12 Designing and Managing Services

12
Designing and Managing

Services
Chapter Questions
 How do we define and classify services and

how do they differ from goods?
 What are the new services realities?
 How can we achieve excellence in services
marketing?
 How can we improve service quality?
 How can goods marketers improve customer
support services?
Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from
the United States edition of Marketing Management, 14e. 12-2
What Is a Service?
A service is any act of performance that one

party can offer 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.
Services Are Everywhere
 The government sector
 The private nonprofit sector
 The business sector
 The manufacturing sector
 The retail sector
Categories of Service Mix
 Pure tangible good

 Good with accompanying services
 Hybrid
 Service with accompany goods
 Pure service
Service Distinctions
 Equipment-based or people-based
 Service processes
 Client’s presence required or not
 Personal needs or business needs
 Objectives and ownership
Figure 12.1 Continuum of
Evaluation for Different Types of
Products
Source: Valarie A. Zeithaml, “How
Consumer
Evaluation Processes Differ between
Goods and
Services,” James H. Donnelly and
William R. George,
eds., Marketing of Services (Chicago:
American
Marketing Association, 1981). Reprinted
with permission
of the American Marketing Association.
Distinctive Characteristics
of Services
Intangibility
Inseparability
Variability
Perishability
Physical Evidence and
Presentation
 Place
 People
 Equipment
 Communication material
 Symbols
 Price
Table 12.1 Dimensions of Brand
Experience
Inseparability
Provider–client interaction is
a special feature of services
marketing.
Variability
Steps to increase quality control:
1. Invest in good hiring and training

procedures
2. Standardize the service-performance
process
3. Monitor customer satisfaction
Service Blueprints
Perishability
Matching Demand and Supply
Demand side Supply side

 Differential pricing  Part-time employees
 Nonpeak demand  Peak-time efficiency
 Complementary  Increased consumer
services participation
 Reservation systems  Shared services
 Facilities for future
expansion
A Shifting Customer Relationship
Figure 12.3 Root Causes of
Customer Failure
Source: Stephen Tax, Mark Colgate, and David

Bowen, MIT Sloan Management Review (Spring
2006): pp. 30–38. ©2006 by Massachusetts
Institute of Technology. All rights reserved.
Distributed by Tribune Media Services.
Solutions to Customer Failures
 Redesign processes and redefine customer

roles to simplify service encounters
 Incorporate the right technology to aid
employees and customers
 Create high-performance customers by
enhancing their role clarity, motivation, and
ability
 Encourage customer citizenship where
customers help customers
Figure 12.4 Types of Marketing in
Service Industries
Best Practices
 Strategic Concept
 Top-Management Commitment
 High Standards
 Self-Service Technologies
 Monitoring Systems
 Satisfying Customer Complaints
 Satisfying Employees
Monitoring Systems
Figure 12.5 Importance-
Performance Analysis
Table 12.3 Factors Leading to
Customer Switching Behavior
 Pricing
 Inconvenience
 Core Service Failure
 Service Encounter Failures
 Response to Service Failure
 Competition
 Ethical Problems
 Involuntary Switching
Improving Service Quality
 Listening  Surprising customers

 Reliability  Fair play
 Basic service  Teamwork
 Service design  Employee research
 Recovery  Servant leadership
Figure 12.6 Service-Quality Model
Sources: A. Parasuraman, Valarie A. Zeithaml, and Leonard L.

Berry, “A Conceptual Model of Service Quality and Its
Implications for Future Research,” Journal of Marketing (Fall
1985), p. 44. Reprinted with permission of the American
Marketing Association. The model is more fully discussed or
elaborated in Valarie Zeithaml, Mary Jo Bitner, and Dwayne D.
Gremler, Services Marketing: Integrating Customer Focus
across the Firm, 4th ed. (New York: McGraw-Hill, 2006).
Determinants of Service Quality
 Reliability
 Responsiveness
 Assurance
 Empathy
 Tangibles
Customer Worries
Failure frequency
Downtime
Out-of-Pocket Costs
For Review
 How do we define and classify services and

how do they differ from goods?
 What are the new services realities?
 How can we achieve excellence in services
marketing?
 How can we improve service quality?
 How can goods marketers improve customer
support services?

12 Designing and Managing Services

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12

Designing and Managing

 How do we define and classify services and

A service is any act of performance that one

 Pure tangible good

Steps to increase quality control:

1. Invest in good hiring and training

Demand side Supply side

 Nonpeak demand  Peak-time efficiency

 Complementary  Increased consumer

 Facilities for future

Source: Stephen Tax, Mark Colgate, and David

 Redesign processes and redefine customer

 Listening  Surprising customers

Sources: A. Parasuraman, Valarie A. Zeithaml, and Leonard L.

 How do we define and classify services and

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