0
CHAPTER              THIRTEEN


MANAGING SERVICES




 Irwin/McGraw-Hill
                                                 ...
PP13-AA Snowboarding is coming to a mountain near you

    Why are Ski Resorts emphasizing Snow Boarding?
•   Aging baby b...
PP13-BB The Growth and Importance of Services in the U.S.
        Economy
• About 90% of the 2.7 million new jobs created
...
PP13-A New Services Identified by U.S. Census Bureau

 • Reproduction of computer                • Interior design service...
PP13-1 Importance of Services in the U.S. Gross Domestic
       Product

                              8,500
             ...
PP13–B The Four I’s of Service
  Intangibility                   Services cannot be held, touched, or
                    ...
PP13-CC Service & Idle Production Capacity
• Inventory of services is different from that of
  goods.
• With services, inv...
PP13-2 Inventory Carrying Costs of Services

         Low Cost                    Cost of Inventory                       ...
PP13–3 Service Continuum
    Service-dominated                                                        Teaching
     item (...
PP13-4 Service Classifications
                                                  Service



               Equipment-based...
PP13-C An Example of An Equipment-Based Service




                                                                 Irwin...
PP13-D An Example of A People-Based Service




                                                           Irwin/McGraw-Hi...
PP13-FF Some Characteristics of the Service Purchase

 • Consumers cannot make a pre-purchase evaluation
   of all the cha...
PP13-GG Services with Credence Properties
• Services provided by specialized professionals
  such as medical diagnoses and...
PP13-GG Services with Credence Properties
• Services provided by specialized professionals
  such as medical diagnoses and...
PP13-GG Services with Credence Properties
• To reduce the uncertainty created by credence
  properties, service consumers ...
PP13-5 How Consumers Evaluate Goods and Services




                            Most goods              Most services


 ...
PP13–6 Dimensions of service quality
                                                             Examples of questions
  ...
PP13-7 Customer Contact in car rental
       1. Customer contacts                   2. Receive customer
          rental c...
PP13-HH The Customer Contact Audit
• The customer contact audit is a flowchart of the
  points of interaction between cons...
PP13-II Relationship Marketing
• Relationship marketing provides several benefits for
   service customers including:
    ...
PP13-KK Internal Marketing
• Internal marketing is based on the notion that a service
  organization must focus on its emp...
PP13-KK Internal Marketing
• Internal marketing is based on the notion that a service
  organization must focus on its emp...
PP13-KK Internal Marketing
• Internal marketing is based on the notion that a service
  organization must focus on its emp...
An Internal Marketing Case Study

                  Two Wisconsin Hospitals




                                          ...
Relationship Marketing - continued
• Question - What is the largest sector or type of service
  providers?




           ...
Relationship Marketing - continued
• Question - What is the largest sector or type of service
  providers?

• Answer - Non...
Typical For-Profit Service Relationship Marketing




            Dry                       Clean                Customers...
Relationship Marketing - Non-profit Organizations



                   Student


                                     UNH...
Relationship Marketing - Non-profit Organizations




                   Student                     Parents



          ...
Relationship Marketing - Non-profit Organizations




                  Student                      Parents



          ...
Relationship Marketing - Non-profit Organizations



                 Student                       Parents



           ...
Relationship Marketing - Non-profit Organizations



                     Student                     Parents



         ...
Relationship Marketing - Non-profit Organizations


                     Student                     Parents



          ...
PP13-LL Managing the Marketing of Services--Product


3 aspects of the product/service element

mix that warrant special a...
PP13-8 Managing Capacity in a Hotel
                          Week 7(low season)                              Week 36 (hig...
PP13-MM Managing the Marketing of Services--Pricing

• Price plays two essential roles regarding
  the pricing of services...
PP13-NN Managing the Marketing of Services--Place
• Place or distribution is a major factor in
  developing a service mark...
PP13-OO Managing the Marketing of Services--Promotion

