Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 1

SERVICES MARKETING BUSE 3004

Solomon Habtay

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 2

Course Outline 2009Overview of Services Marketing

Why Study Services Marketing?

What are Services?

The Differences in Marketing Management between the Services and the manufacturing sector

The Expanded Marketing Mix Required for Services

The Objective of the Course

Questions

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 3

Why study services? Services Dominate the Economy

Services, 68% Agriculture, Forestry, Mining, Fishing, 2.3%

Manufacturing and Construction,

17.3%

Government, 12.4% (mostly Services)

INSIGHTS

Private sector service industries account for over two-thirds of GDP

Adding government services, total is almost four-fifths of GDP

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 4

Why study services? Service Industries

Advertising

Financial services

Insurance

Telecom

Airlines

Entertainment

Healthcare

Security services

Tourism

Hotels

Education

Diet and Weight Reducing Centers

Management Consulting Services

Environmental Consulting

Telemarketing

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 5

Why study services? Transformation of the Service Economy

Government

Policies

Business

Trends

Social

Changes

Advances in

IT

Globalization

The only way of long term survival is innovation!!!

But innovation is not easy!!!!

Success hinges on: Understanding customers and competitors (Part I 10 Feb) Creation of value for customers and firm (Part III) Viable business model innovation (Part IV)

Product life cycles are getting shorter Strategy life cycles are getting shorter More intense competition

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 6

Defining Services

Services

Are economic activities offered by one party to another Most commonly employ time-based performances to bring

about desired results in: ― recipients themselves― objects or other assets for which purchasers have

responsibility

In exchange for their money, time, and effort, service customers expect to obtain value from

Access to goods, labor, facilities, environments, professional skills, networks, and systems

But they do not normally take ownership of any of the physical elements involved

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 7

What Are Services?

The historical view Goes back over 200 years to Adam Smith and Jean-Baptiste

Say Different from goods because they are perishable (Smith 1776) Consumption cannot be separated from production, services

are intangible (Say 1803)

A fresh perspective: Services involve a form of rental, offering benefits without transfer of ownership Include rental of goods Marketing tasks for services differ from those involved in

selling goods and transferring ownership

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 8

Services Pose Distinctive Marketing Challenges

Marketing management tasks in the service sector differ from those in the manufacturing sector

The eight common differences are:1. Most service products cannot be inventoried

2. Intangible elements usually dominate value creation

3. Services are often difficult to visualize and understand

4. Customers may be involved in co-production

5. People may be part of the service experience

6. Operational inputs and outputs tend to vary more widely

7. The time factor often assumes great importance

8. Distribution may take place through nonphysical channels

What are the marketing challenges for services?

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 9

ProductProduct PlacePlace

The target marketThe target market

PricePrice PromotionPromotion

Walker, O.C., Mullins, J. W., Boyd, H. W., & Larreche, J.C. (2006). Marketing Strategy, 5 th Ed. New York. McGraw-Hill, pp. 153-169.

The 4Ps

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 10

The 8Ps of Services Marketing (Course outline)

Product Elements 16 Feb

Service innovation

Promotion and Education 17 Feb

Promoting the value proposition

Positioning services 23 Feb

Place and Time 24 Feb

Service value chain

Process 2 March

Designing and managing services process

Productivity and Quality 3 March

Servqual

Balancing demand and productivity 9 March

Managing relationship 10 Mar

Price and Other User Outlays 16 Mar

Physical Environment (Chapter 10)

People 23 March

Managing people for service advantage

Organizing for change management 24 March

Working in Unison: The 8Ps of Services Marketing

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 11

The Objective of the Course:To develop your analytical skills on how to:

Analyze market opportunities

Pursue services value innovation

Design and manage profitable business models

Implement effective strategies for managing profitable businesses

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 12

Individual Assignment: Research Paper Format and Marking Criteria

Structure Mark

Introduction Study background Problem statement

10%

Literature review (relevance) 10%

Empirical analysis (application) 20%

Findings/conclusions 10%

Recommendation 10%

Research methodology 20%

Academic content (originality, quality, citations, references)

20%

Total 100%

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 13

Performance Evaluation

Component Mark

Group of 4 = 7 case studies (Top 5) Submission on each tutorial day

25%

Individual assignment: Final submission date 31 March, 2009

15%

Final exam 60%

Total 100%

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 14

Text Book

SERVICES MARKETING

PEOPLE, TECHNOLOGY, STRATEGY, 6ed (2007)

CHRISTOPHER LOVELOCK AND JOCHEN WIRTZ

It's important you buy this book because:

It is the best book in services marketing theories and applications

Includes relevant readings materials Contains all case studies for your group assignments & tutorial

discussions Provides the topic and theoretical framework for your individual

research paper Exam questions will come from the book and reading materials 66 books available at the West Campus book store

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 15

WebCIT/Blackboard

Reading material and notes are available at:

http://ignite.wits.ac.za

Log in to the Black Board Learning System

Using your student No. BUSE3004 Services Marketing Go to: Student View

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 16

BUSE3004 Time Table

Mon 08:00 – 08:45

LB 144

09:00 – 09:45

LB 144

Tues 10:15- 11:00

LB 145

11:15-12:00

LB 145

Wed 12:30 – 13:15 Tut

CB128

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CONSULTATION TIMES

Monday 14:00 – 15:00pm

Tuesday 14:00 - 15:00pm

Other times by appointment

NCB, Office No. 208Office Tel: 011-7178085

Email: Solomon.Habtay@wits.ac.za

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 18

Questions