Services • Comprised of deeds, processes and performance. • They are intangible cannot be seen, touched or felt. • There must be human interaction. • Eg: A car wash center, offer the service of washing your car.
Nine categories for classifying services 1. Services and goods. • Have a mixture of tangible and intangible elements. • Tangibility and intangibility often occur when services are offered in addition to goods.
Nine categories for classifying services 2. Profit versus non profit • Non profit organizations make profit, but when going out of business, remaining assets are given to another non profit organization. • Profit organizations, when out of business its assets must be distributed to owners or shareholders.
Nine categories for classifying services 3. Markets and industries • A market is a method for buyers and sellers to exchange goods and services. • An industry is a collection of companies competing with each other.
Nine categories for classifying services 4. Internal or external services • Services can be offered internally in the firm to other departments. • Services can also be offered externally to outside the business to the market.
Nine categories for classifying services 5. Consumer, customer, client and consumer behaviour • One person can be involved in buying services or more than one person. • Customers that search for information about a product, this could depend on there buying decision. • The buying decision also depends on the specific purposes at different occasions.
Nine categories for classifying services 6. Service provider and customer relationship, customer loyalty • The relationship between service provider and customer. • Customer loyalty, repeated customers and word of mouth regarding a product, keeping the customer happy so they will give more business.
Nine categories for classifying services 7. The service providers, knowledge, skills and capacity • The capacity of the service organization and the ability to respond to changes in demand.
Nine categories for classifying services 8. The service delivery process • The process of delivering the service is different and reflects the way the service providers knowledge, skills and capacity are applied.
Nine categories for classifying services 9. The physical site of the service delivery • The place of the service delivery refers to the type of physical setting in which a service is provided to a customer.
Service marketing • Marketing based on the relationship and value and may be used to market a service or product. • The service marketing mix adds 3 extra p’s which are: • People • Process • Physical evidence
The 3 additional p’s in service marketing 1. People • Appropriate staff and people for the job and training them correctly in the delivery of their service. • Staff should have appropriate skills, attitude and knowledge to provide service customer are paying for. • Customers make judgments and perceptions of service based on employee interaction.
The 3 additional p’s in service marketing 2. Process • The systems used to help the organization in delivering the service.
The 3 additional p’s in service marketing 3. Physical evidence • Elements of the service marketing mix which allow customers to make judgments on the organization.
The macro environment • Factors that change according to countries economy or government decisions and affect its performance and strategies.
The macro environment, five factors - DRETS 1. Demographics • Land, population, ecosystem 2. Regulatory • Measures mainly taken by government institutions. 3. Economic • Gross national product- • changing income. • Steady growth of GDP offering opportunities from new companies. • Promotes growth for existing companies.
The macro environment, five factors - DRETS 4. Technological factors • Internet, mobile phones, computers, changing the way jobs are performed. 5. Social factors • More women are working. • Shorter working hours. • Health care is provided.
Franchising • Franchising is a business model in which you purchase a license of a specific business. • The Franchise Fee (Licensing fee) gives the right to open a franchise of that particular business, using trademarks, products, software etc. • Eg: Mc Donald's, Burger King
6 service trends 1. Internationalization • Advance in I.T., expanding boundaries of tradability. • As technology progresses more, this reduces communication costs and trade in services is expected to continue to expand quickly.
6 service trends 2. Rise of commercial principles • Satisfying customers based on excellent service is a must in order to get profits and shareholder value. • Firms try to be self sufficient by focusing on their core business, downsizing or mean and lean production. • Privatization refers to transfers of any government function to private sectors like government functions such as revenue and law enforces.
6 service trends 3. Focusing on core business • Core business -important ways to purse downsize or downscale which are spinning off units which management view as not belonging to core activities, specialization or outsourcing. • Outsourcing - a process of contracting out such as product design or manufacturing to a third party. • Contracting out - a process usually followed by competition, by which a government pays a private provider to deliver a service to itself such as maintenance of public buildings or to public such as collection of household waste.
6 service trends 4. Up selling in core activities • Mergers - two companies joining to become one and the shareholders become joint owners. • Cooperation - an arrangement which two or more entities connect in a joint beneficial exchange instead of competing. • Franchising - purchasing a license of a specific business which gives the right to open a franchise.
