Marketing Management

Sixteenth Edition, Global Edition

Chapter 9
Designing and Managing
Services

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Learning Objectives
9.1 Define the distinctive characteristics of services.
9.2 Explain the new realities that service firms face.
9.3 Identify the key strategies to achieve service
excellence.
9.4 Explain how service firms can manage quality
effectively.

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The Nature of Services
• Service
– Any act or performance one party can offer to another
that is essentially intangible and does not result in the
ownership of anything

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The Service Aspect of an Offering
• A pure tangible good
• A tangible good with
accompanying services
• A hybrid
• A major service with
accompanying minor
goods/services
• A pure service

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Characteristics of Services
• Intangibility
• Inseparability
• Variability
• Perishability

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Intangibility
• Services cannot be seen, tasted, felt, heard, or smelled
• “Tangibilize the intangible”
– Place
– People
– Equipment
– Communication material
– Symbols
– Price

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Inseparability
• Services are typically produced and consumed
simultaneously

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Variability
• The quality of services
depends on who provides
them, when and where,
and to whom
– As such, services are
highly variable

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Perishability (1 of 2)
• Services cannot be stored
– Yield pricing

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Figure 9.1 Blueprint for Overnight Hotel
Stay

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Perishability (2 of 2)
Demand side Supply side
• Differential pricing • Part-time employees
• Nonpeak demand • Peak-time efficiency
routines
• Complementary services
• Increased consumer
• Reservation services
participation
• Shared services
• Facilities for future
expansion

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New Services Realities
• Increasing role of technology
• Importance of the increasingly empowered customer
• Customer coproduction
• Need to engage employees as well as customers

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Increasing Role of Technology
• Fundamentally changing how value is delivered to
customers
• Power to make service workers more productive

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Customer Empowerment
• Unbundled service choices
• Social media to spread the word

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Customer Coproduction (1 of 2)
• Active engagement in the service process
– One-third of all service problems are caused by the
customer

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Customer Coproduction (2 of 2)
• Redesign processes and redefine customer roles
• Incorporate the right
• Create high-performance customers
• Encourage “customer citizenship”

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Satisfying Employees
• Allow employees to:
– Pamper customers
– Read their needs
– Develop a personal
relationship with them
– Deliver high-quality
service

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Achieving Excellence
• External marketing
– Preparing, pricing, distributing, and promoting the
service to customers
• Internal marketing
– Training and motivating employees to serve
customers well
• Interactive marketing
– Employees’ skill in serving the client

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Best Practices of Top Service Companies
• Customer-centricity
• Service quality
• Cater to high-value customers
• Manage customer complaints

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Customer-Centricity
• Customer-centricity
– seeing the world in general, and a company’s
services in particular, from the customer’s point of
view

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Service Quality
• The best service providers set superior quality standards
– Voice of the customer measurements
– Importance–performance analysis

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Catering to High-Value Customers
• Special discounts
• Promotional offers
• Special service

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Managing Complaints
• Extra role behaviors
• Call centers
• Customer service representatives

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Differentiating Services
• Ease of ordering
• Speed and timing of
delivery
• Installation, training, and
consulting
• Maintenance and repair
• Returns

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Innovation with Services
• Online travel
• Retail health clinics
• Private aviation

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Managing Service Quality
• Managing customer expectations
• Incorporating self-service technologies

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Figure 9.2 Service-Quality Model

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Managing Self-Service
• Person to person service interactions are being replaced
by self-service technologies

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Managing Product-Service Bundles
• Key service differentiators
– Ordering
– Delivery
– Installation
– Customer training
– Customer consulting
– Maintenance
– Repair

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Discussion Questions (1 of 2)
• Most hotel chains and airlines have programs designed to
reward customer loyalty.
– How do loyalty programs enable companies like
Marriott to achieve customer service excellence?
▪ Consider customer-centricity, service quality,
catering to high value customers, and managing
customer complaints.

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Discussion Questions (2 of 2)
• Consumers have long been accustomed to self-
service check outs at the grocery store and banking
through ATMs, however the COVID-19 pandemic
prompted a surge in the development and use of self-
service options.
– Discuss how the change will impact the delivery of
services in the post-pandemic period.
– Consider services such as ordering coffee in
person vs. via an app, for example. Will customers
continue to demand more self-service options or
return to person-to-person interactions?

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