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Chapter 11. The concept of service and its classification2.1 Define servicean act or performance offered by one party to another. the performance is essentially intangible and does not normally result in ownership of any of the factors of production.economic activities that create value and provide benefits for customers at specific times and places /as a result of bringing about a desired change inor on behalf ofthe recipient of the service.3.Fundamental Difference between service and goods Intangibility, inseparability, heterogeneity, perishability3.1 Intangibility A distinguished characteristic of services that makes them unable to be touched or sensed in the same manner as physical goods.3.1.1 Marketing problems caused by intangibilityLack of ability to be stored inability to maintain an inventory- a buffer against periods of high demand. constant supply and demand problems .Lack of protection by patents new or existing services may be easily copied; difficult to maintain a firms differential service advantage over attentive competitors for long periods.Difficult in displaying or communicating How do you get customers to take notice of your product when they cannot see it?Difficulty in pricing services. goods: cost-plusservice: primary cost -labor knowledge worker3.1.2 Possible solutions to intangibility problemsphysical evidence or tangible clues. quality of furniture; appearance of the personnel; quality of paper alike; symbolic objectsThe use of personal sources of information Word-of-mouth (lack any objective means of evaluating services;rely on the subjective evaluations relayed by friends, family, and a variety of other opinion leaders.)Mass advertisingIncentives to existing customersCreation of a strong organization image higher levels of perceived risk brand -differential advantage over small, local firms of which the consumer is unware of.3.2 Inseparability the service providers physical connection to the service being provided. the customers involvement in the service production process. the involvement of other customers in the service production process.3.2.1 Marketing problems caused by inseparabilityPhysical connection of the service provider to the service languages, clothing, personal hygiene, interpersonal skills, public contact personnelInvolvement of the customer in the process. customer contact increases, efficiency decreases.Involvement of other customers. negative : different segments ( smokers vs nonsmokers) positive: entertainment3.2.2 Possible solutions to inseparability problemstraining, rewarding, building trust and teamwork -reduce variation in behavior as much as possible. public contact personnel- superior communication and public skills. newly hired employee : robotic VS soft management skills such as reliability, responsiveness, empathy, assuranceConsumer management separate segments; reservation systems; delivery services( send a patient insurance forms and information);isolate the technical core.Use of multisite locations Franchise disadvantage: a consistent image3.3 Heterogeneitylack of ability to control quality Manufacturing: isolate mistakes and correct them overtime (mistakes tend to reoccur at the same points in the process) Service: errors in operations are one-time events (can neither foreseen nor corrected ahead of time)Consistency among personnel within a single firm. the same service provider on a daily basis. Vary from firm to firm.3.3.1 Marketing Problems caused by heterogeneityService standardization and quality control are difficult to achieve( employees personality , mood)3.3.2 Possible solutionsDifferentiation -to take advantage of the variation inherent in each service encounter .Service: take more time to produce, charge higher profitCustomers: not be willing to pay the higher prices speed of service delivery take extra time; have not the luxury of waiting for the final product. not be willing to face the uncertainty associated with customized services.Standardization Intensive training to reduce extreme variations. replace human labor with machines. ATM Positive: lower consumer prices;consistency of performance;faster service delivery. Negative: not care about the individual;attempting to distance itself from the customer. in summary: standardized core product + semi-customized3.4 PerishabilityService that are not sold when they become available cease to exist.3.4.1 Marketing problems caused by perishabilityMatch demand and supply-a major challengeHigher demand than available supply inferior levels service;long waiting periods; expectations are not met; unhappy customers;dissatisfaction and negative word-of-mouthLower demands than optimal supply level：resources are underutilized3.4.2 Possible solutionsCreative pricing to smoothed fluctuations：Reservation system：Complementary services：Development of non-peak demandThe Eight Components of Integrated Service Management.product elementsprocessplace，cyberspace and timeproductivity and qualitypromotion and educationpeopleptice and other user costsphysical evidenceChapter 2 Service Operation System2.3 The model of delivery systemTechnical core: the place within the organization where its primary operations are conducted.2.4 What is encounter?a period of time during which customers interact directly with a service.High-contact : customers visit the service ,facility in person and actively, involved. eg. people-processing servicesMedium-contact: less involvement with service providers. Low-contact : involve very little. contact takes place at arms length through the medium of electronic or physical distribution channel.Key words: people; machine; frequency; be physically present; at home3. Flowchart3.1 Concept of flowchart: 业务流程图是对流程的描述，是一张顺序图，说明各个运作步骤之间的前后关系或并行关系。不同的运作步骤可以用不同的运作符号来表示。