The Nature and Importance of Services

• Defined
• Importance

4
Characteristics of Services

• Intangibility

5
Classification of Service Products Tangibility
Continuum
Sugar
House
Automobile
Service-dominant products (Intangible)
Custom-Made Clothing
(Tangible) Good-dominant products
6
Characteristics of Services

• Inseparability of Production and Consumption

7
Characteristics of Services

• Perishability

8
Characteristics of Services

• Heterogeneity

9
Characteristics of Services

• Client-Based Relationships

10
Characteristics of Services

• Customer Contact

11
Developing and Managing Marketing Mixes for
Services

• Development of Services
• Distribution of Services
• Promotion of Services
• Pricing of Services

12
Developing and Managing Marketing Mixes for
Services

• Development of Services
• Distribution of Services
• Promotion of Services
• Pricing of Services

13
Developing and Managing Marketing Mixes for
Services

• Development of Services
• Distribution of Services
• Promotion of Services
• Pricing of Services

14
Developing and Managing Marketing Mixes for
Services

• Development of Services
• Distribution of Services
• Promotion of Services
• Pricing of Services

15
Service Characteristics
Resulting Marketing Challenges

• Intangibility
• Inseparability of Production and
  Consumption

• Difficult for Customer to Evaluate
• Customer Does Not Take Physical Possession
• Difficult to Advertise and Display
• Difficult to Set and Justify Prices
• Service Processes Usually Not Protectable by
  Patents
• Service Provider Cannot Mass-Produce Services
• Customer Must Participate in Production
• Other Consumers Affect Service Outcomes
• Services Are Difficult to Distribute

Sources K. Douglas Hoffman and John E. G.
Bateson, Essentials of Services Marketing, (Fort
Worth Dryden Press, 1997) pp. 25-38 Valerie A.
Zeithaml, A. Parasuraman, and Leonard L. Berry,
Delivering Quality Service Balancing Customer
Perceptions and Expectations (New York Free
Press, 1990) and Leonard L. Berry and A.
Parasuraman, Marketing Services Competing
Through Quality (New York Free Press, 1991), p.
5.
16
Service Characteristics
Resulting Marketing Challenges
Perishability Heterogeneity Client-BasedRelat
ionships

• Services Cannot Be Stored
• Very Difficult to Balance Supply and Demand
• Unused Capacity Is Lost Forever
• Demand May Be Very Time-Sensitive
• Service Quality Is Difficult to Control
• Difficult to Standardize Service Delivery
• Success Depends on Satisfying and Keeping
  Customers Over the Long term
• Generating Repeat Business Is Challenging
• Relationship Marketing Becomes Critical

Sources K. Douglas Hoffman and John E. G.
Bateson, Essentials of Services Marketing, (Fort
Worth Dryden Press, 1997) pp. 25-38 Valerie A.
Zeithaml, A. Parasuraman, and Leonard L. Berry,
Delivering Quality Service Balancing Customer
Perceptions and Expectations (New York Free
Press, 1990) and Leonard L. Berry and A.
Parasuraman, Marketing Services Competing
Through Quality (New York Free Press, 1991), p.
5.
17
Service Characteristics
Resulting Marketing Challenges

• Customer Contact

• Service Providers Are Critical to Delivery
• High Levels of Service Employee Training and
  Motivation Are Required
• Changing a High-Contact Service into a
  Low- Contact Service to Achieve Lower Costs
  Without Reducing Customer Satisfaction

Sources K. Douglas Hoffman and John E. G.
Bateson, Essentials of Services Marketing, (Fort
Worth Dryden Press, 1997) pp. 25-38 Valerie A.
Zeithaml, A. Parasuraman, and Leonard L. Berry,
Delivering Quality Service Balancing Customer
Perceptions and Expectations (New York Free
Press, 1990) and Leonard L. Berry and A.
Parasuraman, Marketing Services Competing
Through Quality (New York Free Press, 1991), p.
5.
18
Service Quality

• Defined
• Customer Evaluation of Service Quality
• Search Qualities
• Experience Qualities
• Credence Qualities

19
Service Quality

• Delivering Exceptional Service Quality

20
Delivering Exceptional Service Quality
Analysis of Customer Expectations gt Marketing
Research gt Open Communication with Employees

