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Overcoming Problems of Intangibility
And
Addressing customers/firms perceived risks
Overcoming Problems of Intangibility
3.“How” - Challenges of
service communications
Overcoming Problems of Intangibility
• May be difficult to communicate
service benefits to customers,
especially when intangible
• Intangibility creates 4 problems:
o Generality: Items that comprise a
class of objects, persons, or
events
o Non-searchability: Cannot be
searched or inspected before
purchase
o Abstractness: No one-to-one
correspondence with physical
objects
o Mental: Customers find it hard to
grasp benefits of complex,
multidimensional new offerings
OvercomIng
Intangibility
• Use tangible cues in
advertising
• Use metaphors, sometimes
exaggeration to
communicate benefits of
service offerings
https://www.youtube.com/w
atch?v=jHmf-PPg9ZI
https://www.youtube.com/w
atch?v=NeK5ZjtpO-M
Perceived Risks
How do companies deal with the question of the service quality offered and the
risk for the consumer in possibly making a wrong decision in selecting this
company
Copyright © 2018 Pearson Education Ltd.
CONSUMER
BEHAVIOR
IN
A
SERVICES
CONTEXT
Perceived Risks
• Functional―unsatisfactory performance outcomes
• Financial―monetary loss,
unexpected extra costs
• Temporal―wasted time,
delays leading to problems
• Physical―personal injury,
damage to possessions
• Psychological―fears and negative emotions
• Social―how others may think and react
• Sensory―unwanted impact on any of five senses
2-6
Copyright © 2018 Pearson Education Ltd.
CONSUMER
BEHAVIOR
IN
A
SERVICES
CONTEXT
Perceived risks in purchasing and using services
Copyright © 2018 Pearson Education Ltd.
CONSUMER
BEHAVIOR
IN
A
SERVICES
CONTEXT
Perceived Risks
Strategies for Companies to Manage Consumer Perceptions of Risk
• Display credentials
• Use evidence management (e.g., furnishing, equipment etc.)
• Give customers online
access to information
about order status
• Offer guarantees
2-8
Copyright © 2018 Pearson Education Ltd.
CONSUMER
BEHAVIOR
IN
A
SERVICES
CONTEXT
Perceived Risks
How Do Consumers Handle Them?
• Seeking information from respected personal sources
• Using Internet to compare service offerings and search for
independent reviews and ratings
• Relying on a firm that has a good reputation
• Looking for guarantees and warranties
• Visiting service facilities or trying aspects of service before
purchasing
• Asking knowledgeable employees about competing services
2-9

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Overcoming Problems of Intangibility and Perceived Risks.pptx

  • 1. Overcoming Problems of Intangibility And Addressing customers/firms perceived risks
  • 2. Overcoming Problems of Intangibility
  • 3. 3.“How” - Challenges of service communications Overcoming Problems of Intangibility • May be difficult to communicate service benefits to customers, especially when intangible • Intangibility creates 4 problems: o Generality: Items that comprise a class of objects, persons, or events o Non-searchability: Cannot be searched or inspected before purchase o Abstractness: No one-to-one correspondence with physical objects o Mental: Customers find it hard to grasp benefits of complex, multidimensional new offerings
  • 4. OvercomIng Intangibility • Use tangible cues in advertising • Use metaphors, sometimes exaggeration to communicate benefits of service offerings https://www.youtube.com/w atch?v=jHmf-PPg9ZI https://www.youtube.com/w atch?v=NeK5ZjtpO-M
  • 5. Perceived Risks How do companies deal with the question of the service quality offered and the risk for the consumer in possibly making a wrong decision in selecting this company
  • 6. Copyright © 2018 Pearson Education Ltd. CONSUMER BEHAVIOR IN A SERVICES CONTEXT Perceived Risks • Functional―unsatisfactory performance outcomes • Financial―monetary loss, unexpected extra costs • Temporal―wasted time, delays leading to problems • Physical―personal injury, damage to possessions • Psychological―fears and negative emotions • Social―how others may think and react • Sensory―unwanted impact on any of five senses 2-6
  • 7. Copyright © 2018 Pearson Education Ltd. CONSUMER BEHAVIOR IN A SERVICES CONTEXT Perceived risks in purchasing and using services
  • 8. Copyright © 2018 Pearson Education Ltd. CONSUMER BEHAVIOR IN A SERVICES CONTEXT Perceived Risks Strategies for Companies to Manage Consumer Perceptions of Risk • Display credentials • Use evidence management (e.g., furnishing, equipment etc.) • Give customers online access to information about order status • Offer guarantees 2-8
  • 9. Copyright © 2018 Pearson Education Ltd. CONSUMER BEHAVIOR IN A SERVICES CONTEXT Perceived Risks How Do Consumers Handle Them? • Seeking information from respected personal sources • Using Internet to compare service offerings and search for independent reviews and ratings • Relying on a firm that has a good reputation • Looking for guarantees and warranties • Visiting service facilities or trying aspects of service before purchasing • Asking knowledgeable employees about competing services 2-9

