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1、Chapter 11. The concept of service and its classification2.1 Define servicean act or performance offered by one party to another. the performance is essentially intangible and does not normally result in ownership of any of the factors of production.economic activities that create value and provide
2、benefits for customers at specific times and places /as a result of bringing about a desired change inor on behalf ofthe recipient of the service.3.Fundamental Difference between service and goods Intangibility, inseparability, heterogeneity, perishability3.1 Intangibility A distinguished characteri
3、stic of services that makes them unable to be touched or sensed in the same manner as physical goods.3.1.1 Marketing problems caused by intangibilityLack of ability to be stored inability to maintain an inventory- a buffer against periods of high demand. constant supply and demand problems .Lack of
4、protection by patents new or existing services may be easily copied; difficult to maintain a firms differential service advantage over attentive competitors for long periods.Difficult in displaying or communicating How do you get customers to take notice of your product when they cannot see it?Diffi
5、culty in pricing services. goods: cost-plusservice: primary cost -labor knowledge worker3.1.2 Possible solutions to intangibility problemsphysical evidence or tangible clues. quality of furniture; appearance of the personnel; quality of paper alike; symbolic objectsThe use of personal sources of inf
6、ormation Word-of-mouth (lack any objective means of evaluating services;rely on the subjective evaluations relayed by friends, family, and a variety of other opinion leaders.)Mass advertisingIncentives to existing customersCreation of a strong organization image higher levels of perceived risk brand
7、 -differential advantage over small, local firms of which the consumer is unware of.3.2 Inseparability the service providers physical connection to the service being provided. the customers involvement in the service production process. the involvement of other customers in the service production pr
8、ocess.3.2.1 Marketing problems caused by inseparabilityPhysical connection of the service provider to the service languages, clothing, personal hygiene, interpersonal skills, public contact personnelInvolvement of the customer in the process. customer contact increases, efficiency decreases.Involvem
9、ent of other customers. negative : different segments ( smokers vs nonsmokers) positive: entertainment3.2.2 Possible solutions to inseparability problemstraining, rewarding, building trust and teamwork -reduce variation in behavior as much as possible. public contact personnel- superior communicatio
10、n and public skills. newly hired employee : robotic VS soft management skills such as reliability, responsiveness, empathy, assuranceConsumer management separate segments; reservation systems; delivery services( send a patient insurance forms and information);isolate the technical core.Use of multis
11、ite locations Franchise disadvantage: a consistent image3.3 Heterogeneitylack of ability to control quality Manufacturing: isolate mistakes and correct them overtime (mistakes tend to reoccur at the same points in the process) Service: errors in operations are one-time events (can neither foreseen n
12、or corrected ahead of time)Consistency among personnel within a single firm. the same service provider on a daily basis. Vary from firm to firm.3.3.1 Marketing Problems caused by heterogeneityService standardization and quality control are difficult to achieve( employees personality , mood)3.3.2 Pos
13、sible solutionsDifferentiation -to take advantage of the variation inherent in each service encounter .Service: take more time to produce, charge higher profitCustomers: not be willing to pay the higher prices speed of service delivery take extra time; have not the luxury of waiting for the final pr
14、oduct. not be willing to face the uncertainty associated with customized services.Standardization Intensive training to reduce extreme variations. replace human labor with machines. ATM Positive: lower consumer prices;consistency of performance;faster service delivery. Negative: not care about the i
15、ndividual;attempting to distance itself from the customer. in summary: standardized core product + semi-customized3.4 PerishabilityService that are not sold when they become available cease to exist.3.4.1 Marketing problems caused by perishabilityMatch demand and supply-a major challengeHigher demand than available supply inferior levels service;long waiting periods; expectations are not met; unhappy customers;dissatisfaction and negative word-of-mouthLower demands than opti
