Chapter Ten: Services: The Intangible Product TOOLS FOR INSTRUCTORS • Learning Objectives • Annotated Chapter Outline with Instructor’s Notes/Teaching Tips • Answers to End of Chapter Learning Aids Concept Review Marketing Application Questions Net Savvy Chapter Case Study • Video Activities Learning Objectives 1. Describe how marketing a service differs from marketing a product and apply the principles of intangibility, inseparability, inconsistency and inventory 2. Outline the four gaps in the Service Gap Model used to understand and manage customer expectations 3. Describe strategies that firms can use to help employees provide better service 4. Identify three service recovery strategies Annotated Chapter Outline PowerPoint Slides Instructor’s Notes Chapter 10 will focus on Services as a product offering and how they are really seen as an intangible entity. These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides. Opening Vignette: GoTire The intangible nature of services means consumers can’t always see what they are getting before they buy it. By focusing on professional looking trucks, GoTire added tangibility to their tire change business. Service guarantees de-risked transactions and dealt with inseparability. You can’t store a service in inventory so adding mobile windshield repairs and other services helped them deal with the perishable nature of services. Extensive training ensured a consistently great customer service experience addresses inconsistency. All these elements helped build a strong reputation for GoTire. Per chapter introduction: the case study focuses on the success story of GoTire – Canada’s first mobile tire service business. We all know the expression – Time is Money! In this case, business was suffering because vehicles were taking too long to service incurring extra costs & lost revenue. A mobile tire service offered to businesses, brings the entire shop to the customer. This allows customers to get their vehicles serviced quickly & back on the road, so business can continue with minimal disruption. From humble beginnings, then an appearance on the Dragons’ Den, to franchise creation, GoTire now offers even more services to customers. They now have over 30 franchises coast-to-coast and is Canada’s fastest-growing mobile tire franchise. Service is any intangible offering that involves a deed, performance, or effort that cannot be physically possessed. Customer service refers to the human or mechanical activities firms undertake to help satisfy their customers’ needs and wants. In a service economy, firms compete on how well they provide service to their customers. Ask students: Describe your last outstanding and horrible customer service experiences. How did it affect your attitude toward the firm? How did it affect your purchase behaviour? The Service Product Continuum Companies run a continuum from a pure service to a pure product. Importance of Services Increasing service orientations in developed economies, and the decline of manufacturing, has occurred because 1. Production is cheaper elsewhere. 2. Household maintenance activities are more specialized. 3. People place a high value on convenience and leisure. According to Theodore Levitt, all products are services. Ask students: What does this statement mean? When you purchase products, do you also purchase the services associated with the product? Like what? Remind students about how environments influence marketing. As economic, technological, and sociocultural environments change, so do demands for services. Group activity: Examine some key changes in each of these environments that have led to greater demands for service. Some potential responses include automation, women in the workplace, new trade realities, or shipping and transportation improvements. Answer C; see page 307 LO1: Services Marketing Differs from Product Marketing This graph sets up the following discussion; if you wish to shorten this presentation, simply review these differences. The next slides go into greater detail. Intangibility: Services Marketing Is Intangible. • Services cannot be touched, tasted, or seen like a product. • Marketers must offer cues to help customers experience and perceive the service more positively, such as 1. A good atmosphere in which to experience the service. 2. Symbols and images to promote and sell services. 3. Images that reinforce the benefit or value that a service provides. Consumers use cues to judge the service quality of dentists, including the quality of the furnishings, whether magazines are current, and diplomas on the wall. Group activity: Think about the cues you use to assess the quality of a service. Choose a particular service (e.g., hair cut, auto repair, medical care, insurance) and list several cues the provider could use to indicate quality. Inseparability: Production and Consumption Are Inseparable. • Unlike products, services are consumed at the moment they are produced. • Consumers cannot test a service; so many providers offer warranties or guarantees to reduce their risk. When staying at a hotel, you can’t test it out before you stay. Some hotels offer satisfaction guarantees to lower risk. Ask students what other kinds of products can they not test before? Some of them might say delivery while others might say having a root canal at the dentist. Inconsistency: Services Are Variable. • Humans provide services, so variability is inevitable. • To reduce inconsistency, firms can 1. Conduct extensive training of employees. 2. Micro market. 3. Automate services. 