Dr. Close

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)

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Unique Characteristics Unique Characteristics Distinguishing Services from GoodsDistinguishing Services from Goods

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 What services do you just refuse to pay for?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 What are your experiences of horrible customer of horrible customer

service?service?

& What elements of & What elements of SERVQUAL did they miss?SERVQUAL did they miss?

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Quality Service GapsQuality Service Gaps

Quality service generally suffers due to the gap Quality service generally suffers due to the gap betweenbetween Consumer expectations and management Consumer expectations and management

perceptions of the consumer expectationsperceptions of the consumer expectations Management perceptions of consumer expectations Management perceptions of consumer expectations

and firm’s service quality specificationsand firm’s service quality specifications Service quality specifications and actual service Service quality specifications and actual service

qualityquality Actual service delivery and external communications Actual service delivery and external communications

about the serviceabout the service

How to Give Horrible Service

1. Don’t listen to what your customers want (i.e., only listen to your CEO or wallet)

2. Don’t act on customers’ wants3. Hire people without skills or a care, and

don’t train them4. Tell the customer whatever they want to

hear (i.e., overpromise and underdeliver)5. Don’t meet (or barely meet) customers’

expectations (i.e., ignore people and insult their intelligence)

Relationships in Service

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 Industries1. 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

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Obstacles in Service MarketingObstacles in Service Marketing

Four reasons for the lack of innovative marketing on Four reasons for the lack of innovative marketing on the part of service marketersthe part of service marketers Limited view of marketingLimited view of marketing Lack of strong competitionLack of strong competition Lack of creative managementLack of creative management No obsolescenceNo obsolescence

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Service ChallengeService Challenge

Constantly develop new services that will better meet Constantly develop new services that will better meet customer needscustomer needs

Improve on quality and variety of existing servicesImprove on quality and variety of existing services Provide and distribute services in a manner that best Provide and distribute services in a manner that best

serves the customerserves the customer

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BankingBanking

Banking is becoming an increasingly technology-Banking is becoming an increasingly technology-driven businessdriven business Home baking systemsHome baking systems

Banks have also learnt the value of bundling servicesBanks have also learnt the value of bundling services ATM transactionsATM transactions Interest bearing checking accountsInterest bearing checking accounts

Most banks target some marketing activities towards Most banks target some marketing activities towards senior citizenssenior citizens

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Health CareHealth Care

Health Maintenance Organization – Alternative Health Maintenance Organization – Alternative delivery systems delivery systems BenefitsBenefits

Ability to have all ailments treated at one facilityAbility to have all ailments treated at one facility Payment of fixed fees for servicesPayment of fixed fees for services Encouragement of preventive versus remedial treatmentsEncouragement of preventive versus remedial treatments

Success of HMO has inspired similar programs for Success of HMO has inspired similar programs for dental and eye caredental and eye care

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InsuranceInsurance

Insurance industry offers several new products and Insurance industry offers several new products and servicesservices

Distribution of insurance services have increasedDistribution of insurance services have increased Availability of travel auto insurance through AAAAvailability of travel auto insurance through AAA Group insurance written through employers and labor Group insurance written through employers and labor

unionsunions

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TravelTravel

Airline industries have been the leaders in the use of Airline industries have been the leaders in the use of technologytechnology Use of Internet sites to dispense flight and fare Use of Internet sites to dispense flight and fare

informationinformation Technology helps airlines to make strategic pricing Technology helps airlines to make strategic pricing

decisions through the use of yield managementdecisions through the use of yield management Use of elaborate computer programs enable Use of elaborate computer programs enable

managers to determine customer segmentsmanagers to determine customer segments

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Implications for Service MarketersImplications for Service Marketers

Sum total of marketing mix elements represents the Sum total of marketing mix elements represents the total impact of the firm’s marketing strategytotal impact of the firm’s marketing strategy

Services must be made available to prospective usersServices must be made available to prospective users Varying service bundles, new technology, and Varying service bundles, new technology, and

alternative means of distributing the service enable alternative means of distributing the service enable targeted marketingtargeted marketing