Understanding Professional Services

Professional Services  Professional services firms (e.g., law, consulting, accounting firms, advertising agencies) deliver products that are almost entirely dependent upon the quality of the employees. Unlike travel, communications, and other services, the quality of the product delivered is a combination of a number of factors-not only the people involved but the underlying technology (quality of the digital cellular connection), equipment (aircraft used), and so on. While barriers to entry are high, intangibility of the product is still a problem as is the inseparability of production and consumption, to some extent, as clients have to partici­pate in the creation of tax returns, consulting reports, and other products of professional service firms. A high overall level of technical...

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Service Design

Service Design  Because services are intangible, they are difficult to describe and, therefore, to design and redesign if a new service is desired. Perhaps the best way to understand this is to think of the design of a manufactured item. Physical goods can be blueprinted; that is, either on paper or using computer software, the physical nature of the product (width, length, circuitry design, etc.) can be described. As a result, physical product attributes can be shown, communicated, and understood easily. Service blueprinting involves creating a flowchart that describes the flow of activity from the time the customer first contacts the service provider to the time the customer receives the service. An example of a service blueprint is a blueprint for a mail delivery service. The process...

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Singapore Airlines

Singapore Airlines  The Singapore is only 25 percent of the size of the state of Rhode Island, Singapore Airlines is one of the world's ten biggest airlines, as measured in international tons-kilometers of load carried. The airline became successful by concentrating on marketing. The goal of the airline's management was to create an international airline with a distinctly Asian personality. At the top of the priority list was an emphasis on customer service. The company used the island's main natural resource-the natural hospitality of its people-as a competitive advantage. Through comfortable seating, free drinks and movie headsets, and the hospitality of its flight attendants, Singapore Airlines has set the world standard for international air travel quality. In 1991, the airline...

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Channels of Distribution

Channels of Distribution  Because services are intangible, the notion of physical distribution channels does not apply. However, the general principle of channels offering customers access to the product does. Because services are characterized by the inseparability of production and consumption, service organizations must be physically present when the service is delivered or engage others to be present.Any time the product leaves the producing company's hands and is put under the control of others, there is the potential for the independent channel member to do a less effective job of marketing the product than the producer would. This is an even greater problem with services because they are often delivered by people. Nonstandardization of services increases when the service is being...

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Franchising and Services

Franchising  Franchising is an extremely popular form of retail service distribution covering a wide variety of consumer and business-to-business services. A franchise is a contractual agree­ment between the originator of the service concept (the franchiser) and an individual or organization that provides retail distribution for the service (the franchisee). It works particularly well when the service can be standardized across disparate geographic locations. Elements of a typical franchise agreement are: the nature of the service to be supplied by the franchiser the geographic territory within which the franchisee can market the service the percentage of the revenue generated by the franchisee that must be paid to the franchiser the length of the agreement the up-front fee paid by...

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Agents and Brokers for Servies

Agents and Brokers  Many service companies use independent agents or brokers to sell their services. Well­known examples are the insurance and travel industries. There are trade-offs with using these methods for distributing any kind of product. Major advantages include a wider distribution and the fact that agents and brokers know their local markets well. Disadvantages include the loss of control, as it is very difficult to deteTj:nine what agents and brokers are doing and what they are saying about your product....

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Electronic Channels of Services

Electronic Channels  The growth of the Internet has spawned many opportunities for distributing services. Travel services (Expedia, Travelocity, Orbitz, for example) is the largest segment of the e-commerce industry with nearly $70 billion worth of services sold in 2005. The finan­cial services industry has also taken advantage of electronic channels through services such as home banking and stock brokerage. The advantage of electronic channels is their low cost and the ease of access (for those with Internet connections). For example, rather than using a large number of branch banks or automatic teller machines ("bricks and mortar"), customers of most major banks can now check their balances, move money between accounts, and pay bills using the banks' web sites. Entertainment companies,...

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Advertising

Advertising A key element of service quality evaluation is the assessment of the service rela­tive to expectations. Advertising plays an important role in setting customer expectations. Therefore, marketing managers for services must be careful not to promise what cannot be delivered. All communications targeted to customers should be examined in terms of how well they reflect reality. If you do not do this, the customer certainly will. The unique aspects of service have the following implications for advertising. First, service advertising should contain vivid information. Vivid information is more likely to hold the viewer's attention and excite the imagination. It also results in improved customer understanding of the service. Because service attributes are intangi­ble, this improved...