4. Employ the Internet to reduce both online and in-store sale variability. Many students work in service professions. Ask students: How have your employers attempted to reduce service variability? Do these programs work? What else could your employer do to reduce variability? In many industries, consumers have taken roles in the final production process; ATMs, self-service gas stations, and self-service restaurants all shift labour to the consumer, and yet many consumers consider these technologies actually improve customer service. Technology can reduce inconsistency of service delivery. Answer B; see page 311 Inventory: Services Are Perishable. • They cannot be stored for future use. • This aspect poses significant challenges for marketers. Each of the pictured services is perishable, because as soon as the plane/ship departs, the date ends, or the ski lesson is taken, there is no possibility of changing. Services can’t be stored in inventory for future use. Unsold seats or rooms are lost revenue. LO2: Providing Great Service: The Gaps Model This slide sets up the discussion that follows and can be used as the basis for a shorter discussion. Define the Knowledge Gap. • The knowledge gap reflects the difference between customers’ expectations and the firm’s perceptions of those expectations. • To understand consumer expectations, firms must recognize that expectations 1. Are based on knowledge and experience. 2. Vary according to the type of service. 3. Vary depending on the situation. Many doctors believe they should be evaluated on the basis of their credentials and find consumers’ interest in wait times, friendliness of staff, and waiting room décor frustrating. Ask students: What can doctors do to close this knowledge gap? Higher education often gets accused of being customer unfriendly. How can a university close the knowledge gap and thus improve service quality and outcomes? Evaluate Service Quality • Customers often have trouble determining how well a service meets or exceed their expectations. • The building blocks of service quality are 1. Reliability 2. Responsiveness 3. Assurance 4. Empathy 5. Tangibles Ask students: What are your expectations of the service provided by these two businesses. Will there be price differences? In what circumstances would you stay at each property? Class activity. Tell students: Assume you are expecting an important package from UPS. A delivery attempt was made, but you didn't hear the door bell, and missed it. You call the customer service line and they tell you not to worry, and that one of your options is to pick up the package at the terminal that evening. You tell them that you need the package before noon. So, they arrange for you to meet the delivery truck close to your house. You are delighted when you spot the clean brown UPS truck exactly where it is supposed to be. The friendly driver greets you by name, gets your package and you are on your way. Ask the students: Which of the service building blocks of customer service applies to each aspect of this scenario? Answer D; see page 315 Use Marketing Research to Understand Customers. • Research provides a means to understand consumers’ service expectations and service quality perceptions. • Research can take several forms: 1. Voice of the customer (VCO) programs collect customer inputs and integrates them into managerial decisions. 2. The zone of tolerance defines the area between customers’ desired service and the minimum level of acceptable service. Consumers often have a range of acceptable outcomes. Discuss the example of a hotel room: You prefer a king bed but will accept two queen beds; you will not, however, accept a room without towels or a lumpy mattress. Therefore, you have defined your zone of tolerance for hotels. Go to the Toolkits on the OLC. Click on Zone of Tolerance analysis. Work through one of the three problems provided. The other two could be assigned to students to do. Class exercise: Have students evaluate the zone of tolerance for the food service options on campus. This exercise forces students to think about the five service quality dimensions. It will also reinforce the idea that if a firm is above the zone, particularly on an unimportant dimension, they are probably spending too much. At the same time, if it is below the zone, its service is substandard. Being substandard on an important dimension is potentially a devastating problem. Apple’s Genius Bar Ask students – what are your expectations when you buy a computer? How can they be exceeded? Students will mention their basic expectations in terms of fast performance and reliability. It might be challenging for them to figure out how to make it better. LO3: The Standards Gap: Setting Service Standards Strategies for Providing Better Service The Standards Gap dictates service standards. To achieve their service goals through training, firms must set specific, measurable goals based on customers’ expectations and involve employees in setting goals. If managers display a commitment to service quality, they can demand the same attitudes from everyone in the organization. Quality service requires constant investments in training and monitoring. Similar to any other strategic element, service quality flows from the top down. Rewards and incentives must be in place to support service quality commitments. Ask students: What types of incentives work best to make service employees buy in to their firm’s service standards? Answer B; see page 315 The Delivery Gap Indicates How to Deliver Service Quality. This slide again sets up the following discussion, which you may omit if you prefer to focus just on these dimensions. Empowerment means allowing service employees to make decisions about service provision. Frontline employees must be able to solve customer problems. Ask students: The last time you returned something to a store, did the person waiting on you process the return, or did he or she need to get a manager’s approval? Which do you prefer? Provide support and incentives 1. Managers and coworkers should provide emotional support to service providers. 2. Service providers require instrumental support, the systems and equipment necessary to deliver service properly. 3. Managers must be consistent throughout the organization. 