6 service trends 5. Diminishing differences • Selling products, offering after sales service is different now, you pay for service it becomes profitable. • Eg: Leasing and rental of land.
6 service trends 6. Changes in assets structure and delivery mode • Now technology can deliver your service.
Downsizing • Reducing the number of worker on the current payroll.
Customer satisfaction • Through customer satisfaction, the business can generate good profits and might expand its business. • If good customer service is offered by a business it may receive customer loyalty and new customers. • If the customer is not satisfied, they would tell other people, so providing no customer satisfaction the business could lose existing and future customers.
11 sources of customer expectations 1. Personal needs • Conditions essential to the physical or physiological well being of the customer and are desired in service. 2. Ensuring service intensifiers • Individual and stable factors that lead the customer to a high sensitivity of service.
11 sources of customer expectations 3. Transitory service intensifiers • Temporary short term individual factors that make a customer more aware of the need for service. 4. Perceived service alternatives • Provided from whom the customer can get service.
11 sources of customer expectations 5. Customers self • Perceived service, customer perceptions of the degree to which customers exert an influence on the level of service they received. 6. Situational factors • Service performance conditions, customer view as beyond the control of the service provider.
11 sources of customer expectations 7. Predicted service • The level of service customers believe they are likely to get. 8. Explicit service promises • Personal and non personal statements about the service made by the organization to the customer.
11 sources of customer expectations 9. Implicit service promises • Service related signs, leading to inferences about what the service should and will be like. 10. Word of mouth communication • Personal and non personal statements made by people other than the organization, communicate to customers what service will be like and influence predicted and preferred service.
11 sources of customer expectations 11. Past experience • The customers previous experience to service is relevant to the service to another force in forming predictions and desires.
Customer focus • Its important for a business to maintain good customer focus in order to know customer wants and needs. • Satisfying these aspects, leading to customer loyalty, important for a company to become and stay profitable.
The zone of tolerance • How far customers are willing to accept different levels of service from different or the same service provider.
Minimum tolerance expectations • Bad service due to low price. Acceptable expectations • Expecting adequate service. Experience based norms • From experience the service is mostly good. Ideal expectations • Good word of mouth, high expectations.
The GAP model • Deals with how the customer and service provider perceive customer expectations and how they can be met. • Quality is the difference between customers expectations and perceptions of the service delivered.
The GAP model Gap 1 • The difference between actual customer expectations and managers idea or perception of customer expectations. Gap 2 • Mismatch between managers expectations of service quality and service quality expectations.
The GAP model Gap 3 • Poor delivery of service quality. Gap 4 • Differences between service delivery and external communication with the customer. Gap 5 • Differences between expected and perceived quality.
Dimensions of service quality Tangibles • The appearance of physical facilities, equipment, personnel and communication materials. Reliability • Performing the promised service reliably and accurately. Responsiveness • Willingness to help and provide prompt service to customers.
Dimensions of service quality Assurance • Knowledge and courtesy of employees and their ability to inspire trust and confidence. Empathy • Caring, individual attention the firm provides to its customers.
The different types of qualities Technical • What's offered and received. Functional • How is it offered and received. Relational • Who delivers it?
Sensory threshold • How much a person can pick up information such as radio, banner etc. Absolute threshold • The minimum amount of stimulation that can be detected on a sensory channel. Differential threshold • The ability of the human brain to detect changes.
How consumers learn • Learning is a change in behaviour that is caused by experience. Learning takes place as the result of responses to external event such as: names, scents etc.
Memory • Memory involves a process of acquiring information and storing it over time so that it will be available when needed, like studying.
How consumers forget • Consumers forget information over a long period of time because it might not be important and there is no emotion such as death. • Also by replacing old information with updated information.
Motivation • The degree to which a person is willing to expand energy to reach one goal as opposed to another, reflecting their underlying motivation to attain the goal. • An internal state that activates goal oriented behaviour.
Motivation can conflict in three ways 1. Approach-approach: • A person must choose between two desirable alternatives. 2. Approach-avoidance: • Choose between a lox cost good and a high cost good. 3. Avoidance- avoidance: • Two undesirable alternatives (buying a new car or fixing old)