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1. Introduction to Services
Terms in this set (24)
Why do service stinks?
-Industry nations turn to service economy, which creates the need for interaction between people. New social implications are created.
-Human behavior is hard to predict, so there are always problems
-82% of customers left a company because of bad customer service experience
What is a service?
It is sometimes argued that everything is a service and that there are no pure products
What are the characteristics of a service?
1. INTANGIBILITY (vs. tangible)
2. HETEROGENEITY (vs. standardized)
3. SIMULTANEOUS PRODUCTION AND CONSUMPTION (vs. separate)
4. PERISHABILITY (vs. nonperishable)
What are the implications of INTANGIBILITY? (Characteristics of a service)
-Services cannot be inventoried (because of this it is hard to manage fluctuations on demand)
-Services cannot be easily patented
-Services cannot be readily displayed or communicated
-Pricing is difficult
What are the implications of HETEROGENEITY? (Characteristics of a service)
-Service delivery and customer satisfaction depend on employee and customer actions
-Service quality depends on may uncontrollable factors (like human behavior, which is hard to control and measure)
-There is no sure knowledge that the service delivered matches what was planned and promoted
What are the implications of SIMULTANEOUS PRODUCTION AND CONSUMPTION? (Characteristics of a service)
-Customers participate in and affect the transaction
-Customers affect each other
-Employees affect the service outcome
-Mass production is difficult
-As quality happens in real time, it changes every time
What are the implications of PERISHABILITY? (Characteristics of a service)
-It is difficult to synchronize supply and demand with services
-Services cannot be returned or sold
-Services cannot be stored
What is the modern approach for the characteristics of a service?
We are left with no suitable characteristics that differentiate a service from a good. EXCEPT:
GOOD: requires no customer resources in the production process
SERVICE: requires customer resources in the production process
What is the relationship of the modern approach of characteristics with the traditional one?
1. INTANGIBILITY: the service per se is intangible but companies may tangibilize it to give customers a proof
2. HETEROGENEITY: customer's resources are heterogeneous
3. SIMULTANEOUS PRODUCTION AND CONSUMPTION: customer's resources are inseparable from the production process
4. PERISHABILITY: production capacity is perishable when customers are not integrated at the right time
What is the Clark-Fisher hypothesis?
-As labor productivity increases in one sector, the labor force moves to the "next" sector
-As service economy is increasing, employment in services is also increasing
What is the Service Classification?
1. People Processing (Health Care, Restaurants)
2. Procession Processing (Transportation, Repair and Maintenance)
3. Mental Processing (Education, Information)
4. Information Processing (Banking, Insurance)
What is GAP 1 in the Conceptual Model of Service Quality?
EXPECTED SERVICE VS MANAGEMENT PERCEPTION
-Inadequate marketing research orientation
-Lack of upward communication
-Insufficient relationship focus
-Inadequate service recovery
What is GAP 2 in the Conceptual Model of Service Quality?
MANAGEMENT PERCEPTION VS SERVICE DESIGN AND STANDARDS
-Poor service design
-No customer-driven standards
-Inappropriate physical evidence and servicescape
What is GAP 3 in the Conceptual Model of Service Quality?
SERVICE DESIGN AND STANDARDS VS SERVICE DELIVERY
-Deficiencies in HR policies
-Customers who do not fulfill roles
-Problems with service intermediaries
-Failure to match supply and demand
What is GAP 4 in the Conceptual Model of Service Quality?
SERVICE DELIVERY VS. EXTERNAL COMMUNICATION
-Lack of integrated service marketing communication
-Ineffective management of customer expectations
-Inadequate horizontal communications
What are questions for PROFIT AND GROWTH (Customer loyalty) in the Service Profit Chain Audit?
1. How do we define loyal customers?
2. Do measurements of customer profitability include profits from referrals?
3. What proportion of business development expenditures and incentives are directed to the retention of existing customers?
4. Why do our customers defect?
What are questions for CUSTOMER SATISFACTION in the Service Profit Chain Audit?
5. Are customer satisfaction data gathered in an objective, consistent, and periodic fashion?
6. Where are the listening posts for obtaining customer feedback in your organization?
7. How is information concerning customer satisfaction used to solve customer problems?
What are questions for EXTERNAL SERVICE VALUE in the Service Profit Chain Audit?
8. How do you measure service value?
9. How is information concerning customers' perceptions of value shared with those responsible for designing a product or service?
10. To what extent are measures taken of differences between customers' perception of quality delivered and their expectations before delivery?
11. Do our organization's efforts to improve external service quality emphasize effective recovery from service errors in addition to providing a service right the first time?
What are questions for EMPLOYEE PRODUCTIVITY in the Service Profit Chain Audit?
12. How do you measure employee productivity?
13. To what extent do measures of productivity identify changes in the quality as well as the quantity of service produced per unit of input?
What are questions for EMPLOYEE LOYALTY in the Service Profit Chain Audit?
14. How do you create employee loyalty?
15. Have we made an effort to determine the right level of employee retention?
What are questions for INTERNAL SERVICE QUALITY in the Service Profit Chain Audit?
16. Is employee satisfaction measured in ways that can be linked to similar measures of customer satisfaction with sufficient frequency and consistency to establish trends for management use?
17. Are employee selection criteria and methods geared to what customers, as well as managers, believe are important?
18. To what extent are measures of customer satisfaction, customer loyalty, or the quality and quantity of service output used in recognizing and rewarding employees?
What are questions for EMPLOYEE SATISFACTION in the Service Profit Chain Audit?
19. Do employees know who their customers are?
20. Are employees satisfied with the technological and personal support they receive on the job?
What are questions for LEADERSHIP in the Service Profit Chain Audit?
21. To what extent is the company's leadership:
-energetic, creative vs. stately, conservative?
-participatory, caring vs. removed, elitist?
-listening, coaching and teaching vs. supervising and managing?
-motivating by mission vs. motivating by fear?
-leading by means of personally demonstrated values vs. institutionalized policies?
22. How much time is spent by the organization's leadership personally developing and maintaining a corporate culture centered around service to customers and fellow employees?
What are questions for RELATING THE MEASURES in the Service Profit Chain Audit?
23. What are the most important relationships in your company's service-profit chain?
24. To what extent does each measure correlate with profit and growth at the frontline level?
25. Is the importance of these relationships reflected in rewards and incentives offered to employees?
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