Essentials of services marketing 2nd

Essentials of Services Marketing,
2nd Edition

Chapter One – Introduction
to Services Marketing


Chapter 1 Outline
1.1
1.2
1.3
1.4
1.5
1.6
1.7

2

Why study services?
Powerful forces are transforming service markets
What are services?
Four broad categories of services
Challenges posed by services
The 7 Ps of services marketing
Framework for effective services marketing strategies

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1.1
Why study services?

3

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1.1 Why study services?

•

•

Services dominate most economies and are growing rapidly:
–

Services account for more than 60% of GDP worldwide (why?)

–

Almost all economies have a substantial service sector

–

Most new employment is provided by services

–

Strongest growth area for marketing

Understanding services offers you a personal competitive advantage

(How?)

4

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1.1 Why study services?
Contribution of Services Industries to Global GDP

5

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1.1 Why study services? (Find your home country)
Estimated Size of Service Sector in Selected Countries

6

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1.2
Powerful Forces Are Transforming Service Markets

7

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1.2 Powerful Forces Are Transforming Service Markets
Forces Transforming the Service Economy (1)
Social
Changes

Business
Trends

Advances in
IT

Government
Policies

Globalization

● Changes in regulations
● Privatization
● New rules to protect customers,

employees, and the environment

● New agreement on trade in services
8

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1.2 Powerful Forces Are Transforming Service Markets

Forces Transforming the Service Economy (2)
Social
Changes

Business
Trends

Advances in
IT

Government
Policies

Globalization

● Rising consumer expectations
● Greater affluence
● Personal Outsourcing
● Increased desire for buying experiences vs.
things

● Rising consumer ownership of high tech
equipment

● Easier access to more information
● Migration
● Growing but aging population
9

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1.2 Powerful Forces Are Transforming Service Markets
Forces Transforming the Service Economy (3)
Social
Changes

Business
Trends

Advances in
IT

Government
Policies

Globalization

● Push to increase shareholder value
● Emphasis on productivity and cost savings
● Manufacturers add value through service and
sell services

● More strategic alliances
● Focus on quality and customer satisfaction
● Growth of franchising
● Marketing emphasis by nonprofits
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1.2 Powerful Forces Are Transforming Service Markets
Forces Transforming the Service Economy (4)
Social
Changes

Business
Trends

Advances in
IT

Government
Policies

Globalization

● Growth of Internet
● Greater bandwidth
● Compact mobile equipment
● Wireless networking
● Faster, more powerful software
● Digitization of text, graphics, audio, video

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1.2 Powerful Forces Are Transforming Service Markets
Forces Transforming the Service Economy (5)
Social
Changes

Business
Trends

Advances in
IT

Government
Policies

Globalization

● More companies operating on transnational
basis

● Increased international travel
● International mergers and alliances

● “Offshoring” of customer service
● Foreign competitors invade domestic markets

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1.3
What are services?

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1.3 What are services?
Definition of Services
•

•

Services
–

are economic activities offered by one party to another

–

most commonly employ time-based performances to bring about
desired results

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;

–

normally do not take ownership of any of the physical elements
involved.

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1.4
Four broad categories of services

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1.4 Four broad categories of services – which of
these do you use regularly?

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1.5
Challenges posed by services

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1.5 Challenges posed by services
Differences, Implications, and Marketing-Related
Tasks (1) (Table 1.2)
Difference

Implications

 Most service products
cannot be inventoried

 Customers turned away

or capacity not used

 Intangible elements
usually dominate
value creation

 Harder to evaluate
service & distinguish
from competitors

 Services are often
difficult to visualize &
understand

 Greater risk &
uncertainty perceived

 Customers may be
involved in coProduction

 Interaction between
customer & provider;
but poor task execution
could affect satisfaction

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Marketing-Related Tasks
 Use pricing, promotion,
reservations to smooth

demand; work with ops to
manage capacity
 Emphasize physical clues,
employ metaphors and vivid
images in advertising
 Educate customers on
making good choices; offer
guarantees
 Develop user-friendly
equipment, facilities &
systems; train customers,
provide good support


1.5 Challenges posed by services
Differences, Implications, and Marketing-Related
Tasks (2) (Table 1.2)
Difference

Implications

 People may be part of
service experience

 Behavior of service
personnel & customers
can affect satisfaction

 Operational inputs and
outputs tend to vary

more widely

 Hard to maintain quality,
consistency, reliability

 Difficult to shield
customers from failures

Marketing-Related Tasks
 Recruit, train employees to
reinforce service concept
 Shape customer behavior
 Redesign for simplicity and
failure proofing
 Institute good service
recovery procedures

 Time factor often
assumes great
importance

 Time is money;
customers want service
at convenient times

 Find ways to compete on
speed of delivery; offer
extended hours

 Distribution may take

place through
nonphysical channels

 Electronic channels or
voice telecommunications

 Create user-friendly,
secure websites and free
access by telephone

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1.5 Challenges posed by services
Added by Physical, Intangible Elements Helps
Distinguish Goods (Products) and Services (Fig 1.14)

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1.6
The 7 Ps of services marketing

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1.6 The 7 Ps of services marketing

•

Product elements (Chapter 4)

•

Place and time (Chapter 5)

•

Price and other user outlays (Chapter 6)

•

Promotion and education (Chapter 7)

•

Process (Chapter 8)

•

Physical environment (Chapter 10)

•

People (Chapter 11)

Let’s watch the Wahoo’s Fish Taco videos with these 7ps in
mind. Take notes on each of these factors as you watch the
videos.

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1.7
Framework for effective services marketing
strategies

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1.7 Framework for effective services marketing
strategies
Overview

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Essentials of Services Marketing,
2nd Edition

Chapter Two – Consumer
Behavior in a Services
Context