Managing Services

Professor Chip Besio Cox School of Business Southern Methodist University

SERVICES GET REAL!

Services are now a larger part of the U.S. gross domestic product (GDP)

THE UNIQENESS OF SERVICES

THE FOUR IS OF SERVICES

Four Is of Services
Intangibility Cannot perceive with 5 senses Inseparability cannot separate from provider Inconsistency can vary with each occasion Inventory in people based services, inventory goes home each night
The result - Idle Production Capacity

Singapore Airlines, American Express, and Allstate

What 4 Is of services element?

Inventory carrying costs of services depend on the cost of employees and equipment

THE UNIQENESS OF SERVICES

THE CONTINUUM & CLASSIFICATION OF SERVICES

Service Continuum Classifying Services

Delivery by People or Equipment Profit or Nonprofit Organizations

Government Sponsored

The service continuum shows how offerings can vary in their balance of goods and services

Services can be classified as equipmentbased or people-based

Red Cross, Unicef, and Susan G. Komen Race for the Cure
What is the classification of each service?

HOW CONSUMERS PURCHASE SERVICES

The Purchase Process

Search Properties

Experience Properties

Credence Properties

Consumers use search, experience, and credence properties to evaluate services

The five dimensions of service quality

HOW CONSUMERS PURCHASE SERVICES

Customer Contact and Relationship Management

Service Encounters Customer Contact Audit A Customers Car Rental Activities Relationship Marketing

Customer contact audit for a car rental agency (green boxes = customer activity; orange boxes = employee activity)

MANAGING THE MARKETING OF SERVICES

THE EIGHT Ps OF SERVICES

Eight Ps of Services Marketing

Product (Service)
Branding

Price
Off-Peak Pricing

MANAGING THE MARKETING OF SERVICES

THE EIGHT Ps OF SERVICES

Place (Distribution)

Promotion

Publicity

Public Service Announcements (PSAs)

MANAGING THE MARKETING OF SERVICES

People
Internal Marketing Customer Experience Management (CEM)

Physical Environment Process Productivity

Capacity Management

Different prices and packages help match demand to capacity

MANAGING THE MARKETING OF SERVICES -PRICING

Price plays two essential roles regarding

the pricing of services: 1. To affect consumer perceptions and 2. To be used in capacity management.

Off-peak pricing consists of charging different prices during different times of the day or days of the week to reflect variations in demand for the service.

MANAGING THE MARKETING OF SERVICES -PLACE

Place

or distribution is a major factor in developing a service marketing strategy because of the inseparability of services from the producer. As competition grows, the value of convenient location becomes more important. The availability of electronic distribution through the World Wide Web now provides global coverage for travel services, banking, entertainment, and many other informationbased services.

MANAGING THE MARKETING OF SERVICES -PROMOTION

In

most cases promotional concerns of services are similar to those of products. value of promotion (advertising) is to stress: Heart by-pass availability Surgery 20% discount for location weekend consistent quality procedures and efficient, courteous service

The

MANAGING THE MARKETING OF SERVICES -PROMOTION

PROFESSIONAL SERVICES A Supreme Court case in 1976 struck down constraints by professional organizations to constrain the advertising of professional services, specifically the American Medical Association and the American Bar Association. Although opposition to advertising still remains in some professional groups, the barriers to promotion are being broken down, mostly in response to competitive pressures.

MANAGING THE MARKETING OF SERVICES -PROMOTION

Publicity

has played a major role in the promotional strategies of nonprofit services and some professional services. Many nonprofit groups have relied on Public Service Announcements (PSAs) as the foundation of their media plan because they are free.

LO6

USING MARKETING DASHBOARDS

Are JetBlues Flights Profitably Loaded?

Airline Operating Income (Loss) per Available Seat Flown One Mile (ASM)

Operating Income (Loss) = Yield Load Factor Operating Expense Flown ASM

SERVICES IN THE FUTURE

Technological Advances
Mobility
Convergence

Personalization
Collaboration

Expanding Global Economy