CHAPTER 5: Services and relationship marketing
5.1 The unique characteristics of services
What is a service?
--> a service is any act or performance offered by one party to another that is essentially
intangiable (ontastbaar), no transfers of ownership even when attached to a physical
product
Why important?
Large part of GDP, it’s becoming more important
Characteristics of services
5.1 a Intangibility
Services can not be seen tasted, felt, heard, or smelt before they are bought
- You don’t really know what to expect if it’s good
- You can read reviews
- You can only know it after
- Before you go to the hairdresser you don’t know how it will look
- Use substitute cues: reviews, reputation
! Quality related cues !
- Intrinsic cues: specific to the product or the service, nature of the service
- Extrinsic cues: things around the product, p.ex: price
--> try to communicate them
Evidence management
The use of tangible elements to reinforce the quality of service
p.ex: friendly personnel, try with images how it will look if you go and eat somewhere,
quality symbols (michelin, tripasvisor (blue vinkje) )
5.1b Perishability
Services are manufactured and consumed simultaneously, no storage possible
! Problems when demand fluctuates
- Charging for missed appointments
- Reservation system
- Shared services p.ex as hotel, extra services: activities, longer singing in
Not increasing demands, but gain more of the people who are there
, - Differential pricing (=dynamic pricing)
Different prices for the same service p.ex public transport, streaming platforms
• Time of purchase
• Customer segments (student discounts, children, seniors)
• Demand levels (more expensive in august/ July)
5.1c Variability
Services vary greatly depending on who provides them and when, where and how
- p.ex: train on rush hour
- Quality is difficult to control
- Increase consistency: people
• Invest in recruiting the right employees, providing excellent training,
motivating staff
- Employee empowerment and accountability
• Empower employees to take action
• Increase visibility of service employees and accountability to customers
- Standardize the service performance process
- With a little help from technology , more unified service
5.1d service inseparability
Services are consumed at the point they are produced
In other words, service delivery cannot be separated or split out of service provision or
service consumption
• Customers participate actively
• Value is created in the provider-customer interaction (co-creation)
• Often in the presence of other customers
Particularly difficult when demand rises
5.1e lack of ownership
Services can not be owned, noting is transferred
Loyal schemes are used to create the psychological ownership
Remarks
- Difficult to protect
- All employees involved
- Physical surroundings matter
- Often trust relationship
- Importance of word to mouth
,--> trend: product as a service: you don’t own a computer but you rent and pay monthly
5.2 Service processes
--> series of sequential actions that lead to predetermined outcome
Service encounter: period of time during which a customer interacts directly with a
service
High contact: you’re physically in attendance the whole time p.ex: surgery
Medium contact: you’re physically present for a small time p.ex: repair services, you
drop it off but don’t stay
Low contact: online services p.ex: netflix
5.3 Key dimensions of services Marketing
Consumers use search, experience, and credence properties to evaluate services
High in experience: only evaluate after it happens, you can only explain or illustrate
after you have experienced it p.ex sitting in an audience of 100.000 people
High in credence: you can’t evaluate it yourself if the quality even after the service
happened, something you don’t require the knowledge of p.ex a complex surgery
High in search properties: elements that help customers to evaluate the offering prior to
the purchase
The service marketing triangle(p.176)
Internal marketing: explain to service providers what should be delivered to the
customers, requires offering a good experience to staff, good employees can be
attracted
External marketing: what they can expect, the offering that makes the company
attractive p.ex reasonable pricing, unique menu items
Interactive marketing: providers need to deliver what is promised in the external
marketing to the consumers, concerns the relationship between staff and customers
Service differentiation:
Difficult:
- no patent/ protection possible
- Intangibility and inseparability: Difficult to compare services prior to purchase
-Often leads to intense price competition
, 4P’s (both product as services)
3 aanvullende P’s
People: invest in recruiting the right people and training them correctly, they are the
ones that come in direct contact with the customer
Process: the mechanisms, flow of activities that are required to have a smooth service
p.ex online reservations (more smooth), amazon go (no more caissier), better delivery
options/ tracking , adding convenience
Physical evidence: environment of the service, sensory components p.ex professional
website, hotel lobby (unique/ clean), staff uniforms (better quality perception)
(Product/service): offer innovative options, brand(image) reliable reputation p.ex inno (a
lot of options underneath one roof)
(price): indicator of quality/positioning (lowest price, you need to make sure customers
know that this does not mean a lower quality)
(place): experience, clean, unique setting: do more: experience, feel like they are p.ex:
in disneyland, in the store
(promotion): communication, make it more tangible on how it will be done,
communicate what to expect, dont overpromise! --> evidence management
New P : Personalization: more unique service, specific recommendations p.ex netflix,
articles to read (newssite)
5.4 Measuring service quality and performance
SERVQUAL
• Customers compare perceived service with expected service
• If a service meets or exceeds expectations, consumers are satisfied
• A model based on the difference between expected service and actual perceived
service
• Service = objectif
5.1 The unique characteristics of services
What is a service?
