SERVICES 1 SERVICES AS PRODUCTS Acts efforts

SERVICES 1

SERVICES AS PRODUCTS Acts, efforts, or performances exchanged from producer to user No transfer of ownership rights Core or primary service benefit ü Flight to London Augmented: core + other services ü Frequent flier miles, in-flight movie 2 © Used By Permission.

Service Continuum Offerings vary in their balance of goods and services 3

Unique Characteristics of Services Intangibility Inseparability Inventory (Perish-ability) Inconsistency (Variability) 4

Intangibility Considerations for Marketers Tough for consumer to evaluate quality evaluation especially pre-purchase ü Provide tangibility via cues/images or other tangible benefit ü Ads emphasis what is tangible (e. g. more leg room); frequent flier miles, etc. ü Promote price, guarantees, availability, personnel skills ü Offer services on a trial basis ü Referral programs –current customers vouch for quality 5

Characteristics of Services Inseparability: ü Service is produced and consumed simultaneously ü Provider and service itself are hard to separate 6

Inseparability Considerations for Marketers Interaction between customer and actual service provider is critical ü Social and physical elements of encounter matter § Both influence quality perceptions ü Strong emphasis on training – technical and interpersonal skills Personalize ads (e. g. feature owner in the ad) 7

Inventory (Perish-ability) Most services are 100% perishable ü Many unused services can’t be used at a future time Idle capacity ü Capacity is available – no demand 8

Inventory (Perish-ability) Considerations Capacity management is critical (as with Inseparability) ü Match supply and demand ü Reservation-based systems Pricing flexibility ü “Off season” (demand based) prices for resort hotels ü Requires strong forecasting capability 9

Inconsistency (Variability) Variation in quality from one purchase to the next ü People perform services and: § different individuals different skills § Individuals vary from one service call to the next 10

Inconsistency (Variability) Considerations Easier to customize service provided Harder to standardize quality Pricing is difficult ü Sell in standard packages ü Completely customized to meet customer needs ü Combination of the two ü Disintermediation: removing people from the service § ATMs § Self service gas pumps 11

Pricing of Services Performance of specific tasks ü Car wash Amount of time to complete the service ü Babysitting Variable pricing based on the level of demand ü Airline seats Bundling: offer a bundle at one price, price services separately, or a combination ü Cell phone services Price as quality indicator: ü Cosmetic surgery 12

Distribution of Services Direct channels with no intermediaries ü Exceptions – travel agents Customers come to a service facility ü Laundromat Services are brought to the consumer ü Lawn care Focus on service demand/supply management (e. g. , scheduling of service delivery) ü Reservation-based businesses Increase accessibility by disintermediation ü ATM banking 13

Promotion of Services Provide tangible (symbolic) cues/images ü Logos, ad claims, etc. Promote quality ü Skilled personnel – e. g. H&R Block ü Price, guarantees, skilled personnel, technology used Use personal selling and word-of-mouth advertising Free trial, money back guarantee as quality cues ü Rosetta Stone (free demo + 180 day guarantee) Offer services on a trial basis 14

Promotion of Services Identify the core service; augmented service(s), quality cues, etc. ü http: //www. youtube. com/watch? v=Na 1 We. MCy. ABM ü http: //www. youtube. com/watch? v=Hra. Onki. KVe. Q ü http: //www. youtube. com/watch? v=Pj. H-R 2 TUOz. U 15