Services Marketing Part 1

Services Marketing
Session 1:
New Perspectives On
Marketing in the
Service Economy
Overview of session 1
 Why Study Services?
 What are Services?
 Marketing Challenges Posed by Services
 Extended Marketing Mix Required for Services
 Integration of Marketing with Other Management Functions
 Developing Effective Service Marketing Strategies
Adapted from Slide © 2010 by Lovelock & Wirtz, Service Marketing 7/e
Why Study Services?
Why Study Services?
 Services dominate most economies and are growing

rapidly:
 Services account for more than 60% of GDP worldwide
 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
Services Dominate the Global
Economy
Contribution of Service Industries to GDP Globally
Manufacturing 32%
Services 64%
Agriculture 4%
Source: The World Factbook 2008, Central Intelligence Agency
Estimated Size of Service Sector
in Selected Countries
Jersey (97%), Cayman Islands (95%), Hong Kong (92%)
Bahamas (90%), Bermuda ( 89%), Luxembourg (86%)
USA (79%), Fiji (78%), Barbados (78%), France (77%), U.K. (76%)
Japan (72%), Taiwan (71%), Australia (71%), Italy (71%)
Canada (70%), Germany (69%), Israel (67%)
South Africa (65%), Brazil (66%), Poland (66%)
Turkey (63%), Mexico (62%)
Argentina (57%), Russia (55%)
Malaysia (46%), Chile (45%)
Indonesia (41%), China (40%)
Saudi Arabia (35%)

Services as Percent of GDP
10 20 30 40 50 60 70 80 90
Source: The World Factbook 2008, Central Intelligence Agency
An ever extending field of business
 Casino Hotels  HMO Medical Centers

 Continuing Care Retirement  Industrial Design Services
Communities
 Investment Banking and Securities
 Diagnostic Imaging Centers Dealing
 Diet and Weight Reducing Centers  Management Consulting Services
 Environmental Consulting  Satellite Telecommunications
 Golf Courses, Country Clubs  Telemarketing Bureaus
 Hazardous Waste Collection  Temporary Help Services
Why Study Services?
 Most new jobs are generated by services

 Fastest growth expected in knowledge-based industries
 Significant training and educational qualifications required,

but employees will be more highly compensated
 Will service jobs be lost to lower-cost countries? Yes, some service

jobs can be exported
Why Study Services?
 Powerful forces are transforming service markets

 Government policies, social changes, business trends,
advances in IT, internationalization
 Forces that reshape:

 Demand
 Supply
 The competitive landscape
 Customers’ choices, power, and decision making
Transformation of the
Service Economy
Social Business Advances
Changes Trends In IT
Government Globalization
Policies
 New markets and product categories
 Increase in demand for services
 More intense competition
Innovation in service products & delivery systems, stimulated by better technology
Customers have more choices and exercise more power
Success hinges on:  Understanding customers and competitors

 Viable business models
 Creation of value for customers and firm
Increased focus on services marketing and management
Factors Stimulating Transformation
of the Service Economy
Policies
 Changes in regulations
 Privatization
 New rules to protect customers, employees,
and the environment
 New agreement on trade in services
Policies
 Rising consumer expectations

 More affluence
 More people short of time
 Increased desire for buying experiences vs.
things
 Rising consumer ownership of high tech
equipment
 Easier access to information
 Immigration
 Growing but aging population
Policies
 Push to increase shareholder value

 Emphasis on productivity and cost savings
 Manufacturers add value through service and
sell services
 More strategic alliances and outsourcing
 Focus on quality and customer satisfaction
 Growth of franchising
 Marketing emphasis by nonprofits
Policies
 Growth of Internet
 Greater bandwidth
 Compact mobile equipment
 Wireless networking
 Faster, more powerful software
 Digitization of text, graphics, audio, video
Policies
 More companies operating on transnational

basis
 Increased international travel
 International mergers and alliances
 “Offshoring” of customer service
 Foreign competitors invade domestic markets
What are Services?
What Are Services?
 The historical view

