SM7_Ch01_Introduction.pptx

Services Marketing
Chapter 1:
New Perspectives On
Marketing in the
Service Economy
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 1
Why Study Services?
Services Marketing
= 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
Why Study Services?
Services Marketing
=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?
Services Marketing
= 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 Services Marketing
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
Definition of Services
Services Marketing
= 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.
Service Products vs. Customer
Service & After-Sales Service Services Marketing
= 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
4 Categories of Services
Services Marketing
Differences, Implications, and
Marketing-Related Tasks Services Marketing
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
manage capacity
▪ Intangible elements ▪ Harder to evaluate ▪ Emphasize physical clues,
usually dominate service & distinguish employ metaphors and vivid
value creation from competitors images in advertising
▪ Services are often ▪ Greater risk & ▪ Educate customers on
difficult to visualize & uncertainty perceived making good choices; offer
understand guarantees
▪ Customers may be ▪ Interaction between ▪ Develop user-friendly
involved in co- customer & provider; equipment, facilities &
production poor task execution systems; train customers,
could affect satisfaction provide good support
Differences, Implications, and
Marketing-Related Tasks Services Marketing
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 ▪ Institute good service
▪ Difficult to shield recovery procedures
customers from failures
▪ Time factor often ▪ Find ways to compete on
▪ Time is money; speed of delivery; offer
assumes great customers want service
importance extended hours
at convenient times
▪ Distribution may take ▪ Create user-friendly,
▪ Electronic channels or secure websites and free
place through voice communications access by telephone
nonphysical channels
Services Require
An Extended Marketing Mix Services Marketing
= 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 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
Services Marketing
= Traditional Marketing Mix Applied to Services

Product (Chapter 4)
Place and Time (Chapter 5)
Price (Chapter 6)
Promotion and Education (Chapter 7)
= Extended Marketing Mix for Services

Process (Chapter 8 & 9)
Physical Environment (Chapter 10)
People (Chapter 11)
Marketing to be Integrated with
Other Management Functions Services Marketing
Three management functions play central and interrelated

roles in meeting needs of service customers
Operations Marketing
Management Management
Customer
s
Human Resources
Management

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Services Marketing

= Services dominate most economies and are growing

= Understanding services oﬀers you a personal competitive

=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:

Social Business Advances

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

= 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

Diﬀerence Implications Marketing-Related Tasks

Diﬀerence Implications Marketing-Related Tasks

= Marketing can be viewed as:

= Marketing is only function to bring operating revenues into

= The “7 Ps” of services marketing are needed to create

= Traditional Marketing Mix Applied to Services

= Extended Marketing Mix for Services

Three management functions play central and interrelated

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