Download Service Marketing

Dr. Close
SERVICE MARKETING
Services are HUGE!
 Service is a deed, a performance, or effort




that can’t be physically possessed
You will likely work in services
I work in services (education and research)
The most job growth is in services (here,
education, healthcare, casinos, finance)
Vegas thrives on services
Services are…
 Intangible
 Inseparable
 Heterogeneous
 Perishable
 Harder to search for (experience or credence
goods)
Unique Characteristics
Distinguishing Services from Goods
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©2009 The McGraw-Hill Companies, All Rights Reserved
Importance of Services
 Tradeoffs:
 Desire: high service and low price (difficult for
companies to do)
 Choosing a service level:
 Too low: consumers go elsewhere (FedEx/Kinkos:
constantly searching for ways to improve service)
 Too high: customers will not pay
 What services do you just refuse to pay for?
Service Quality (SERVQUAL)
To be a good provider, I better be…
 Reliable
 Responsive
 Trustworthy
 Knowledgeable
 Empathetic
 Incorporating Tangibles
(just being a few of these things won’t cut it…)
Service Quality Experiences
What are your experiences of horrible
customer service?
& What elements of SERVQUAL did
they miss?
Quality Service Gaps
 Quality service generally suffers due to the gap
between
 Consumer expectations and management
perceptions of the consumer expectations
 Management perceptions of consumer expectations
and firm’s service quality specifications
 Service quality specifications and actual service
quality
 Actual service delivery and external communications
about the service
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©2009 The McGraw-Hill Companies, All Rights Reserved
How to Give Horrible Service
1. Don’t listen to what your customers want (i.e.,
2.
3.
4.
5.
only listen to your CEO or wallet)
Don’t act on customers’ wants
Hire people without skills or a care, and don’t
train them
Tell the customer whatever they want to hear
(i.e., overpromise and underdeliver)
Don’t meet (or barely meet) customers’
expectations (i.e., ignore people and insult
their intelligence)
Relationships in Service


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Attract, develop and retain clients
Satisfaction is not enough; instill more loyalty
(attitudinal and behavioral)
Going to the competition = cheating on you
How to Instill Relationships
in Service Industries
1. Pricing incentives for loyal customers
2. Nonpricing incentives for loyal customers (e.g.,
airline points)
3. Build social or emotional bonds (e.g., sponsor a
UNLV game)
4. Build structural bonds (e.g., Amex or BMW
concierege services)
Service Strategy
 Service as process (people, possession,
mental stimulus, or information processing)
 Core versus supplementary services
 Customization versus standardization
Obstacles in Service Marketing
 Four reasons for the lack of innovative marketing on
the part of service marketers
 Limited view of marketing
 Lack of strong competition
 Lack of creative management
 No obsolescence
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©2009 The McGraw-Hill Companies, All Rights Reserved
Service Challenge
 Constantly develop new services that will better meet
customer needs
 Improve on quality and variety of existing services
 Provide and distribute services in a manner that best
serves the customer
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©2009 The McGraw-Hill Companies, All Rights Reserved
Banking
 Banking is becoming an increasingly technologydriven business
 Home baking systems
 Banks have also learnt the value of bundling services
 ATM transactions
 Interest bearing checking accounts
 Most banks target some marketing activities towards
senior citizens
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©2009 The McGraw-Hill Companies, All Rights Reserved
Health Care
 Health Maintenance Organization – Alternative
delivery systems
 Benefits
 Ability to have all ailments treated at one facility
 Payment of fixed fees for services
 Encouragement of preventive versus remedial treatments
 Success of HMO has inspired similar programs for
dental and eye care
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©2009 The McGraw-Hill Companies, All Rights Reserved
Insurance
 Insurance industry offers several new products and
services
 Distribution of insurance services have increased
 Availability of travel auto insurance through AAA
 Group insurance written through employers and labor
unions
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©2009 The McGraw-Hill Companies, All Rights Reserved
Travel
 Airline industries have been the leaders in the use of
technology
 Use of Internet sites to dispense flight and fare
information
 Technology helps airlines to make strategic pricing
decisions through the use of yield management
 Use of elaborate computer programs enable
managers to determine customer segments
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved
Implications for Service Marketers
 Sum total of marketing mix elements represents the
total impact of the firm’s marketing strategy
 Services must be made available to prospective users
 Varying service bundles, new technology, and
alternative means of distributing the service enable
targeted marketing
McGraw-Hill/Irwin
©2009 The McGraw-Hill Companies, All Rights Reserved