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1 Chapter 09
2 Service as the Core Offering
1.1 ETHICAL DIMENSION 9
Ethical Perspective
1. U.S. Physician: Many doctors in the United States cite a lack of valid research and no
evidence of long-term health benefits related to Chinese stem cell therapy. At the same time,
patients who go to China often report benefits from the treatment. Once a patient has
exhausted existing treatments in the United States, should a doctor recommend the patient
consider Chinese stem cell treatment?
2. U.S. Patient: As a patient, would you consider traveling to China for stem cell therapy? If
so, would you wait until all U.S. treatments had been exhausted?
1.2 KEY TERMS
service A product that represents a bundle of benefits that can satisfy customer wants and needs
without having physical form.
service economy An economy that is predominantly comprised of service-related jobs.
service sector The portion of an economy that is comprised of service-related jobs.
new dominant logic for marketing A shift in worldview from the traditional goods versus
services dichotomy to recognition of both goods and services as “offerings” that create value for
consumers.
intangibility The characteristic of a service in which it cannot be experienced through the
physical senses of the consumer.
inseparability The characteristic of a service in which it is produced and consumed at the same
time and cannot be separated from its provider.
variability The characteristic of a service in which its service quality can only be as good as that
of its provider.
perishability The characteristic of a service in which it cannot be stored or saved for future use.
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fluctuating demand When the level of consumer demand is not constant, having serious
implications related to the perishability of services.
service-profit chain The formalization of linkages between employee and customer aspects of
service delivery.
internal marketing The treating of employees as customers and developing systems and
benefits that satisfy their needs to promote internal service quality.
customer-centric Placing the customer at the core of the enterprise and focusing on investments
in customers over the long term.
customer expectations management The process of making sure the firm does not set customer
expectations so high that they cannot be effectively met on a consistent basis.
customer retention Low propensity among a fi rm’s customer base to consider switching to
other providers.
customer advocacy A willingness and ability on the part of a customer to participate in
communicating the brand message to others within his or her sphere of influence.
search attributes Aspects of an offering that are physically observable before consumption.
experience attributes aspects of an offering that can be evaluated only during or after
consumption.
credence attributes Aspects of an offering for which customers cannot make a reasonable
evaluation, even after use.
professional services Services that require specialized training and certifi cation that are
typically selfregulated by industry or trade groups.
customer delight The exceeding of customer expectations.
delightful surprises Built-in extras in service delivery not expected by the customer.
service quality The formalization of the measurement of customer expectations of a service
compared to perceptions of actual service performance.
service encounter The time period during which a customer interacts in any way with a service
provider.
moment of truth The face-to-face time between customer and service provider.
gap model A visual tool used in the measurement of service quality that identifies and measures
the differences between consumer and marketer perceptions of a provided service.
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service recovery The restoring of service quality to a level at or above customer’s expectations
following a service failure.
service failure When a service fails to meet the quality level promised by the provider.
dimensions of service quality The five aspects of a service that make up its total quality,
including tangibles, reliability, responsiveness, assurance, and empathy.
tangibility The physical aspects of a product.
reliability The percentage of time a product works without failure or stoppage.
responsiveness The willingness and ability to provide prompt service and to respond quickly to
customer requests.
assurance The knowledge and courtesy of employees, and the ability to convey trust and build a
customer’s confidence in the quality of the service.
empathy The caring and individual attention a service provider gives to customers.
SERVQUAL A measurement instrument designed to reflect the five dimensions of service
quality.
service blueprints Complete pictorial designs and flow charts of all of a service’s activities from
the first customer contact to the actual delivery of the service.
line of visibility The separation between activities customers see and those they do not in the
process of service delivery.
1.3 APPLICATION QUESTIONS
1 Marketing managers must be cognizant of the unique characteristics of services: intangibility,
inseparability, variability, and perishability.
a. How does each of these characteristics potentially impact the development and
execution of marketing plans?
b. What might a manager do to mitigate any negative consequences of each
characteristic on the delivery of his or her firm’s service?
c. Come up with an example of a service encounter you have had as a customer
(either in the B2C or B2B space) in which each of these characteristics came into play in
how the service was delivered.
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3. The service-profit chain guides managers toward understanding and facilitating successful
linkages in the service delivery system to drive loyalty, revenue growth, and higher profits.
a. What functional areas of a firm must a marketing manager effectively interface with to
implement a service-profit chain approach?
b. What potential impediments do you foresee in implementing the service-profit chain in
an organization? How might these impediments best be overcome?
c. What do you believe are the key advantages in implementing a service-profit chain
approach?
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4. Review Exhibit 9.5 and the accompanying discussion on search, experience, and credence
attributes of offerings.
a. Why are the types of offerings on the far right side of the continuum – professional
services – difficult for customers to evaluate?
b. What challenges does this difficulty create for marketing managers in professional
services firms? Why?
5. Review the Gap Model of Service Quality (Exhibit 9.6). Consider each of the five gaps
where customer expectations might not be met. Select a firm of your choice and for each
potential gap list specific actions that firm could take to improve the likelihood that customer
expectations will be met on a regular basis.
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6. Consider the five dimensions of service quality: tangibles, reliability, responsiveness,
assurance, and empathy.
a. Identify a recent service encounter you have experienced as a customer (either B2C or
B2B) that you would classify as a generally bad experience. In what ways specifically
did each of the five service quality dimensions contribute to your perceptions of poor
service? Be as specific with your examples as you can. What could the service provider
have done to improve each of the relevant dimensions and thus improve your experience?
b. Repeat the above process but instead of a bad service experience this time identify a
generally good service experience. For each relevant dimension, specifically what did
the service provider do really well? Did you experience any delightful surprise? If so,
what?
MANAGEMENT DECISION CASE: Service and the Story of Netflix
Questions for Consideration
1. Netflix started out as a DVD rental company but has since added online video streaming to
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their service offerings. Also, in recent years they began developing their own content, which
reduces their reliance on other production companies to provide the shows customers watch.
What other innovative offerings do you recommend Netflix investigate for the future (think
“outside the box” on this)?
2. Over its history, Netflix has done a great job of utilizing the elements of the marketing mix to
enhance its success. Describe Netflix’s marketing mix— what product, pricing, distribution,
and promotion strategies have contributed to its popularity with customers?
Word of Mouth
3. The chapter identifies five dimensions of service quality. Considering these with respect to
Netflix, how does the firm stack up on each of these dimensions to set itself apart from
competitors and other providers of entertainment content?
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