 Smith (1776): Services are different from goods because they are
perishable
 Say (1803): As services are immaterial, consumption cannot be
separated from production
 A fresh perspective: Benefits without Ownership

 Rental of goods:
(a) Payment made for using or accessing something – usually for a defined
period of time – instead of buying it outright and
(b) Allows participation in network systems that individuals and
organizations could not afford
What Are Services?
Five broad categories within non-ownership

framework of which two or more may be combined
Rented goods Defined space Labor and

services and place rentals expertise rentals
Access to shared Access to and

physical usage of systems
environments and networks
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.
Value Creation is Dominated by
Intangible Elements
Physical Elements
High
Salt
Detergents
CD Player
Wine
Golf Clubs
New Car
Tailored clothing Plumbing Repair
Fast-Food Restaurant Health Club
Airline Flight
Landscape Maintenance
Consulting
Life Insurance
Internet Banking
Low High
Intangible Elements
Source; Adapted from Lynn Shostack
Service Products vs. Customer
Service & After-Sales Service
 A firm’s market offerings are divided into core product

elements and supplementary service elements
 Need to distinguish between:

 Marketing of services – when service is the core product
 Marketing through service – when good service increases the
value of a core physical good
 Manufacturing firms are reformulating and enhancing

existing added-value services to market them as stand-
alone core products
Mini case : Rolls-Royce sells power
by the hour
 What are the main products and services offered by Rolls-

Royce?
 What is the core product ? What are the supplementary

services?
 What are the benefits for Rolls-Rolls and for its clients
derived from such a bundled offer?
Service – A Process Perspective
 Differences exist amongst services depending on what is

being processed
 Classification of services into

 People processing
 Possession processing
 Mental stimulus processing
 Information processing
4 Categories of Services
People Processing
 Customers must:
 physically enter the service factory
 cooperate actively with the service operation
 Managers should think about process and output from

the customer’s perspective
 to identify benefits created and non-financial costs: Time, mental
and physical effort
Possession Processing
 Involvement is limited
 Less physical involvement
 Production and consumption are separable
Mental Stimulus Processing
 Ethical standards required:

 Customers might be manipulated
 Physical presence of recipients not required
 Core content of services is information-based

 Can be ‘inventoried’
Information Processing
 Most intangible form of service
 May be transformed:
 Into enduring forms of service output
 Line between information processing and mental

stimulus processing may be unclear
Marketing Challenges Posed
by Services
Services Pose Distinctive
Marketing Challenges
 Marketing management tasks in the service sector differ

from those in the manufacturing sector.
 Eight common differences between services and goods but

they do not apply equally to all services
What are marketing implications of these differences?
Differences, Implications, and
Marketing-Related Tasks
Difference Implications Marketing-Related Tasks

 Most service products  Customers may be  Use pricing, promotion,
cannot be inventoried turned away reservations to smooth
demand; work with ops to
 Intangible elements  Harder to evaluate manage capacity
usually dominate service & distinguish  Emphasize physical clues,
value creation from competitors employ metaphors and vivid
images in advertising
 Services are often  Greater risk &  Educate customers on
difficult to visualize & uncertainty perceived making good choices; offer
understand guarantees
 Interaction between  Develop user-friendly
 Customers may be
customer & provider; equipment, facilities &
involved in co-
poor task execution systems; train customers,
production
could affect satisfaction provide good support
Differences, Implications, and
Marketing-Related Tasks
Difference Implications Marketing-Related Tasks