Service Quality Specifications
gt
Service Goals
Service Quality
Mgmt. Commitment to Service Quality
gt

gt
Tangibles

Reliability
gt

Responsiveness
gt
gt
Assurance
Employee Performance

gt
Empathy
gt
Employee Training
Evaluation and Compensation Systems
gt
Management of Service Expectations
Advertising
gt
Good Internal Communications
gt
Source Adapted from A. Parasuraman, Leonard L.
Berry, and Valerie A. Zeithaml, An Empirical
Examination of Relationships in an Extended
Service Quality Model, Marketing Science
Institute Working Paper Series. Report no.
90-112 (Cambridge, Mass. Marketing Science
Institute, 1990). Used with permission.
21
Delivering Exceptional Service Quality
Analysis of Customer Expectations
Marketing Research
gt
gt
Open Communication with Employees
Service Quality Specifications gt Service Goals
gt Mgmt. Commitment to Service Quality
Service Quality

gt
Tangibles

Reliability
gt

Responsiveness
gt
gt
Assurance
Employee Performance

gt
Empathy
gt
Employee Training
Evaluation and Compensation Systems
gt
Management of Service Expectations
Advertising
gt
Good Internal Communications
gt
Source Adapted from A. Parasuraman, Leonard L.
Berry, and Valerie A. Zeithaml, An Empirical
Examination of Relationships in an Extended
Service Quality Model, Marketing Science
Institute Working Paper Series. Report no.
90-112 (Cambridge, Mass. Marketing Science
Institute, 1990). Used with permission.
22
Delivering Exceptional Service Quality
Analysis of Customer Expectations
Marketing Research
gt
gt
Open Communication With Employees
Service Quality Specifications
gt
Service Goals
Service Quality
gt
Mgmt. Commitment to Service Quality

gt
Tangibles

Reliability
gt

Responsiveness
gt
Employee Performance gt Employee Training gt
Evaluation and Compensation Systems
gt
Assurance

gt
Empathy
Management of Service Expectations
Advertising
gt
Good Internal Communications
gt
Source Adapted from A. Parasuraman, Leonard L.
Berry, and Valerie A. Zeithaml, An Empirical
Examination of Relationships in an Extended
Service Quality Model, Marketing Science
Institute Working Paper Series. Report no.
90-112 (Cambridge, Mass. Marketing Science
Institute, 1990). Used with permission.
23
Delivering Exceptional Service Quality
Analysis of Customer Expectations
Marketing Research
gt
gt
Open Communication with Employees
Service Quality Specifications
gt
Service Goals
Service Quality
gt
Mgmt. Commitment to Service Quality

gt
Tangibles

Reliability
gt

Responsiveness
gt
gt
Assurance
Employee Performance

gt
Empathy
gt
Employee Training
Evaluation and Compensation Systems
gt
Management of Service Expectations gt
Advertising gt Good Internal Communications
Source Adapted from A. Parasuraman, Leonard L.
Berry, and Valerie A. Zeithaml, An Empirical
Examination of Relationships in an Extended
Service Quality Model, Marketing Science
Institute Working Paper Series. Report no.
90-112 (Cambridge, Mass. Marketing Science
Institute, 1990). Used with permission.
24
Delivering Exceptional Service Quality
Analysis of Customer Expectations
gt
Marketing Research
Open Communication With Employees
gt
Service Quality gt Tangibles gt Reliability gt
Responsiveness gt Assurance gt Empathy
Service Quality Specifications
Service Goals
gt
Mgmt. Commitment to Service Quality
gt



Employee Performance
Employee Training
gt
gt
Evaluation and Compensation Systems
Management of Service Expectations
gt
Advertising
gt
Good Internal Communications
Source Adapted from A. Parasuraman, Leonard L.
Berry, and Valerie A. Zeithaml, An Empirical
Examination of Relationships in an Extended
Service Quality Model, Marketing Science
Institute Working Paper Series. Report no.
90-112 (Cambridge, Mass. Marketing Science
Institute, 1990). Used with permission.
25
Nonprofit Marketing

• Defined
• Why Is Nonprofit Marketing Different?
• Nonprofit Marketing Objectives

26
Nonprofit Marketing

• Developing Nonprofit Marketing Strategies
• Target Markets
• Target Public
• Client Public
• General Publics
• Developing a Marketing Mix
• Opportunity Cost

27
Nonprofit Marketing

• Developing Nonprofit Marketing Strategies
• Target Markets
• Target Public
• Client Public
• General Publics
• Developing a Marketing Mix
• Opportunity Cost

28
OK, YOU SHOULD NOW . . .

• Understand the Nature and Importance of Services
• Be Familiar with the Characteristics of Services
  That Differentiate Them from Goods
• Understand How the Characteristics of Services
  Influence the Development of Marketing Mixes for
  Services
• Be Aware of the Importance of Service Quality and
  Be Able to Explain How to Deliver Exceptional
  Service Quality
• Have Explored the Nature of Nonprofit Marketing