service marketing - overview of services

7/30/2019 Service Marketing - Overview of Services

1/49

1

SERVICE

MARKETING

MODULE COORDINATOR:

MS PETULA WHITE

OFFICE: Building 5C

E-MAIL: [email protected]

OVERVIEW OF SERVICES
mailto:[email protected]:[email protected]


2/49

2

Specific Objectives: At the end of the lesson students should be

able to explain the :

Basic Marketing Concepts & Philosophy Customer Satisfaction/Value

Reason why Services Marketing is important

Concept of & Classification of services

Basic differences between goods andservices and the resulting challenges andstrategies for service businesses


3/49

3

MARKETING ORIENTATION

Production, Product, Selling, Marketing,Societal marketing Concepts

Marketing concept takes an outside-inperspective.

It starts with a well defined market,focuses on customer needs, coordinates

all the marketing activities affectingcustomers, and makes profits by creatinglong-term customer relationships basedon customer value and satisfaction.


4/49

4

CUSTOMER SATISFACTION Satisfaction a

persons feelings ofpleasure or

disappointmentresulting fromcomparing a productsperceived performanceto his/her expectations

Result - satisfied,dissatisfied, ordelighted customer


5/49

5

CUSTOMER VALUE Customer perceived

value the differencebetween customers

evaluation of all thebenefits and all thecosts of an offeringrelative to those ofcompeting offers


6/49

6

CUSTOMER VALUE Total customer cost the

bundle of costs (money, effort,time) customers expect to incur

in evaluating, obtaining, usingand disposing of an offering

Total customer value theperceived monetary value ofthe benefits (economic,functional, psychological)customers expect


7/497

Customer Satisfaction/

Customer Value Customer Value

Marketing a principle of

enlightened marketing thatholds that a companyshould put most of itsresources into customervalue-building marketing

investments eg. productquality improvement vsone-shot sales promotion


8/498

What is a Service? Servicesactivities, benefits, or

satisfactions offered for sale that are

essentially intangible and do not result in theownership of anything. Its production may ormay not be tied to a physical product. (Kotler)

Servicesare acts or performances thatcreate benefits for customers by bringingabout a desired change in or on behalf of therecipient (Lovelock & Wright)


9/499

What is a Service? Services- are originally intangible and

relatively quickly perishable activities whose

buying, which does not lead to materialpossession, takes place in an interactiveprocess aimed at creating customersatisfaction (Kasper, Gabbott, Helsdingen)

Servicesare deeds, efforts orperformances (Hoffman & Bateson)


10/4910

What are Services? Service Sectorthe portion of a nations

economy represented by services of all

kinds, including those offered by public andnon-profit organisations


11/4911

Classification of Services(Fisk & Tansuhaj, 1985)

Financial Services

Health Care Services

Professional Services Hospitality, Travel &

Tourism Services

Sports, Arts and

Entertainment Services Telecommunication

Services

Educational & ResearchServices

Channel, PhysicalDistribution, Rental &Leasing Services

Personal, Repair &Maintenance Services

Governmental, Quasi-Governmental &Nonprofit services


12/4912

What are Services? Service Industries and companies

include those industries and companies

typically classified within the service sectorwhose core product is a service. Eg. AirJamaica (transportation), The Jamaica

Pegasus (lodging), UHWI (health care),Mayberry Investments (financial)


13/4913

What are Services? Services as Products represent a wide range

ofintangible product offerings that customer

value and pay for in the marketplace. Serviceproducts are sold by service companies and nonservice companies such as manufacturers andtechnology companies.

Eg. Pharmacies providing consultancy andprescription delivery services; Hewlett Packardproviding business consultancy


14/49

14

What are Services? Customer Service is a critical aspect of

what we mean by service. Customer

service is the service provided in support ofa companys core products. It can beoffered on-site, via telephone or via the

internet. Some companies operate customerservice call centers.


15/49

15

What are Services? Derived Service it is a view that all products

and physical goods are valued for the services

they provide. It suggests that the value derivedfrom physical goods is really the serviceprovided by the good, not the good itself.