4. Reward employees for excellent service. If the firm has just a paper commitment to service quality, it will not happen. Systems must support the service providers and allow them to do their job and exceed customer expectations. Ask students: What types of incentives do you believe would best motivate UPS delivery drivers? Of course they will say money. This could lead to an interesting discussion about how intrinsic rewards like recognition plaques can mean as much or more than money. Technology has changed the way firms do business with other businesses and customers. Technology has become an increasingly important method for facilitating the delivery of services. RFIDs (radio frequency identification devices) are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products. Another way to use technology in the service delivery process is with a retail store assistant (RSA). An RSA can be a kiosk or a device attached to the customer’s shopping cart. Instead of bringing a shopping list to the store, a customer can swipe a loyalty card or enter a phone number at an RSA. Any information the customer has entered online from home will show up on the customer’s profile. Ask Students what new technologies they have seen at retailers? The Communication Gap Suggests Ways to Communicate the Service Promise. • To manage the communications gap, firms must manage customer expectations. • That means promising only what they can deliver, or perhaps even a little less. Many people have never stayed in a five-star hotel, but they know what level of service quality they expect. Often, such expectations develop in response to the promises made in promotional materials provided by the firm. Many firms over promise and under deliver; WestJet Airlines attributes its success to under promising and over delivering instead. LO4: Service Recovery This slide sets up the following discussion and can be used instead of the more detailed discussion that follows. 1. Listen to the Customer Group activity: Think about the last time you called a firm about a service issue. How were you treated? What determined your level of satisfaction with the result? Sometimes, just having someone who listens and tries to understand the issue is sufficient. According to a recent airline study, if the airline provides a reason for delays, travelers are less annoyed by the service interruption. 2. Find a Fair Solution A. Distributive fairness refers to customers’ perceptions of the benefits they receive compared with the costs they must expend. B. Procedural fairness refers to their perceptions of the fairness of the process used to resolve complaints. Even if they eventually receive a solution that seems fair, when consumers must work hard to achieve it, their low procedural fairness perceptions may cause them to believe that they are being punished for receiving bad service. Ask students: How can service firms enhance both distributive and procedural fairness simultaneously? By establishing firm policies, such as the “Customer Bill of Rights” adopted by Jet Blue. (http://www.jetblue.com/about/ourcompany/promise/index.html) This statement details what type of service the firm should provide as well as the remedies that will be offered in case of service failure. This statement allows consumers to understand how and when they will be compensated for service failures. 3. Resolve Problems Quickly A. The longer a resolution takes, the more irritated customers become. B. With more time, they have more opportunities to tell others about the problem. By compounding a service failure with long delays in correcting it, the firm creates a hostile customer. Remind students about the strong influence of negative word of mouth. Answer C; see page 326 Real Marketer Profile: Marc-Olivier Vachon Ridesharing is a way for students (and others) to travel cheaply if they don’t have a vehicle at their disposal. Kangaride allows travellers to match up with drivers, and does it in a way that addresses safety and reliability. World-class execution and truly caring about their customers has helped Kangaride grow through positive word of mouth. Ask students to watch CBC’s Dragons’ Den video. Ask them to evaluate this service idea. Most of them would probably appreciate being able to hitch a ride cheaply but would they be willing to hook up with a complete stranger to do this? Discuss how Kangaride addresses this issue. Concept Review Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. Describe the four dimensions in which services marketing is different from product marketing. Answer: ○ Intangible – services cannot be touched, tasted, or seen ○ Inseparable production and consumption - services are produced and consumed at the same time so are inseparable ○ Inconsistent – service quality is variable and varies in consistency since it is provided by humans who are not perfect ○ Inventory - services are perishable and cannot be held in inventory or stored for future use 2. Why is intangibility described as the most fundamental difference between products and services? Answer: Products can be seen, heard, touched, and tasted, allowing consumers to “test-drive” them and know what they are getting before they buy them. The fact that services are intangible means it makes it difficult to convey their benefits. Services can’t be shown directly to prospective customers, making them difficult to promote. 