Pure Tangible Good

Tangible Good with Services

Hybrid

With Goods

Major Pure Service Service

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A service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Services are economic activities that create value and provide benefits for customers at specific times and places, as a result of bringing about a desired change in or on behalf of the recipient of the service.

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Offer

Delivery

Image
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Types of Service
Private Service (e.g. warehousing and distribution firms, banks)

Public Service (e.g. police, state-run hospitals)

consumer Service (e.g. household insurance policy provider, retailer) Industrial Service (e.g., IT and software agency). Services can be people-based (e.g. consultancies, education) Equipment-bound (e.g. vending machines, bank cash dispensers or ATM).

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Transportation & Public Utilities Communication Tele Services, TV/Radio, courier, electric, gas etc Finance, Insurance & Real Estate Hospitality, Business/ Consultancy services Legal, Healthcare & Education services Central/State Govt. & other NGO services

Intangibility Services cannot be seen, tasted, felt, heard, or smelled before purchase Services Variability Quality of services depends on who provides them and when, where, and how

Inseparability Services cannot be separated from their providers

Perishability Services cannot be stored for later sale or use

Lack of Ownership
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Intangibility Use cues to make it tangible Variability Standardize service production & delivery Services

Inseparability Increase productivity of providers

Perishability Match supply and demand

Lack of Ownership

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Company

Internal marketing

External marketing

Cleaning/ maintenance services

Financial/ banking Restaurant industry services

Employees
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Interactive marketing

Customers
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A company makes promises to its customers regarding what they can expect and how it will be delivered. Traditional marketing activities: advertising, sales, special promotions etc. For services, some other factors like the service employees, the design and dcor of the facility, the service process etc. also helps to set customer expectations. Tendency to overpromise also leads to shaky beginning of the customer relationship

Promises made must be kept The most critical from customer point of view Also delivered through technology Interactive marketing occurs in the moment of truth when the customer interacts with the organisation and the service is produced and consumed. Reliability of services is tested every time the customer interacts with the organisation.

In order to deliver the promises made, the providers or service systems must have the skills, abilities, tools, and motivation to deliver. It also indicates that employee satisfaction and customer satisfaction are closely interlinked.

Creates a sense of involvement at all levels Underscores the importance of linkages between service promisers and providers

Creates synergy between functional areas and allows employees to an interactive mindset
Sensitizes employees to management vision Enables employees to appreciate marketing and competitive realities.

All three sides are essential to complete the whole and are critical for the success. Without one of the sides in place, the triangle, or the total marketing efforts, cannot be optimally supported.

McKinsey 7S Framework 4/12/2012 14-16

Word-of-mouth communications Consumer

Personal needs Expected service

Past experience

Gap 5

Perceived service Service delivery (including pre- and post-contacts) External communications to consumers

Gap 1 Marketer

Gap 4

Gap 3 Translation of perceptions to service-quality specifications Gap 2 Management perceptions of consumer expectations

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The central focus of the gaps model is the customer gap, the difference between customer expectations and perceptions. Expectations are the reference points customers have coming in to a service experience, Perceptions reflect the service as actually received

The firms will like to close this gap between what is expected and what is received

to satisfy their customers and to build long term relationships with them.

To close this all-important customer gap, the model suggests that four other gaps the provider gaps need to be closed.

The provider gaps are the underlying causes behind the customer gap:

Gap 1: Not knowing what customers expect Gap 2: Not selecting the right service designs and standards Gap 3: Not delivering to service standards Gap 4: Not matching performance to promises.

Gap 1: Not knowing what customers expect

A primary cause in many firms for not meeting customers expectations is that the firm lacks accurate understanding of exactly what those expectations are. A gap exist between company perceptions of customers expectations and what customers actually expect. We will try to explore why this gap occurs and develop strategies for closing it.

Gap 2: Not selecting the right service designs and standards

Even if a firm does have a clear understanding of its customers expectations, there still have problems if that understanding is not translated into customer-driven service designs and standards

Gap 3: Not delivering to service standards

Once service designs and standards are in place, the firm is on its way to delivering high-quality services. But this is not enough. There must be systems, processes, and people in place to ensure that service delivery actually matches (or is even better than) the designs and standards in place.

Gap 4: Not matching performance to promises.

Finally with everything in place to effectively meet or exceed customer expectations, the firm must ensure that what is promised to customers matches what is delivered.

