Chapter 12

Designing and Managing

Services
PowerPoint by Karen E. James
Louisiana State University - Shreveport
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 1 in

Objectives
Learn how services are defined and
classified.
Understand how service firms improve
their competitive differentiation,
service quality, and productivity.
Identify how goods-producing
companies can improve their customer
support services.
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 2 in

Nature of Services
The Service Industry includes the:
Government sector
Private nonprofit sector
Business sector
Manufacturing sector

2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 3 in

Nature of Services
Service Mix Categories:
Pure tangible good: no services
Tangible good with accompanying
services
Hybrid: equal parts service and goods
Major service with accompanying minor
goods and services
Pure service
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 4 in

Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
2003 Prentice Hall, Inc.

Cannot be touched,
seen, tasted, heard, or
smelled before purchase
Lack of trial means
higher consumer risk
Consumers rely on cues
to draw quality
inferences
Marketers must try to
tangibilize the
intangible

To accompany A Framework for

Slide 5 in

Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
2003 Prentice Hall, Inc.

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

To accompany A Framework for

Slide 6 in

Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
2003 Prentice Hall, Inc.

Service providers vary

with respect to attitudes,
skills, mood, etc. Even
the same provider may
give different service on
a different day.
Quality control is critical:
Hiring the right people
Standardizing service
Monitoring satisfaction

To accompany A Framework for

Slide 7 in

Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
2003 Prentice Hall, Inc.

Services can not be

inventoried or
otherwise stored
Capacity / demand
management is
critical:
Demand side
strategies
Supply side strategies

To accompany A Framework for

Slide 8 in

Nature of Services
Demand-side
strategies
Use differential
pricing
Cultivate nonpeak
demand
Develop
complementary
services
Install reservation
systems
2003 Prentice Hall, Inc.

Supply-side
strategies
Hire part-time
employees
Introduce peak-time
efficiency routines
Increase consumer
participation
Plan facilities for
future expansion
Share services

To accompany A Framework for

Slide 9 in

Marketing Strategies
People, physical evidence, and
process must be considered in
addition to the 4 Ps when creating
external marketing plans.
Successfully delivering a service
often depends on staff being trained
via internal marketing efforts.
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 10 in

Marketing Strategies
Interactive marketing refers to the
employees skill in serving the client.
Customers judge a service by its:
Technical quality
Functional quality

Search qualities, experience qualities

and credence qualities are evaluated
by customers.
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 11 in

Marketing Strategies
Marketing Tasks
Managing
differentiation
Managing service
quality
Managing
productivity
2003 Prentice Hall, Inc.

Can not differentiate

on price alone
Innovative features
Delivery system
Reliability
Resilience
Innovativeness

Image and branding

To accompany A Framework for

Slide 12 in

Marketing Strategies
Marketing Tasks
Managing
differentiation
Managing service
quality
Managing
productivity
2003 Prentice Hall, Inc.

The service quality

model identifies
five gaps that can
cause service
delivery failure
Service companies
that successfully
address these gaps
follow common
practices

To accompany A Framework for

Slide 13 in

Marketing Strategies
Service Delivery Failure Results
from Gaps Between:
Consumer expectations and
management perceptions

Service-quality specifications
and service delivery

Management perception and Service delivery and external

service-quality specification
communications
Service-quality specifications and service delivery

2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 14 in

Marketing Strategies
Well-Managed Service Firms
Share These Characteristics
A strategic concept

High standards

Commitment from
Firm and customer
top-management
monitoring systems
Satisfaction of employees
and customers
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 15 in

Marketing Strategies
Marketing Tasks
Managing
differentiation
Managing service
quality
Managing
productivity
2003 Prentice Hall, Inc.

Have service providers

work more skillfully
Decrease service quality,
increase service quantity
Industrialize the service
Reduce need for service
Design a more effective
service
Give customers incentives
to serve themselves
Use technology

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Slide 16 in

Managing Product Support

Services
Product support services are often
sources of competitive advantage
When designing service support
programs, marketers must consider
key customer concerns:
Failure frequency
Downtime duration
Out-of-pocket expenses
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 17 in

Managing Product Support

Services
Marketers must design appealing
and competitive service offerings
that will attract customers. Service
offerings should include:
Facilitating services
Value-augmenting services
Optional service contracts
2003 Prentice Hall, Inc.

To accompany A Framework for

Slide 18 in