3. Discuss the actions companies can implement to minimize the potential negative impact of service variability on the delivery of customer service. Answer: ○ Training programs for employees on the company’s services to ensure all staff members are knowledgeable and can perform the tasks associated with delivering the service ○ Standardization of service delivery by setting service standards so that employees understand the standards they must meet ○ Replace people with machines (technology) which is usually faster, more convenient and has far less variability 4. How can companies deal with the perishability of their services? Answer: Match supply and demand by: ○ Offering promotional pricing in off-season or slower periods to increase demand ○ Increasing facility usage, e.g. Cineplex showing NHL games ○ Charging cancellation fees 5. Identify the components of the Services Gaps Model. Describe each component and explain the strategies companies can implement to reduce the gaps in service delivery. Answer: ○ Knowledge gap - the difference between customers’ expectations and the firm’s perception of those expectations. Close this gap by matching customer expectations with actual service through research. ○ Standards gap - the difference between the firm’s perceptions of customers’ expectations and the service standards it sets. Close this gap by setting appropriate service standards and measuring service performance. ○ Delivery gap - the difference between the firm’s service standards and the actual service it provides to customers. Close this gap by getting employees to meet or exceed service standards. ○ Communication gap - the difference between the actual service provided to customers and the service that the firm’s promotion program promises. Close this gap by being more realistic about the services provided and managing customer expectations effectively. 6. Describe the five dimensions of services quality that consumers often use to judge the quality of a service experience. Answer: ○ Reliability – the ability to perform the service dependably and accurately ○ Responsiveness – the willingness to help customers and provide prompt service ○ Assurance – the knowledge and courtesy of employees and their ability to convey trust and confidence ○ Empathy – the caring, individualized attention provided to customers ○ Tangibles – the appearance of physical facilities, equipment, personnel, and communication materials 7. Explain how the use of technology can help companies deliver higher quality service. Answer: Technology enables customers to buy more quickly, more easily, and with more information than in the past. It provides access to a wider variety of services, a greater degree of control by the customer over the services, and the ability for the company to obtain information. Technology can also can strengthen customer relationships and enhance loyalty thereby resulting in higher quality service. 8. Discuss why under promising and overdelivering is an important way to control the communication gap. Answer: By under promising, a company will have a much better chance to exceed customers’ expectations and will be perceived as overdelivering instead of falling short of or just meeting expectations. Overpromising may attract customers to a business once, however, they will not return if they are disappointed. Worse than that, they may spread negative word of mouth to tell others about the underperformance. By managing customer expectations, the communications gap can be reduced and controlled. 9. What is meant by service recovery? How can companies use service recovery to ensure that a service failure does not lead to a lost customer? Answer: ○ Service recovery is an attempt to make amends with customers when service providers fail to meet their expectations. ○ Companies can use service recovery to prevent the loss of a customer by: ○ listening to the customer ○ finding a fair solution • distributive fairness compensates customers with a fair amount for the service failure • procedural fairness ensures efficient complaint procedures are in place and that providers follow specific company guidelines when resolving problems ○ resolving problems quickly. 10. Explain the differences between distributive and procedural fairness in the context of service recovery. Answer: ○ Distributive fairness pertains to a customer’s perception of the benefits he or she received compared with the costs (inconvenience or loss). The key to distributive fairness, of course, is listening carefully to the customer to understand what they feel is a fair amount of compensation. ○ Procedural fairness refers to the perceived fairness of the process used to resolve them. Customers want efficient complaint procedures over whose outcomes they have some influence. Marketing Applications 1. Companies from which you purchase products and services are not pure sellers of services, nor are they pure sellers of products. What services does a department store provide? What goods does a dentist provide? Instructor’s Notes: The service–product continuum concept discussed in this chapter notes that a company can be service dominant, product dominant, or somewhere in between. In addressing where department stores and dentists fall on the continuum, students enhance their understanding of how businesses provide both elements. Example answers: A department store provides services such as offering many different products from different manufacturers together in one store, which enhances the shopping convenience for the consumer, and providing customer assistance in response to questions about sizes, return policies, stock levels, and the location of particular products. A dentist provides products such as fillings for cavities and free toothbrushes and floss. A department store provides services such as customer assistance, returns, and product selection guidance. It also offers convenience, ambiance, and various in-store experiences. A dentist provides goods like dental materials and treatments (e.g., fillings, braces) and services including oral examinations, cleanings, and dental procedures. 