3.2 The value of flowchartProvide a means for understanding .a necessary first step in exercising control over procedures.Useful for defining the points of the core service and supplementary servicesThe time to move from one step to the nextThe costs involved with each stepIdentify what encounters customers have different service personnel, specific physical facilities, and equipments.Relate the customers behavior and experience at each stage to changes in their expectations and satisfaction.The bottlenecks in the systems.Speed up processes and weed out unnecessary steps to avoid wasted time and effort.Validate your description (an open discussion may help to achieve consensus.)11.Supplement the flowchart by a brief narrative describing the activities and their interrelationships. Chapter 3 Customer BehaviorSearch attributes-Can evaluate before purchasing it. eg. Style, color, texture, taste, sound, Tryout, taste-test, Reduce the sense of uncertainty or risk associated with the purchase occasionExperience attributes-Must experience these features to know what they are getting. eg. Holidays, live entertainment performances, Sporting events, restaurants Can examine brochuresScroll through websites, View travel films, Read,reviews by travel experts, Not always rely on information from friends, family or other personal sourcesCredence attributes-Impossible to evaluate confidently even after purchase and consumption The customer is forced to trust that certain benefits have been delivered even though it may be hard to document them.4. Understanding customers evaluation4.1 core product and supplementary product Core product-provides the central benefit that addresses specific customer needs. define the fundamental nature of a companys businessPerforming on the core product is a matter of do or die. Banks: lose customers moneyAirlines: aircraft never arrive at their intended destinations.Architectural firms: design buildings so flawed that they subsequently collapseSupplementary elements-supply additional benefits to enhance the core product and differentiate it from competitors offerings.Fedex:Core product: time-definite shipping and delivery of packages.Supplementary service: pick up; information; free packaging in the form of envelops and small boxes; insurance; delivery; access to a web site for tracing the progress of packages and confirming shipment; problem solving , billing.Competing on supplementary service elementsInnovation in the core product-time-consuming and expensive, requiring enormous research investments. only occurs infrequently.Supplementary services offer the best opportunity for increasing customers perceptions of value.Most companies in mature industries should focus their strategic thinking for the short and medium term.4.2 Hygiene factors and enhancing factorsHygiene factors-service elements that customers take for granted. Do or-decline factorsIf they are absent or present but performed below a certain threshold level of acceptability , customers will be dissatisfied.Provide needed information, Take orders promptly and accurately, Provide intelligible bills, Accept responsibility for problem solving as a matter of course.Enhancing factors- optional service extras whose presence will create satisfaction but whose absence will not necessarily cause dissatisfaction.Chapter 4 Service QualityWhat is service quality?customer satisfaction- a short-term, transaction-specific measure.service quality-an attitude formed by a long-term , overall evaluation of a performance.Service quality focused on the customers accumulative attitude toward the firm, which is collected by consumers from a number of successful or unsuccessful service experience.2.Diagnosing failure gaps in service quality.service gap- is between customers expectations of service and their perception of the service actually delivered.goal- to close the service gap or at least narrow it as far as possible.2.1 The knowledge gap Knowledge gap- the difference between customers want and what managers think customers want.the result of knowledge gap A variety of other mistakes tend to follow, The wrong facilities may be provided, The wrong staff may be hired, The wrong training may be undertaken, Service may be provided that customers have no use for, whereas the services they do desire are not offered.Factors influencing the knowledge gapResearch orientation.the firms research orientationThe data cant reflect true demands.(百威啤酒）Upward communication(the flow of information front-line upper levels)Levels of management Customers unreasonable expectation.Solution: Market survey.Eg. The market investigation of Qunguang Commercial Department, Internal information management. Communication with customers, Build platform of information transition., Reduce the levels of management.2.2 the standard gap- managements perception of customer expectations and the actual standards set for service delivery.Hotel front-desk personnel: acknowledging the customer upon arrival; establish eye contact; smiling; completing the proper paperwork; reviewing with the customer the available amenities; Providing the customer with keys to the room.Factors influencing the standards gapManagement has no commitment to the delivery of service quality.No culture of service qualitymanagement genuinely fails to understand the issues involved.Management feel hampered by insufficient methods of measuring quality or by converting those measurements into standards.2.3 The delivery gap-between the actual performance of a service and the standards set by management.Factors influencing the delivery gapWillingness: beginning , a period of time lateremployee-job fit: not qualified to handle ,temperamentally unsuited, not sufficient training for the roles expected of themRole conflict: inconsistency between what the service manager expects employees to provide and the service their customers actually want. a service provider who has been expected to do too many kinds of work. Role ambiguity Not understand the roles of their jobs or what their jobs are intended to accomplish.dispersion of control the situation in which control over the nature of the service being provided is removed from employees hands. are not allowed to make independent decisions.inadequate support not receiving personal training and/or technological and other resources necessary .2.4 The communication gap- difference between the service the firm promises it will deliver through its external communications and service it actually delivers to its customers.Factors influencing the communication gap: Propensity of the firm to over-promise3. Measuring service quality: Tangibles, responsiveness, Reliability, assurance, empathy3.1 the tangible dimension-A variety of objects such as capets, desks, lighting, wall colors, brochures, daily