--> a service is any act or performance offered by one party to another that is essentially
intangiable (ontastbaar), no transfers of ownership even when attached to a physical
product
Why important?
Large part of GDP, it’s becoming more important
Characteristics of services
5.1 a Intangibility
Services can not be seen tasted, felt, heard, or smelt before they are bought
- You don’t really know what to expect if it’s good
- You can read reviews
- You can only know it after
- Before you go to the hairdresser you don’t know how it will look
- Use substitute cues: reviews, reputation
! Quality related cues !
- Intrinsic cues: specific to the product or the service, nature of the service
- Extrinsic cues: things around the product, p.ex: price
--> try to communicate them
Evidence management
The use of tangible elements to reinforce the quality of service
p.ex: friendly personnel, try with images how it will look if you go and eat somewhere,
quality symbols (michelin, tripasvisor (blue vinkje) )
5.1b Perishability
Services are manufactured and consumed simultaneously, no storage possible
! Problems when demand fluctuates
- Charging for missed appointments
- Reservation system
- Shared services p.ex as hotel, extra services: activities, longer singing in
Not increasing demands, but gain more of the people who are there
, - Differential pricing (=dynamic pricing)
Different prices for the same service p.ex public transport, streaming platforms
• Time of purchase
• Customer segments (student discounts, children, seniors)
• Demand levels (more expensive in august/ July)
5.1c Variability
Services vary greatly depending on who provides them and when, where and how
- p.ex: train on rush hour
- Quality is difficult to control
- Increase consistency: people
• Invest in recruiting the right employees, providing excellent training,
motivating staff
- Employee empowerment and accountability
• Empower employees to take action
• Increase visibility of service employees and accountability to customers
- Standardize the service performance process
- With a little help from technology , more unified service
5.1d service inseparability
Services are consumed at the point they are produced
In other words, service delivery cannot be separated or split out of service provision or
service consumption
• Customers participate actively
• Value is created in the provider-customer interaction (co-creation)
• Often in the presence of other customers
Particularly difficult when demand rises
5.1e lack of ownership
Services can not be owned, noting is transferred
Loyal schemes are used to create the psychological ownership
Remarks
- Difficult to protect
- All employees involved
- Physical surroundings matter
- Often trust relationship
- Importance of word to mouth
,--> trend: product as a service: you don’t own a computer but you rent and pay monthly
5.2 Service processes
--> series of sequential actions that lead to predetermined outcome
Service encounter: period of time during which a customer interacts directly with a
service
High contact: you’re physically in attendance the whole time p.ex: surgery
Medium contact: you’re physically present for a small time p.ex: repair services, you
drop it off but don’t stay
Low contact: online services p.ex: netflix
5.3 Key dimensions of services Marketing
Consumers use search, experience, and credence properties to evaluate services
High in experience: only evaluate after it happens, you can only explain or illustrate
after you have experienced it p.ex sitting in an audience of 100.000 people
High in credence: you can’t evaluate it yourself if the quality even after the service
happened, something you don’t require the knowledge of p.ex a complex surgery
High in search properties: elements that help customers to evaluate the offering prior to
the purchase
The service marketing triangle(p.176)
Internal marketing: explain to service providers what should be delivered to the
customers, requires offering a good experience to staff, good employees can be
attracted
External marketing: what they can expect, the offering that makes the company
attractive p.ex reasonable pricing, unique menu items
Interactive marketing: providers need to deliver what is promised in the external
marketing to the consumers, concerns the relationship between staff and customers
Service differentiation:
Difficult:
- no patent/ protection possible
- Intangibility and inseparability: Difficult to compare services prior to purchase
-Often leads to intense price competition
, 4P’s (both product as services)
3 aanvullende P’s
People: invest in recruiting the right people and training them correctly, they are the
ones that come in direct contact with the customer
Process: the mechanisms, flow of activities that are required to have a smooth service
p.ex online reservations (more smooth), amazon go (no more caissier), better delivery
options/ tracking , adding convenience
Physical evidence: environment of the service, sensory components p.ex professional
website, hotel lobby (unique/ clean), staff uniforms (better quality perception)
(Product/service): offer innovative options, brand(image) reliable reputation p.ex inno (a
lot of options underneath one roof)
(price): indicator of quality/positioning (lowest price, you need to make sure customers
know that this does not mean a lower quality)
(place): experience, clean, unique setting: do more: experience, feel like they are p.ex:
in disneyland, in the store
(promotion): communication, make it more tangible on how it will be done,
communicate what to expect, dont overpromise! --> evidence management
New P : Personalization: more unique service, specific recommendations p.ex netflix,
articles to read (newssite)
5.4 Measuring service quality and performance
SERVQUAL
• Customers compare perceived service with expected service
• If a service meets or exceeds expectations, consumers are satisfied
• A model based on the difference between expected service and actual perceived
service
• Service = objectif
