Agenda

1
Agenda

• Marketing Insights?
• Review of Chapter 15
• Start Chapter 16

2
Designing and Managing Services

• Marty Gustafson
• EM 670S Chapter 15
• April 30, 2003

3
Question

• What do you hate most about some of the services
  you have received?
• Think about that as we discuss marketing of
  services tonight so you can understand the
  challenges marketers face.

4
Who works in Service?

• Government Sector
• Courts, hospitals, military, police, schools,
  mail
• Private Non-profit Sector
• Museums, charities, churches, colleges, hospitals
• Business Sector
• Airlines, banks, hotels, insurance, law firms,
  consulting firms, real estate
• Manufacturing Sector
• Accountants, computer operators, legal staff

5
Characteristics of Services

• Intangibility
• Cant see before you buy
• Inseparability
• Produced and consumed simultaneously
• Variability
• Very dependent on peoples training, personality
• Perishability
• Fluctuating demand cant be stored

6
Marketing of Services

• Three New Ps of Marketing
• People
• Physical Evidence or Presentation
• Process
• This leads to both
• External marketing
• Prepare, price, place, promote
• Internal marketing
• Train and motivate employees

7
Three Tasks for Marketers

• 1. Establish Competitive Differentiation
• Innovate in the offering. Have a primary
  service, then offer new secondary service
  features.
• Have faster and better delivery.
• Create an image for your brand.

8
Three Tasks for Marketers

• 2. Establish Service Quality
• Customers will compare the perceived service with
  the expected service. Know the gaps.
• Set high standards.
• Self-service technologies
• How is SST changing the way you live?
• Monitoring systems
• Customer Complaint satisfaction
• Also employee complaint satisfaction

9
Three Tasks for Marketers

• 3. Manage Productivity
• More skillful workers
• Increase quantity by sacrificing quality
• Industrialize the service
• Web sites, self-service
• Make obsolete your service with technology or
  product innovation

10
Problems

• 3. Manage Productivity
• More skillful workers
• Increase quantity by sacrificing quality
• Industrialize the service
• Web sites, self-service
• Make obsolete your service with technology or
  product innovation
• From your MIS class, what are some of the
  challenges that web technology brings to services?

11
Product/Service Companies

• Many companies manufacture products and then must
  provide services.
• Marketers must consider life-cycle costs
• Promotions should target reliability, service
  dependability, low downtime
• Trends
• Service contracts are extending
• Unbundling of services to pick choose format
• Self-service or 3rd party service

12
Developing Price Strategies and Programs

• Marty Gustafson
• EM 670S Chapter 16
• April 30, 2003

13
Setting a Price

• Before setting a price, you must decide where you
  are going to position your product and use that
  to determine a price objective.
• Maximize market share
• Maximize profit
• Survival
• Market skimming
• Partial cost recovery

14
Setting a Price

• There are 9 pricing strategies.

15
Evaluate your Price Often

• Customers become more price sensitive
• Demand can change rapidly or not at all if prices
  change
• Costs change
• Learning curve of production
• Variable costs of increased production
• From your Process class what else?

16
Pick a Price

• Markup Pricing
• Unit Cost Variable Cost Fixed Cost/Units Sold
• Retail Cost Unit Cost
• Target Return Pricing
• Price that gives you your Return on Investment
• Hope you sell enough!
• Perceived Value Pricing
• Value Pricing
• Going rate Pricing
• Auction Pricing

17
Pricing Problems

• What has happened with products or stores where
  everything is always on sale?
• Will you buy a car for list price? What effect
  will the current 0 and rebate deals have on you
  the next time you buy a car?