2. You have been sitting in the waiting room of your doctor’s office for an hour. With the knowledge that products are different than services, develop a list of things the office manager could do to improve the overall service delivery. Consider how the office might overcome problems associated with the tangibility, separability, consistency, and inventory issues associated with services. Instructor’s Notes: 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. Example answers: The office manager could provide a television for patients to watch while waiting; offer refreshments such as water, juice, coffee, or tea; have a nurse practitioner meet with waiting patients to get preliminary information; and make the waiting room comfortable and inviting by providing soft reclining chairs and decorating it with nice pictures, plants, and perhaps an aquarium. Specifically, the office might overcome some of the problems associated with marketing a service as follows: • Tangibility: Communicate service quality, which cannot be touched, tasted, or seen, by posting the doctor’s qualifications or diplomas. • Separability: Involve patients in determining their own course of treatment. • Variability: Train receptionists, nurses, and doctors to greet each patient and establish a high level of standardized care protocols. • Perishability: Match patients’ demands for convenient office hours and appointments with a sufficient supply of personnel on staff during those times. To improve overall service delivery, the office manager could: 1. Tangibility: Enhance the physical environment with comfortable seating, clean facilities, and informative signage. 2. Separability: Improve staff training to ensure consistent, empathetic interactions and communication with patients. 3. Consistency: Implement standardized procedures for managing appointments and wait times, and regularly review and refine these processes. 4. Inventory: Manage appointment scheduling efficiently to reduce wait times and ensure that the scheduling system minimizes overbooking and cancellations. 3. You have conducted a zone of tolerance analysis for a local dry cleaner. You find that the length and width of the reliability and responsiveness boxes are much greater than those of the other three service quality dimensions. You also find that the dry cleaner is positioned above the zone box on reliability but below the box on responsiveness. What should you tell the manager of the dry cleaner to do? Instructor’s Notes: 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 dry cleaner, students should examine the company’s performance relative to customers’ expectations regarding the five service quality factors. Example answers: The greater length of the reliability and responsiveness factors means that customers expect more of these factors but will accept a fairly low level. Their greater width also suggests customers consider reliability and responsiveness more important. In terms of reliability, the dry cleaner is surpassing customers’ expectations by performing its service dependably and accurately—perhaps too much so. However, it is not meeting customers’ responsiveness expectations, such as prompt service or willingness to help. Therefore, the dry cleaner should spend a little less energy on performing the service accurately and dependably and start focusing more on prompt, friendly, helpful customer service. Advise the manager to focus on improving responsiveness to meet customer expectations. While the dry cleaner is performing well in reliability, enhancing responsiveness through faster service and better communication will help align with customer expectations and improve overall service quality. 4. Assume you were hired by the local grocery store to assess their service quality. How would you go about undertaking this project? Instructor’s Notes: How might this grocery store get customer feedback about its service quality? A well-designed system prompts a high customer response rate without making customers feel uncomfortable about giving the feedback. Example answers: 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 they are meeting their customers’ expectations. Firms also evaluate the zone of tolerance which refers to the area between customers’ expectations regarding their desired service and the minimum level of acceptable service. Assessing a grocery store’s service quality would involve, market research, including: focus groups, surveys, and observations to measure the five service dimensions. A zone of tolerance analysis could also be conducted with customers to determine if customers’ service quality needs are being met. 1. Survey Customers: Gather feedback on their experiences and expectations regarding service quality. 2. Evaluate Service Dimensions: Assess reliability, responsiveness, assurance, empathy, and tangibles through observations and staff interviews. 3. Benchmark: Compare the grocery store’s performance with competitors or industry standards. 4. Analyze Data: Identify gaps between customer expectations and actual service delivery. 5. Recommend Improvements: Suggest actionable changes based on the analysis to enhance service quality. 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 they avoid a service failure by being empowered? What should they do? Instructor’s Notes: To deliver consistently high-quality service, firms must set specific, measurable goals based on customers’ expectations. To ensure these goals are met, they must train their employees to execute properly. This question prompts students to consider the need for employees to understand the restaurant’s service standards and receive proper training to help them deal with situations like this one. Example answers: 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 can make decisions about how service is provided to customers. If the server in this situation is empowered by his/her manager, he could do a variety of things to recover from this service failure. Examples include: offering the customer the meal for free or at a discount, offer complementary dessert, or offer a discount on future meals at the restaurant. The server should calmly acknowledge the issue, apologize sincerely, and offer a replacement or refund. To avoid service failure, they should be empowered to make decisions on the spot, such as expediting a new dish or providing a discount, to quickly resolve the problem and ensure customer satisfaction. 