Chapter 13: Services; The Intangible Product

Objectives:

• Describe how the marketing of services differs from the marketing of products,
• Discuss the 4 gaps in the Service Gaps Model,
• Examine the 5 service quality dimensions,
• Explain the zone of tolerance,
• Identify 3 service recovery strategies.

"Services account for 76 percent of the U.S. GDP, a much higher percentage than they did 50, 20, or even 10 years ago."

Service: Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer.

Customer Service: Specifically refers to human or mechanical activities firms undertake to help satisfy their customers' needs and wants.

I. Services Marketing Differs from Product Marketing:

• Intangible: 
• Intangible: A characteristic of a service, it cannot be touched, tasted, or seen like a pure product can. 
• A service that cannot be shown directly to potential customers is more difficult to promote. Because of intangibility of services, the images that marketers use must reinforce the benefit or value that a service provides. 
• Inseparable Production and Consumption: 
• Inseparable: A characteristic of a service: it is produced and consumed at the same time; that is, service and consumption are inseparable. 
• The interaction with the service provider may have an important impact on the customers perception of the service outcome. Services cannot be tried first and come with a great deal of risk.
• Heterogeneous:
• Heterogeneity: As it refers to the differences between the marketing products and services, the delivery of services is more variable. 
• Marketers can use this variability to their advantage. 
• "An inferior service can't be recalled; by the time the firm recognizes a problem, the damage has been done."
• Perishable:
• Perishable: A characteristic of a service: it cannot be stored for use in the future.
• As long as the demand for the supply of the service match closely, there is no problem, but unfortunately, this perfect matching rarely occurs. 

II. Providing Great Service: The Gaps Model

Service Gap: Results when a service fails to meet the expectations that customers have about how it should be delivered.

• Knowledge Gap: A type of service gap; reflects the difference between customers' expectations and the firms' perception of those expectations. Firms can close this gap by determining what customers want by doing research using marketing metrics such as service quality and the zone of tolerance.
• Understanding Customer Expectations: Customers' expectations are based on their knowledge and experiences. Expectations vary according to the type of service. Peoples expectations also vary depending on the situation.
• Evaluating Service Quality using Well-Established Marketing Metrics:
• Service Quality: Customers perceptions of how well a service meets or exceeds their expectations. 
• Building Blocks of Service Quality:
• Reliability: the ability to perform the service dependably and accurately.
• Responsiveness: The willingness to help customers and provide prompt service.
• Assurance: The knowledge of and courtesy by employees and their ability to convey trust and confidence.
• Empathy: The caring, individualized attention provided to customers.
• Tangibles: The appearance of physical facilities, equipment, personnel, and communication material. 
• Voice-of-Customer (VOC) Program: An ongoing marketing research system that collects customer inputs and integrates them into managerial decisions. 
• Zone of Tolerance: The area between customers' expectation regarding their desired service and the minimum level of acceptable service -- That is, the difference between what the customer really wants and what he or she will accept before going elsewhere.

• Standards Gap:pertains to the difference between the firms' perceptions of the customers' expectations and the service standards it sets. By setting appropriate service standards, training employees to meet or exceed those standards, and measuring service performance, firms can attempt to close the gap. 
• Service Providers generally want to do a good job as long as they know what is expected of them. The employees must be thoroughly trained not only to complete their specific tasks but also how to treat guests, and managers need to set an example of high service standards, which will permeate through the entire organization. In extreme cases, such training becomes even more crucial. 

• Delivery Gap: The difference between the firm's service standards and the actual service it provides. This gap can be closed by getting employees to meet or exceed service standards when the service is being delivered by empowering service providers, providing support and incentives, and using technology where appropriate. 
• Methods to Reduce Delivery Gaps:
• Empower Employees
• Empowerment: In context of service delivery, means allowing employees to make decisions about how service is provided to customers.
• Provide Support and Incentives
• Emotional Support: Concern for others' well-being and support of their decision in a job setting.
• Instrumental Support: Providing the equipment or systems needed to perform a task in a job setting.
• Plus, the support that managers provide must be consistent and coherent throughout the organization. 
• Finally, Provide rewards to employees for their excellent service abilities. 
• Use of Technology
• Technology has become an increasingly important factor in the delivery of services. Technological advances that help close the delivery gap are expanding.
• But, they can also create problems. Some people do not support replacing human interaction with  machines or have problems using technology. 

• Communication Gap: refers to the difference between the actual service provided to customers and the service that the firm's promotion program promises. If firms are more realistic about the services they can provide and at the same time manage customer expectations effectively, they generally can close this gap. 
• The communications gap can be reduced by managing customer expectations and by promising only what you can deliver, or possibly even a little less. A relatively easy way to manage customer expectations is to coordinate how the expectation is created and the way the service is provided. 
• Service Quality and Customer Satisfaction and Loyalty: Good service leads to satisfied and loyal customers. Assuming that none of the service gaps discussed earlier occur, or are not too wide, customers should be more or less satisfied. 

III. Service Recovery

• Listening to the Customers and Involving them in the Service Recovery
• Customers can become very emotional about a service failure, whether the failure is serious, or minor. When the customer and company work together, the outcome is often better than either could achieve on their own. 
• Finding a fair Solution
• Distributive Fairness: Pertains to a customer's perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure. 
• Procedural Fairness: Refers to the customers perception of the fairness of the process used to resolve complaints about service. 
• Resolving Problems Quickly
• The longer it takes to resolve a service failure, the more irritated the customer will become and the more people he or she is likely to tell about the problem.