• In most cases promotional concerns of
  services are similar to t...
PP13-PP Advertising & Professional Services
• A Supreme Court case in 1976 struck down
  constraints by professional organ...
PP13-E IRS E File Advertisement




                                                           Irwin/McGraw-Hill
MARKETING...
PP13-QQ Services and Publicity
• Publicity has played a major role in
  the promotional strategies of nonprofit
  services...
PP13-RR Services in the Future
• In the future we can expect:
    - new and better services
    - an unprecedented variety...
Upcoming SlideShare
Loading in...5
×

Chap13Services72C.ppt

1,663

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,663
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
52
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Chap13Services72C.ppt"

  1. 1. CHAPTER THIRTEEN MANAGING SERVICES Irwin/McGraw-Hill Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  2. 2. PP13-AA Snowboarding is coming to a mountain near you Why are Ski Resorts emphasizing Snow Boarding? • Aging baby boomers are skiing less • Snowboarding has grown by 270% since 1987, compared to only a 2% annual increase in the number of snow skiers • Ski areas are offering incentives for the snowboarder’s repeat business • Many ski areas have developed “terrain parks” and obstacle courses for snowboarders • Snowboarding is the fastest growing sport in the U.S. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  3. 3. PP13-BB The Growth and Importance of Services in the U.S. Economy • About 90% of the 2.7 million new jobs created each year are in the services sector. • Services accounted for $4.679 trillion in 1998, which was an increase of more than 300% since 1980. • Services represent a large export business--the $280 billion of service exports in 1998 is one of the few areas in which the U.S. has a trade surplus. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  4. 4. PP13-A New Services Identified by U.S. Census Bureau • Reproduction of computer • Interior design services software • Industrial design services • Pet care services • Hazardous waste collection • Cable networks • HMO medical centers • Satellite communications • Continuing care retirement • Paging communities • Cellular and other wireless • Casino hotels communications • Casinos • Telecommunication resellers • Other gambling industries • Credit card issuing • Bed and breakfast inns • Temporary help supply • Automotive oil change and • Telemarketing bureaus lubrication shops • Diet and weight reducing centers Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  5. 5. PP13-1 Importance of Services in the U.S. Gross Domestic Product 8,500 8,000 7,500 7,000 Billions of dollars 6,500 6,000 5,500 5,000 GDP 4,500 4,000 3,500 3,000 Services 2,500 2,000 1,500 Goods 1,000 500 0 1970 1975 1980 1985 1990 1995 1998 Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  6. 6. PP13–B The Four I’s of Service Intangibility Services cannot be held, touched, or seen before the purchase decision. Inconsistency Service quality varies with the capabilities of the people who provide the service. Inseparability The consumer cannot separate the deliverer of the service from the service itself. Inventory The inventory cost of a service is the cost of paying the person used to provide the service along with the cost of any needed equipment. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  7. 7. PP13-CC Service & Idle Production Capacity • Inventory of services is different from that of goods. • With services, inventory carrying costs are more subjective and are related to idle production capacity, which is when the service provider is available but there is no demand. • The inventory cost of a service is the cost of paying the person used to provide the service along with any needed equipment. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  8. 8. PP13-2 Inventory Carrying Costs of Services Low Cost Cost of Inventory High Cost Hair Salon Real Estate Employment Insurance auto dry Amusement Utility agency company repair cleaner hotel restaurant park Airline Hospital Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  9. 9. PP13–3 Service Continuum Service-dominated Teaching item (intangible) Nursing The theatre Advertising agency Air travel Television Balanced Fast-food restaurant Tailored suit Automobile House Balanced item Dog food equally weighed Good-dominated between goods Necktie item (tangible) Salt and services Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  10. 10. PP13-4 Service Classifications Service Equipment-based People-based Monitored by Operated by relatively Unskilled Skilled Professionals Automated skilled unskilled labor labor operators operators •Vending •Motion •Electric •Lawn care utilities •Appliance •Lawyers machines picture •Security •Automated •Airlines repair •Managing theaters guards •Computer •Plumbing consultants car washes •Dry cleaning •Janitorial •ATM network •Catering •Accountants •Taxis services installation Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  11. 11. PP13-C An Example of An Equipment-Based Service Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS Reproduced with permission of MCI WorldCom. © The McGraw-Hill Companies, Inc., 2000