6. Describe a specific situation in which a service provider could have avoided a service failure if he or she had been empowered by an employer to do so. What should that person have done? Instructor’s Notes: Empowerment in this case means allowing employees to decide how to provide service to customers. Students must consider what types of situations might warrant empowerment and what actions could result. Example answers: A customer in a health club complains about how crowded the last yoga class was, to the point that she did not receive the benefit she expected from the exercise. If the health club empowered its employees, the person at the front desk who receives the complaint could apologize for the crowded class and offer the customer a free yoga session in which her spot is guaranteed. A customer at a hotel receives a room that is not properly cleaned. If the housekeeper had been empowered by the employer, they could have immediately offered to switch the customer to a clean room and provided a complimentary service or discount. This proactive approach would have addressed the issue promptly and improved customer satisfaction. 7. What types of support and incentives could your university provide advisors to help make them more attentive to students’ needs? Instructor’s Notes: This question prompts students to recall 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. Example answers: First, the university could provide emotional support to advisors who have to deal with difficult and sometimes unruly students. Second, the university should provide appropriate computer systems and an atmosphere that makes advisors feel well-equipped in comfortable settings. Third, the university could limit the number of students assigned to each advisor, so that the advisor does not feel overwhelmed. Fourth, it should provide a mechanism to reward advisors when students provide positive feedback about their performance. The university could provide advisors with: 1. Training: Regular workshops on effective advising techniques and student support. 2. Resources: Access to up-to-date student data and support tools. 3. Incentives: Recognition programs, performance bonuses, or professional development opportunities. 4. Time: Reduced administrative load to allow more time for student interactions. 5. Support Networks: Peer mentoring or collaboration with other advisors for shared best practices. 8. What technologies do you use that help facilitate your transactions with a specific retailer or service provider? Would you rather use the technology or engage in a face-to-face relationship with a person? How, if at all, would your parents’ answers be different to these two questions? Instructor’s Notes: Technology has become an increasingly important means of service delivery. Most students probably rely more heavily on technology, whereas their parents likely consider face-to-face interactions important for key personal transactions. Example answers: I use the Internet and telephone to facilitate my transactions with my bank. I access my bank account and make simple requests of the customer service department via the Internet, and when I need to deal with a more complex transaction, I use the telephone and the bank’s automated phone routing system to find the right customer service agent who can address my need. I prefer to use these technologies rather interact face-to-face, primarily because I don’t want to take time out of my busy schedule to go to the bank and see someone in person. However, my parents probably would be more inclined to use the telephone or face-to-face interactions, and use the Internet only to a very limited extent, because of their lack of trust in its security and privacy. I use technologies like mobile apps and online payment systems to facilitate transactions with retailers and service providers. I prefer using technology for its convenience and efficiency. My parents might prefer face-to-face interactions for personalized service and trust, while they might use technology for its practicality and time-saving benefits but with less preference than I do. 9. 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? Instructor’s Notes: In examining how a health club’s promotional claim creates a difference between the service promised and the actual service delivered, students should recognize the difficultly of conveying a single message that encompasses all customers’ expectations. Example answers: This claim might create unrealistic expectations in the minds of consumers. Take, for example, a woman who only needs to lose 5–10 lbs to reach her ideal weight. There is no way the club can guarantee this woman will continue to lose an inch around her waist after the first month or so—at least not without causing health problems! In addition, much of the success of the claim depends not on the health club but on the customer’s dedication to the exercise program. In either case, customers’ expectations become unrealistic, and a communication gap occurs. The club could avoid such a service failure by changing the wording of the promotion to set more realistic expectations, perhaps by focusing on helping customers reach their ideal body weight rather than some arbitrary waistline measurement. The claim might cause a communications gap if it is perceived as unrealistic or misleading, leading to customer dissatisfaction if results are not achieved. To avoid service failure, the club should provide clear, realistic expectations, detailed information on the program's effectiveness, and personal consultations to tailor plans to individual needs. Ensuring transparent and honest communication will help manage customer expectations and enhance trust. 