Services Marketing

Chapter 1: Introduction to Services

Have you experienced it?http://www.youtube.com/watch?v=OaZnCu1h

c0Ihttp://www.youtube.com/watch?

v=PyG2jtA_rd8

What are services?In the simplest term services are deeds,

processes and performancesServices are a form of product that consist of

activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.

More elaborately services can be defined as, “ Service include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort, or health) that are essentially intangible concerns of its first

Challenges for ServicesChallenges for Services

Defining and improving qualityCommunicating and testing new servicesCommunicating and maintaining a

consistent imageMotivating and sustaining employee

commitmentCoordinating marketing, operations and

human resource effortsSetting pricesStandardization versus personalization

Examples of Service IndustriesExamples of Service Industries

Health Carehospital, medical practice, dentistry, eye care

Professional Servicesaccounting, legal, architectural

Financial Servicesbanking, investment advising, insurance

Hospitalityrestaurant, hotel/motel, bed & breakfast, ski resort, rafting

Travelairlines, travel agencies, theme park

Others:hair styling, pest control, plumbing, lawn

maintenance, counseling services, health club

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

Percent of Percent of U.S. Labor Force by IndustryU.S. Labor Force by Industry

0

10

20

30

40

50

60

70

80

1929 ------ ----- ----- ---- 2009

Perc

en

t of

GD

P

Year

Services Manufacturing Mining & Agriculture

0

10

20

30

40

50

60

70

80

1948 ----- ----- ----- ----- 2009

Percent of U.S. Gross Domestic Percent of U.S. Gross Domestic Product by IndustryProduct by Industry

Perc

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t of

GD

P

Year

Services Manufacturing Mining & Agriculture

Differences Between Goods and ServicesDifferences Between Goods and Services

Intangibility

PerishabilitySimultaneous

Productionand

Consumption

Heterogeneity

Implications of IntangibilityImplications of Intangibility Services cannot be inventoried Services cannot be patented Services cannot be readily

displayed or communicated Pricing is difficult

Implications of HeterogeneityImplications of HeterogeneityService delivery and customer satisfaction

depend on employee actionsService quality depends on many

uncontrollable factorsThere is no sure knowledge that the service

delivered matches what was planned and promoted

Implications of Simultaneous Production and Implications of Simultaneous Production and ConsumptionConsumption

Customers participate in and affect the transaction

Customers affect each otherEmployees affect the service outcomeDecentralization may be essentialMass production is difficult

Implications of PerishabilityImplications of Perishability

It is difficult to synchronize supply and demand with services

Services cannot be returned or resold

Services are DifferentServices are DifferentGoods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.

Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.

Standardized Heterogeneous Service delivery and customer satisfaction depend onemployee actions.Service quality depends on many uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.

Productionseparate fromconsumption

Simultaneousproduction andconsumption

Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.Decentralization may be essential.Mass production is difficult.

Nonperishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.

Internal Marketing

Interactive Marketing

External Marketing

Company(Management)

CustomersEmployees

“enabling thepromise”

“delivering the promise”

“setting thepromise”

Services Marketing Triangle Applications Services Marketing Triangle Applications ExerciseExercise

Focus on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle?

How is each type of marketing being carried out currently?

Are the three sides of the triangle well aligned?

Are there specific challenges or barriers in any of the three areas?

Ways to Use the Ways to Use the Services Marketing TriangleServices Marketing Triangle

Overall Strategic Assessment• How is the service

organization doing on all three sides of the triangle?

• Where are the weaknesses?

• What are the strengths?

Specific Service Implementation• What is being

promoted and by whom?

• How will it be delivered and by whom?

• Are the supporting systems in place to deliver the promised service?

Company

CustomersProviders

Technology

The Services Triangle The Services Triangle and Technologyand Technology

Services Marketing Mix:Services Marketing Mix:7 Ps for Services7 Ps for Services

Traditional Marketing Mix

Expanded Mix for Services: 7 Ps

Building Customer Relationships Through People, Processes, and Physical Evidence

Ways to Use the 7 Ps

Traditional Marketing MixTraditional Marketing Mix

All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:

Product Price Place Promotion

Expanded Mix for Services --Expanded Mix for Services --the 7 Psthe 7 Ps

ProductPricePlacePromotion

PeopleProcessPhysical Evidence

Expanded Marketing Mix for ServicesExpanded Marketing Mix for Services

PRODUCT PLACE PROMOTION PRICE

Physical good features

Channel type Promotion blend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Sales promotion

Differentiation

Warranties Transportation Publicity Allowances

Product lines Storage

Branding

Expanded Marketing Mix for Services Expanded Marketing Mix for Services (cont---)(cont---)

PEOPLE PHYSICALEVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customerinvolvement

Employee research Employee dress

Other tangibles

Ways to Use the 7 PsWays to Use the 7 PsOverall Strategic

AssessmentHow effective is a

firm’s services marketing mix?

Is the mix well-aligned with overall vision and strategy?

What are the strengths and weaknesses in terms of the 7 Ps?

Specific Service Implementation

Who is the customer?What is the service?How effectively does

the services marketing mix for a service communicate its benefits and quality?

What changes/improvements are needed?