  12. 12. PP13-D An Example of A People-Based Service Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-HillHewitt Courtesy Companies, Inc., 2000
  13. 13. PP13-FF Some Characteristics of the Service Purchase • Consumers cannot make a pre-purchase evaluation of all the characteristics of services because services: - cannot be displayed - cannot be demonstrated - cannot be illustrated I disagree many services have observed characteristics • Similarly, because service providers may vary in their delivery of a service, an evaluation of a service may change with each purchase Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  14. 14. PP13-GG Services with Credence Properties • Services provided by specialized professionals such as medical diagnoses and legal services have credence properties, or characteristics that the consumer may find impossible to evaluate even after purchase and consumption. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  15. 15. PP13-GG Services with Credence Properties • Services provided by specialized professionals such as medical diagnoses and legal services have credence properties, or characteristics that the consumer may find impossible to evaluate even after purchase and consumption. • What surrogates do people use to evaluate professional services? – Waiting time - I didn’t have to wait – Personality - S/he was nice – Cleanliness - I could not believe how clean it was – Food - It was great, and lots of it MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000
  16. 16. PP13-GG Services with Credence Properties • To reduce the uncertainty created by credence properties, service consumers turn to personal sources of information such as early adopters, opinion leaders, and reference group members during the purchase decision process. • 35% of all people find their doctor or dentist by recommendations from family and friends Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  17. 17. PP13-5 How Consumers Evaluate Goods and Services Most goods Most services Easy to Difficult to evaluate evaluate High in search High in experience High in credence properties properties properties Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  18. 18. PP13–6 Dimensions of service quality Examples of questions Dimension and Definition Stock Brokerage Customers Might ask Reliability: Ability to perform the promised Does the stockbroker follow exact instructions service dependably and accurately to buy or sell? Tangibles: Appearance of physical facilities, Is the monthly report easy to read and equipment, personnel, and understand? communication materials Responsiveness: Willingness to help customers Is my stockbroker willing to answer my and provide prompt service questions? Assurance: Knowledge and courtesy of Does my broker refrain from acting busy or employees and their ability to being rude when I ask questions? convey trust and confidence Empathy: Caring, individualized Does my broker try to determine what my attention provided customers specific financial objectives are? Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  19. 19. PP13-7 Customer Contact in car rental 1. Customer contacts 2. Receive customer rental company information 3. Customer arrives 4. Receive customer Access reservation information system 6. Customer takes bus 5. Assign car to care and departs 7. Customer returns A. Preliminary car to receiving lot inspection 8. Customer checks B. Secondary C. Perform periodic in inspection maintenance 9. Receive customer D. Preparation and information park in ready lot 10. Customer E. Update car status in receives bill reservation system Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  20. 20. PP13-HH The Customer Contact Audit • The customer contact audit is a flowchart of the points of interaction between consumer and service provider. • Customer contact audits are particularly important in high-contact services such as hotels, educational institutions, and automobile rental agencies. • The interactions identified in a customer contact audit often serve as the basis for developing relationships with customers. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  21. 21. PP13-II Relationship Marketing • Relationship marketing provides several benefits for service customers including: – the continuity of a single provider – customized service delivery – reduced stress due to a repetitive purchase process – and an absence of switching costs Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  22. 22. PP13-KK Internal Marketing • Internal marketing is based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  23. 23. PP13-KK Internal Marketing • Internal marketing is based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers. • The internal marketing concept holds that an organization’s employees (its “internal market”) will be influenced to develop a market orientation if marketing- like activities are directed at them. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  24. 24. PP13-KK Internal Marketing • Internal marketing is based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers. • The internal marketing concept holds that an organization’s employees (its “internal market”) will be influenced to develop a market orientation if marketing- like activities are directed at them. • The idea of internal marketing suggests that employees and employee development through recruitment, training, communication, and administration are critical to the success of service organizations. