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| HOW SERVICES DIFFER FROM GOODS |
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Definition
| Intangibility; Inseparability; Heterogeneity; Perishability |
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| Services cannot be touched, seen, tasted, heard, or felt in the same way as goods. Tangible cues are often used to communicate a service’s quality and nature. Facilities are a critical tangible part of a service experience. |
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| Services are often sold, produced, and consumed at the same time. Consumers are involved in the production of the services that they buy. The quality of services depends on the quality of employees. |
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| Services are less standardized and uniform than goods. Because services tend to be labor-intensive, consistency and quality control can be hard to achieve. Standardization and training help increase consistency and reliability. |
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| Services cannot be stored, warehoused, or inventoried. One of the most important challenges in many service industries is finding ways to synchronize supply and demand. |
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Search Quality: a characteristic that can be easily assessed before purchase. Services tend to assess fewer search qualities than goods
Experience Quality: characteristic that can be assessed after use
Credence Quality: characteristic assessed with only appropriate knowledge |
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Term
| COMPONENTS OF SERVICE QUALITY |
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Definition
| Reliability; Responsiveness; Assurance; Empathy; Tangibles. |
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| The ability to perform the service right the first time |
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| The ability to provide prompt service |
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| The knowledge and courtesy of employees |
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| Caring, individualized attention to customers |
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| The physical evidence of the service |
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| The gap between what customers want and what management thinks customers want. This gap results from a lack of understanding or a misinterpretation of customers’ needs or wants. To close gap 1, keep in touch with what customers want by doing research on customer needs and customer satisfaction. |
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| The gap between what management thinks customers want and the quality specifications that management develops to provide the service. |
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| The gap between the service quality specifications and the service that is actually provided. If gaps 1 and 2 are closed, gap 3 is due to the inability of management and employees to do what should be done. To close gap 3, employees need the skills, training, and tools to perform their jobs. |
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| The gap between what the company provides and what the customer is told it provides. This is a communication gap, caused by such things as misleading or deceptive advertising campaigns. To close gap 4, companies need to create realistic customer expectations through honest, accurate, realistic communication. |
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| The gap between the service that customers receive and the service they want. This gap can be positive or negative. As the gaps shrink, service quality improves. |
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Term
| RELATIONSHIP MARKETING IN SERVICES |
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Definition
It is more cost effective to keep existing customers than to attract new ones.
Increasing customer retention by 2 percent can have the same effect on profits as reducing costs by 10% |
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Definition
| LEVEL 1, LEVEL 2, LEVEL 3. |
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| The firm uses pricing incentives to encourage customers to continue doing business. This level of relationships marketing is the least effective because its price-based advantage is easily initiated by competitive firms |
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| This level uses pricing incentives as well as building social bonds with customers. The firm keeps in touch with customers |
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| At this level, the firm adds structural bonds to the formula. This offers value-added services that are not available by competitive firms |
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Term
| OBJECTIVES OF NON-PROFIT ORGANIZATIONS |
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Definition
Nonprofit organizations: do not seek to make a profit for redistribution to owners or shareholders. The focus is often on generating enough funds to cover expenses.
Most nonprofit organizations are expected to provide equitable, effective, and efficient services that respond to the wants and needs of multiple constituencies. |
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Term
| Product (service) strategy |
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Definition
the product offering is intangible and consists in large part of a process or multiple processes.
Two things get processed in service organization: people and objects. In some cases, the process is physical, while in others the process is intangible. There are four types of service processing categories: 1.People processing; 2.Possession processing; 3.Mental stimulus processing; 4.Information processing. |
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Definition
| takes place when the service is directed at a customer. Examples include health care and hairstyling |
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| occurs when the service is directed at customers’ physical possessions. Examples include lawn care, car repair, and dry cleaning. |
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| 3.Mental stimulus processing |
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| refers to services directed at people’s minds. Examples include spectator sports events, theater performances, and education. |
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| describes services that use technology or brainpower directed at a customer’s assets. Examples include insurance, consulting, and banking. |
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Term
| PLACE (DISTRIBUTION) STRATEGY |
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Definition
Convenience: A key factor influencing the selection of a service provider
Number of Outlets: The intensity of distribution should meet the target markets needs and preferences
Direct or Indirect Distribution: Many service firms use direct distribution or franchising. The newest form of direct distribution is the internet
Location: The location of a service reveals the relationship between its target market strategy and distribution strategy
Scheduling: The most important factor for time-dependent service providers like, airlines, physicians, and dentists |
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Services are less tangible and are more difficult to promote than tangible goods. Four promotion strategies are:
Stressing tangible cues
Using personal informational sources
Creating a strong organizational image
Engaging in post purchase communication |
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Objectives
Revenue-Oriented Pricing: Maximize the surplus of income over costs
Operations-Oriented Pricing: Match supply and demand by varying price
Patronage- Oriented Pricing: Maximize the number of customers by varying price |
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