Session 2 - Designing and Managing Services

Designing and Managing Services1 3/10/2013 Definition A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. 2 3/10/2013 . .     Government sector Private nonprofit sector Business sector Manufacturing sector 3 3/10/2013 .Services are everywhere. Categories of Service Mix      Pure tangible good Tangible good with accompanying services Hybrid Major service with accompanying minor goods and services Pure service 4 3/10/2013 . Evaluation Continuum for Different Types of Products 5 3/10/2013 . seen. or smelled before purchase Marketers must try to “tangibilize the intangible” Lack of trial means higher consumer risk Consumers rely on cues to draw quality inferences 6 3/10/2013 . heard. tasted.Distinctive Characteristics of Services Characteristics      Intangibility Inseparability Variability Perishability    Cannot be touched. Distinctive Characteristics of Services Characteristics      Intangibility Inseparability Variability Perishability   Services are produced and consumed at the same time (air travel) Service providers and sometimes other customers become part of the service (restaurant) Strong preferences for service providers exist 7 3/10/2013 . Even the same provider may give different service on a different day.Distinctive Characteristics of Services Characteristics      Intangibility Inseparability Variability Perishability  Service providers vary with respect to attitudes. mood. etc. Quality control is critical:  Hiring the right people  Standardizing service  Monitoring satisfaction 8 3/10/2013 . skills. Distinctive Characteristics of Services Characteristics      Intangibility Inseparability Variability Perishability  Services can not be inventoried or otherwise stored Capacity / demand management is critical:   Demand side strategies Supply side strategies 9 3/10/2013 . Distinctive Characteristics of Services  Demand-side strategies     Supply-side strategies      Use differential pricing Cultivate nonpeak demand Develop complementary services Install reservation systems Hire part-time employees Introduce peak-time efficiency routines Increase consumer participation Share services 10 3/10/2013 . Services Company Internal marketing External marketing Cleaning/ maintenance services Employees Financial/ banking Restaurant services industry Interactive marketing Customers 11 3/10/2013 .Holistic Marketing . 12 3/10/2013 .Managing Service Quality Service quality represents a formalization of the measurement of customer expectations of a service compared to their perceptions of actual service performance Parasuraman. The model identifies five gaps that cause unsuccessful delivery. Zeithaml and Berry formulated a service-quality model that highlights the main requirements for delivering high service quality. Service-Quality Model 13 3/10/2013 . GAP ANALYSIS Gap 1 • Management’s Perceptions of Customer Service Expectations versus Actual Customer Expectations of Service Gap 2 • Management’s Perceptions of Customer Service Expectations versus the Actual Service Quality Specifications Developed 14 3/10/2013 . GAP ANALYSIS 15 3/10/2013 . Determinants of Service Quality Tangibles Empathy Reliability Five dimensions of service quality Assurance Responsive ness 16 3/10/2013 .