managing services ● professor chip besio ● cox school of business ● southern methodist...

Managing Services

●Professor Chip Besio●Cox School of Business●Southern Methodist University

CONSUMER WANT AUTHENTIC EXPERIENCES!

Services are now a larger part of the U.S. gross domestic product (GDP)

THE UNIQENESS OF SERVICESTHE FOUR I’S OF SERVICES

Four I’s of Services• Intangibility – Cannot perceive with 5 senses

• Inseparability – cannot separate from provider

• Inconsistency – can vary with each occasion

• Inventory – in people based services, inventory goes home each night

The result - Idle Production Capacity

Singapore Airlines, American Express, and AllstateWhat 4 I’s of services element?

Inventory carrying costs of services depend on the cost of employees and equipment

THE UNIQENESS OF SERVICESTHE CONTINUUM & CLASSIFICATION OF SERVICES

Service Continuum

Classifying Services

• Delivery by People or Equipment

• Profit or Nonprofit Organizations

• Government Sponsored

The service continuum shows how offerings can vary in their balance of goods and services

Services can be classified as equipment-based or people-based

Red Cross, Unicef, andSusan G. Komen Race for the Cure

What is the classification of each service?

HOW CONSUMERSPURCHASE SERVICES

The Purchase Process

• Search Properties

• Experience Properties

• Credence Properties

Consumers use search, experience, and credence properties to evaluate services

The five dimensions of service quality

HOW CONSUMERSPURCHASE SERVICES

Customer Contact andRelationship Management

• Customer Contact Audit

• Service Encounters

• A Customer’s Car Rental Activities

• Relationship Marketing

Customer contact audit for a car rental agency (green boxes = customer activity; orange boxes = employee activity)

MANAGING THE MARKETING OF SERVICESTHE EIGHT Ps OF SERVICES

Eight Ps of Services Marketing

Product (Service)

• Branding

Price

• Off-Peak Pricing

MANAGING THE MARKETING OF SERVICESTHE EIGHT Ps OF SERVICES

Place (Distribution)

Promotion

• Publicity

• Public Service Announcements (PSAs)

MANAGING THE MARKETINGOF SERVICES

People• Internal Marketing

• Customer Experience Management (CEM)

Physical Environment

Process

Productivity

• Capacity Management

Different prices and packages help match demand to capacity

● Price plays two essential roles regarding

the pricing of services: 1. To affect consumer perceptions and 2. To be used in capacity management.

● Off-peak pricing consists of charging different prices during different times of the day or days of the week to reflect variations in demand for the service.

MANAGING THE MARKETINGOF SERVICES -PRICING

●Place or distribution is a major factor in developing a service marketing strategy because of the inseparability of services from the producer.

●As competition grows, the value of convenient location becomes more important.

●The availability of electronic distribution through the World Wide Web now provides global coverage for travel services, banking, entertainment, and many other information-based services.

MANAGING THE MARKETINGOF SERVICES -PLACE

●In most cases promotional concerns of services are similar to those of products.

●The value of promotion (advertising) is to stress:●availability●location●consistent quality●and efficient, courteous ●service

Heart by-pass Surgery

20% discount forweekend

procedures

MANAGING THE MARKETINGOF SERVICES -PROMOTION

MANAGING THE MARKETINGOF SERVICES -PROMOTION

PROFESSIONAL SERVICES●A Supreme Court case in 1976 struck down

constraints by professional organizations to constrain the advertising of professional services, specifically the American Medical Association and the American Bar Association.

●Although opposition to advertising still remains in some professional groups, the barriers to promotion are being broken down, mostly in response to competitive pressures.

MANAGING THE MARKETINGOF SERVICES -PROMOTION

●Publicity has played a major role in the promotional strategies of nonprofit services and some professional services.

●Many nonprofit groups have relied on Public Service Announcements (PSAs) as the foundation of their media plan because they are free.

USING MARKETING DASHBOARDSAre JetBlue’s Flights Profitably Loaded?

Airline Operating Income (Loss) per Available Seat Flown One Mile (ASM)

Operating Income (Loss)Flown ASM

= Yield Load Factor Š Operating Expense

LO6

Technological Advances

• Mobility

• Convergence

Expanding Global Economy

SERVICES IN THE FUTURE

• Personalization

• Collaboration