978-1259709074 Chapter 13 Part 1

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Chapter 13 – Services: The Intangible Product Marketing 6th

McGraw-Hill Education.

Chapter 13

Services: The Intangible Product

Tools for Instructors

• Brief Chapter Outline

• Learning Objectives

• Extended Chapter Outline with Teaching Tips

• Answers to End of Chapter Learning Aids

• Chapter Case Study

• Additional Teaching Tips

• Connect Activities

Brief Chapter Outline

Services Marketing Differs from Product Marketing

Providing Great Service: The Gaps Model

Service Recovery

End of Chapter Learning Aids

Chapter Case Study: Transportation Network Services: Uber vs. Lyft vs. Taxis

Learning Objectives

LO 13-1 Describe how the marketing of services differs from the marketing of products.

Unlike products, services are intangible, inseparable, variable, and perishable. They cannot be seen or

touched, which makes it difficult to describe their benefits or promote them. Service providers therefore

enhance service delivery with tangible attributes, like a nice atmosphere or price benefits. Services get

LO 13-2 Discuss the four gaps in the Service Gap Model.

The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of

those customer expectations. Firms need to match customer expectations with actual service through

research. The standards gap is the difference between the firm’s perceptions of customers’ expectations

communications gap by managing customer expectations and promising only what they can deliver.

LO 13-3 Examine the five service quality dimensions.

First, reliability refers to whether the provider consistently provides an expected level of service. Second,

responsiveness means that the provider notes consumers’ desires and requests and then addresses

Chapter 13 – Services: The Intangible Product Marketing 6th

McGraw-Hill Education.

entails the provider’s recognition and understanding of consumer needs. Finally, tangibles are the

elements that go along with the service, such as the magazines in a doctor’s waiting room.

LO 13-4 Explain the zone of tolerance.

The area between customers’ desired service and the minimum level of service they will accept is the

zone of tolerance. It is the difference between what the customer really wants and what he or she will

LO 13-5 Identify three service recovery strategies.

In a best-case scenario, the service never fails. But some failures are inevitable and require the firm to

make amends to the customer by: (1) listening carefully and involving the customer in the service

Extended Chapter Outline with Teaching Tips

I. Services Marketing Differs from Product Marketing

A. Intangible

B. Inseparable Production and Consumption

C. Heterogeneous

D. Perishable

Progress Check: Several questions are offered for students to check their understanding of core

concepts.

1. What are the four marketing elements that distinguish services from products?

Answer: The four marketing elements that distinguish services from products are that services

2. Why can’t we separate firms into just service or just product sellers?

Answer: Another difference between services and products is that services are produced and

consumed at the same time; that is, service and consumption are inseparable. Because service

for their customers to get directly involved in the service.

II. Providing Great Service: The Gaps Model

A. The Knowledge Gap: Understanding Customer Expectations

1. Evaluating Service Quality Using Well-Established Marketing Metrics

B. The Standards Gap: Setting Service Standards

Chapter 13 – Services: The Intangible Product Marketing 6th

McGraw-Hill Education.

C. The Delivery Gap: Delivering Service Quality

1. Empowering Service Providers

2. Support and Incentives for Employees

3. Use of Technology

D. The Communications Gap: Communicating the Service Promise

E. Service Quality and Customer Satisfaction and Loyalty

Progress Check: Several questions are offered for students to check their understanding of core

concepts.

1. Explain the four service gaps identified by the Service Gaps Model.

2. List at least two ways to overcome each of the four service gaps.

Answer: To overcome the knowledge gap, firms must understand the customers’ expectations.

To understand those expectations, firms undertake customer research and increase the

interaction and communication between managers and employees. To overcome the standards

III. Service Recovery

A. Listening to the Customers and Involving Them in the Service Recovery

B. Finding a Fair Solution

1. Distributive Fairness

2. Procedural Fairness

C. Resolving Problems Quickly

Progress Check: Several questions are offered for students to check their understanding of core

concepts.