correspondence, and the appearance of the firms personnel. equipment and facilities personnel and communications materialsTangible expectations/perceptionsE1: modern-looking equipment / perceptionsE2: physical facilities will be visually appealing. E3: employees will be neat in appearance.E4: materials associated with the service ( such as pamphlets or statements) will be visually appealing3.2 reliability dimension- The most important dimension -reflects the consistency and dependability of a firms performance.the same level of service, time after time? keep its promises perform the service correctly the first time?Reliability expectations:E5: when promises to do something by a certain time, they will do so.E6: When customers have a problem, excellent companies will show a sincere interest in solving it.E7: Excellent companies will perform the service right the first time.E8: provide their services at the time they promise to do so.E9: insist on error-free records.3.3 The responsiveness dimension-reflects a service firms commitment to provide its services in a timely manner. Concerns the willingness and /or readiness of employees to provide a service.Responsiveness expectationsE10: tell customers exactly when service will be performed.E11: give prompt service to customers.E12: be always willing to help customersE13: never be too busy to respond to customer requests.3.4. The assurance dimension-addresses the competence of the firm , the courtesy it extends its customers, the security of its operations.Competence-pertains to the firms knowledge and skill in performing its service. Does the firm possess the required skills to complete the service on a professional basis?Courtesy-how the firms personnel interact with the customer and the customers possessions. Reflects politeness, friendliness, and consideration for the customers property.Security-a customers feeling that he or she is free from danger, risk, and doubt, financial risk issues. physical danger, financial risk, confidentiality issues.Assurance Expectations:E14: The behavior of employees of excellent companies will instill confidence in customers.E15: customers will feel safe in their transactions.E16: Employees will be consistently courteous to customers.E17: Employees will have the knowledge to answer customer questions.3.5. the empathy dimensionsEmpathy- the ability to experience anothers feelings as ones own.Empathy expectations:E18: Excellent companies will give customers individual attention.E19: will have operating hours convenient to all their customers.E20: have employees who give customers personal attention.E21: will have the customers best interest at best.E22: the employees of excellent companies will understand the specific needs of their customers.Chapter 5 Segmentation and positioning1. Segmentation1.1 concept of segment: A market segment is composed of a group of current and potential customers who share common characteristics, needs, purchasing behavior or consumption patterns.3 attracting, retaining , upgrading and terminating customersAttracting: Ads, sales, promotional strategies should reach prospects from desired segments and seek to avoid customers who do not fit the desired profiles. Over emphasis attraction of new customers.Retaining: Develop long-term , cost-effective links between customers and organization for the mutual benefit of Both parties.Treating customer fairly, Offering service augmentation. Offering service extraUpgrading: Encourage an increased volume of purchase, Upgrading the type of service used, Adding new servicesTerminating: Not all existing customer relationships are worth keeping4.Positioning4.1 Concept of positioning: The process of establishing and maintaining a distinctive place in the market for an organization and /or its individual product offering. Understanding: a position in customers mind, Singular, providing one simple and consistent message, Set a company apart from its competitions, Focus its effort. 4.2 steps for positioningChapter 6 Product2 Composition of service product2.1 Hygiene factors and enhancing factorsHygiene factors: Information, Order taking, Billing, PaymentEnhancing: Consultation, Hospitality , Safekeeping, ExceptionsChapter 7 Service failure , recovery and guarantee2.2 Principle of effective problem resolutionAct fastAdmit mistake but dont be defensiveShow that you understand the problem from each customers point of view.Dont argue with customersAcknowledge the customers feeling, either tacitly or explicitlyGive customers the benefit of the doubt.Clarify the steps needed to solve the problemKeep customers informed of progress.Consider compensationPersevering to regain customer goodwill.3.3 The value of service guarantees powerful tools for both promoting and achieving service quality for the following reasons.Force firms to focus on what their customers want and expect in each element of the service.Set clear standards, Require the development of systems for generating meaningful customer feedback and acting on it.Force to understand why they fail Encourage them to identify and overcome potential fail points.Build marketing muscle by reducing the risk of purchase decision and long term loyalty.Chapter 8 Physical Evidence三、有形展示的作用Packaging the serviceFacilitate the flow of the service delivery process;Socializing customers and employees alike in terms of their respective roles, behaviors, and relationships;Differentiating the firm from its competitors.Chapter 9 Pricing 3. Special consideration of service pricingdemand, cost, customer, competitive, profit, product, legal3.1 Demand consideration3.1.1 Service products demand tends to be more inelastic.3.1.2 Price discrimination price discrimination- charging customers different prices for essentially the same service.price discrimination is a viable practice to manage demand and supply challenges.Effective price segmentation benefits consumers and provider alike:Consumers often benefit from options that offer lower prices.Consumers who pay high enjoy comfort and less people environment.Providers are often able to manage demand and increase capacity utilization.Providers get more revenue.Criteria for effective price segmentation:different groups of consumers must have different responses to price. th
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