Chapter 15

Designing and Managing

Services
by

15-1
Copyright © 2003 Prentice-Hall, Inc.
 Chapter Objectives
 In this chapter, we focus on the following
questions:
 How are services defined and classified?
 How do services differ from goods?
 How can service firms improve their
differentiation, quality, and productivity?

15-2
Copyright © 2003 Prentice-Hall, Inc.
 The Nature of Services
 Categories of Service Mix
 Pure tangible good
 Tangible good with
accompanying services
 Hybrid
 Major service with accompanying
minor goods and services
 Pure service

15-3
Copyright © 2003 Prentice-Hall, Inc.
 Figure 1-1
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics Fast-food
 Outlets
 Intangible
Dominant

Tangible

Dominant Fast-food

Outlets
Advertising 
Agencies
Airlines 
Investment

Management
Consulting 
Teaching
Copyright © 2003 Prentice-Hall, Inc.
 The Nature of Services
 Characteristics of Services and Their
Marketing Implications
 Intangibility
 Services can be made tangible through:
 Place
 People
 Equipment
 Communication material
 Symbols
 Price

15-5
Copyright © 2003 Prentice-Hall, Inc.
 The Nature of Services
 Inseparability
 Variability
 Quality control by:
 Good hiring and training procedures
 Service blueprint - Franchisees
 Monitoring
customer
satisfaction

15-6
Copyright © 2003 Prentice-Hall, Inc.
 The Nature of Services
 Perishability
 Strategies for better matching between demand and
supply in a service business
 Differential pricing
 Reservation systems
 Part-time employees
 Increased consumer participation
 Shared services
 Facilities for future expansion

15-7
Copyright © 2003 Prentice-Hall, Inc.
 Marketing Strategies
for Service Firms
 Three Additional Ps
 People
 Physical
evidence
 presentation
 Process

15-8
Copyright © 2003 Prentice-Hall, Inc.
Figure 15.3: Three Types of Marketing in Service Industries

15-9
Copyright © 2003 Prentice-Hall, Inc.