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Goods Vs Services
Marketing of Services1
Are Goods & Services
different ?
Basic Differences between Goods &
Services
Marketing of Services2
Customers do not obtain ownership of services1
Service products are intangibleperformances, & not objects2
Customers often actively involved in production process3
Basic Differences between Goods &
Services
Marketing of Services3
Time factor is more important--speed may be key4
Often difficult for customers to evaluate5
Absence of inventories after production6
Basic Differences between Goods &
Services
Marketing of Services4
More variability in operational inputs and outputs--harder to improve productivity, control quality
7
Delivery systems include electronicand physical channels8
The Four
Is
Characteristics of Services
Characteristics of Services -
Marketing of Services6
Intangibility Inseparability
Inconsistency or Variability
Inventory Perish ability
Four Is of Services
Marketing of Services8
Intangibility
Inseparability
Inconsistancy
Inventory perishability
Services cannot be touched, seen, tasted, heard, or felt in the
same manner as goods.
Implications of Intangibility
Challenges Solutions9
1. No physical attributes to demonstrate while selling - Lack of Tangible attributes: which can be
touched,
smelled,
seen,
tasted or
heard prior to purchase.
Stress tangible cues:
Tangible goods which are included in the service offer
Physical environment in which the service production or consumption process takes place
Tangible evidence of service performance
Implications of Intangibility
Challenges Solutions10
2. Cannot be examined by customer before purchase
3. Risk of loss of integrity -
This is not what you told me I am going to get.
advertised claims cannot be verified
Do not over-promise &
deliver as promised
Communicate explicitly, no
implied meanings
Create strong corporate
image- BRAND
Stimulate word-of-mouth
communications.
Use personal sources of
information.
Provide tangible evidence
for assurance
Four Is of Services
Marketing of Services1
1
Intangibility
Inseparability
Inconsistancy
Inventory perishability
Services that cannot be touched, seen, tasted, heard, or felt in the
same manner as goods.
A characteristic of services that allows them to be produced and
consumed simultaneously.
Implications of Inseparability
Challenges Solutions12
1. Combined productivity
effect-
Customer & employee
jointly participate &
influence transaction
Best net-performance
with matching
contribution of
customer &
employees
Inefficiency of anyone
pulls other down.
Automate service
processes.
Develop processes to
manage customers.
Select right customer
and train them for
participation
Emphasize right
selection and training
of employees
Implications of Inseparability
Challenges Solutions13
2. Simultaneous
production and
consumption of
Services :
Goods first produced,
then sold and then
consumed
Services first sold,
then produced and
consumed together
No mass production
More precise demand
forecasting & capacity
planning
Introduce self-service,
automation & electronic
delivery.
Customize services to
your advantage
Four Is of Services
Marketing of Services1
4
Intangibility
Inseparability
Inconsistancy
Inventory perishability
Services that cannot be touched, seen, tasted, heard, or felt in the
same manner as goods.
A characteristic of services that allows them to be produced and
consumed simultaneously.
A characteristic of services that makes them less standardized
and uniform than goods.
Why are Services Inconsistent
Presence of Human Element
Different Service employees will perform same
process differently
Different customer have different expectations &
capabilities
Same employee will perform same process differently
At two different times
Under different situation
Marketing of Services15
Implications of Inconsistency
Challenges Solutions16
1. Limited control on
quality of service
delivered.
Dependence on:
Performance of
employee/s
Participation of
customer
Increase standardization
of procedures
Customization within
tolerance for individual
customer
Train employees &
Develop in process for
quality control
Implications of Inconsistency
Challenges Solutions17
2. No sure knowledge that the service delivered matches what was planned and promoted
3. Risk of loss of integrity -
This is not what you told me I am going to get.
This is not what I got last.
Educate customer &
employees : What is to be expected &
what not to.
Clearly define &
communicate acceptable
variance in service delivery.
Keep measuring customer
expectation and monitoring
satisfaction regularly
Encourage employees to
communicate with
customers to mitigate
dissonance.
Four Is of Services
Marketing of Services1
8
Intangibility
Inseparability
Inconsistancy
Inventory perishability
Services that cannot be touched, seen, tasted, heard, or felt in the
same manner as goods.
A characteristic of services that allows them to be produced and
consumed simultaneously.
A characteristic of services that makes them less standardized
and uniform than goods.
A characteristics of services that prevents them from being stored,
warehoused, or inventoried.
Implications of Inventory Perishability
Challenges Solutions19
1. Difficult demand-
capacity
synchronization:
Services can not be
stocked
Capacity loss
Loss of unfulfilled
Demand
Dynamic & precision
demand forecasting
& capacity planning
Manage demand
shifting
Manage capacity
flexing
Implications of Inventory Perishability
Challenges Solutions20
2. Customer
dissatisfaction
Service once fully
or partially
consumed, can not
be returned or
exchanged
Clarity in understanding customer needs
Unambiguous communication to customer
Monitor customer expectations & satisfaction
Develop service-recovery & complaint resolution processes.
Theodore Levitt (worlds best known marketing expert) commented 30 years ago:There are no such things as Service or
manufacturing industries. There are only industries whose service components are greater or less than those of other industries.
Marketing of Services2
1