Product. Managers must select the features of both the core product and the bundle of supplementary service elements surrounding it, with reference to the benefits desired by customers and how well competing products perform. In short, they must be attentive to all aspects of the service performance that have the potential to create value for customers.
Place. Delivering product elements to customers involves decisions on the place and time of delivery as well as on the methods and channels employed. Delivery may involve physical or electronic distribution channels, depending on the nature of the service being provided. Use of messaging services and the Internet allows information-based services to be delivered in cyberspace for retrieval by telephone or computer wherever and whenever it suits the customer. Firms may deliver service directly to customers or through intermediary organizations, such as retail outlets that receive a fee or percentage of the selling price to perform certain tasks associated with sales, service, and customer contact, speed and convenience of place and time for the customer are becoming important determinants in service delivery strategy.
Process. Creating and delivering product elements to customers requires the design and implementation of effective processes that describe the method and sequence of actions in which service operating systems work. Badly designed processes are likely to annoy customers when the latter experience slow bureaucratic, and ineffective service delivery. Similarly, poor processes make it difficult for frontline staff to do their jobs well, result in low productivity, and increase the likelihood of service failures.
Productivity and Quality. These elements, often treated separately, should be treated strategically as interrelated. No service firm can afford to address either element in isolation. Productivity relates to how inputs are transformed into outputs that are valued by customers, whereas quality refers to the degree to which a service satisfies customers by meeting their needs, wants, and expectations. Improving productivity is essential to keep costs under control, but managers must beware of making inappropriate cuts in service levels that are resented by customers (and perhaps by employees, too).Service quality, as defined by customers, is essential for product differentiation and building customer loyalty. However, investing in quality improvement without understanding the tradeoff between incremental costs and incremental revenues may hurt profitability.
People. Many services depend on direct, personal interaction between customers and a firm’s employees (such as getting a haircut or eating at a restaurant ). The nature of these interactions strongly influences the customer’s perceptions of service quality. Customers will often judge the quality of the service they receive based on their assessment of the people providing that service. They may also make judgments about other customers they encounter. Successful service firms devote significant effort to recruiting, training, and motivating their personnel. Firms often seek to manage customer behavior, too.
Promotion and Education. No marketing program can succeed without effective communications. This component plays three vital roles: providing needed information and advice, persuading target customers of the merits of a specific product, and encouraging them to take action at specific times. In services marketing, much communication is educational in nature, especially for new customers. Companies may need to teach these customers about the benefits of the service, as well as where and when to obtain it, and provide instructions on how to participate in service processes. Communications can be delivered by individuals, such as salespeople and trainers, or through such media as TV, radio, newspapers, magazines, posters, brochures, and Web sites. Promotional activities may serve to marshal arguments in favor of selecting a particular brand or use incentives to catch customers’ attention and motivate them to act.
Physical Evidence. The appearance of buildings, landscaping, vehicles, interior furnishing, equipment, staff members, signs, printed materials, and other visible cues all provide tangible evidence of a firm’s service quality. Service firms need to manage physical evidence carefully, because it can have a profound impact on customers’ impressions. In services with few tangible elements, such as insurance, advertising is often employed to create meaningful symbols. For instance, an umbrella may symbolize protection, and a fortress, security.
Price and Other User Costs. This component addresses management of the expenditures and other outlays incurred by customers in obtaining benefits from the service product. Responsibilities are not limited to the traditional pricing tasks of establishing the selling price to customers, setting trade margins, and establishing credit terms. Service managers also recognize and, where practical, seek to minimize other burdens that customers may bear in purchasing and using a service, including time, mental and physical effort, and unpleasant sensory experiences, such as noises and smells.