204 CHAPTER11 DESIGNING ANDMANAGINGSERVICES
confidence?),^14 service providers must deliver services that are “high touch” as well as
“high tech.”^15
Consider how Charles Schwab, the nation’s largest discount brokerage house,
uses the Web to create an innovative combination of high-tech and high-touch ser-
vices. One of the first major brokerage firms to provide on-line trading, Schwab now
provides millions of investors with Web-based financial and company information,
account data, and detailed research. By offering high-tech services, Schwab has taken
on the role of on-line investment adviser. Nonetheless, the on-line trading service does
not entirely replace the personal service offered by Schwab in its local branches or via
the telephone.^16
In some cases, customers cannot judge the technical quality of a service even
after they have received it, as shown in Figure 4-6.^17 At the left are goods that are high
insearch qualities—characteristics the buyer can evaluate before purchase. In the mid-
dle are goods and services that are high in experience qualities—characteristics the buyer
can evaluate after purchase. At the right are services that are high in credence qualities—
characteristics the buyer normally finds hard to evaluate even after consumption.^18
Because services are generally high in experience and credence qualities, there
is more risk in their purchase. As a result, service buyers tend to rely more on word of
mouth than on advertising when selecting a provider. Second, they rely heavily on
price, personnel, and physical cues to judge quality. Third, they are highly loyal to ser-
vice providers who satisfy them.
Given these issues, service firms face three key marketing tasks: increasing com-
petitive differentiation, service quality,andproductivity.Although these interact, we will
examine each separately.Managing Differentiation
Service marketers frequently complain about the difficulty of differentiating their ser-
vices on more than price alone. Price is a major marketing focus in service industries
such as communications, transportation, and energy, which have experienced intenseFigure 4-5 Three Types of Marketing in Service Industries