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Marketing chapter 12a managing services

McGraw-Hill/Irwin

Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Rese


LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 12, YOU SHOULD BE ABLE TO:

LO1

Describe four unique elements of
services.

LO2

Recognize how services differ and how
they can be classified.

LO3

Explain how consumers purchase and

evaluate services.

LO4

Develop a customer contact audit to
identify service advantages.
12-2


LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 12, YOU SHOULD BE ABLE TO:

LO5

LO6

Discuss the important roles of internal
marketing and customer experience
management.
Explain the role of the four Ps in the
services marketing mix.

12-3


FIGURE 12-1 Services are now a larger part
of the U.S. gross domestic product (GDP)

12-5


THE UNIQUENESS OF SERVICES

Slide 12-6


LO1




THE UNIQENESS OF SERVICES
THE FOUR I’S OF SERVICES

Four I’s of Services
• Intangibility

• Inseparability

• Inconsistency

• Inventory
 Idle Production
Capacity
12-7


THE UNIQUENESS OF SERVICES
• The Four I’s of Services
1. Intangibility
• They cannot be held, touched, or
seen before the purchase decision
• Difficult for consumers to evaluate as
they tend to be a performance rather
than an object
• Marketers need to make services
tangible or show their benefits

Slide 12-6


THE UNIQUENESS OF SERVICES
• The Four I’s of Services
2. Inconsistency
• Services depend on the people who
provide them – their quality varies
with each person's capabilities and
day-to-day performance
• More of a problem with services than
with tangible goods – problems can
be reduced through standardization
and training

Slide 12-6


THE UNIQUENESS OF SERVICES
• The Four I’s of Services
3. Inseparability
• Consumers cannot (and do not) separate
the deliverer of the service from the service
itself
• The amount of interaction between the
consumer and the service provider depends
on the extent to which the consumer must
be present to receive the service
• Some services, such as banking, can now
be delivered electronically, often requiring
no face-to-face consumer interaction and
therefore a more consistent experience
Slide 12-6


THE UNIQUENESS OF SERVICES
• The Four I’s of Services
4. Inventory
• Inventory problems exist with goods
because many items are perishable and
there are costs associated with its handling
• With services, inventory costs are more
subjective and are related to idle production
capacity (the service provider is available
but there is no demand)

Slide 12-6


THE UNIQUENESS OF SERVICES
• The Four I’s of Services
4. Inventory, cont.
• The inventory cost of a service is the cost of
the person used to provide the service
along with any needed equipment
– Inventory costs can be low or nonexistent
because idle production capacity can be cut
back through reducing hours or paying by
commission
– Inventory carrying costs of service vary widely,
from the high-end airlines and hospitals with
highly trained, salaried specialists to the low-end
of real estate agencies and hair salons with
employees working on commission and needing
little expensive equipment
Slide 12-6


FIGURE 12-2 Inventory carrying costs of
services depend on the cost of employees
and equipment

12-14


LO2

THE UNIQENESS OF SERVICES
THE CONTINUUM & CLASSIFICATION OF SERVICES

Service Continuum

12-16


THE UNIQUENESS OF SERVICES

• The Service Continuum – range

from the tangible to the intangible
– Tangible, good-dominant offerings, four I’s
are not relevant
– Intangible, service-dominated offerings:
four I’s are major marketing concerns
– Some businesses are a mix of intangible
service and tangible good factors

Slide 12-12


THE UNIQUENESS OF SERVICES

• The Service Continuum
– For businesses today, it is useful to
distinguish between core product and
supplementary services
– Supplementary services allow service
providers to differentiate their offering from
competitors – add value
– Key categories include; information
delivery, consultation, order taking, billing
procedures, and payment options
Slide 12-12


FIGURE 12-3 Service continuum

Slide 12-13


LO2

THE UNIQENESS OF SERVICES
THE CONTINUUM & CLASSIFICATION OF SERVICES

Classifying Services
• Delivery by People or Equipment
• Profit or Nonprofit Organizations
• Government Sponsored
12-20


THE UNIQUENESS OF SERVICES

Classifying Services
– Delivery by People or Equipment
• Professional to unskilled labor
• Equipment-based services do not have
inconsistency concerns
– Profit or Not-for-profit
• Not-for-profit organizations net profits are not
taxed or distributed to shareholders
• 1.1 million generate 7 percent of GDP
– Government Sponsored
• Federal, state, and municipal/local levels

Slide 12-12


FIGURE 12-4 Services can be classified as
equipment-based or people-based

12-22


Concept Check

1. What are the four I’s of service?
A: intangibility, inconsistency,
inseparability, and inventory

Slide 12-20


Concept Check

2. Would inventory carrying costs
for an accounting firm with
certified public accountants be
(a) high, (b) low, or (c)
nonexistent?
A: (a) high because the inventory
cost of a service is the cost of
paying the person used to
provide the service: the salary
of the accountant.
Slide 12-21


Concept Check

3. To eliminate service
inconsistencies, companies
standardization and
rely on _____________
training
_______.

Slide 12-22


LO3



HOW CONSUMERS
PURCHASE SERVICES
The Purchase Process
• Search Properties

• Experience Properties

• Credence Properties
12-27


HOW CONSUMERS
PURCHASE SERVICES

• The Purchase Process
– Service organizations must understand how
consumer makes service purchase decision
– Services cannot be displayed, or
demonstrated – consumers cannot make
prepurchase evaluation of all characteristics
– Evaluation of a service may change with
each purchase
Slide 12-23


FIGURE 12-5 How consumers evaluate
goods and services

Slide 12-24


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