Marketing Of Services Midterm (1-5)

Front 1

• Transition to services economy (concepts not #s)

Back 1

o Services compose a much greater portion of US economic output (over 75%)
o Development of other countries’ economies lead to a greater portion of US GDP made up of services
o Most new jobs are generated by services
o Services are essential inputs into the production of virtually all products. The price and quality of services influence costs and productivity in all other sectors in an economy, including manufacturing and agriculture.
o There are potential risks and rewards to becoming a economy based 100% on services

Front 2

• What is transforming our service markets

Back 2

this is reshaping demand, supply, the competitive landscape, and customers’ styles of decision making

Front 3

• Definition of services

Back 3

 Are economic activities offered by one party to another
 In exchange for their money, time, effort-service customers expect to obtain value from (but don’t take ownership of any physical elements involved):
 Rented goods/services, space and time rental, labor and expertise, access to systems and networks
 Most commonly employ time-based performances to bring about desired results in:
 recipients themselves
 objects or other assets for which purchasers have responsibility
 Can be a product, customer service, add value to a good, embedded in a tangible product

Front 4

• 4 characteristics of services

Back 4

(SHIP)
o Simultaneity- Production and consumption are simultaneous and inseparable
o Heterogeneity- Product varies across customer, provider and for the same provider and customer from one consumption occasion to the next
o Intangibility- Product is a process, deed or a performance
o Perishability- Product cannot be stored and can only be produced after customer initiates

Front 5

• Lovelock grid – categories of services

Back 5

Front 6

7 P's of Marketing services

Back 6

Product
Price
Place
Promotion
People
Physical Environment
Process

Front 7

• Standard consumer decision making model applied to services vs products

Back 7

o Consumer Choice/ Prepurchase Stage
 Need recognition, Information Search, Evaluation of alternatives, purchase
o Consumer Experience/ Service Encounter Stage
 Request service from chosen suplplier or initiate self-service
o Postexperience evaluation/ Post Encounter Stage
 Evaluation of service performance and future intentions

-Awareness, Info search, alternatives, action/decision

Front 8

Risks in a services context and service company's risk reduction strategies

Back 8

-Many services are hard to evaluate so they are perceived as riskier
-Firm must provide more of a reward to get people to buy/use
-Offer free trials, guarantees, previews, etc. to reduce risk

Front 9

• High contact vs. low contact

Back 9

o High Contact: Interaction throughout the service delivery between the customer and the organization- many points of contact and moments of truth- ie: nursing home, haircut, hotel, airlines
o Low contact- Little, if any, contact between customer and service provider- ie: cable, insurance, internet based services- Mostly delivered via websites, equipment, or call centers

Front 10

Back Stage vs. Front Stage

Back 10

o Front stage= visible, tangible- common in high contact services= service delivery system- creates the service experience
o Back stage= invisible components- common in low contact services= technical core to a service

Front 11

Search Attributes

Back 11

Easy to evaluate,mostly goods like clothes, cars, food

Front 12

Experience Attributes

Back 12

Restaurant meals, haircut, entertainment

Front 13

Credence Attributes

Back 13

Difficult to evaluate- education, legal services, health services

Front 14

• Customer delight issues

Back 14

 Unexpectedly high levels of performance
 Arousal (e.g., surprise, excitement)
 Positive affect (e.g., pleasure, joy, or happiness)
 Issues: Should delight always be the goal, is it better than profitability, does it set unrealistic expectations
 You should not try to exceed customer expectation all of the time because eventually customer satisfaction will become unattainable-“the point of diminishing returns”

Front 15

Positioning (for a svcs business)

Back 15

o Strategy is concerned with creating, communicating, and maintaining distinctive differences that will be noticed and valued by those customers with whom the firm would most like to develop a long term relationship
o Company must understand their target customers’ preferences, their conception of value and the characteristics of their competitors offerings
o Distinguishes a brand from its competitors
o Avoid trap of investing too heavily in points that are easily copied

Front 16

Positioning is often associated with

Back 16

-Price and product attributes
-Customer service processes- convenience and ease of use
-Service distribution and delivery systems
-service environment- luxury and functionality
-Service personnel

Front 17

• Determinant attributes

Back 17

o Those which actually determine buyer’s choice between competing alternatives
o May be way down on the list of features important to purchasers but are attributes in which the customers see significant differences between competing alternatives

Front 18

• “focused” strategies for creating competitive advantage

Back 18

-Providing relatively small product mix to particular market segment
-Market segmentation forms the basis for focused strategies
o 4 Basic strategies:
 Fully Focused-service and market
 Market Focused-Firm serves few or many markets
 Service Focused-Extent to which a firm provides few or many services
 Unfocused- serve too broad of a market and too many services-not advisable for firms to do

Front 19

• Flower of service

Back 19

o Includes core product and two types of supplementary services that surround it: facilitating and enhancing
o All parts of the flower are important to delivering a well-designed and well-managed service product
o Flower petals are arranged in clockwise order based on order they would likely occur in the process

Front 20

o Core Service

Back 20

-the center of the flower of service
-Provides the principal, problem-solving benefits customers seek

Front 21

Supplementary services

Back 21

Augment the core product- facilitaing its use and enhancing its value and appeal to the customers overall experience
-Where companies can gain a competitive advantage, increase the services value, and charge a higher price

Front 22

Facilitating services

Back 22

Aid in the use of the core product and sometimes required for service delivery
-ie: information, order taking, billing, payment

Front 23

Enhancing services

Back 23

Add extra value for customers
-ie: consultation, hospitality, safekeeping, exceptions

Front 24

• Positioning in competitive markets

Back 24

o Want to try and be a specific thing to a specific person
o Understand your customers, who you want for customers, and how you stand in their minds; understand value proposition; know your competitors; know if your services meet target consumer needs

Front 25

• Distribution options

Back 25

o Customers visit service site
o Service providers go to customers- more expensive/time consuming for service provider
o Service transaction conducted remotely

Front 26

Foundation of any service distribution strategy

Back 26

What? How? Where? When? Responses to those questions

Front 27

3 Flows of a service distribution strategy

Back 27

1. Information and promotion flows- information and consultation
2. Negotiation Flow- order-taking, billing, payment
3. Product Flow- core service and other petals of flower

Front 28

Channel Preferences

Back 28

-Driven by customer preferences
-CONVENIENCE is key driver
-Prefer remote (impersonal/Self-serve) channels when they have high confidence and knowledge about the product and are technology savvy
-Prefer personal channels for complex and high perceived risk services and there are social motives behind the transaction

Front 29

Role of intermediaries

Back 29

Used by service firms to distribute some of the supplementary services of the core product
-May be more cost effective to outsource certain tasks

Front 30

Franchises +/-

Back 30

o Advantages
 Allows company to expand delivery of effective service concept
 A fast growth strategy when resources are limited and long term commitment of store managers is crucial and local knowledge is important
o Cost effective way to expand operations
o Disadvantages
 Loss of control over delivery system and ultimately over how customers experience the actual service
 Effective quality control is difficult (but very important)
 Conflict between franchisees may arise especially as they gain experience
 High attrition (failure) rate

Front 31

Opportunities/Challenges for emerging technologies in services

Back 31

Opportunities
-Convenience and customer satisfaction through self service
-Self-service technology
-can create new business opportunities and intermediary roles

Challenges
-Legal Issues involved
-Is it considered unfair competition if the smartphone apps are not adhering to the same regualtions and standards for the NIST and Handbook 44; operating in gray area of services between taxis and for hire services
-liability issues within the industry the are operating in (taxi and transportation)