Chapter Nine

Services MarketingServices Marketing

Chapter Objectives

• Discuss impact of the services sector.• Identify unique characteristics of services.• Explain components of the purchasing process.• Identify factors that impact the purchase decision.• Discuss relevant elements of the service encounter.• Describe the post-purchase evaluation of services.• Discuss how service quality is measured.• Describe an effective service recovery process.• Explain the importance of the customer value package.

The Service SectorThe Service SectorPure Services

Pure Goods

Accounts for 79% ($6.95 trillion) of U.S. GDPAccounts for 77% of total U.S. employment

Reasons for growth

- Aging population- Longer life expectancy- Increased leisure time- Higher per-capita income- Increased time pressure

– More women in workforce– Sedentary life style– Advanced technology– Changing social and

cultural values

Characteristics of Services

Characteristicsof

Services

Intangibility Variability

Perishability Inseparability

Inventory*

IntangibilityIntangibilityIntangibilityIntangibility

• Patent Protection– Continuous Innovation– Rapid recoup of R & D investment– Promote the “Original” (Strong corporate image)

• Pricing– Roles of costing, forecasting

• Quality Perception– Word of Mouth– Tangible (Extrinsic) Cues

• Patent Protection– Continuous Innovation– Rapid recoup of R & D investment– Promote the “Original” (Strong corporate image)

• Pricing– Roles of costing, forecasting

• Quality Perception– Word of Mouth– Tangible (Extrinsic) Cues

Issues and StrategiesIssues and Strategies**

In order to address intangibility, fast-food restaurants may stress extrinsic attribute cues, such as the quality of the food, prices, or the restaurant’s

location.

Perishability (Inventory), Inseparability and

Variability (Inconsistency)

Perishability (Inventory), Inseparability and

Variability (Inconsistency)

• Perishability (Inventory)– Managing Supply– Managing Demand

• Inseparability – Distribution, Operations Management

• Variability (Inconsistency)– Computerization and technology– Standardization of processes, training

• Perishability (Inventory)– Managing Supply– Managing Demand

• Inseparability – Distribution, Operations Management

• Variability (Inconsistency)– Computerization and technology– Standardization of processes, training

Issues and Strategies*

Cool Hunting #3

The Purchase Process for Services1.1. Pre-purchase phase: Consumers Pre-purchase phase: Consumers

evaluate alternatives and make evaluate alternatives and make purchase decision. (Evaluate and purchase decision. (Evaluate and reduce risk)reduce risk)

2.2. Service encounter: Actual interaction Service encounter: Actual interaction between the customer and the service between the customer and the service provider. (Note “Blueprinting”)provider. (Note “Blueprinting”)

3.3. Post-purchase phase: Consumers will Post-purchase phase: Consumers will evaluate the quality (technical and evaluate the quality (technical and functional) of service, and their level functional) of service, and their level of satisfaction.of satisfaction.

Service QualityService Quality • Internal measures• Gap theory• Service quality dimensions

– Tangibles– Reliability– Responsiveness– Empathy– Assurance

Service Failure and RecoveryService Failure and Recovery

Service failures are defined as instances where a service is either not performed at all or is poorly performed.

Firm switching behaviorNegative word of mouth

Service recovery program

• Why Customers Switch Firms

Companies should always have a plan to Companies should always have a plan to handle service failures.handle service failures.

Attitude of indifference (69%)Dissatisfied with service (14%)Competitive reasons (9%)Developed relationships with competitors (5%)No reason (3%)