The gaps model says that a service marketer must first close the customer gap. To do so, the provider must close the four provider gaps, or discrepancies within the organization that inhibit delivery of quality service.

The gaps model focuses on strategies and processes that firms can employ to drive service excellence.

CUSTOMER GAP
Expected Service

Customer Gap

The figure corresponds to two concepts CUSTOMER EXPECTATIONS and CUSTOMER PERCEPTIONS

Perceived Service

It plays a major role in services marketing.

Customer Perceptions are subjective assessments of actual service experiences. Customer Expectations are the standard of or reference points for performance against which service experiences are compared and are often formulated in terms of what a customer believes should or will happen.

The sources of customer expectations consist of

Marketer-controlled factors (price, advertising, sales promises etc.) and Factors which marketer has limited ability to affect (word-of-mouth communication, competitive offerings etc)

The goal of services marketing is to bridge this gap.

Consumer problem: Time shortage The Solution: Services

Changing family structure and job profile, dual career couple, single, atomic family etc. are realising consumer burning need: TIME. The antidote to time shortage? New Services/Innovative features: Wedding consultants & arrangement, executive meeting organizer, presentation preparation, home delivery (retailer, banks, etc.). Extending working hours to suit consumer schedules Outsourcing various services

Primary objective of producers and marketers is identical: to develop and provide offerings that satisfy consumer needs and expectations. Other words, marketers need to be able to close the customer gap. Therefore it is also important to understand consumer evaluation process/ decision process for selection of a service

Categories of properties of consumer products:

Search qualities: attributes that can be determined before purchasing of a product. Ex. Clothing, Jewelry, Furniture, Houses etc. Experience qualities: attributes that can be identified after purchase or during purchase. Meals, Vacation, Hair Cut etc. Credence qualities: characteristics that consumer may find difficult/impossible to evaluate even after purchase and consumption. Difficult to evaluate Ex. Medical Diagnosis
Easy to evaluate

Normally the decision process for goods purchase:

1. 2. 3. 4. 5.

Need Recognition Information search Evaluation of alternatives Purchase Purchase outcome or feedback

 1.

In purchase of services - Three phases: Consumer Choice

2.

Need recognition Information Search Evaluation of alternatives Purchase

3.

Consumer Experience Post Experience Evaluation

Need Recognition

Various ways to identify needs

Maslows hierarchy Physiological needs: shelter, protection, and security Social needs: affection, friendship and acceptance Ego Needs prestige, success, accomplishment, and self-esteem Self Actualization self-fulfillment and enriching experiences

Use of Personal Sources

Friends, experts etc.

Mass or selective media

Use of Non-personal Sources

Non-personal sources may not be available if small, local vendors Perceived Risk

Some degree of risk perceived in all transactions Dissatisfied customers may not or rarely come back if alternatives are available They use the strategies to reduce the perceived risk.

Evoked Set

Set of alternatives - acceptable options in a given product category Smaller set as two brands of services are rarely provided in a single institution (bank, dry cleaner, hair salon etc.) Faced with the task of collecting & evaluation experience qualities, consumer may select the first one. It influence people (customers) perceptions and evaluations of their experiences.

Emotion & Mood

Service Provision as Drama

Both aim to create and maintain a desirable impression before an audience and required to manage the actors and the physical setting of their behaviour. Each player (both employees & customers) having a role to perform Employees need to perform their role as per the expectations of customers Customers are to be informed and educated about the expectations and requirements of service.

Service Roles & Scripts

Compatibility of Customers

Role of other customers (Restaurants, dances, bars, spectator sports, movie hall etc.) Customers can be incompatible due to many reasons: difference in beliefs, values, experiences, abilities to pay, age, health etc.

Attribution of Dissatisfaction

May attribute to different sources, producers, retailers, or themselves Customers own decision making error Rate of diffusion depends on consumer perception of innovation Compatible to existing norms, values, and behaviours more easily diffuse Ex. Novel Day Care Center: providing breakfast to the employees children Committed to particular brands depends on many factor: switching cost, availability of substitutes, perceived risk, degree of satisfaction in the past

Innovation Diffusion

Brand Loyalty

ROLE OF CULTURE: Values, attitudes, manners,

customs etc

Reliability Responsiveness

Assurance
Empathy Tangibles
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Strategic Concept Top-Management Commitment High Standards Monitoring Systems Satisfying Customer Complaints Satisfying Employees & Customers Managing Productivity

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