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MARK Chapter 13 Notes

by: Kyla Brinkley

MARK Chapter 13 Notes MARK 3001

Marketplace > University of Georgia > Marketing > MARK 3001 > MARK Chapter 13 Notes
Kyla Brinkley
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Notes for chapter 13 in the book with a review of important concepts at the end!
Principles of Marketing
Kimberly Grantham
Class Notes
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This 8 page Class Notes was uploaded by Kyla Brinkley on Tuesday November 17, 2015. The Class Notes belongs to MARK 3001 at University of Georgia taught by Kimberly Grantham in Summer 2015. Since its upload, it has received 66 views. For similar materials see Principles of Marketing in Marketing at University of Georgia.


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Date Created: 11/17/15
Kyla Brinkley MARK 3001 Notes Fall 2015 I. Chapter 13: Services a. The intangible product b. Service: any intangible offering that involves a deed, performance, or effort that can’t be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer c. Customer service: specifically refers to human or mechanical activities firms undertake to help satisfy their customers’ needs and wants d. Firms add value to their products by providing good customer service e. Service-product continuum from service-dominant to product- dominant i. Doctor ii. Hotel iii. Dry cleaners iv. Restaurant v. Apparel specialty store vi. Grocery store f. Most offerings are a mixture of service and product-dominant g. Many stores view service as a method to maintain a sustainable competitive advantage h. Services account for 76% of the US gross domestic product i. Growing dependence/growth of service-oriented economies because: i. Less expensive for firms in developed countries to manufacture products in less developed countries 1. Proportion of service to production goods has increased ii. People place high value on convenience and leisure 1. Household maintenance like lawn maintenance, hair care, pet grooming performed by specialists iii. People are demanding more specialized services 1. Plumbers, personal trainers, health care providers, etc. j. Services Marketing Differs from Product Marketing i. Intangible: a characteristic of a service: it cannot be touched, tasted, or seen like a pure product can 1. Hard to convey the benefits of services 2. Service providers offer cues to help customers experience/perceive their service more positively a. Ex: comfortable waiting rooms 3. Difficult to promote a. Marketers must creatively employ symbols and images b. Images must reinforce the benefit or value that a service provides 4. Professional service providers like doctors, lawyers, accountants, and consultants depend heavily on consumers’ perceptions of their integrity and trustworthiness but they also need to market their offerings using promotional campaigns a. Too far? Aggressive commercials for attorneys b. American Bar Association (ABA) has drafted a set of rules that its members must abide by when advertising, such as banning pop-up ads or actors when advertising law services c. Ethical dilemma—challenge of advertising law services ii. Inseparable Production and Consumption 1. Services are produced and consumed at the same time 2. Inseparable: a characteristic of a service: it is produced and consumed at the same time; service and consumption are inseparable 3. Interaction with the service provider can have an important impact on the customer’s perception of the service outcome a. Does the hairstyle seem to be having fun? 4. Customers rarely have the opportunity to try the service before purchasing it a. Some service firms provide extended warranties or 100% satisfaction guarantees iii. Heterogeneous 1. Heterogeneity: as it refers to the differences between the marketing of products and services, the delivery of services is more variable 2. if a customer has a problem with a service it can’t be recalled, unlike with a product 3. by the time the firm recognizes the problem, damage has been done 4. but, marketers can use the variable nature of services to their advantage: a micromarketing segmentation strategy can customize a service to meet customer’s needs exactly 5. some service providers tackle the variability issue by replacing people with machines a. atm is faster than going in the bank b. kiosks in retail stores to shop online or find merchandise iv. Perishable: a characteristic of a service: it cannot be stored for use in the future 1. Provides challenges and opportunities in the task of matching demand and supply 2. Ex: movie theaters are cheaper for matinee since they aren’t busy at that time (not in demand) k. Providing Great Service: The GAPS Model i. Service gap: results when a service fails to meet the expectations that customers have about how it should be delivered ii. The Service Gaps Model is designed to encourage the systematic examination of all aspects of the service delivery process and prescribes the steps needed to develop an optimal service strategy iii. 4 service gaps 1. Knowledge gap: reflects the difference between customer’s expectations and the firm’s perception of those expectations a. Firms can close this gap by researching what customers really want using marketing metrics like service quality/zone of tolerance 2. Standards gap: pertains to the difference between the firm’s perceptions of customers’ expectations and the service standards it sets a. By setting appropriate service standards, training employees to meet and exceed those standards, and measuring