Designing And Managing Services

Chapter 13: Designing and Managing Services

As product companies find it harder and harder to differentiate their physical products, they turn to service differentiation. Top service providers know these advantages well and also how to create memorable customer experiences.

Many workers in the manufacturing sector, such as computer operators, accountants, and legal staff, are reallyservice providers.

A service is any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Increasingly, manufacturers, distributors, and retailers are providing value-added services, or simply excellent customer service, to differentiate themselves.

Fivecategories of offerings:
1. Pure tangible good—a tangible good such as soap, toothpaste, or salt with no accompanying services.
2. Tangible good with accompanying services—a tangiblegood, like a car, computer, or cell phone, accompaniedby one or more services. Typically, the more technologically advanced the product, the greater the need for high-quality supporting services.
3. Hybrid—anoffering, like a restaurant meal, of equal parts goods and services. People patronize restaurants for both the food and its preparation.
4. Major service with accompanying minor goods and services—a major service, like air travel, with additional services or supporting goods such as snacks and drinks.
5. Pure service—primarily an intangible service, such as babysitting, psychotherapy, or massage.Services vary as to whether they are equipment based (automated car washes, vending machines) or people based (window washing, accounting services).

Some services need the client’s presence.

Services may meet a personal need or a business need.

Service providers differ in their objectives (profit or nonprofit) and ownership (private or
public).

At the left are goods high in searchqualities—that is, characteristics the buyer can
evaluate before purchase. In the middle are goods and services high in experience qualities—characteristics the buyer can evaluate after purchase. At the right are goods and services high in credence qualities—characteristics the buyer normally finds hard to evaluate even after consumption






Consumers are highly loyal to serviceproviders who satisfy them. Because switching costs are high, consumer inertia can make it challenging to entice business away from a competitor.

Distinctive Characteristics of Services

INTANGIBILITY To reduce uncertainty, buyers will look for evidence of quality by drawing inferences from the place, people, equipment, communication material, symbols, and price. Therefore, the serviceprovider’s task is to “manage the evidence,” to “tangibilize the intangible.”
Tools to make physical evidence and presentation:

1. Place
2. People
3. Equipment
4. Communication material
5. Symbols
6. Price

Service marketers must be able to transform intangible services into concrete benefits and a well-defined experience. Dimensions of brand experience are:



INSEPARABILITYWhereas physical goods are manufactured, then inventoried, then distributed,
and later consumed, services are typically produced and consumed simultaneously.
When clients have strong provider preferences, the provider can raise its price to ration its limited time.

VARIABILITY Because the quality of services depends on who provides them, when and where, and to whom, services are highlyvariable.

Increase quality control.

1. Invest in good hiring and training procedures.
2. Standardize the service-performance process throughout the organization. A service blueprint can map out the service process.
3. Monitor customer satisfaction.

Marketing communication and information programs. Consumers learn more about the brand than what they get from service alone.

PERISHABILITY...