Chapter 9

Marketing Management
Sixteenth Edition
Chapter 9
Designing and Managing
Services
Copyright © 2022, 2016, 2012 Pearson Education, Inc. All Rights Reserved
Learning Objectives
9.1 Define the distinctive characteristics of services.
9.2 Explain the new realities that service firms face.
9.3 Identify the key strategies to achieve service
excellence.
9.4 Explain how service firms can manage quality
effectively.
The Nature of Services
• Service
– Any act or performance one party can offer to another
that is essentially intangible and does not result in the
ownership of anything
The Service Aspect of an Offering
• A pure tangible good
• A tangible good with
accompanying services
• A hybrid
• A major service with
accompanying minor
goods/services
• A pure service
Characteristics of Services
• Intangibility
• Inseparability
• Variability
• Perishability
Intangibility
• Services cannot be seen, tasted, felt, heard, or smelled
• “Tangibilize the intangible”
– Place
– People
– Equipment
– Communication material
– Symbols
– Price
Inseparability
• Services are typically produced and consumed
simultaneously
Variability
• The quality of services
depends on who provides
them, when and where,
and to whom
– As such, services are
highly variable
Perishability (1 of 2)
• Services cannot be stored
– Yield pricing
Figure 9.1 Blueprint for Overnight Hotel
Stay
Perishability (2 of 2)
Demand side Supply side
• Differential pricing • Part-time employees
• Nonpeak demand • Peak-time efficiency
routines
• Complementary services
• Increased consumer
• Reservation services
participation
• Shared services
• Facilities for future
expansion
New Services Realities
• Increasing role of technology
• Importance of the increasingly empowered customer
• Customer coproduction
• Need to engage employees as well as customers
Increasing Role of Technology
• Fundamentally changing how value is delivered to
customers
• Power to make service workers more productive
Customer Empowerment
• Unbundled service choices
• Social media to spread the word
Customer Coproduction (1 of 2)
• Active engagement in the service process
– One-third of all service problems are caused by the
customer
Customer Coproduction (2 of 2)
• Redesign processes and redefine customer roles
• Incorporate the right
• Create high-performance customers
• Encourage “customer citizenship”
Satisfying Employees
• Allow employees to:
– Pamper customers
– Read their needs
– Develop a personal
relationship with them
– Deliver high-quality
service
Achieving Excellence
• External marketing
– Preparing, pricing, distributing, and promoting the
service to customers
• Internal marketing
– Training and motivating employees to serve
customers well
• Interactive marketing
– Employees’ skill in serving the client
Best Practices of Top Service Companies
• Customer-centricity
• Service quality
• Cater to high-value customers
• Manage customer complaints
Customer-Centricity
• Customer-centricity
– seeing the world in general, and a company’s
services in particular, from the customer’s point of
view
Service Quality
• The best service providers set superior quality standards
– Voice of the customer measurements
– Importance–performance analysis
Catering to High-Value Customers
• Special discounts
• Promotional offers
• Special service
Managing Complaints
• Extra role behaviors
• Call centers
• Customer service representatives
Differentiating Services
• Ease of ordering
• Speed and timing of
delivery
• Installation, training, and
consulting
• Maintenance and repair
• Returns
Innovation with Services
• Online travel
• Retail health clinics
• Private aviation
Managing Service Quality
• Managing customer expectations
• Incorporating self-service technologies
Figure 9.2 Service-Quality Model
Managing Self-Service
• Person to person service interactions are being replaced
by self-service technologies
Managing Product-Service Bundles
• Key service differentiators
– Ordering
– Delivery
– Installation
– Customer training
– Customer consulting
– Maintenance
– Repair
Discussion Questions (1 of 2)
• Most hotel chains and airlines have programs designed to
reward customer loyalty.
– How do loyalty programs enable companies like
Marriott to achieve customer service excellence?
▪ Consider customer-centricity, service quality,
catering to high value customers, and managing
customer complaints.
Discussion Questions (2 of 2)
• Consumers have long been accustomed to self-
service check outs at the grocery store and banking
through ATMs, however the COVID-19 pandemic
prompted a surge in the development and use of self-
service options.
– Discuss how the change will impact the delivery of
services in the post-pandemic period.
– Consider services such as ordering coffee in
person vs. via an app, for example. Will customers
continue to demand more self-service options or
return to person-to-person interactions?
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