chapter 10 services and other tangibles: marketing the product that isn’t there

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Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

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Page 1: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Chapter 10

Services and Other Tangibles:Marketing the Product

That Isn’t There

Page 2: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-2

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

Page 3: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-3

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

Page 4: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-4

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!

Page 5: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-5

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

Page 6: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-6

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

Page 7: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-7

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

Page 8: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-8

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

Page 9: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-9

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

Page 10: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-10

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

Page 11: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-11

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

Page 12: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-12

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

Page 13: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-13

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

Page 14: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-14

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

Page 15: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-15

Providing Quality Service: Measuring Service Quality

Several methods of measuring service quality exist:– SERVQUAL scale (questionnaire) measures

customer perceptions of five key dimensions• Tangibles• Reliability• Responsiveness• Assurance• Empathy

Page 16: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-16

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

Page 17: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-17

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

Page 18: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-18

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

Page 19: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-19

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

Page 20: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-20

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

Page 21: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-21

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

Page 22: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-22

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 click-through and other e-mail metrics, and compared these rates to industry standards

Page 23: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-23

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?

Page 24: Chapter 10 Services and Other Tangibles: Marketing the Product That Isn’t There

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall10-24

Copyright © 2009 Pearson Education, Inc.  Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice HallPublishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.