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What is a key focus of the modern automotive industry's shift?
Customer service is a service that does not require any cost to the customer.
True
What do derived services refer to?
Services that arise from the use of physical products.
Modern automotive companies have expanded their scope into _____ and _____ industries.
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Match the following service industries with their examples:
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What has caused the increasing share of services in global economies?
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Service-based economies include industries like manufacturing and agriculture.
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Identify one reason why service marketing is important.
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The process of _____ involves providing customers with non-tangible benefits or products.
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Which of the following is an example of a service sector?
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What is a key factor driving the need for customer-centric marketing in deregulated industries?
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What is one consequence of excessive service standardization?
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Globalization has narrowed the scope of services available to consumers.
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Technology complexity simplifies consumer interactions with services.
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What term refers to the transformation of manufacturing companies into service-oriented businesses?
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What practice is referred to as 'the vicious circle of frontline job'?
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In servitization, companies recognize that good products alone cannot guarantee ________ success.
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The three principles for effective service marketing are sincerity, speed, and _____ .
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Match the following industries with their relationship to service marketing effects:
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Which of the following is NOT an example of new technology impacting service marketing?
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Match the following concepts with their descriptions:
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Servitization guarantees success for all manufacturing companies.
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What service is included in Hyundai’s subscription program 'Hyundai Selection'?
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The competitive landscape for professional service providers intensifies in industries that are ______.
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Match the companies with their service transformations:
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What is the phenomenon of deservitization in service marketing?
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Service disintermediation involves including intermediaries in the service process.
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Name one source of new services that has emerged due to advancements in information technology.
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Expanding supplementary services is crucial, as _________ service alone cannot provide a competitive advantage.
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Match the following services with their associated features:
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Which of the following is a characteristic of services?
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The emergence of sharing economy services allows customers to act as service providers to fulfill others' needs.
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Give an example of a new online-based service that has become common.
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In the service sector, the concept of _________ refers to the uniqueness in service delivery among providers.
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What is a primary feature of service offerings in the context of premiumization?
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Which characteristic of services refers to the inability to store or resell a service?
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Heterogeneity implies that services can be easily standardized.
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What is a significant implication of intangibility in service marketing?
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Services that are experienced only after purchase are known as __________ qualities.
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Match the following marketing implications with their appropriate characteristics of services:
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Which of the following is NOT a characteristic of services?
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Physical evidence in service delivery includes the appearance of service facilities.
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What strategy can be employed to address issues of perishability?
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The three types of qualities associated with offerings are search, experience, and __________ qualities.
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Match the service marketing mix elements with their descriptions:
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Which of the following is an implication of the perishability of services?
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Self-service can contribute to a perception of reduced service quality.
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What is one implication of inseparability in service marketing?
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To address __________, services should focus on customer interactions during service production.
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Study Notes
Hyundai Assurance as an example of Servitization
- Hyundai Assurance is an example of servitization, where a manufacturing company expands its service offerings.
- Introduced in 2008 during the global financial crisis, Hyundai Assurance allowed customers who had purchased Hyundai vehicles through loans or leases to return their vehicles if they became unemployed or faced health problems within a year.
- This program demonstrates how manufacturers can respond to consumer needs by providing services that add value beyond the core product (cars, in this case).
Concepts of Services
- Service industries and companies: These are industries and companies where services are the primary products. This includes pure service companies that offer only services.
- Services as products: These are intangible goods that provide value to customers, inspiring the willingness to pay. They are traded in the market and are distinct from customer service.
- Customer service: Refers to the services provided in support of a company's core product. It is not directly charged to customers.
- Derived services: These are services that arise from using a product. The value of the product is not solely in the physical product but also in the services provided during its usage.
- Examples of derived services: Medications provide medical services, razors provide barber services, and computers provide information services.
Why is Service Marketing Important?
- Service-based economies: Global service industries are becoming increasingly dominant, contributing significantly to GDP and employment.
- Diverse consumer needs: Consumers are shifting from basic survival needs to seeking a more enriching and fulfilling life experience, leading to increased demand for services that cater to these needs.
- Globalization: Globalized trade and competition have expanded the scope of services, necessitating enhanced employee skills and higher service quality.
- Deregulated Industries and Professional Service Needs: Deregulation in sectors like airlines, finance, and telecommunications has created a more competitive environment. Consequently, marketing strategies that are both customer-centric and adaptable are crucial.
- New Technology Development: Emerging technologies such as AI, Big Data, IoT, cloud computing, and social media are driving the creation of new services. These demand innovative marketing approaches to engage customers and offer personalized experiences.
Key Trends in the Service Economy
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Servitization:
- Manufactures are embracing servitization – transforming from solely product-focused companies to businesses offering integrated products and services.
- This involves expanding into diverse areas related to their products, such as technical services, maintenance, customer training, consulting services, and materials management.
- It aims to create a more comprehensive system that prioritizes service and customer value.
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Deservitization:
- Deservitization is the trend of companies reducing the level of direct customer interaction through services.
- Driven by service commoditization, where standardized services become commonplace, reducing the need for customized solutions.
- This leads to service disintermediation, where service providers eliminate intermediaries, allowing customers to directly access services.
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Expansion of Auxiliary Services: Companies are strategically incorporating auxiliary services by offering additional benefits that enhance the core experience.
- Examples: Hotels offering restaurants, fitness centers and spas, airlines offering miles programs and airport lounges, and department stores offering cultural centers and nursing rooms.
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Rise of New Services:
- The evolution of information and communication technologies (ICT) through the internet has been instrumental in the creation of new service-based businesses like Google and Amazon.