 People may be part of  Behavior of service  Recruit, train employees to
service experience personnel & customers reinforce service concept
can affect satisfaction  Shape customer behavior
 Operational inputs and  Hard to maintain quality,  Redesign for simplicity and
outputs tend to vary consistency, reliability failure proofing
more widely  Difficult to shield  Institute good service
customers from failures recovery procedures
 Time factor often  Time is money;  Find ways to compete on

assumes great customers want service speed of delivery; offer
importance at convenient times extended hours
 Distribution may take  Electronic channels or  Create user-friendly,

place through voice communications secure websites and free
access by telephone
nonphysical channels
Case Sullivan Ford Auto World
Sullivan Ford Auto world: Requested
 How does marketing cars differ from marketing services for

those same vehicles?
 Compare and contrast the sales and service departments at

Auto World
 From a customer perspective, what useful parallels do you

see between running an automobile sales and service
dealership and running health care services?
 What advice would you give to Carol Sullivan-Diaz?
Extended Marketing Mix for
Services
Services Require
An Extended Marketing Mix
 Marketing can be viewed as:

 A strategic and competitive thrust pursued by top management
 A set of functional activities performed by line managers
 A customer-driven orientation for the entire organization
 Marketing is the only function to bring operating revenues

into a business; all other functions are cost centers
 The “7 Ps” of services marketing are needed to create

viable strategies for meeting customer needs profitably
The 7Ps of Services Marketing
 Traditional Marketing Mix Applied to Services

 Product
 Place and Time
 Price (non-financial cost, dynamic pricing)
 Promotion and Education (difficult to visualize, co-producer,
customer-customer interactions affect the service experience)
 Extended Marketing Mix for Services

 Process / Productivity
 Physical Environment
 People
 Operational inputs and outputs can vary widely

"We can't control the quality of our product as well as P&G control
engineer on a production line can… When you buy a box of Tide,
you can reasonable be 99 and 44/100ths percent sure that this stuff
will work to get your clothes clean. When you buy a Holiday Inn
room, you're sure at some lesser percentage that it will work to
give you a good night's sleep without any hassle, or people
banging on the walls and all the bad things that can happen in a
hotel".
 Demand and capacity need to be balanced
 Crafting a physical environment is key when a service

business requires customers to enter the service factory
 People' interactions are the very levers of value creation in

a service encounter.
 Loyal, skilled, motivated employees who can also work

independantly or together in teams represent a key
competitive advantage.
Integration of Marketing with
Other Management Functions
Marketing to be Integrated with
Other Management Functions
Three management functions play central and interrelated

roles in meeting needs of service customers
Operations Marketing
Management Management
Customers
Human Resources
Management
Case study : Dr Beckett's Dental Office
 1. Which of the 7P elements of the services marketing mix

are addressed in this case? Give examples of each “P” you
identify.
 2. Why do people dislike going to the dentist? Do you feel

that Beckett has addressed the problem effectively?
 3. How do Beckett and her staff educate patients about the

service they are receiving? What else could they do ?
 4. What supplementary services are offered? How do they

enhance service delivery?
Services Marketing
Session 2:
Consumer Behavior
in a Services Context
Mini Case: Susan Munro, service customer
 What are the different services experienced by Susan Munro? How do

you classify them?
 How do you describe the service consumption process of each of

them?
4 Categories of Services
Overview Of session 2
Customer Decision Making: Pre-purchase Stage

The Three-Stage Model of
Service Consumption
Service Encounter Stage
Post-encounter Stage
Pre-purchase Stage
Pre-purchase Stage - Overview
Pre-purchase Stage  Customers seek solutions to

aroused needs
 Evaluating a service may be
difficult
 Uncertainty about outcomes
Increases perceived risk
Service Encounter  What risk reduction strategies
Stage can service suppliers develop?
 Understanding customers’
service expectations
 Components of customer
expectations
Post-encounter Stage  Making a service purchase
decision
Need Arousal
 Decision to buy or use a service is triggered by need

arousal
 Triggers of need:
 Unconscious minds (e.g., personal identity and aspirations)
 Physical conditions (e.g., hunger )
 External sources (e.g., a service firm’s marketing activities)
 Consumers are then motivated to find a solution for their

need
Courtesy of Masterfile Corporation
Information Search
 Need arousal leads to attempts to find a solution
 Evoked set – a set of products and brands that a consumer

considers during the decision-making process – that is
derived from past experiences or external sources
 Alternatives then need to be evaluated before a final

decision is made
Evaluating Alternatives –
Service Attributes
 Search attributes help customers evaluate a product before

purchase
 E.g., type of food, location, type of restaurant and price
 Experience attributes cannot be evaluated before purchase