10. You are hired by a career consulting firm for new college graduates that promises to market them to high-paying employers. Job seekers pay a fee for the service, plus a finder’s fee if the consultant places them in a position. The firm aggressively markets its services and has achieved a large client base. However, you soon learn that the consultant takes submitted resumes and posts them to a variety of online job search engines, without ever contacting employers on its clients’ behalf. The CEO, a recent college graduate, tells you that the firm never actually promises it will contact potential employers but only that it has access to them. What do you think of the career consulting firm’s practices? Instructor’s Notes: 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. Example answers: In applying the ethical decision-making framework: • “Have you thought broadly of any ethical issues associated with the decision in question?” I have thought broadly about the ethical issues, and I have concerns because the consulting firm is less than forthcoming with clients about the amount of effort expended on their behalf and gives the false impression that it actively markets each client to prospective employers. • “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” The clients themselves have not been involved at all, and they are likely the most important stakeholders to keep in mind, because without them the firm would have no business. • “Does this decision respect the rights and dignity of the stakeholders?” The clients believe that the firm is being honest and aboveboard about the amount of effort being put forth on their behalf, and they are not aware that the consulting firm is merely doing what they could do themselves—without any of the fees charged by the firm! • “Does this decision produce the most good and the least harm to the relevant stakeholders?” The clients are not getting the type of service they think they are. They could be relying on the consulting firm to find them employment, which may never happen because of the lack of marketing actually being done on the clients’ behalf. • “Does this decision uphold relevant conventional moral rules?” It likely violates the community’s standard for business disclosures and transparency. If the consulting firm portrays itself as marketing each client and then doesn’t, the community likely would feel outrage toward the firm and its practices. • “Can you live with this decision alternative?” If the decision is to have the firm change its practices and actively market clients, as it implies in its marketing communications, then it is a decision I could live with as a client and an employee. Based on my answers, I believe 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 actually providing the service it said it would for free. I would give up my job, because I do not want to be associated with such unethical practices, and contact the Better Business Bureau to report the firm. The firm's practices are misleading and ethically questionable. While they may technically adhere to their wording, they create a false impression of personalized, proactive service. This can result in significant dissatisfaction and damage to their reputation. The firm should clarify their service scope and improve transparency to avoid misleading clients. Net Savvy 1. What services does WestJet (www.westjet.com) offer? Compare its services to those offered by Air Canada (www.aircanada.ca) using the five service quality dimensions (tangibility, responsiveness, reliability, assurance, and empathy). Instructor’s Notes: This exercise reinforces the concept of evaluating service providers on the basis of the five service quality dimensions. Example answers: WestJet offers services that allow consumers to book their air travel online, track flight status, observe which cities the company operates in, change reservations, reserve a hotel or car, establish their expectations about what will happen at the airport, and consider vacation packages. Air Canada offers the same services but also provides a wide range of additional services that a small, low-cost carrier like WestJet cannot, such as a private airport club in which some passengers may wait between flights, a more comprehensive rewards program that offers travel on affiliated airlines, and cargo and business services. WestJet Air Canada Tangibility Modern, streamlined design is intuitive and pleasing to the eye. Same basic color scheme that AC has always used, with a lot of design clutter leading to confusion for the customer. Responsiveness Few customer service agents to respond to customer issues and slow response time on customer requests sent through the website. Many customer service agents available to talk to customers as the need arise. Reliability Offers basic travel service for cost-conscious travelers. Offers more features and options for travelers to tailor their travel experience to suit their needs. Assurance Informal staff who is more relaxed in their approach. Professional staff who maintain consistent service standards. Empathy More focused on individual customers. Less concerned about individual customers and more interested in following established protocols. 2. Evaluate the ease with which you can make hotel reservations using Fairmont’s (www.fairmont.com) Internet reservation system. Check out the hotel’s privacy policy. Are you comfortable with their use of “cookies” to identify visitors when they return to the site? Instructor’s Notes: Students must consider why Fairmont would want to use “cookies” on its website. In exploring possible reasons, students should address who visits the site, what fears those consumers might have. Example answers: The online hotel reservation system seems very intuitive and easy to use, with multiple options for hotel locations near common points of interest. The hotel’s privacy policy stresses the importance of privacy and its commitment to adopting high standards to protect personal information. The privacy policy clearly states that “cookies” are used to help customize the online experience. For example, they can help to recognize clients when they log on, welcome a returning visitor back to the site and provide a high level of service by remembering visitor preferences by preloading information stored in the guest’s profile. Fairmont’s Internet Reservation System: The system is user-friendly with a clear interface for checking availability, booking rooms, and managing reservations. Privacy Policy: Fairmont’s policy typically outlines their use of cookies for enhancing user experience, such as remembering preferences