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Designing and Managing Services

Designing and Managing Services

A service is any act or performance one party can offer to 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. Service industries are everywhere
Categories of Service Mix

The service component can be a major or minor part of the total offering. Five categories of offerings are:

1. Pure tangible good - a tangible good such as toothpaste, with no accompanying services.
2. Tangible good with accompanying services - a tangible good, like a cell phone, accompanied by one or more services.
3. Hybrid - an offering, like a restaurant meal, of equal parts goods and services.
4. Major service with accompanying minor goods and services - a major service, like air travel with additional services or supporting goods such as drinks.
5. Pure service - primarily an intangible service, such as babysitting or psychotherapy.

Distinctive Characteristics of Services

Four distinctive service characteristics greatly affect the design of marketing programs:
Intangibility - Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought.

Inseparability - Services are typically produced and consumed simultaneously.
Variability - Services are highly variable because the quality depends on who provides them, when and where, and to whom.

Perishability - Services cannot be stored, so their perishability can be a problem when demand fluctuates.
The New Services Realities
A Shifting Customer Relationships

Savvy services marketers must recognize three new services realities: the newly empowered customer, customer coproduction, and the need to engage employees as well as customers.

Customer Empowerment - customers are more sophisticated about buying support services and are pressing for "unbundled services" so they can select the elements they want.

Customer Coproduction - the reality is that customers do not merely purchase and use a service: they play an active role in its delivery. Their words and actions affect the quality of their service experiences and those of others, and the productivity of frontline employees.

Satisfying Employees as Well as Customers - Excellent service companies know that positive employee attitudes will promote stronger customer loyalty. Employees thrive in customer-contact positions when they have an internal drive to (1) pamper customers, (2) accurately read customer needs, (3) develop a personal relationship with customers, and (4) deliver quality service to solve customers' problems.