Chapter 7 Services Marketing Management
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1 Chapter 7 Services Marketing Management 1 Characteristics of Services 2 Intangibility Inseparability Service characteristics Variability Perishability 1
2 Intangibility Characteristics of Services 3 a deed, performance or effort difficulty in evaluation use tangible cues benefits on nonownership Service Characteristics Inseparability Variability Perishability Intangibility Characteristics of Services Service Characteristics Inseparability simultaneous production and consumption importance of service provider selection, training and rewarding of staff avoid inter-customer conflict 4 Variability Perishability 2
3 Characteristics of Services 5 Intangibility Inseparability Service Characteristics Variability standardisation difficult selection, training and rewarding of staff evaluation systems use of reliable equipment Perishability Characteristics of Services 6 Intangibility Inseparability Variability Service Characteristics Perishability consumption cannot be stored match supply and demand use of part-time staff multi-skilling participation by consumers differential pricing stimulation of off-peak demand comfortable waiting area reservation system 3
4 IKEA 7 Clever advertisement for IKEA which recognises the variability that exists in terms of customers ability to self-assemble products. The Services Marketing Mix The services marketing mix is an extension of the 4P s: 8 Product Price Promotion Place The additional elements of the mix are: Physical evidence Process People The McGraw-Hill Companies,
5 B&Q 9 Advertising from service businesses like B&Q regularly feature company employees. This type of advertising is aimed at both employees (to motivate them to deliver the service promise) and customers (to reassure them that company employees are there to serve them) 10 Barriers to the Matching of Expected and Perceived Service Levels Expected service Barriers misconceptions inadequate resources inadequate delivery exaggerated promises Perceived service 5
6 Relationship Marketing Six Benefits of Strong Customer Relationships Increased purchases Lower costs Lifetime value Sustainable competitive advantage Word of mouth promotion Decreased staff turnover Ladder of Loyalty Partner Advocate Supporter Prospect Customer Client Emphasis on new customers (customer catching) Emphasis on developing and enhancing relationships (customer keeping) Source: Christopher, M.C, A Payne and D Balantyne (1991) Relationship Marketing, Oxford Butterworth-Heinemann 6
7 Marketing in Non-profit Organisations 13 Characteristics of non-profit marketing Measurement of success and conflicting objectives Marketing procedures for non-profit organisations French Film Festival 14 A clever print advert, used to create awareness of a French film festival. The primary goal is to provide cultural enrichment not necessarily profit. 7
8 Chapter Summary There are 4 unique characteristics of services marketing: intangibility, inseparability, variability and perishability. The services marketing mix is an extension of the marketing mix used for products. The additional elements are people, physical evidence and process. Frontline employees are very important and much attention needs to be paid to their selection, training and motivation.. It is important to be able to measure how service perceptions match up against customer expectations. Service businesses have the opportunity to build strong relationships with customers through Relationship Marketing. Non-profit organisations can pursue complex objectives and in doing so need to carefully manage the service element of the offer. 15 8
9 Background Founded: 1943, Gothenburg, Sweden Founder: Ingvar Kamprad Headquarters in Delft, Netherlands By the end of 2014 Revenue: billion Operating income: billion Net income: billion Total assets: billion Total equity: billion Owner: Stichting INGKA Foundation Number of employees: 147,000 9
10 Map of Ikea stores around the world Legend: Current market locations Future market locations No current or planned market locations 10
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