1. Why is service recovery so important to companies?

Answer: Effective service recovery efforts can significantly increase customer satisfaction,

2. What can companies do to recover from a service failure?

Chapter 13 – Services: The Intangible Product Marketing 6th

McGraw-Hill Education.

Answers to End of Chapter Learning Aids

Marketing Digitally

1 What services does Zipcar (www.zipcar.com) offer? Go to Zipcar’s website and click on “for

everybody.” Evaluate how quick it is to reserve a car in a major city or at a university that has

a dedicated Zipcar car pickup/dropoff location.

Zipcar has four simple steps to quickly reserve a car. “JOIN – Apply in the app and drive in minutes. Or

apply online. Once approved, we’ll send you a Zipcard to access vehicles worldwide. RESERVE – Book a

2 Go to Zappos’s website, www.zappos.com, and examine its customer service offerings. Next,

go to Reseller Ratings, www.resellerratings.com, and look up Zappos. Based on these

reviews, does Zappos have a service gap? If so, how can the company close it?

Zappos has over 300 ratings, with an average five-star (out of five) rating, and a score of 9.93/10. The

amount of positive reviews would indicate that Zappos does not have a service gap. However, if Zappos’s

score declined and negative customer reviews began to accumulate, Zappos could address the problem

Marketing Applications

1 Those companies from which you purchase products and services are not pure sellers of

services, nor are they pure sellers of products. What services does Home Depot provide?

What goods does a health club provide?

The service–product continuum concept discussed in this chapter notes that a company can be service

dominant, product dominant, or somewhere in between. Most offerings lie somewhere in the middle and

2 You have been sitting in the waiting room of your mechanic’s shop for more than an hour.

With the knowledge that products are different from services, develop a list of the things the

shop manager could do to improve the overall service delivery. Consider how the shop might

overcome problems associated with the tangibility, separability, heterogeneity, and

perishability of services.

Providing great service is not easy, so companies must make diligent efforts to analyze their service

process closely to ensure all aspects work together to provide a positive customer experience.

The dealership could provide a television for people to watch while waiting, offer refreshments such as

water, juice, coffee, or tea, and make the waiting area comfortable. The dealership might overcome some

of the problems associated with marketing a service as follows:

• Tangibility: Services are intangible, meaning they cannot be touched, tasted, or seen like a product

can. To overcome some of the challenges of intangibility, the mechanic’s shop should reinforce the

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benefit that they are providing. The mechanic could state that they are the most “trusted mechanic’s

shop in the county” or that “drivers are safer who visit this mechanic’s shop.”

• Separability: Services are inseparable, meaning that service production cannot be separated from

3 You have conducted a zone of tolerance analysis for your local pizza place. You find that the

lengths of the reliability and responsiveness boxes are much greater than those of the other

three service quality dimensions. You also find that the restaurant is positioned above the

zone box on reliability but below the box on responsiveness. What should you tell the

manager to do?

Determining customers’ perceptions of a service’s ability to meet or exceed their expectations is difficult,

but the zone of tolerance offers an effective method. For the pizza place, students should examine the

company’s performance relative to customers’ expectations regarding the five service quality factors.

The greater length of the reliability and responsiveness factors means that customers expect more of

service.

4 Assume you were hired by the local grocery store to help assess their service quality. How

would you go about undertaking this project?

Service quality is the customers’ perceptions of how well a service meets or exceeds their expectations.

It is often difficult for customers to evaluate service quality. There are five service dimensions to

determine overall service quality: reliability, responsiveness, assurance, empathy, and tangibles.

Many firms use voice-of-customer programs and employ ongoing market research to assess how well

5 What should a restaurant server do who is faced with an irate customer who has received

undercooked food after a long wait? How can he or she avoid a service failure by being

empowered? What should the server do?

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Despite a firm’s best efforts, sometimes service providers don’t meet customer expectations. When this

happens, the firm must make amends with the customer and learn from the experience. Service recovery

can help increase satisfaction, purchase intentions, and word of mouth. Employees who are empowered

6 What types of support and incentives could your university provide advisors to help make

them more attentive to students’ needs?

