Download Chapter 12

Chapter Twelve
Marketing in Special
Fields
Key Words / Outline
Intangible, Off peak pricing, Tangibles,
Reliability, Responsiveness, Assurance,
Continual
McGraw-Hill/Irwin
Marketing Management, 8e
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Services
• Service Products: Such as a bank loan or home security,
they are intangible or at least substantially so
• Services: Activities by sellers and others that accompany
the sale of a product and that aid in its exchange or its
utilization
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Service Features
• Intangibility: Without physical dimensions or
characteristics
• Inseparability: Service and seller are inseparable
• Perishability and Fluctuating Demand: Seasonal, days, time
of day, vacant seats, waiting time on phone, etc
• Client Relationship: Similar to customer relationship but
typically more intense
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Service Features
• Customer Effort: Customers are often involved to a
relatively great degree in production of many types of
services
• Uniformity: The quality of services can vary more than the
quality of goods. Producers of goods have procedures to
prevent, identify and correct defects
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Differences Between
Products and Services
• Products
- The customer owns an object
- The goal of producing a product is uniformity
- A product can be put into inventory
- The customer is the end user
- Quality control conducted by comparing output to the
specifications
- If improperly produced the product line can be recalled
- The morale of the production employees is important
- Comparison of products in order to determine quality level
- Low level of collaboration between the buyer and the seller
- Greater number and variety of product brands available to the
customer
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Differences Between
Products and Services
• Services
- Customer owns a memory; the experience cannot be sold or passed on to a
third party
- Goal of service is uniqueness
- A service happens at the moment
- The customer is a co producer who is a partner in creating the service
- Customer conducts quality control by comparing expectations to
experience
- If improperly performed, apology and reparations through out the delivery
of the service
- The morale of the service employees is critical
- Customer can determine the level of quality throughout the delivery of the
service
- High levels of collaboration between the buyer and seller
- Fewer brands of service are available to the customer
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Quality Service
• 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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Quality Service
• Determinants of service quality include
-
Tangibles
Reliability
Responsiveness
Assurance
Empathy
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Measure Customer Satisfaction
• Understand the expectations and requirements of the
customer and your firm’s ability to meet them
• Determine how well your company and its major
competitors are succeeding in satisfying these expectations
and requirements
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Customer Satisfaction
Measurement (CSM) - Research
• Marketing and sales personnel primarily responsible for
designing CSM programs
• Top management and the marketing function championed
the programs
• Combination of qualitative and quantitative research
methods
• Evaluations included both the company’s and competitor’s
satisfaction performance
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Customer Satisfaction
Measurement (CSM) - Research
• Results of all research were made available to employees
but not to customers
• Research was performed on continual basis
• Customer satisfaction was incorporated into the strategic
focus of the company
• There was commitment to increasing service quality and
customer satisfaction from employees at all levels within the
organization
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Internal Marketing
• For employee commitment to customer service,
management must develop programs possessing the
following critical components
-
Careful selection and hiring of frontline employees
Particular service strategy that frontline people need to act on
Managers need to be role models
Training, support and incentives to be provided to employees
with capacity
- An emphasis on teaching employees to have good attitudes
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Obstacles In Service Marketing
• Four reasons connected to past practices 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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Service Challenge
• Constantly develop new services that will better meet
customer needs
• Improve on the quality and variety of existing services
• Provide and distribute these services in a manner that best
serves the customer
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Banking
• Banking is becoming an increasingly technology-driven
business
• To prevent loss of customer base, many large banks are
developing home baking systems
• Banks have also learnt the value of bundling services
• Benefits to the customers such as ATM transactions,
interest bearing checking accounts
• Most banks target some marketing activities towards senior
citizens
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Health Care
• Recently several alternative delivery systems such as HMO
have been developed
• HMO: Health Maintenance Organization benefits
- The ability to have all ailments treated at one facility
- Payment of fixed fees for services
- Encouragement of preventive versus remedial treatments
• The success of HMO has inspired similar programs for dental
and eye care
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Insurance
• In recent years the insurance industry has exploded with new
products and services offerings
• Distribution of insurance services has also been growing
• Travel auto insurance is now available in may motel chains and
through AAA
• Group insurance written through employers and labor unions
also has been extremely successful
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Travel
• The travel industry, mostly the airline has been the leader in the
use of technology
• Nearly all airlines are using internet sites to dispense flight and
fare information
• Technology has also allowed airlines to make strategic pricing
decisions through the use of yield management
• Through the use of elaborate computer programs, managers are
able to determine who their customer segments are and who is
likely to purchase airline tickets, when, and to where
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Ten Lessons in Good Services
Marketing
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Customers do not buy your services – they buy solutions to their problems
Change of customer behavior only under two conditions
- Matter of life and death
- Only if they want to
The most important parts of employees’ contributions to the goals of your
organization are being made at their discretion
Management and leadership exercised outside not inside the office
Quality service means never having to say “that is not my job”
How your employees feel eventually is how your customers feel
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Ten Lessons in Good Services Marketing
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Customers should not be allowed to restate their requests or
complaints to several employees before having it solved
If you establish negative expectations for your customers, you
will always meet them
The delivery of quality service is never a customer’s job
Use discretion and compete in market segments where you
have or can develop strengths
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Implications For Service Marketers
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The sum total of the marketing mix elements represents the
total impact of the firm’s marketing strategy
Services must be made available to prospective users
The problem of making services more widely available must
not be ignored
With the use of varying service bundles, new technology and
alternative means of distributing the service, companies are
now able to practice targeted marketing
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