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Tangibility Spectrum

Salt

Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets

Intangible Dominant

Tangible Dominant

Fast-food Outlets

Advertising Agencies Airlines Investment Management Consulting

Teaching

Marketing Challenges: due to following characteristics

Intangibility Heterogeneity

Simultaneous Production Perishability and Consumption

Services are Different


Goods
Tangible

Services
Intangible

Resulting Implications
Services cannot be inventoried. Services cannot be patented. Services cannot be readily displayed or communicated. Pricing is difficult.

Standardized

Heterogeneous Service delivery and customer satisfaction depend on employee actions. Service quality depends on many uncontrollable factors. There is no sure knowledge that the service delivered matches what was planned and promoted. Simultaneous production and consumption Customers participate in and affect the transaction. Customers affect each other. Employees affect the service outcome. Decentralization may be essential. Mass production is difficult. It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.

Production separate from consumption

Nonperishable Perishable

Expanded Marketing Mix for Services


PEOPLE
Employees Customers Communicating culture and values Employee research

PHYSICAL EVIDENCE
Facility design Equipment Signage Employee dress Other tangibles

PROCESS
Flow of activities Number of steps Level of customer involvement

PRODUCTIVI TY & QUALITY No org. can offer one in isolation of another

Reducing Cost

Customer satisfaction & Loyalty

SESSION 4 & 5 Nature of Services


By Dr. Nripendra Singh Jaypee Business School, Noida Agenda
Characteristics of Services The Service Package Service Classification Classifying Services for Strategic Insights Case Study: Village Volvo

Characteristics of Services (eg. Doctors Clinic) Customer participation in the service process: cooperative or uncooperative and providing some self-care Simultaneity: round-the-clock staffing is necessary Perishability: expensive services of Specialist (doctor) are not needed full-time. Thus, it gives rise to scheduling problems. Intangibility: patients are not in a position to judge the quality of a clinic before they enter it, and usually have difficulty in changing the clinic. Heterogeneity: Every patient is an individual

Service Package
ELEMENT BUSINESS CORE SUPPORTING FACILITY FACILITATING GOODS INFORMATION Hospitality REST / SLEEP Hotel Room / Bathroom / Restaurant Bed / Bedding / Complementary Breakfast / AC EXAMPLE

Using CRM: Customer Preferences / Tariff / Tour Desk / Rooms Occupancy (software) EXPLICIT SERVICES Star rated / member of International chain of hotels / 24 Hours HELP DESK / Guaranteed Satisfaction IMPLICIT SERVICES Friendly Employee / Ambience: dcor & Music / Magnetic Key Cards / Reservation / Free Parking

Service Classification
Service Process Matrix Nature of the Service Act Relationship with Customers Customization and Judgement Nature of Demand and Supply Method of Service Delivery

The Service Process Matrix


Degree of Interaction & Customization
LOW HIGH

Degre LOW Service Factory e of Labou r Intensi ty


HIGHMass Service

Service Shop

Professional Service

The Service Process Matrix


Degree of Interaction & Customization
LOW HIGH

Degre LOW Service Factory: e of - Airlines - Trucking Labou - Hotels r - Resorts & Recreation Intensi ty
HIGHMass Service:

Service Shop: - Hospitals - Auto Repair - Other Repair Services Professional Service: Physicians Lawyers Accountants Architects

Retailing Wholesaling Schools Retail Banking

Classifying Services for Strategic Insights


Understanding the Nature of the Service Act
Direct Recipient of the Service People Nature Tangible of the Actions Service Act Intangib le Actions Things

Classifying Services for Strategic Insights


Relationships with Customers
Type of Relationship between service organisation and its customers Membership No Formal Relationship Nature Continuous of the Delivery Service Delivery Discrete transaction s

Classifying Services for Strategic Insights


Relationships with Customers
Type of Relationship between service organisation and its customers Membership No Formal Relationship Nature Continuous of the Delivery Service Delivery Discrete transaction s
Insurance Radio Station Telephone Police subscription Highways Electric utility ISD calls Toll Highway Transit Pass Pay phone Wholesale Buying Movie Theater club Restaurant Frequent Flyer

Classifying Services for Strategic Insights


Customization and Judgment in Service Delivery
Extent to which service characteristics are customized high low Customehigh r contact persone xercise judgeme low nt

Classifying Services for Strategic Insights


Customization and Judgment in Service Delivery
Extent to which service characteristics are customized high low CustomehighSurgery r contact Taxi persone Gourmet restaurant xercise judgeme low Telephone nt Hotel Retail banking Education Family restaurant Preventive health program Public transportation Movie theater Spectator sports

Classifying Services for Strategic Insights


What is the Nature of Demand for the Service Relative to Supply?
Extent of Demand Fluctuations Over Time Wide Narrow Extent to Peak which demand Supply is met Constrai without ned delay Peak demand exceeds capacity

Classifying Services for Strategic Insights


What is the Nature of Demand for the Service Relative to Supply?
Extent of Demand Fluctuations Over Time Wide Narrow Extent to Peak which demand Supply is met Constrai without ned delay Peak demand exceeds capacity Electricity Insurance Telephone Legal Services Police Emergency Dry Cleaning

Tax Preparation Hotels Passenger Transportation

Fast Food Restaurant Movie Theater Petrol Pump

Classifying Services for Strategic Insights


Method of Service Delivery
Availability of Service Outlets Single Site Multiple Site Interac Customer tion Travels to betwee Service Firm n Custo Service mer & Provider Service travels to providecustomers r Transaction at Arm's Length

Classifying Services for Strategic Insights


Method of Service Delivery
Interac Customer tion Travels to betwee Service Firm n Custo Service Pest Control mer & Provider Service Service travels to Taxi providecustomers r Transaction at Credit Card Arm's Length Local TV station Availability of Service Outlets Single Site Multiple Site Bus Service Theater Fast Food Barbershop Mail Delivery Emergency Repairs National TV Telephone

Case Study: Village Volvo


Describe Village Volvo's service package. How are the distinctive characteristics of a service firm illustrated by Village Volvo? Characterize Village Volvo in regard to the nature of the service act, the relationship with customers, customization and judgment, the nature of demand and supply, and

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