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Pricing

Pricing  Customers find service prices difficult to determine and compare. You cannot put physical price tags on services. The fact that services can be delivered in many different configurations makes the task even more difficult. For example, try finding out a rate on a home mortgage. The combinations of terms (5, 15, 20, 30 years), amount of down payment, points you are willing to pay (percentage ofthe loan amount paid as a fee to the mortgage originator), and myriad other options are nearly infinite. Try the same exercise with life insurance policies. Therefore, it is important to simplify your pricing policy as much as possible to eliminate customer confusion. More than with physical goods, price is often used as an indicator of service quality. This is because service quality...

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Customer Relationship Management

Customer Relationship Management While CRM is important for physical products as well as services, it is particularly criti­cal for what are called contractual services where the contract or subscription must be renewed on a periodic basis. Examples of contractual services are health club member­ships, cable TV and cellular phone contracts, etc. What makes these different is that once dropped, it is very difficult to get the customer back. The customer will have switched to another service supplier or dropped the service entirely. If it is the former, it takes a complete subscription cycle to have the opportunity to get the customer back. However, unlike the purchase decision for most services, the decision about renewing is known and visible to the service supplier. This is clearly an advantage...

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Global Aspects of Services Marketing

Global Aspects of Services Marketing  As we have noted in this chapter, one feature of service businesses that distinguishes them from product manufacturers is that they involve interpersonal contact between the service provider and the customer. An implication of this is that, generally, service firms do not grow by producing more of the same service in the same place. There are three basic growth strategies for service businesses: Multisite: provision of the same sMtice(s) in new locations Multiservice: provision of a new service at existing locations Multisegment: provision of a different class of service targeting a different market segment, at new or existing locations. Many service and retail businesses have chosen the first option. McDonald's, for example, views global expansion...

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Marketing and Euro Disney

Euro Disney  Euro Disney resort complex opened on April 12, 1992 in Marne-la-Vallee, France, Disney theme parks had built their reputations not only on the quality of the product but on the service delivery as well. Standards of service, park design and operating details, human resource policies and practices were integrated to ensure that the Disney "play" would be performed at a uniformly high level at each location. The reason behind this outstanding level of service was the establishment of "Disney University," where new employees were oriented to Disney's strict service standards, received continuous communication and training, and gathered for frequent recognition and social events. Employees were called "cast members," as they wore "costumes," not uni­forms and were "cast in...

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Technology and Services

Impact of Technology on Service Marketing  The rapid improvements in and diffusion of information technology and the use of the Internet have changed marketing in general and, specifically, services marketing, for three main reasons: As mentioned earlier in this chapter, the use of the Internet has created a new channel of distribution ideally suited for certain kinds of services, particularly those involving travel and financial transactions and entertainment services. Recall that an important feature of services is that because they are often delivered by people, their quality is variable both at one point in time and over time (Le., they are nonstandardized). Computerization, substituting capital for labor, provides uniform service delivery at a quality level people cannot match. As...

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Automobile Purchasing Services

 Automobile Purchasing Services  The most active are.as of the early Internet e-tailing boom was in automobile buying services. At one time (late 1999), there were at least 11 different web sites where a customer could order a car online (with some variations in the process): CarsDirect.com, Autobytel.com, Cars.com, DriveOff.com, CarPoint.com, carOrder.com, Autoweb.com, DealerNet.com, carclub.com, and Greenlight.com. However, by 2005, the industry had changed dramatically. According to J.D. Power and Associates, about two-thirds of new car buyers use the Internet as part of the shopping process. They do not purchase the cars online, though, as the business model for the Internet auto sites has changed. The three major online car malls-CarsDirect.com, Autobytel.com, and Cars. com-generate...

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Characteristics of Services

Most services can be characterized as having experience attributes (where product quality is determined only after usage) rather than search attributes (where product quality can be ascertained before purchase). The main characteristics of services are intangibility (lack of physical attributes). nonstandardization (because they are usually delivered by people), and inseparabil­ity of production and consumption. Service quality is defined by the service provider's reliability, responsiveness, assur­ance, empathy, and tangibles (service features or physical aspects of the service delivery). Service quality is assessed negatively when there is a gap between customer expec­tations and experienced quality. Service quality can be measured through the use of survey instruments such as SERVQUAL;...

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