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Essentials of Services Marketing,2nd EditionInstructor Supplements

Pearson Education South Asia Pte Ltd 2013. All rights reserved* Introduction to Services Marketing

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Pearson Education South Asia Pte Ltd 2013. All rights reserved

Pearson Education South Asia Pte Ltd 2013. All rights reserved* Chapter 1 Outline1.1Why study services? 1.2 Powerful forces are transforming service markets1.3What are services?1.4Four broad categories of services1.5Challenges posed by services1.6The 7 Ps of services marketing1.7Framework for effective services marketing strategies


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.1 Why study services?Services dominate most economies and are growing rapidly:Services account for more than 60% of GDP worldwideAlmost all economies have a substantial service sectorMost new employment is provided by services Strongest growth area for marketing

Understanding services offers you a personal competitive advantage


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.2 Powerful Forces Are Transforming Service MarketsForces Transforming the Service Economy (1)Changes in regulationsPrivatizationNew rules to protect customers, employees, and the environment New agreement on trade in services


1.2 Powerful Forces Are Transforming Service MarketsForces Transforming the Service Economy (2)

Rising consumer expectationsGreater affluencePersonal OutsourcingIncreased desire for buying experiences vs. thingsRising consumer ownership of high tech equipmentEasier access to more informationMigrationGrowing but aging population Pearson Education South Asia Pte Ltd 2013. All rights reserved*


1.2 Powerful Forces Are Transforming Service MarketsForces Transforming the Service Economy (3)Push to increase shareholder valueEmphasis on productivity and cost savingsManufacturers add value through service and sell servicesMore strategic alliancesFocus on quality and customer satisfactionGrowth of franchisingMarketing emphasis by nonprofits Pearson Education South Asia Pte Ltd 2013. All rights reserved*


1.2 Powerful Forces Are Transforming Service MarketsForces Transforming the Service Economy (4) Pearson Education South Asia Pte Ltd 2013. All rights reserved*Growth of InternetGreater bandwidthCompact mobile equipmentWireless networkingFaster, more powerful softwareDigitization of text, graphics, audio, video


1.2 Powerful Forces Are Transforming Service MarketsForces Transforming the Service Economy (5) Pearson Education South Asia Pte Ltd 2013. All rights reserved*More companies operating on transnational basisIncreased international travelInternational mergers and alliancesOffshoring of customer serviceForeign competitors invade domestic markets


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.3 What are services?Services involve a form of rental, offering benefits without transfer of ownershipInclude rental of goodsMarketing tasks for services differ from those involved in selling goods and transferring ownership


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.3 What are services?Definition of ServicesServices 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 fromaccess to goods, labor, facilities, environments, professional skills, networks, and systems; normally do not take ownership of any of the physical elements involved.


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.4 Four broad categories of servicesBased on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services: People processingPossession processingMental stimulus processingInformation processing


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.4 Four broad categories of servicesPossession ProcessingPossession ProcessingCustomers are less involved compared to people processing servicesInvolvement may be limited to just dropping off the possessionProduction and consumption are separable


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.4 Four broad categories of servicesMental Stimulus ProcessingMental Stimulus ProcessingEthical standards required when customers who depend on such services can potentially be manipulated by suppliersPhysical presence of recipients not requiredCore content of services is information-basedCan be inventoried


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.4 Four broad categories of servicesInformation ProcessingInformation ProcessingInformation is the most intangible form of service outputMay be transformed into enduring forms of service outputLine between information processing and mental stimulus processing may be blurred.


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.5 Challenges posed by servicesServices Pose Distinctive Marketing Challenges Marketing management tasks in the service sector differ from those in the manufacturing sector.The eight common differences are:Most service products cannot be inventoriedIntangible elements usually dominate value creationServices are often difficult to visualize and understandCustomers may be involved in co-productionPeople may be part of the service experienceOperational inputs and outputs tend to vary more widelyThe time factor often assumes great importanceDistribution may take place through nonphysical channels


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingProduct 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)


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingApplying the 4 Ps of Marketing to Services (1)Product elementsService products are at the heart of services marketing strategy

Marketing mix begins with creating service concept that offers value

Service product consists of core and supplementary elementsCore products meet primary needsSupplementary elements are value-added enhancements


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingApplying the 4 Ps of Marketing to Services (2a)Place and time

Service distribution can take place through physical and non-physical channels

Some firms can use electronic channels to deliver all (or at least some) of their service elements

Information-based core services can be delivered almost instantaneously electronically


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingApplying the 4 Ps of Marketing to Services (2b)Place and time

Delivery Decisions: Where, When, How

Time is of great importance as customers are physically present

Convenience of place and time become important determinants of effective service delivery


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingApplying the 4 Ps of Marketing to Services (3a)Price and other user outlays

From the firms perspective, pricing generates income and creates profits

From the customers perspective, pricing is key part of costs to obtained wanted benefits

Marketers must recognize that customer costs involve more than price paid to seller


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingApplying the 4 Ps of Marketing to Services (3b)Price and other user outlays

Identify and minimize non-monetary costs incurred by users:Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.)Time expenditures, especially waiting Unwanted mental and physical effortNegative sensory experiences

Revenue management is an important part of pricing


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingApplying the 4 Ps of Marketing to Services (4)Promotion and Education

Plays three vital roles:Provide information and advicePersuades the target customers of merit of service product or brandEncourages customer to take action at specific time

Customers may be involved in co-production so:Teach customer how to move effectively through the service processShape customers roles and manage their behavior


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingExtended Mix for Managing the Customer Interface (1)ProcessHow firm does things may be as important as what it doesCustomers often actively involved in processes, especially when acting as co-producers of serviceOperational inputs and outputs vary more widelyCustomers are often involved in co-productionDemand and capacity need to be balanced


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingExtended Mix for Managing the Customer Interface (2a)Physical environment

Design servicescape and provide tangible evidence of service performances

Manage physical cues carefully can have profound impact on customer impressions


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingExtended Mix for Managing the Customer Interface (2a)Physical environment

Create and maintain physical appearancesBuildings/landscapingInterior design/furnishingsVehicles/equipmentStaff grooming/clothingSounds and smellsOther tangibles


Pearson Education South Asia Pte Ltd 2013. All rights reserved*1.6 The 7 Ps of services marketingExtended Mix for Managing the Customer Interface (3)People

Interactions between customers and contact personnel strongly influence customer perceptions of service quality

Well-managed firms devote special care to selecting, training and motivating service employees

Other customers can also affect ones satisfaction with a service


Pearson Education South Asia Pte Ltd 2013. All rights reserved*Chapter 1 Summary: Introduction to Services Marketing (1)

Reasons for studying servicesService sector dominates economy in most nationsPowerful forcesgovernment policies, social changes, business trends, IT advances, and globalizationare transforming service marketsThe service concept and its definition:Services offer benefits without transfer of ownershipFour broad categories of services people processing, possession processing, mental stimulus processing and information processingCustomers expect value from access to goods, facilities, labor, professional skills, environments, networks & systems in return for money, time, effort


Pearson Education South Asia Pte Ltd 2013. All rights reserved*Chapter 1 Summary: Introduction to Services Marketing (2)

Services present distinctive marketing challenges relative to goods, requiring:Expanded marketing mix comprising 7Ps instead of traditional 4Ps

Framework for developing effective services marketing strategies:Understanding service products, consumers & markets

Applying the 4 Ps of marketing to services

Designing and managing the customer interface

Developing customer relationships

Striving for service excellence


Thank you

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