• Posted By: Robin Wade, Will Norris, Josh Goldstein and Kelsey Schafer


Characteristics of Services:
  1. Intangible: they can not be touched, smelt, tasted or heard. (5 senses)
  2. Perishability: when service has been completed, this service vanishes as it has been consumed by the consumer. Requires high fixed cost to meet erratic demand. Strategies for managing demand include: differential pricing, reservation systems, and cultivating non-peak demand. Strategies for managing supply include: part-time employees, increased customer participation, and shared services.
  3. Interactivity: typically produced and consumed simultaneously. The customer becomes part of the process by which the service is consumed. Self-Directed interactivity: reduces costs, makes customization the responsibility of the user, and requires in-depth knowledge of likely scripts. The less scripts you have to deal with, the higher the rate of customer satisfaction.
  4. Variability: when a particular service is consumed, it is never the same even if the same customer request the same service due to different time, condition, or resources. Services are often provided by people which introduces variability. Quality control can be monitored by: Good hiring and training procedures, service blueprint, and monitoring customer satisfaction. One can reduce the variability by reducing the human component, but this depends on the value prop! (ex: speed and efficiency vs. quality and customization- what do you lose? gain?)

Service Mix:
  1. Pure tangible good - ex. NBA 2k 11
  2. Tangible good with accompanying services - ex. Apple computer w/ applecare
  3. Hybrid - combo of service and product - ex. clothing store, clothes and personal staff interactions
  4. Major service with accompanying minor goods and services - ex. Lawyer
  5. Pure Service -ex. Dog-walker??? Medium???

It can be concluded, that the difference between product and service is arbitrary. If the product/output of the company has intangibility, interactivity, perishability and variability, it should be managed as a service and used as a differentiator.

You can make a service tangible by:
1. Place
2. People
3. Equipment
4. Communication material
5. Symbols
6. Price

Service companies face three tasks:
1. Competitive differentiation-
Look at ...
Primary Service package
Secondary service features: Secondary service is a service that is needed by the consumer for rehabilitation and personal reasons. The cost of secondary service is usually high. it may only exist on an conjunction with and be provided concurrently with a primary service.
Faster and better delivery

2. Managing Quality
  • 5 Gaps
    • Gap between consumer expectation and management perception
    • Gap between management perception and service-quality specification
    • Gap between service-quality specification and service delivery
    • Gap between service delivery and external communications
    • Gap between perceived service and expected service

    • All these gaps lead to the customer dissatisfaction and have to be considered.

3.Lower Costs-
Managing the bottom line is generally more difficult with services, because of the characteristics that define a service make it harder to pinpoint


1. Value Proposition—

a. Segment: Long Term Investors, $50,000 - $1,000,000 net worth, conservative investing acumen

b. Characteristics/Behaviors of Segment: managers, complacent individual

c. Benefits:Economical, high returns

d. Capabilities: No Load, op-exec, brand association (long term return), investor owned, more revenue from exsisting clients & more services.

e. Opportunities for Growth/Strategies:
1. Target striver segment: more service, more IMC, more distribution
2. More of the same target: increase market share, using IMC
3. Financial provided service
4. Do nothing


  • · Do any of these opportunities match value proposition? (If match, less risky)
  • · Need to have a Quantitative analysis.

Alternative 1
Alternative 2
Alternative 3
Decision Criteria 1
value prop
Financial return

Decision Criteria 2

Decision Criteria 3

Decision Criteria 4