Chapter 2 Fundamental Differences Between Goods and Services

Chapter 2 Fundamental Differences Between Goods and Services

Chapter 2 Fundamental Differences Between Goods and Services COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. INTANGIBILITY: ASSOCIATED PROBLEMS Lack the ability to be stored Not protected by patents Not easily displayed or communicated Pricing is difficult COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

INTANGIBILITY: SUGGESTED SOLUTIONS Use tangible clues/physical evidence Utilize personal sources of information Create a strong organizational image COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. INSEPERABILITY: ASSOCIATED PROBLEMS Service provider is involved in the production process Other customers are involved in the

production process (shared experience) The mass production of services presents special challenges COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. INSEPARABILITY: ASSOCIATED PROBLMES Customer is involved in the production process: impact on the type of service desired length of the delivery process

cycle of service demand service factory must be built with the customers presence in mind COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. INSEPARABILITY: SUGGESTED SOLUTIONS Focus on the training and selection of public contact personnel Develop strategies to manage consumers Develop multi-site locations COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

HETEROGENEITY: ASSOCIATED PROBLEMS Standardization and quality control are difficult to achieve COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. HETEROGENEITY: SUGGESTED SOLUTIONS Customization Constructed to fit customers exact needs

Increased profit potential Standardization Faster Less expensive

More consistent COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. PERISHABILITY: ASSOCIATED PROBLEMS Services cannot be inventoried Production and consumption cannot be separated by time and space Statistical sampling techniques cannot be used Marketing and production must work together COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license.

ALL RIGHTS RESERVED. DEMAND AND SUPPLY SCENARIOS Demand exceeds maximum available supply Demand exceeds optimum supply level Demand is below optimal levels of supply Demand

and supply are at optimal levels COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. STRATEGIES FOR ALTERING DEMAND AND SUPPLY DEMAND STRATEGIES: Creative pricing strategies Reservation systems

Complementary services Developing nonpeak demand utilizing nonpeak periods to prepare for peak periods appeal to different market segments with different demand patterns COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. STRATEGIES FOR ALTERING DEMAND AND SUPPLY SUPPLY STRATEGIES:

Utilize part-time employees Share capacity Prepare in advance for expansion Utilize third-parties COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED. STRATEGIES FOR ALTERING DEMAND AND SUPPLY SUPPLY STRATEGIES: Increase customer participation

Advantages: convenience price customization Disadvantages: loss of control over service quality may be perceived as an attempt to distance form from customer COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

THE ROLE OF MARKETING IN A SERVICE FIRM Different functions are interwoven Marketing must maintain closer relationships with other departments Marketing, operations, and human resources should work together.

COPYRIGHT 2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license. ALL RIGHTS RESERVED.

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