MARKETING MANAGEMENT

13
Designing and
Managing
Services

Kotler

Keller

Chapter Questions
What are the characteristics of products and how
can they be classified?
How can companies differentiate products?
How can a company build and manage its
product mix and product lines?
How can companies combine products to create
strong co-brands or ingredient brands?
How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?
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IBM has moved

from a goods
business to a
service business

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Service

Any act of performance that one

party can offer another that is
essentially intangible and does not
result in the ownership of anything;
its production may or may not
be tied to a physical product.

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Service Sectors are everywhere

Government

Private
nonprofit

Business

Retail
Manufacturing
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General Motors OnStar Service

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Categories of Service Mix

Pure
Pure tangible
tangible good
good (ex.
(ex. soap,
soap, toothpaste,
toothpaste, salt)
salt)
Good
Good w/
w/ accompanying
accompanying services
services
((car,
car, computer,
computer, cell
cell phone
phone warranty
warranty))

Hybrid
Hybrid

(( restaurant
restaurant food
food and
and service
service ))

Service
Service w/
w/ accompanying
accompanying goods
goods (airline
(airline
passenger
passenger onboard
onboard snacks
snacks and
and drinks
drinks ))

Pure
Pure service
service (psychotherapy
(psychotherapy and
and message
message ))
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Service Distinctions
Equipment-based or people-based
Service processes (Ex. Restaurant- cafeteria style , fast
food , buffet, candle light service format)

Clients presence required (ex-brain surgery) or

not (ex- Car repair)
Personal needs (personal service) or
business needs (business services)
Objectives (profit or non profit) and
ownership (private or public)
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Figure 13.1 Continuum of Evaluation for

Different Types of Products

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Distinctive Characteristics of Services

Intangibility
Inseparability
Variability
Perishability
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For tangible the intangible :

Physical

Evidence and Presentation

Place
People
Equipment
Communication material
Symbols
Price
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Mayo Clinics Tangible Cues

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Variability : How to Increase Quality

Control

Invest in good hiring and training procedures

Standardize the service-performance process.
Fig.13.3

Monitor customer satisfaction

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Perishability:

Matching Demand and Supply

Demand side
Differential pricing
Nonpeak demand
Complementary
services
Reservation
systems

Supply side
Part-time employees
Peak-time efficiency
Increased consumer
participation
Shared services
Facilities for future
expansion

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Figure 13.2 A ServicePerformance Process Map

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Marketing strategies for service

firms:
A shifting customer relationship
Profit tiers
Customer empowerment
Coproduction

Holistic Marketing for services

(Fig-13.5)

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Consumer-Friendly Services

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Figure 13.3 Holistic Marketing for

Services

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Table 13.1 Factors Leading to

Customer Switching Behavior

Pricing
Inconvenience
Core Service Failure
Service Encounter Failures
Response to Service Failure
Competition
Ethical Problems
Involuntary Switching
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Figure 13.4 Service-Quality Model

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Gaps that Cause Unsuccessful

Service Delivery
Gap between consumer expectation and
management perception
Gap between management perception and
service-quality specifications
Gap between service-quality specifications
and service delivery
Gap between service delivery and external
communications
Gap between perceived service and
expected service
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Determinants of Service Quality

Reliability
Responsiveness
Assurance
Empathy
Tangibles
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Best Practices
Strategic Concept
Top-Management
Commitment
High Standards
Self-Service
Technologies
Monitoring Systems
Satisfying Customer
Complaints
Satisfying Employees
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Figure 13.5 Tracking Customer

Service Performance

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Table 13.3 Customer Importance and

Performance Ratings for an Auto Dealership

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Figure 13.6
Importance-Performance Analysis

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Developing Brand Strategies for

Services
Choosing
Brand Elements
Establishing Image
Dimensions
Devising Branding
Strategy

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Customer Worries
Failure frequency
Downtime
Out-of-pocket costs

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Marketing Debate
Is Service Marketing Different
From Product Marketing?
Take a position:
1. Product and service marketing are
fundamentally different.
2. Product and service marketing are highly
related.
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Marketing Discussion
Colleges and universities can be
classified as service organizations.
How can you apply the marketing
principles developed in this chapter
to your school? Do you have any
advice as to how it could become
a better service marketer?
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