Editor's Notes

  1. As you know, as services are performances rather than objects, their benefits can be difficult to communicate to customers. This is especially the case when the service does not involve tangible actions performed on customers or their possessions. Intangiblity creates 4 problems for marketers seeking to promote its attributes or benefits: Abstractness Generality Non-searchability Mental impalpability Abstractness: Abstract (existing in thought or as an idea but not having a physical or concrete existence) concepts such as financial security or investment-related matters, expert advice, etc. don’t have one to one correspondence with physical objects. It can therefore be challenging for marketers to connect their services to these intangible concepts. How to overcome Abstractness? As an example, capture and show typical customers benefiting from the service. E.g. by smiling in satisfaction at a staff member going out of their way to help. Generality: This refers to items that comprise a class of objects, persons, or events – for instance, airline seats, flight attendants and cabin service. As there may be physical objects that can show these services, abstractness is not a problem. However, these services are not specific enough. Thus, even though most consumers know what these services are, it is difficult for marketers to create a unique value proposition (an innovation, service, or feature intended to make a company or product attractive to customers) to communicate what makes a specific offering distinctly different from , and superior to, competing offerings. How to overcome Generality? Document facts and statistics about the service delivery system. For example, the UPS website states that the company has 227 aircraft in operation. Another is to document and cite past service performance statistics, such as the number of packages that have been delivered on time, and lastly, present actual service delivery being performed by service personnel. The video mode is best for showing this. Non-Searchability: This refers to the fact that many service attributes cannot be searched or inspected before they are purchased. Physical service attributes, such as the appearance of a hotel and its furniture installed, can be checked in advance, but the experience of working with the Event Managers to create a conference can only be determined through extended personal involvement. How to overcome Non-Searchability? Obtain and present testemonials from customers who have experienced the service. Or, if the service is high in credence attributes, document the awards received or the qualifications of the service provider. As an example, at my hotel we received the highest possible zone during the company’s Quality Assurance Inspection. That was used in my time to share with prospects. Mental Impalpability: Many services are complex, multi dimensional, or novel (new). This makes it difficult for consumers, especially new prospects, to understand what the experience of using them will be like and what benefits will result from the experience. How to overcome Mental Impalpability? Present a clear step by step documentation of what exactly will happen during the service experience. Or present an actual case history of what the firm did for a specific client and how it solved the customer’s problem (you see that in insurance ads as an example). Lastly you can presenta story or depiction of a customer’s experience with a service.
  2. In addition to the strategies presented in the previous slide, companies can use tangible cues and metaphors (a figure of speech that describes an object or action in a way that isn't literally true, but helps explain an idea or make a comparison) to overcome the 4 challenges of intangibility. Both these methods help to communicate intangible service attributes and benefits to potential customers. Tangible Cues: Commonly used strategies in advertising include the use of tangible cues whenever possible, especially for services that involve few tangible elements. It’s also helpful to include “vivid information” that catches the audience attention and produces a strong, clear impression on the senses, especially for services that are complex and highly intangible. For example, many business schools feature successful alumni to make the benefits of their education tangible and communicate what their program cold do for prospective students in terms of career advancement, salary increases and lifestyle. Use Metaphors: Some companies have created metaphors that are tangible in nature to help communicate the benefits of their service offerings and to emphasize key points of differentiation. For example, the Merrill Lynch bull (animal) has been a symbol for the wealth manager’s business philosophy, which suggests both a bullish market (a bull market is the condition of a financial market in which prices are rising or are expected to rise) and a strong commitment to the financial performance of its clients. When possible, advertising metaphors should highlight how service benefits are actually provided.