 The consumer will not know how much s/he will enjoy the food, the
service, and the atmosphere until the actual experience
 Credence attributes are those that customers find impossible to

evaluate confidently even after purchase and consumption
 E.g., hygiene conditions of the kitchen and the healthiness of the
cooking ingredients
How Product Attributes Affect
Ease of Evaluation
Most Goods Most Services
Easy Difficult
To Evaluate To evaluate
Clothing Restaurant Meals Computer Repair
Chair Lawn Fertilizer Education
Motor Vehicle Haircut Legal Services
Foods Entertainment Complex Surgery
High In High In High In

Search Experience Credence
Attributes Attributes Attributes
Source: Adapted from Valarie A. Zeithaml , “How Consumer Evaluation Processes Differ Between Goods & Services,” in J.H. Donelly and W. R. George, Marketing of
Services (Chicago: American Marketing Association, 1981)
Perceived Risks of Purchasing and
Using Services
 Functional–unsatisfactory performance outcomes
 Financial – monetary loss, unexpected extra costs
 Temporal – wasted time, delays leading to problems
 Physical – personal injury, damage to possessions
 Psychological – fears and negative emotions
 Social – how others may think and react
 Sensory – unwanted impact on any of five senses
How Might Consumers Handle
Perceived Risk?
 Seek information from respected personal sources
 Compare service offerings and search for independent

reviews and ratings via the Internet
 Relying on a firm with good reputation
 Looking for guarantees and warranties
 Visiting service facilities or going for trials before purchase

and examining tangible cues or other physical evidence
 Asking knowledgeable employees about competing services
Strategic Responses to Managing
Customer Perceptions of Risk
Free trial (for

services with Advertise (helps Display
high experience to visualize) credentials
attributes)
Use evidence
Encourage visit
management Offer
to service
(e.g., furnishing, guarantees
facilities
equipment etc.)
Give customers
online access
about order
status
Understanding Customers’
Service Expectations
 Customers evaluate service quality by comparing what they

expect against what they perceive
 Situational and personal factors also considered
 Expectations of good service vary from one business to

another, and differently positioned service providers in
same industry
 Expectations change over time
Factors Influencing Customer
Expectations of Service
Source: Adapted from Valarie A. Zeithaml, Leonard A. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of
Service,”Journal of the Academy of Marketing Science 21, no. 1 (1993): 1-12
Components of Customer
Expectations
Desired Service Level

• wished-for level of service quality that customer believes can and
should be delivered
Adequate Service Level

• minimum acceptable level of service
Predicted Service Level

• service level that customer believes firm will actually deliver
Zone of Tolerance
• Acceptable range of variations in service delivery
Purchase Decision
 Purchase Decision: Possible alternatives are compared and

evaluated, whereby the best option is selected
 Simple if perceived risks are low and alternatives are clear
 Complex when trade-offs increase
 Trade-offs are often involved
 After making a decision, the consumer moves into the

service encounter stage
Service Encounter Stage - Overview
Pre-purchase Stage ● Service encounters range from high-

to low-contact
● Understanding the servuction

system
Service Encounter ● Theater as a metaphor for service

Stage delivery: An integrative perspective
 Service facilities
 Personnel
Post-encounter Stage  Role and script theories
 Service encounter – a period of time during which a

customer interacts directly with the service provider
 Might be brief or extend over a period of time (e.g., a phone call or
visit to the hospital)
 Models and frameworks:

1. “Moments of Truth” – importance of managing touchpoints
2. High/low contact model – extent and nature of contact points
3. Servuction model – variations of interactions
4. Theater metaphor – “staging” service performances
Moments of Truth
“[W]e could say that the perceived quality is realized at the

moment of truth, when the service provider and the service
customer confront one another in the arena. At that moment they
are very much on their own… It is the skill, the motivation, and
the tools employed by the firm’s representative and the
expectations and behavior of the client which together will create
the service delivery process.”
Richard Normann
Service Encounters Range from
High-Contact to Low-Contact
Distinctions between High-Contact
and Low-Contact Services
 High-Contact Services  Low-Contact Services