- ICT advancements continuously fuel the emergence of new service offerings.
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Shared Economy Services:
- The shared economy allows customers to directly provide services to other customers, transforming consumers into service providers.
- This model emphasizes peer-to-peer interaction and resource sharing.
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Higher-End, Specialized, and Diversified Services:
- Customers are demanding more sophisticated, niche-specific, and diverse service offerings.
- Examples: Private banking tailored to high-net-worth individuals, specialized clinics for particular medical conditions, pet-specific clinics and salons, and honeymoon-focused travel agencies.
- Companies are adapting to meet this demand by offering high-quality, personalized services, catering to specific customer needs across various domains.
Characteristics of Services
- Intangibility: Services are inherently intangible, meaning they cannot be physically observed or possessed before purchase, unlike tangible goods.
- Heterogeneity: Services are highly variable, as they are delivered by individuals, leading to inconsistent quality, making standardization difficult.
- Inseparability: The production and consumption of services often occur simultaneously, meaning the customer is directly involved in the service process.
- Perishability: Services are perishable, as they cannot be stored or reserved for later use, and any unsold capacity leads to lost revenue.
Marketing Implications of Service Characteristics
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Intangibility:
- Emphasize physical evidence: Use cues like the doctor's educational credentials, the environment surrounding the service, and tangible items to convey quality.
- Promote positive brand image: Build a strong brand reputation through effective communication and marketing.
- Leverage Word-of-Mouth (WOM): Encourage recommendations from satisfied customers.
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Heterogeneity:
- Implement service standardization, such as setting up procedures and training employees to maintain consistency.
- Offer service personalization, tailored to individual needs.
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Inseparability:
- Emphasize employee training: Invest in training to ensure professional and customer-oriented service delivery.
- Develop effective customer management strategies: Manage customer interactions to ensure a positive experience.
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Perishability:
- Manage demand and capacity: Utilize tools like reservation systems, adjust pricing strategies, and employ creative solutions for managing high demand and off-season periods.
- Implement strong service recovery strategies: Adopt measures to address service failures and ensure customer satisfaction.
Classification of Offering Properties
- Search Qualities: Attributes that customers can assess before purchasing a product, such as its color, price, or physical fit.
- Experience Qualities: Attributes that can only be evaluated after purchase or consumption, like taste or product durability.
- Credence Qualities: Characteristics that are difficult for customers to evaluate even after consumption, such as medical skills, technical competence, or the quality of a complex repair.
The 7 Ps of the Service Marketing Mix
- Product: The service itself, including its core features, benefits, and supporting elements.
- Price: The cost of the service, including any additional fees or discounts.
- Place: The location and channels through which the service is delivered.
- Promotion: Marketing efforts to attract and inform prospective customers about the service.
- People: The individuals who are directly involved in providing the service, including employees, customers, and other stakeholders.
- Physical Evidence: The tangible environment in which service delivery happens, such as the service location, uniforms, and other visual cues.
- Process: The operational procedures, systems, and flow of activities involved in delivering the service.
The Service Paradox
- In a service-based economy, the increasing dominance of services can paradoxically result in declining customer perceptions of service quality.
- Factors contributing to this paradox include:
- Excessive Service Standardization: While standardization can improve efficiency and consistency, it can also lead to impersonal interactions and a lack of individual attention.
- Loss of Humanity: Increasing pressure on employees due to high service demand and limited staff can lead to less engaged and personalized service.
- Technology Complexity: Rapid technological advancements can create products and services that are overly complex, making it challenging for both customers and employees to fully comprehend and utilize.
- A Vicious Circle of Frontline Service Jobs: This cycle is characterized by low profits, low wages, simple jobs, inadequate recruitment and training, high turnover rates, and limited opportunities for advancement.
Overcoming the Service Paradox
- Sincerity, Speed & Smile (3S): Emphasizing genuine friendliness, prompt service, and a welcoming attitude.
- Impressive Service: Delivering service that goes above and beyond expectations, creating joy and a sense of delight for the customer.
- Energy: Having energetic and enthusiastic staff with a positive attitude.
- Communication: Engaging in two-way communication with customers, actively listening and understanding their needs.
- Revolutionary Service: Providing innovative and fresh service experiences, constantly exploring new ideas and possibilities.
- Entertainment: Creating a delightful and enjoyable atmosphere for customers, incorporating elements of entertainment into the service encounter.
- Valuable Service: Delivering service that is valuable to both the service provider and the customer, benefiting both parties through quality interactions and outcomes.
롯데호텔's Strategies to Overcome Service Challenges
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Addressing Intangibility:
- Standardized cooking manuals for consistent quality.
- Ongoing employee training through service manuals and competitions.
- Offering diverse room options and personalized amenities.
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Addressing Perishability:
- Increasing demand during off-peak seasons by offering special deals and discounted services.
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Addressing Heterogeneity:
- Promoting the hotel's reputation and brand image through effective communication and media campaigns.
- Utilizing past VIP guest photos to highlight the hotel's prestige.
- Engaging in community outreach activities and social events to foster a positive image.
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Addressing Inseparability:
- Shifting from group-oriented services toward catering to individual customers and fostering repeat clientele.
- Implementing membership-based dining options to provide exclusive benefits for loyal patrons.
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Description
Explore the concept of servitization through the example of Hyundai Assurance, a program introduced during the 2008 financial crisis. This initiative allowed customers to return their vehicles under specific conditions, showcasing how manufacturers can enhance value through service offerings. Understand the importance of services as products in various industries.