and providing personalized content. Comfort Level: Generally, the use of cookies for these purposes is standard practice. If you have concerns, ensure you review their privacy policy to understand how your data is used and managed. End-of-Chapter Case Zipcar: Delivering Only as Much Driving as You Want Questions 1. Using the building blocks (five dimensions) of service quality (Exhibit 10.4) discussed in this chapter, evaluate Zipcar. Students will refer back to Exhibit 10.4 below and use critical thinking skills to apply the concepts to the case. Reliability The ability to perform the service dependably and accurately. For Zipcar, reliability would involve having cars that are reliable and safe for the drivers to rent. In order to do this, Zipcar should perform regular maintenance on its cars and keep an updated fleet. Responsiveness The willingness to help customers and provide prompt service. Zipcar has numerous stations in most metropolitan areas, so a customer needing a Zipcar will never have to search very far. Assurance The knowledge of and courtesy of the employees? Zipcar employees remain friendly and helpful to customers and always work to find them the best car to meet their needs. Empathy The caring, individualized attention provided to customers. In order for Zipcar customers to feel empathy, employees should work to provide specialized attention for them. The online system also helps customers customize orders as well. Tangibles The appearance of physical facilities, equipment, personnel, and communication materials. Zipcar’s automobiles should be clean and work well. All communication, including electronic and web communication, between customers and Zipcar should be professional and informative. 2. Compare Zipcar’s service quality performance with that of the most recent car rental service (e.g. Hertz, Enterprise) that you may have used. This may apply only to students who have rented a car through both Zipcar and a competing car rental service. Other car rentals like Avis and Hertz lack the convenience of Zipcar and are often tailored more towards professionals than Zipcar. However, Avis and Hertz might offer customers more options for car rental than Zipcar. Ask students which company they would prefer. Zipcar vs. Traditional Car Rental Services (e.g., Hertz, Enterprise): 1. Tangibility: • Zipcar: Modern app interface and well-maintained vehicles. • Traditional Services: Professional rental locations, varied vehicle options, and more physical amenities. 2. Responsiveness: • Zipcar: Quick support via the app, with a focus on convenience. • Traditional Services: Responsive customer service, often with on-site assistance, but sometimes slower due to higher volume. 3. Reliability: • Zipcar: Generally reliable with accurate booking and availability. • Traditional Services: Reliable but can face issues with vehicle availability or reservation accuracy during peak times. 4. Assurance: • Zipcar: Strong assurance with clear policies and well-maintained cars. • Traditional Services: High assurance with in-person support, established reputation, and more comprehensive insurance options. 5. Empathy: • Zipcar: Focuses on user experience through a streamlined app. • Traditional Services: Personalized service at rental locations, though interactions can vary based on staff and location. 3. How well has Zipcar handled service failure situations? What could it do to improve recovery efforts? The case provides an example of a customer who was trying to use Zipcar, but the car he rented was not where it was supposed to be. Zipcar told the customer to take a cab and reimbursed the customer for his expenses. This is an example of service recovery. Zipcar is committed to retaining its customers and actively recovering from service failures. Zipcar’s Handling of Service Failures: Zipcar generally addresses service failures by providing prompt support through their app and offering solutions such as refunds or alternative vehicles. Improvements for Recovery Efforts: 1. Enhanced Communication: Improve real-time communication channels for quicker resolution of issues. 2. Proactive Notifications: Notify customers of potential problems before they escalate. 3. Compensation: Offer more substantial compensation or discounts for significant inconveniences. Video Activities Video: Kangaride (CBC’s Dragons’ Den) Learning Objective: LO1, LO2 Description: This video provides a real world pitch by two Quebec-based entrepreneurs on CBC’s Dragons’ Den. Marc-Olivier Vachon and his fiancée and business partner, Edith Bisson, started a business to help cash-strapped travellers find a ride inexpensively or even for free. Their ridesharing service is like a matchmaker for people with cars who don’t mind carrying passengers for long distance trips. The couple successfully attracted a deal from Bruce Croxon. As a post-mortem, when Croxon turned out to be too busy to help them and offered only his cash, Vachon and Bisson walked away from the deal. They said they could get a loan from a bank. What they really needed was Croxon’s knowledge of building online businesses. Key Words: services, intangibility, customer service, customer loyalty, service quality, technology to deliver a service Activity: Poll students to see how many of them look for inexpensive ways to travel from college or university home or to visit friends in distant cities. Ask how comfortable they would be using a service like Kangaride. While many of them would appreciate being able to get a cheap ride home not all of them would be willing to ride with a complete stranger to accomplish this. (You might ask if any of them have done any “couch surfing” – a trend where students connect with folks they’ve never met in other cities and stay at their homes for free!) Have them discuss what Kangaride would need to do to make them feel comfortable using this ridesharing service. Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9781259030659, 9781259104312
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