Introduction to Services Introduction to Services MarketingMarketing

Week 1Week 1

The emergence of services The emergence of services marketingmarketing

Services dominate most economies and are growing Services dominate most economies and are growing rapidly:rapidly:

Services account for more than Services account for more than 60% of GDP 60% of GDP worldwideworldwide

Almost all economies have a substantial service sectorAlmost all economies have a substantial service sector

Most Most new employment new employment is provided by services is provided by services

Strongest Strongest growth area growth area for marketingfor marketing

Understanding services offers you a personal competitive Understanding services offers you a personal competitive advantageadvantage

Some facts and figuresSome facts and figures

The macro environmental context The macro environmental context of the emerging service sector of the emerging service sector

UNCONTROLLABLE

FACTORS

Demographic

factors

Regulatory

factors

Economic

factors

Technological

factors

Social

factors

Uncontrollable Uncontrollable ‘Demographic ‘Demographic factors’factors’ Population growthPopulation growth Increase in number of householdsIncrease in number of households Decrease in number of household members in Decrease in number of household members in

industrialised countriesindustrialised countries Greater life expectancyGreater life expectancy Dejuvenation and population agingDejuvenation and population aging Better educationBetter education Multi racial societiesMulti racial societies

Threats or opportunities??

Uncontrollable Uncontrollable ‘‘Regulatory Regulatory factorsfactors’’

Governments controlling the commercial Governments controlling the commercial operations of service providersoperations of service providers

EU controlling business legislation which affects EU controlling business legislation which affects service sectors (EU warning to 10 countries for service sectors (EU warning to 10 countries for not implementing telecom regulations)not implementing telecom regulations)

In UK BT regulated in their service strategy by In UK BT regulated in their service strategy by regulationsregulations

Uncontrollable Uncontrollable ‘‘Economic Economic factorsfactors’’

Impact of recessionImpact of recession ‘‘Baby boom’ generation being forced to save for Baby boom’ generation being forced to save for

pensionspensions- Impact on expenditure in health, travel and Impact on expenditure in health, travel and

financialfinancial Long term impact Long term impact - Shortage of young labour- Prices of healthcare and leisure - More demand for professionals working in services

for the aging population

Uncontrollable Uncontrollable ‘‘TechnologicalTechnological’’ factors factors

Growth of InternetGrowth of Internet Greater bandwidthGreater bandwidth Compact mobile equipmentCompact mobile equipment Wireless networkingWireless networking Faster, more powerful softwareFaster, more powerful software Digitisation of text, graphics, audio, videoDigitisation of text, graphics, audio, video E-advertisingE-advertising

Uncontrollable Uncontrollable ‘‘SocialSocial factorsfactors’’

Growing individualismGrowing individualism More people short of time/ WMore people short of time/ Work life balance ork life balance

emphasisemphasis Increased desire for buying experiences vs. thingsIncreased desire for buying experiences vs. things Services for household chores owing to more Services for household chores owing to more

female labour force participationfemale labour force participation ImmigrationImmigration Growing but aging population Growing but aging population

Impact of ‘Macro context’ on services Impact of ‘Macro context’ on services in a in a travel companytravel company

Factor Trend Macro

level

Impact on Travel service sector

Demographic Smaller families More income to spend on leisure/less time

Specialised theme package tours

Economic Pressure to save for pensions- Aging population

Less disposable income for leisure

Bundling of products and services/differentiation

Technological Use of internet, mobile technology

Emphasis on ‘self service’

E-booking

ba.com

Social More single people

Emphasis on individualism

Tailored holidays/

Extreme sports

Marketing-RelatedMarketing-Related trends trends influencing the service sectorinfluencing the service sector

Internationalisation

The rise of

commercial principles

Increased down

sizing, outsourcing, off shoring

Up-scaling in core activities

Marketing Related trends - Marketing Related trends - InternationalisationInternationalisation

Global brands (Nike/Gap)Global brands (Nike/Gap) Internationalisation of media and Internationalisation of media and

television (American soaps - ‘Friends’)television (American soaps - ‘Friends’) Impact on ‘Glocal’ service strategies Impact on ‘Glocal’ service strategies

(Mc Donald’s in India)(Mc Donald’s in India)

Marketing Related trends – Marketing Related trends – Increase in commercial principlesIncrease in commercial principles

Emphasis on stakeholder valueEmphasis on stakeholder value Being self sufficient (focus on core Being self sufficient (focus on core

activities)activities) Commercialising government servicesCommercialising government services Unbundling of services for increased Unbundling of services for increased

competitioncompetition

Marketing Related trends – Marketing Related trends – Focussing on Core BusinessFocussing on Core Business

OutsourcingOutsourcing- Hotels outsourcing cleaning, security and Hotels outsourcing cleaning, security and

gardening servicesgardening services- Supermarkets outsourcing packaging of Supermarkets outsourcing packaging of

food productsfood products Off-shoring Off-shoring - Software developmentSoftware development- Processing claims etcProcessing claims etc

Marketing Related trends – Marketing Related trends – Up-scaling in Core BusinessUp-scaling in Core Business

CooperationCooperation- Strategic partnering and Strategic Strategic partnering and Strategic

alliances (Airlines)alliances (Airlines)

FranchisingFranchising

-- Franchising ‘business formats’ Franchising ‘business formats’ (Hairdressers)(Hairdressers)

Marketing Related trends – Marketing Related trends – Diminishing DifferencesDiminishing Differences

Diminished borders between services and Diminished borders between services and goods (IBM - computer or service??)goods (IBM - computer or service??)

Bundling of products and servicesBundling of products and services Growth in leasing, rentals and collective Growth in leasing, rentals and collective

propertyproperty

Marketing Related trends – Marketing Related trends – Changes in Delivery Mode /Asset Changes in Delivery Mode /Asset StructureStructure

- The use of mobile phones- The use of mobile phones

- Internet (E -tickets)- Internet (E -tickets)

- Call centres (Service queries)- Call centres (Service queries)

- Self service (Direct Insurance)- Self service (Direct Insurance)

Impact of Impact of ‘marketing related trends’‘marketing related trends’ on on

the service sector – the service sector – Travel servicesTravel services Marketing factorsMarketing factors TrendTrend Impact on travel Impact on travel

servicesservicesInternationalisation Increase in global

travel

Customising onboard service (menus, multilingual in flight crew)

Focussing on core business

Outsourcing peripheral services

Call centre bookings/

reservations/missing baggage queries

Changes in delivery mode

Cost cutting by companies/ emphasis on self help for convenience

Self check-in, E-tickets, E-bookings

Summary Summary

Decline of ‘traditional Decline of ‘traditional industries’ in industries’ in industrialised western industrialised western societysociety

Combination of Combination of ‘macro ‘macro environmental’ and environmental’ and ‘marketing led’ factors ‘marketing led’ factors resulting in the resulting in the emergence/growth of emergence/growth of the service sectorthe service sector

Next WeekNext Week Fundamentals of the Fundamentals of the

‘service’ concept‘service’ concept

- The 5I’s- The 5I’s