 Customers visit service  Little or no physical contact
facility and remain  Contact usually at arm’s
throughout service delivery length through electronic or
 Active contact physical distribution
 Includes most people- channels
processing services  Facilitated by new
technologies
The Servuction System
Source: Adapted and expanded from an original concept by Eric Langeard and Pierre Eiglier
The Servuction System:
Service Production and Delivery
 Servuction System: visible front stage and invisible

backstage
 Service Operations
 Technical core where inputs are processed and service elements
created
 Contact people
 Inanimate environment
 Service Delivery
 Where “final assembly” of service elements takes place and service
is delivered
 Includes customer interactions with operations and other customers
Theater as a Metaphor for
Service Delivery
“All the world’s a stage and all the men

and women merely players. They have
their exits and their entrances and each
man in his time plays many parts.”
William Shakespeare
As You Like It
Theatrical Metaphor:
an Integrative Perspective
Good metaphor as service delivery is a series of events that

customers experience as a performance
Service facilities Personnel

• Stage on which drama • Front stage personnel are
unfolds like members of a cast
• This may change from • Backstage personnel are
one act to another support production team
Roles Scripts
• Like actors, employees • Specifies the sequences
have roles to play and of behavior for customers
behave in specific ways and employees
Implications of Customer
Participation in Service Delivery
 Greater need for information/training

 Help customers to perform well, get desired results
 Customers should be given a realistic service preview in

advance of service delivery
 This allows them to have a clear idea of their expected role and
their script in this whole experience
 Manages expectations and emotions
Post-Encounter Stage
Post-purchaseStage - Overview
Pre-purchase Stage
● Evaluation of service
performance
Service Encounter
Stage ● Future intentions
Post-encounter Stage
Customer Satisfaction with
Service Experience
 Satisfaction: attitude-like judgment following a service

purchase or series of service interactions
 Whereby customers have expectations prior to consumption,
observe service performance, compare it to expectations
 Satisfaction judgments are based on this comparison

 Positive disconfirmation (better)
 Confirmation (same)
 Negative disconfirmation (worse)
Customer Delight:
Going Beyond Satisfaction
 Research shows that delight is a function of three

components
 Unexpectedly high levels of performance
 Arousal (e.g., surprise, excitement)
 Positive affect (e.g., pleasure, joy, or happiness)
 Strategic links exist between customer satisfaction and

corporate performance
 By creating more value for customers (increased satisfaction), the
firm creates more value for the owners
Customer Delight:
Going Beyond Satisfaction
 Best Practice in Action 2.1:

Turkish Delight: Back-Up
Company Offers Customers
Surprisingly Innovative
Solutions
 Provided excellent customer

service whatever the time
and wherever the place.
Summary
• Key Steps • Customers face perceived risks

1. Need arousal which marketers should reduce
Pre-purchase 2. Information search with some strategic responses
Stage 3. Evaluation of alternative
solutions • Zone of tolerance: Adequate to
4. Purchase decision desired. Dissatisfaction if service
level falls below adequate level.
• Moments of Truth: importance of • Servuction model – variations of

Service Encounter effectively managing touchpoints interactions
Stage
• High/low contact service model – • Theater metaphor – “staging”
understanding the extent and service performances
nature of contact points
• In evaluating service performance, • Unexpectedly high levels of

Post- customers can have expectations performance, arousal, and
positively disconfirmed, confirmed, positive affect are likely to lead
encounterStage or negatively disconfirmed to delight
Services Marketing
Session 3:
Developing
Service Products:
Core and Supplementary
Elements
Overview of session 3
 Planning and Creating Services
 The Flower of Service
 New Service Development
Planning and Creating
Service Products
Service Products
A service product comprises of all elements of service performance,

both tangible and intangible, that create value for customers.
Service products consist of:
 Core Product  central component that supplies the principal,

problem-solving benefits customers seek
 Supplementary Services  augments the core product,

facilitating its use and enhancing its value and appeal
 Delivery Processes  used to deliver both the core product and

each of the supplementary services
Designing a Service Concept
 Service concept design must address the following issues:

 How the different service components are delivered to the
customer
 The nature of the customer’s role in those processes
 How long delivery lasts
 The recommended level and style of service to be offered
Documenting Delivery Sequence
Over Time
 Must address sequence in which customers will use each

core and supplementary service
 Determine approximate length of time required for each

step
 Information should reflect good understanding of

customers, especially their:
 needs
 habits
 expectations
Integration of Core Product,
Supplementary Elements, and
Delivery Process
Temporal Dimension to
Augmented Product
Reservation
Parking Get car

Check in Check out
Internet Internet
Use
Room USE GUESTROOM OVERNIGHT
internet
Porter
Pay TV
Meal
Room service
Time Frame of an Overnight Hotel Stay

Before Visit (real-time service use)
The Flower of Service
 There are two types of supplementary services

 Facilitating: either needed for service delivery, or help in the use
of the core product
 Enhancing: add extra value for the customer
 In a well-managed service organization, the petals and

core are fresh and well-formed
 Market positioning strategy helps to determine which

supplementary services should be included
Information
Payment Consultation
Billing Core Order-Taking
Exceptions Hospitality
Safekeeping
KEY:
Enhancing elements
Facilitating elements
Facilitating Services – Information
• Directions to service site

• Schedules/service hours
• Prices
• Reminders
• Warnings
• Conditions of sale/service
• Notification of changes
• Documentation
• Confirmation of reservations
• Summaries of account activities
• Receipts and tickets
Facilitating Services – Order-Taking
Applications
• Memberships in clubs/programs
• Subscription services
(e.g., utilities)
• Prerequisite based services
(e.g., financial credit,
college enrollment)
Order Entry
• On-site order fulfillment
• Mail/telephone/e-mail/web order
Reservations and Check-in
• Seats/tables/rooms
• Vehicles or equipment rental
• Professional appointments
Facilitating Services – Billing
• Periodic statements of account

activity
• Invoices for individual
transactions
• Verbal statements of amount due
• Self-billing (computed by
customer)
• Machine display of amount due
Facilitating Services – Payment
Self-Service
• Insert card, cash or token into machine
• Electronic funds transfer
• Mail a check
• Enter credit card number online
Direct to Payee or Intermediary
• Cash handling or change giving
• Check handling
• Credit/charge/debit card handling
• Coupon redemption
Automatic Deduction from Financial
Deposits
• Automated systems (e.g., machine-
readable tickets that operate
entry gate)
• Human systems (e.g., toll collectors)
Enhancing Services – Consultation
• Customized advice
• Personal counseling
• Tutoring/training in product use
• Management or technical
consulting
Enhancing Services – Hospitality
Greeting
Food and beverages
Toilets and washrooms
Waiting facilities and
amenities
• Lounges, waiting areas,
seating
• Weather protection
• Magazines,
entertainment,
newspapers
Transport
Security
Enhancing Services – Safekeeping
Caring for Possessions Customer Bring

with Them
• Child care, pet care
• Parking for vehicles, valet parking
• Coat rooms
• Baggage handling
• Storage space
• Safe deposit boxes
• Security personnel
Enhancing Services – Safekeeping
(cont)
Caring for Goods Purchased (or

Rented) by Customers
• Packaging
• Pickup
• Transportation and delivery
• Installation
• Inspection and diagnosis
• Cleaning
• Refueling
• Preventive maintenance
• Repair and renovation
Enhancing Services – Exceptions
Special Requests in Advance of Service

