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C hapter 2 F undamental D ifferences B etween G oods and S ervices

C hapter 2 F undamental D ifferences B etween G oods and S ervices. INTANGIBILITY: ASSOCIATED PROBLEMS. Lack the ability to be stored Not protected by patents Not easily displayed or communicated Pricing is difficult. INTANGIBILITY: SUGGESTED SOLUTIONS.

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C hapter 2 F undamental D ifferences B etween G oods and S ervices

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  1. Chapter 2Fundamental Differences Between Goods and Services

  2. INTANGIBILITY: ASSOCIATED PROBLEMS • Lack the ability to be stored • Not protected by patents • Not easily displayed or communicated • Pricing is difficult

  3. INTANGIBILITY:SUGGESTED SOLUTIONS • Use tangible clues/physical evidence • Utilize personal sources of information • Create a strong organizational image

  4. INSEPERABILITY:ASSOCIATED PROBLEMS • Service provider is involved in the production process • Other customers are involved in the production process (shared experience) • The mass production of services presents special challenges

  5. INSEPARABILITY:ASSOCIATED PROBLMES • Customer is involved in the production process: • impact on the type of service desired • length of the delivery process • cycle of service demand • service factory must be built with the customer’s presence in mind

  6. INSEPARABILITY:SUGGESTED SOLUTIONS • Focus on the training and selection of public contact personnel • Develop strategies to manage consumers • Develop multi-site locations

  7. HETEROGENEITY:ASSOCIATED PROBLEMS • Standardization and quality control are difficult to achieve

  8. HETEROGENEITY:SUGGESTED SOLUTIONS • Customization • Constructed to fit customer’s exact needs • Increased profit potential • Standardization • Faster • Less expensive • More consistent

  9. PERISHABILITY:ASSOCIATED PROBLEMS • Services cannot be inventoried • Production and consumption cannot be separated by time and space • Statistical sampling techniques cannot be used • Marketing and production must work together

  10. DEMAND AND SUPPLY SCENARIOS • Demand exceeds maximum available supply • Demand exceeds optimum supply level • Demand is below optimal levels of supply • Demand and supply are at optimal levels

  11. STRATEGIES FOR ALTERING DEMAND AND SUPPLY DEMAND STRATEGIES: • Creative pricing strategies • Reservation systems • Complementary services • Developing nonpeak demand • utilizing nonpeak periods to prepare for peak periods • appeal to different market segments with different demand patterns

  12. STRATEGIES FOR ALTERING DEMAND AND SUPPLY SUPPLY STRATEGIES: • Utilize part-time employees • Share capacity • Prepare in advance for expansion • Utilize third-parties

  13. STRATEGIES FOR ALTERING DEMAND AND SUPPLY SUPPLY STRATEGIES: • Increase customer participation • Advantages: • convenience • price • customization • Disadvantages: • loss of control over service quality • may be perceived as an attempt to distance form from customer

  14. THE ROLE OF MARKETING IN A SERVICE FIRM • Different functions are interwoven • Marketing must maintain closer relationships with other departments • Marketing, operations, and human resources should work together.

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