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Chapter 10
Services and Other Tangibles:
Marketing the Product
That Isn’t There
Chapter Objectives
 Describe the characteristics of
services and the ways marketers
classify services
 Appreciate the importance of service
quality to marketers
 Explain the marketing of people,
places, and ideas
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Real People, Real Choices:
Decision Time at the Philadelphia 76ers
 What is the best way to compile more
detailed information on the 76ers
customer base?
– Option 1: Phase in a CRM database
– Option 2: Send out surveys to season ticket
holders annually
– Option 3: Analyze the lifetime value of
customers
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Marketing What Isn’t There
 Intangibles:
Services and other experience-based
products that cannot be touched
– Example: concerts, tax preparation, haircuts,
medical diagnosis, etc.
 Does marketing work for intangibles?
Yes!
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What Is a Service?
 Services:
– Are acts, efforts, or performances exchanged
from producer to user without ownership
rights
 Services share several characteristics:
– Intangibility
– Perishability
– Variability
– Inseparability
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Characteristics of Services
 Intangibility:
– Can’t see, touch, or smell a service
 Perishability:
– Services can’t be stored for later sale or
consumption
• Capacity management allows firms to adjust
their services to match supply with demand
 Variability:
– Even the same service performed
by the same person will vary
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Characteristics of Services
 Inseparability:
– It is impossible to separate the production of
a service from its consumption
– Service encounter:
The interaction between the customer and
the service provider
– Disintermediation:
Eliminating the interaction between
customers and salespeople
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Classifying Services
 Services can be classified by:
– Whether the service is performed directly on
the customer or on some possession that the
customer owns
– Whether the service consists of tangible or
intangible actions
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The Services Continuum
 Most products are a combination of
goods and services
 Products vary in their level of
tangibility
– Tangible: salt, necktie, dog food
– Intangible: teaching, nursing, theater
– Balanced products: fast food, television
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The Services Continuum
 Goods-dominated products
– Firms that sell tangible products still provide
support services, such as warranties, Web
sites with FAQs, and 1-800 numbers
 Equipment- or facility-based services
– Operational factors, locational factors, and
environmental factors are important
 People-based services
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Core and Augmented Services
 Core service:
– The benefit a customer gets from the service
• Example: Airline transportation from Dallas to
Chicago
 Augmented service:
– Core service plus additional services that
enhance value
• Example: Frequent flyer miles, in-flight movie
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Services on the Internet
 Anything that can be delivered can be
sold on the Web
– Banking and brokerage services
– Software
– Music
– Travel services
– Dating sites
– Career-related services
– Medical care
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The Service Encounter
 Several elements of the service
encounter are important:
– Social elements, including employees and
customers
• Service quality is only as good as the employee
– Physical elements, including the servicescape,
or actual physical facility where the service is
performed, delivered, or consumed
• Servicescapes influence quality perceptions
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Providing Quality Service:
Service Quality Attributes
 Search qualities:
– Product characteristics that the consumer can
examine before purchase
 Experience qualities:
– Product characteristics that buyers can
determine during or after consumption
 Credence qualities:
– Product characteristics that are difficult to
evaluate even after experiencing
them
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Providing Quality Service:
Measuring Service Quality
 Several methods of measuring service
quality exist:
– SERVQUAL scale (questionnaire) measures
customer perceptions of five key dimensions
•
•
•
•
•
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Tangibles
Reliability
Responsiveness
Assurance
Empathy
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Providing Quality Service:
Measuring Service Quality
 Several methods of measuring service
quality exist:
– Gap analysis measures the difference
between actual and expected service quality
– Critical incident technique uses customers
complaints to identify problems that lead to
dissatisfaction
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The Future of Services
 Services will continue to grow in the
United States and global economies
due to several factors:
– Changing demographics
– Globalization
– Technological advances
– Shift to flow of information
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The Future of Services
 New dominant logic for marketing:
– Argues that service is the central core
deliverable, while actual physical products
are relatively incidental to the value
proposition
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Marketing People, Places, and Ideas:
Marketing People
 Politicians and celebrities are
commonly marketed by agents or
others
– Celebrities often rename themselves to craft
a “brand identity”
– Other techniques for selling celebrities:
• The pure selling approach
• The product improvement approach
• The market fulfillment approach
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Marketing Places
 Marketing places
– Attempting to position a city, state, country,
or other locale so consumers choose the
brand over competing destinations
• Example: Shreveport-Bossier shares more
characteristics with East Texas than it does
with New Orleans, and now markets itself
using the “Louisiana’s Other Side" campaign
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Marketing Ideas
 Marketing ideas
– Gaining market share for a concept,
philosophy, belief, or issue
• Example: Religious institutions market ideas
about faith
• Example: Not-for-profit organizations or
governmental agencies market ideas about
proper or improper behavior, such as drinking
and driving
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Real People, Real Choices:
Decision Made at the Philadelphia 76ers
 Lara chose option 1 and implemented a
CRM database
– Implementation: A web-based firm was hired
to provide a data warehouse and to develop
CRM software. The 76ers realized a 150-to-1
ROI due to more targeted marketing efforts
– Measuring success: The 76ers used clickthrough and other e-mail metrics, and
compared these rates to industry standards
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Keeping It Real: Fast-Forward to
Next Class Decision Time at Taco Bell
 Meet Danielle Blugrind, Director of
Consumer and Brand Insights at Taco
Bell
 Taco Bell is a national fast-food firm
 The decision to be made:
What price points should Taco Bell use
in pricing Taco Bells items?
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Publishing as Prentice Hall
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall