part 1 foundations for services marketing 1-1. chapter 1 introduction to services what are...
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Part 1
FOUNDATIONS FOR SERVICES MARKETING
FOUNDATIONS FOR SERVICES MARKETING
1-1
Chapter 1Introduction to Services What are Services? Why Service Marketing? Service and Technology Characteristics of Services Service Marketing Mix Staying Focused on the Customer
1-2
Objectives for Chapter 1:Introduction to Services Explain what services are and identify important trends in services.
Explain the need for special service marketing concepts and practices and why the need has developed and is accelerating.
Explore the profound impact of technology on service.
Outline the basic differences between goods and services and the resulting challenges and opportunities for service businesses.
Introduce the expanded marketing mix for services and the philosophy of customer focus as powerful frameworks and themes that are fundamental to the rest of the text.
1-3
What are Services?
Services are deeds, processes, and performances provided or coproduced by one entity or person for another entity or person.
e.g. IBM -repair and maintenance service for its equipment, -consulting services for IT and e-commerce applications, -training services and etc.
Differentiate these termsService industries and companiesService as a product
a wide range of intangible product offerings that customers value and pay for
Customer Servicethe service provided in support of a company’s core products
Derived servicethe value derived from physical goods
Examples of Service 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 airline, travel agency, theme park
Others hair styling, pest control, plumbing, lawn maintenance, counseling services, health
club, interior design
1-6
Contributions of Service Industries toU.S. Gross Domestic Product
1-7
Tangibility Spectrum
1-8
Tangibility is a key determinant of whether and offering is a service.
Why Service Marketing?
Services dominate U.S. and worldwide economies
Service as a business imperative in goods-focused businesses
Deregulated industries and professional service needs
Service marketing is differentService leads to profits
1-9
Percent of U.S. Labor Force by Industry
1-10
Percent of U.S. Gross Domestic Product by Industry
1-11
Why service? (Continued)
Service as a business imperative in goods-focused businesses
e.g. Xerox: document management service Petsmart: pet hotels, groooming, and training P&G:Tide Dry Cleaners, Mr.Clean Car Wash
Examples of Goods Companies that are Expanding into Services
Boeing
1-13
Firms focus on services because
Services can provide higher profit margins and growth potential than products
Customer satisfaction and loyalty are driven by service excellence
Services can be used as a differentiation strategy in competitive markets
Why service? (Continued)
Deregulated industries and professional service needs For example, the deregulation in airline industries
created turmoil in the industry, since the price used to be determined and monitored by US government.
Professional service providers need to understand their customers, to ensure the delivery of quality services
Why service? (Continued)
Service marketing is different Services differ from goods. There is a need for new concepts and approaches for
marketing and managing service businesses.
Service leads to profits Successful businesses devote to common service
themes, e.g. trust-based relationship with customers and commitment to investment in employee success.
Service and TechnologyTechnology significantly influences the practice
of service marketingNew service offerings
Interactive edition of The Wall Street Journal
New way to deliver existing servicesMedical information on the web
Enabling both customers and employeesCustomers: online banking, online shoppingEmployees: software and real-time information to customize
services to fit customer’s needs
Eight Central Paradoxes of Technological Products
1-18
Characteristics of ServicesCompared to Goods
Intangibility
Perishability
SimultaneousProductionandConsumption
Heterogeneity
1-22
Comparing Goods and Services
1-23
IntangibilityServices cannot be seen, felt, tested or touched
Heterogeneity No two services will be precisely alike
Simultaneous Production and ConsumptionSold first, and then produced and consumed
simultaneously
PerishabilityServices cannot be saved, stored, resold, or
returned.
Implications of Intangibility
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or communicated
Pricing is difficult
1-26
Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee and customer actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted
1-27
Implications of 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 difficult1-28
Implications of Perishability
It is difficult to synchronize supply and demand with services
Services cannot be returned or resold
1-29
Search, Experience, and Credence Qualities:A framework to classify goods and services Search qualitiesAttributes that a customer can determine before
purchasing a productExperience qualitiesAttributes that can be discerned only after purchase
or during consumptionCredence qualitiesAttributes that may be impossible to evaluate even
after purchase and consumption
Search, Experience, and Credence Qualities
1-31
Challenges and Questions for Service MarketersDefining and improving qualityDesigning and testing new servicesCommunicating and maintaining a consistent
imageAccommodating fluctuating demandMotivating and sustaining employee
commitment
1-32
Challenges and Questions for Service MarketersSetting pricesOrganizing to facilitate strategic and tactical
decision-makingFinding a balance between standardization and
personalizationProtecting new service concepts from
competitorsCommunicating quality and value to customersEnsuring the delivery of consistent quality
service1-33
Traditional Marketing Mix
Elements an organization controls that can be used to satisfy or communicate with customers: Product Price Place Promotion
1-34
Expanded Mix for Services – The 7 Ps People
All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.
Physical Evidence The environment in which the service is delivered and where
the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
Process The actual procedures, mechanisms, and flow of activities by
which the service is delivered—the service delivery and operating systems.
1-35
Expanded Marketing Mix for Services
1-36
Expanded Marketing Mix for Services
Ways to Use the 7 Ps
Overall Strategic Assessment
How effective is a firm’s service 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
service marketing mix for a service communicate its benefits and quality?
What changes/ improvements are needed? 1-38
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