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Service (What is a Service? ("A service is any deed, performance or…
Service
What is a Service?
"A service is any deed, performance or effort carried out for the customer" - Fahy + Jobber, 2015
Various sectors within service industries: Government, Creative Industries, Financial Services, Retailing, Hospitality, Non-Profit Organisations etc
Goods Dimension: Physical thing, e.g coffee
Service Dimension: Location, Experience, Feeling. This is up to the customer - Buy coffee beans + take them home, or go to a nice café + get table service?
Products have a physical presence, services don't. A service is consumed at the point where it's produced
Competition can be intense + products are copied quickly - Services are an opportunity to add value yet not be copied, bc each service is a unique experience
5 Characteristics of Service: shape the way in which marketers design, deliver + evaluate the marketing of services
Intangibility
- When purchasing products we use most of our senses: we see the size/colour, feel the weight etc. These are important purchasing decision cues
- Services are intangible: they are only delivered + experienced post-purchase
- Customers have to use substitute cues to help them make decisions when buying services. They help make the intangible service 'tangible'
- 2 Types of Cue: Intrinsic + Extrinsic [Olson + Jacoby, 1972]
- Intrinsic Cues: drawn directly from the offering itself + regarded as difficult to change
- Extrinsic Cues: surround the offering + can be changed relatively easily
- Different types of services need different types of cues [Brady et al 2005]
- Services w/ a more tangible element, like hotels/transport services, need more subjective communications like adverts + WOM
- Financial + Investment-based brands do better w/ intrinsic cues, which stress objective info like industry rankings, good media reviews etc
Inseperability
- Bc services are consumed at the point of production, can't separate service delivery from service provision or service consumption
- This means customers interact w/ service providers. This is important both for the quality of the service + the customer experience
- EXAMPLE: private doctors may develop a strong reputation + get an increase in demand - if this gets unmanageable, they can use pricing to reduce/reschedule demand
- Services can be a mass experience or a solo experience. Differences can impact on the nature of the interaction process
- W/ a mass service experience, the other members of the audience can influence the perceived quality of the experience
- W/ a solo experience, the service provider has more control, bc there are no wider environmental influences. More flexibility + adaptation as the service delivery unfolds
- There can also be variability through influences from the mixture of customers present during the service delivery. Broad mix of customers = service delivery affected bc needs of different groups have to be attended to
Perishability
- Products can be kept for a while before they have to be sold, e.g until their expiry date/until they're purchased
- Services are perishable: they're manufactured + consumed simultaneously, they can't be stored either before or after the service encounter
- Fluctuations in demand can cause 'wasted services': could be due to changes in the wider environment + may follow easily predictable patterns of behaviour
- Service marketers must ensure 'lost-forever' revenue is minimised: e.g varying level of service capacity when demand is predictable, EXAMPLE: a longer train for more passengers
- BUT, demand can be unpredictable so managers must be able to provide varying levels of service capacity at short notice
- Main way of influencing demand patterns: Differential Pricing
Lowering prices to attract customers when it's quieter, + raising prices when demand is high
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EXAMPLE: some football clubs categorise matches according to ranking/prestige of opposition, + adjust prices to fill the stadium
- Or, extra services can be offered to divert demand. EXAMPLE: Hotels offer specialist weekend breaks, like golfing or fishing, to attract ppl outside the holiday season
- Companies may use part-time staff e.g Retail hiring "Christmas Temps"
Variability
- Difficult to standardise the delivery of services
- Difficult to deliver services so that they always meet the brand promise
- If demand increases unexpectedly, + there's insufficient capacity, then service breakdown may occur. EXAMPLE: Too many train passengers could mean there isn't enough seats
EXAMPLE: Criticism of some organisations who have tried to lower costs by moving their call centre operations offshore. Has led to some employees lacking training, product knowledge or just not being understood. This type of service experience will vary for every customer, but a fall in customer satisfaction could lead to lots of them favouring competitors
- Managers should try to anticipate situations where service breakdown might occur, + provide facilities. EXAMPLE: entertainment provided for queues at theme parks
- Can also be improved by good selection, training + rewarding of staff, use of reliable equipment, + evaluation systems
Lack of Ownership
- Arises naturally from the other characteristics
- Services can't be owned as nothing is transferred during the interaction or delivery experience
- May be a legal transaction, but no physical transfer of ownership like w/ a product purchase
- EXAMPLE: Train seat is rented for a set period of time for a fee, but remains the property of the rail operator, + has to be available for renting to other ppl in the future
- Companies may use loyalty schemes like membership clubs to promote a sense of ownership. Helps create customer involvement + so customers feel they have a right to be a part of the service provider, even though there's nothing to physically own