Delivery
• Children’s needs
• Dietary requirements
• Medical or disability needs
• Religious observances
Handling Special Communications
• Complaints
• Compliments
• Suggestions
Enhancing Services – Exceptions
(cont)
Problem Solving
• Warranties and guarantees
• Resolving difficulties that arise
from using
the product
• Resolving difficulties caused
by accidents,
service failures
• Assisting customers who have
suffered an accident or a
medical emergency
Restitution
• Refunds and compensation
• Free repair of defective goods
Managerial Implications
 Core products do not have to have supplementary elements
 Nature of product helps determine supplementary services

offered to enhance value
 People-processing and high contact services have more

supplementary services
 Different levels of service can add extra supplementary services

for each upgrade in service level
 Low-cost, no-frills basis firms needs fewer supplementary

elements
Achieving Success in Developing
New Services
 Services are not immune to high failure rates that plague

new manufactured products
 In developing new services:

 core product is often of secondary importance, many innovations
are in supplementary services or service delivery
 ability to maintain quality of the total service offering is key
 accompanying marketing support activities are vital
 Market knowledge is of utmost importance
Success Factors in
New Service Development
 Market synergy
 Good fit between new product and firm’s image
 Advantage in meeting customers’ needs
 Strong support from firm during and after launch
 Understands customer purchase decision behavior
 Organizational factors
 Strong inter-functional cooperation and coordination
 Internal marketing to educate staff on new product and its
importance
Summary
 Creating services involve:

 Designing the core product, supplementary services, and their
delivery processes
 Flower of service includes core product and two types of

supplementary services: facilitating and enhancing
 Facilitating services include information, order taking, billing, and
payment
 Enhancing services include consultation, hospitality, safekeeping,
and exceptions
Summary
 To develop new services, we can

 Reengineer service processes
 Use physical goods as a source of new service ideas
 Use research to design new services
 Understand how to achieve success in new service development

Services Marketing Part 1

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Services Marketing Part 1

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Services Marketing

 Why Study Services?

 What are Services?

 Marketing Challenges Posed by Services

 Extended Marketing Mix Required for Services

 Integration of Marketing with Other Management Functions

 Developing Effective Service Marketing Strategies

 Services dominate most economies and are growing

 Understanding services offers you a personal competitive

Contribution of Service Industries to GDP Globally

Source: The World Factbook 2008, Central Intelligence Agency

Argentina (57%), Russia (55%)

Malaysia (46%), Chile (45%)

Indonesia (41%), China (40%)

Saudi Arabia (35%)

 Casino Hotels  HMO Medical Centers

 Hazardous Waste Collection  Temporary Help Services

 Most new jobs are generated by services

 Significant training and educational qualifications required,

 Will service jobs be lost to lower-cost countries? Yes, some service

 Powerful forces are transforming service markets

 Forces that reshape:

Innovation in service products & delivery systems, stimulated by better technology

Customers have more choices and exercise more power

Success hinges on:  Understanding customers and competitors

 Rising consumer expectations

 Push to increase shareholder value

 More companies operating on transnational

 The historical view

 A fresh perspective: Benefits without Ownership

Five broad categories within non-ownership

Rented goods Defined space Labor and

Access to shared Access to and

 In exchange for their money, time, and effort, service

 A firm’s market offerings are divided into core product

 Need to distinguish between:

 Manufacturing firms are reformulating and enhancing

 What are the main products and services offered by Rolls-

 What is the core product ? What are the supplementary

 Differences exist amongst services depending on what is

 Classification of services into

 cooperate actively with the service operation

 Managers should think about process and output from

 Less physical involvement

 Production and consumption are separable

 Ethical standards required:

 Physical presence of recipients not required

 Core content of services is information-based

 Most intangible form of service

 Into enduring forms of service output

 Line between information processing and mental

 Marketing management tasks in the service sector differ

 Eight common differences between services and goods but

What are marketing implications of these differences?

Difference Implications Marketing-Related Tasks

Difference Implications Marketing-Related Tasks

 Time factor often  Time is money;  Find ways to compete on

 Distribution may take  Electronic channels or  Create user-friendly,

 How does marketing cars differ from marketing services for