service performance, firms can try to close this gap 3. Delivery gap: the difference between the firm’s service standards and the actual service it provides to customers a. Can be closed by getting employees to meet or exceed service standards when the serviced is being delivered by empowering service providers, providing support and incentives, and using technology where appropriate 4. Communication gap: the difference between the actual service provided to customers and the service that the firm’s promotion program promises a. Firms can close this gap by being more realistic about the services they can provide and managing customer expectations effectively iv. The Knowledge Gap: Understanding Customer Expectations 1. Knowing what the customer wants is important to providing good service 2. To reduce the knowledge gap firms must understand customers’ expectations by undertaking customer research and increasing interaction/communication between managers & employees 3. Customers’ expectations are based on their knowledge and experiences 4. Expectations vary according to the type of service and the situation 5. Service provider must know and understand the expectations and service usage of the customers in its target market 6. Evaluating Service Quality Using Well-Established Marketing Metrics a. To meet or exceed customer’s expectations, marketers must determine what those expectations are b. Service quality: customer’s perceptions of how well a service meets or exceeds their expectations i. Hard for customer to evaluate because service is intangible c. Customers use 5 building blocks of service quality i. Reliability: the ability to perform the service dependently and accurately ii. Responsiveness: the willingness to help customers and provide prompt service iii. Assurance: the knowledge of and courtesy by employees and their ability to convey trust and confidence iv. Empathy: the caring, individualized attention provided to customers v. Tangibles: the appearance of physical facilities, equipment, personnel, and communication materials d. Market research provides a means to better understand consumers’ service expectations and their perceptions of service quality i. Can be extensive/expensive or integrated into firm’s everyday interactions with customers e. Voice-of-customer (VOC) program: an ongoing marketing research system that collects customer inputs and integrates them into managerial decisions i. Used by most service firms today l. Service Recovery i. Despite a firm’s best efforts, sometimes service providers fail to meet customer expectations 1. When this happens it is best to try to make amends with the customer and learn from the experience 2. Best to avoid a service failure altogether but when it does, creates opportunity for firm to demonstrate its customer commitment ii. Effective service recovery efforts can increase customer satisfaction, purchase intentions, and positive word of mouth iii. Social media provides an enormous stage on which to share dissatisfaction 1. Ex: yelp iv. Effective service recovery demands: 1. Listening to the customers and involving them in the service recovery 2. Providing a fair solution 3. Resolving the problem quickly v. Listening to the Customers and Involving them in the Service Recovery 1. Firms often don’t find out about service failures until a customer complains 2. Customer must have opportunity to air complaint completely and firm must listen carefully 3. In many cases, the customer may just want to be heard so it’s important for firm to show sympathy by listening carefully and being anxious to rectify the situation to ensure it doesn’t happen again 4. When the company and customer work together the outcome is often better than either could achieve on their own 5. When customers participate in resolution, it results in a more positive outcome than just listening and providing a preapproved set of potential solutions that may satisfy them vi. Finding a Fair Solution 1. When mistakes happen customers want to be treated fairly 2. Distributive Fairness: pertains to a customer’s perception of the benefits he or she received compared with the costs (inconvenience or loss) that resulted from a service failure a. Customers want to be compensated a fair amount for their perceived loss b. The key is listening to customer c. Customers usually want tangible restitution, not just an apology i. If this isn’t possible, next best thing it to assure customer that steps are being taken to prevent the failure from recurring 3. Procedural Fairness: refers to the customer’s perception of the fairness of the process used to resolve complaints about service a. Customers want efficient complaint procedures over whose outcomes they have some influence b. Customers tend to believe they have been treated fairly if the service providers follow specific company guidelines c. But rigid adherence to rules can have negative effects d. Service providers should have some procedural flexibility to solve customer complaints vii. Resolving Problems Quickly 1. The longer it takes to solve a service failure, the more irritated the customer will get and more likely it is they will share their negative opinion 2. To resolve service failures quickly, firms need clear policies, adequate training for their employees, and empowered employees 3. Social media helps for faster responses FOR REVIEW: Services are: -Intangible -Inseparable -Heterogeneous -Perishable Service Gaps 1. Knowledge gap 2. Standards gap 3. Delivery gap 4. Communication gap


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