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Services Marketing
Services Marketing
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If You want these slides then send me at
E-mail at or call me at
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Chapter 1
INTRODUCTION
TO
SERVICES
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Objectives for Chapter 1:
Objectives for Chapter 1:
Introduction to Services
Introduction to Services
•
Explain what services are and identify service
trends
•
Explain the need for special services marketing
concepts and practices
•
Outline the basic differences between goods and
services and the resulting challenges for service
businesses
•
Introduce the service marketing triangle
•
Introduce the expanded services marketing mix
•
Introduce the gaps model of service quality
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Introduction
Introduction
•
Services are deeds,processes and
performance
•
Intangible, but may have a tangible
component
•
Generally produced and consumed at the
same time
•
Need to distinguish between SERVICE and
CUSTOMER SERVICE
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Challenges for Services
Challenges for Services
•
Defining and improving quality
•
Communicating and testing new services
•
Communicating and maintaining a consistent
image
•
Motivating and sustaining employee commitment
•
Coordinating marketing, operations and human
resource efforts
•
Setting prices
•
Standardization versus personalization
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Examples of Service
Examples of Service
Industries
Industries
•
Health Care
–
hospital, medical practice, dentistry, eye care
•
Professional Services
–
accounting, legal, architectural
•
Financial Services
–
banking, investment advising, insurance
•
Hospitality
–
restaurant, hotel/motel, bed & breakfast,
–
ski resort, rafting
•
Travel
–
airlines, travel agencies, theme park
•
Others:
–
hair styling, pest control, plumbing, lawn
maintenance, counseling services, health club
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Figure 1-1
Figure 1-1
Tangibility Spectrum
Tangibility Spectrum
Tangible
Dominant
Intangible
Dominant
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching
Fast-food
Outlets
Fast-food
Outlets
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Figure 1-2
Figure 1-2
Percent of
Percent of
U.S. Labor Force by Industry
U.S. Labor Force by Industry
0
10
20
30
40
50
60
70
80
1929 1948 1969 1977 1984 1996
Percent of GDP
Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and
July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S.
Economy,” Scientific American, 244,3 (1981): 31-39.
Year
Services
Manufacturing
Mining & Agriculture
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0
10
20
30
40
50
60
70
80
1948 1959 1967 1977 1987 1996
Figure 1-3
Figure 1-3
Percent of U.S. Gross Domestic
Percent of U.S. Gross Domestic
Product by Industry
Product by Industry
Percent of GDP
Year
Source: Survey of Current Business, August 1996, Table 11, April 1998, Table
B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S.
Economy,” Scientific American, 244,3 (1981): 31-39.
Services
Manufacturing
Mining & Agriculture
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Differences Between
Differences Between
Goods and Services
Goods and Services
Intangibility
Perishability
Simultaneous
Production
and
Consumption
Heterogeneity
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Implications of Intangibility
Implications of Intangibility
Services cannot be inventoried
Services cannot be patented
Services cannot be readily displayed
or communicated
Pricing is difficult
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Implications of Heterogeneity
Implications of Heterogeneity
Service delivery and customer satisfaction
depend on employee actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted
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Implications of Simultaneous
Implications of Simultaneous
Production and Consumption
Production and Consumption
Customers participate in and affect the
transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
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Implications of Perishability
Implications of Perishability
It is difficult to synchronize supply and
demand with services
Services cannot be returned or resold
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Table 1-2
Table 1-2
Services are Different
Services are Different
Goods Services Resulting Implications
Tangible 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 on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production
separate from
consumption
Simultaneous
production and
consumption
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 with
services.
Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”
Journal of Marketing 49 (Spring 1985): 33-46.
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Figure 1-5
Figure 1-5
The Services Marketing Triangle
The Services Marketing Triangle
Internal
Marketing
Interactive Marketing
External
Marketing
Company
(Management)
CustomersEmployees
“enabling the
promise”
“delivering the promise”
“setting the
promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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Ways to Use the
Ways to Use the
Services Marketing Triangle
Services 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?
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Source: Adapted from A. Parasuraman
Company
Customers
Providers
Technology
Figure 1-6
Figure 1-6
The Services Triangle
The Services Triangle
and Technology
and Technology
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Services Marketing Mix:
Services Marketing Mix:
7 Ps for Services
7 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
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Traditional Marketing Mix
Traditional 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
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Expanded Mix for Services
Expanded Mix for Services
the 7 Ps
the 7 Ps
•
Product
•
Price
•
Place
•
Promotion
•
People
•
Process
•
Physical Evidence
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Table 1-3
Table 1-3
Expanded Marketing Mix for
Expanded Marketing Mix for
Services
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
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PEOPLE PHYSICAL
EVIDENCE
PROCESS
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicating
culture and values
Signage Level of customer
involvement
Employee research Employee dress
Other tangibles
Table 1-3 (Continued)
Table 1-3 (Continued)
Expanded Marketing Mix for
Expanded Marketing Mix for
Services
Services
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Ways to Use the 7 Ps
Ways to Use the 7 Ps
Overall Strategic
Assessment
•
How 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?