This question reminds students that universities provide services too and that advisors, as service

providers, often face the difficult task of dealing with unhappy students. Therefore, they must empathize

with advisors and consider what possible supports and incentives could make their lives easier.

Student answers will vary. The following illustrates a few examples of support systems a university can

provide for advisors. First, the university could provide emotional support to advisors who have to deal

7 What mobile apps do you use that help facilitate your transactions with a specific retailer or

service provider? Would you rather use the apps or engage in a face-to-face relationship with

a person? How, if at all, would your parents’ answer to these two questions differ?

Apps have become an increasingly important means of service delivery. Most students probably rely

more heavily on apps, whereas their parents might consider face–to-face interactions important for key

8 A local health club is running a promotional campaign that promises you can lose an inch a

month off your waist if you join the club and follow its program. How might this claim cause a

communications gap? What should the club do to avoid a service failure?

The communications gap refers to the difference between the actual service provided to customers and

the service that the firm’s promotion program promises. This claim might cause a communications gap if

every client expects to lose an inch off their waist in a month. The club can avoid this service failure in

several ways:

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9 Suppose the health club didn’t listen to your advice and ran the promotional campaign as is. A

new member has come in to complain that not only did he not lose inches off his waist, he

actually gained weight. How should the health club manager proceed?

In taking the perspective of the health club manager, students must consider two elements of service

recovery: how to placate the disgruntled customer and then how to avoid such problems in the future.

The health club manager should try to make amends with the customer and learn from the experience. To

10 You are hired by a career consulting firm that promises to market new graduates to high–

paying employers. The firm provides potential clients with an impressive list of employers. It

charges the clients a fee, and then a separate finder’s fee if the client gets a position. The firm

aggressively markets its services and has a large client base. You learn that the firm simply

takes submitted résumés and posts them to a variety of online job search engines. The firm

never actually contacts any firms on its clients’ behalf. The CEO, himself a recent college

grad, tells you that the firm never promises to actually contact potential employers, only that it

has access to employers and will distribute clients’ résumés. What do you think of the career

consulting firm’s practices?

This scenario forces student to question to what degree the career consulting firm’s practices might

violate their ethical standards. Using the ethical decision-making framework, students should evaluate

these practices to determine an appropriate course of action.

In applying the ethical decision-making framework:

• “Have you thought broadly of any ethical issues associated with the decision in question?” The

consulting firm is less than forthcoming with clients about the amount of effort expended on their

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Based on these answers, the practices of the career consulting firm are unethical and dishonest. To

charge fees for something that the clients can do themselves is disgraceful. The consulting firm should

come clean about its practices and rectify the situation for clients who might have been harmed by either

refunding their money or providing the service it said it would for free.

Quiz Yourself

1 Which of the following represents the most fundamental difference between a product and a service?

a. heterogeneity

b. tangibility

c. perishability

d. serviceability

e. inseparability

2 The Gaps Model is designed as a diagnostic tool to highlight specific areas where

a. marketers deliver better quality service compared to the physical goods they sell.

b. manufacturers are cutting costs on product quality.

c. marketers are falling short in their service delivery.

d. marketers can take advantage of unsuspecting customers.

e. there is a gap in product quality compared to service quality.

Chapter Case: Transportation Network Services: Uber vs. Lyft vs. Taxis

1 How can Uber and Lyft apply the Service Gaps Model to identify potential service failures?

Using the building blocks of service quality, how can Uber and Lyft ensure high service

quality?

Reliability is the ability to perform the service dependably and accurately. For Uber and Lyft, reliability

would involve having cars that are reliable and safe. In order to do this, Uber and Lyft should have their

drivers perform regular maintenance on their cars and keep an updated fleet.

Responsiveness is the willingness to help customers and provide prompt service. Uber and Lyft need to

have cars available for customers needing rides at all times.

Assurance is the knowledge of and courtesy of the employees. Uber and Lyft drivers need to be friendly