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  25. 25. An Internal Marketing Case Study Two Wisconsin Hospitals Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  26. 26. Relationship Marketing - continued • Question - What is the largest sector or type of service providers? Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  27. 27. Relationship Marketing - continued • Question - What is the largest sector or type of service providers? • Answer - Non-profit organizations • Let’s look at why they are different from profit service providers Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  28. 28. Typical For-Profit Service Relationship Marketing Dry Clean Customers Cleaners Clothes Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  29. 29. Relationship Marketing - Non-profit Organizations Student UNH Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  30. 30. Relationship Marketing - Non-profit Organizations Student Parents UNH Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  31. 31. Relationship Marketing - Non-profit Organizations Student Parents UNH Alumni Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  32. 32. Relationship Marketing - Non-profit Organizations Student Parents UNH Alumni Donors Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  33. 33. Relationship Marketing - Non-profit Organizations Student Parents UNH Alumni Foundations Donors Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  34. 34. Relationship Marketing - Non-profit Organizations Student Parents UNH Alumni Foundations Donors State of NH Legislative Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  35. 35. PP13-LL Managing the Marketing of Services--Product 3 aspects of the product/service element mix that warrant special attention: 1. Exclusivity 2. Brand name 3. Capacity management Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  36. 36. PP13-8 Managing Capacity in a Hotel Week 7(low season) Week 36 (high season) 100% Out of commission for renovation Executive service Executive service guests* guests* Transient guests† Weekend Weekend package package 50% Transient guests† Groups and conventions Groups (no conventions) Airline contracts Airline contracts Nights: M Tu W Th F S Sn M Tu W Th F S Sn Time * Employees of corporations called upon by salesforce (book rooms through special reservations line). † Customers reserving rooms via public telephone number or by just “walking in.” Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  37. 37. PP13-MM Managing the Marketing of Services--Pricing • Price plays two essential roles regarding the pricing of services: 1. To affect consumer perceptions and 2. To be used in capacity management. • Off-peak pricing consists of charging different prices during different times of the day or days of the week to reflect variations in demand for the service. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  38. 38. PP13-NN Managing the Marketing of Services--Place • Place or distribution is a major factor in developing a service marketing strategy because of the inseparability of services from the producer. • As competition grows, the value of convenient location becomes more important. • The availability of electronic distribution through the World Wide Web now provides global coverage for travel services, banking, entertainment, and many other information- based services. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  39. 39. PP13-OO Managing the Marketing of Services--Promotion • In most cases promotional concerns of services are similar to those of products. • The value of promotion (advertising) is to stress: Heart by-pass Surgery 20% discount for – availability weekend procedures – location – consistent quality – and efficient, courteous service Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  40. 40. PP13-PP Advertising & Professional Services • A Supreme Court case in 1976 struck down constraints by professional organizations to constrain the advertising of professional services, specifically the American Medical Association and the American Bar Association. • Although opposition to advertising still remains in some professional groups, the barriers to promotion are being broken down, mostly in response to competitive pressures. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  41. 41. PP13-E IRS E File Advertisement Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  42. 42. PP13-QQ Services and Publicity • Publicity has played a major role in the promotional strategies of nonprofit services and some professional services. • Many nonprofit groups have relied on Public Service Announcements (PSAs) as the foundation of their media plan because they are free. Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  43. 43. PP13-RR Services in the Future • In the future we can expect: - new and better services - an unprecedented variety of suppliers • Changes in the services industry will be driven by: - deregulation - technological development and - consumer interests Irwin/McGraw-Hill MARKETING, 6/e BERKOWITZ KERIN HARTLEY RUDELIUS © The McGraw-Hill Companies, Inc., 2000
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×