Eg. Pharmaceutical provides medical services, a

razor provides barbering services andcomputers provide information and datamanipulation services


16/49

16

Service Continuum The Scale of Market Entities this concept

provides another way of looking at the differencesbetween goods & services.

The scale displays a range of products along acontinuum based on their degree of tangibility

Pure goods are tangible dominant

Pure services are intangible dominant Businesses e.g. fast foods or airlines, which contain

both goods & services components fall in themiddle of the continuum.


17/49

17

Products/Services Continuum

PureTangible

Good

PureService

Soap

Tangible GoodWith

Accompanying

Services

Auto WithAccompanying

RepairServices

HybridOffer

Restaurant

ServiceWith

Accompanying

Minor Goods

Airline TripWith

AccompanyingSnacks

Doctors

Exam


18/49

18

Tangibility Spectrum

TangibleDominant

Intangible

Dominant

SaltSoft Drinks

Detergents

Automobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

Management

ConsultingTeaching

Fast-foodOutlets

Fast-foodOutlets


19/49

19

WHY STUDY SERVICES?1. Growth of global service economy

(profit & nonprofit) are now dominating global

economies contributing to GDP a change in perspective from the industrial

management model (location, sales promotion &advertising drives sales revenue) to a market-focused model (where the focus is to serve thecustomer & to support the front-line employees).

Increased competitiveness of service industries sincethe 1980s is forcing many service industries to becompetitive adopt commercial principles


20/49

20

WHY STUDY SERVICES?2. Growth of global service labour force

contributing to employment


21/49

21

WHY STUDY SERVICES?

Source: World Fact Book 2009

Country GDP (%) Employment (%)

USA 76.9 76.8

UK 75.0 80.4Canada 69.6 79.0

Bahamas 90.0 90.0

Jamaica 64.7 64.0

Cuba 74.8 60.6

China 40.5 33.2

India 62.5 34.0


22/49

22

WHY STUDY SERVICES?

3. Emerging service sectors e-service(s)

4. Importance of developing sustainable

services marketing business practices eco-efficiency, environmental cost leadership,

beyond compliance leadership, eco-branding


23/49

23

EVOLVING SERVICE ENVIRONMENT/

TRENDS IN THE SERVICE SECTOR Government policies

Less regulated markets increased competition

eg. Banking, telecommunications, universities Privatization Utility companies

New agreements on Trade in Services (GATS)

Movement of services across geographicborders are now being facilitated throughseveral global and regional tradeagreements (NAFTA, EU, CSM)


24/49

24

EVOLVING SERVICE ENVIRONMENT/

TRENDS IN THE SERVICE SECTOR

Social changes

More people short of time childcare,

house cleaning, laundry, food preparation Increased desire to buy experiences vs

things more disposable income (vacation,travel, wellness

Rising ownership of computers/mobiledevices access services across the world


25/49

25

EVOLVING SERVICE

ENVIRONMENT Business trends

Marketing emphasis on nonprofits Hewlett Packard, Xerox, Ford, GE, uses what was

once supplementary services as profit-seekingservices for eg. Consultation, maintenance &repair, delivery & installation, training

Relaxation of professional association

standards relax/remove ban on advertising/promotional

activities eg. Lawyers, doctors, accountants,architects

Growth in franchising


26/49

26

EVOLVING SERVICE

ENVIRONMENT Advances in information technology

Convergence of computers and

telecommunications Miniaturization creates more compact mobile

equipment

Wireless networking

Growth of the internet


27/49

27

EVOLVING SERVICE

ENVIRONMENT Internationalisation/globalisation

More services are being delivered throughnational and global chains

Domestic airlines have extended intoforeign route networks, hotels (ritz), foodchains (TGIF), body shop etc

Increased international travel


28/49

28

CLASSIFICATION OF SERVICES

InstrumentalService

Service is performedby others to achievegoals without directinvolvement of theconsumer in thetask. e.g. hiring agardener


29/49

29

CLASSIFICATION OF SERVICES Consummatory

Service

The consumer isdirectly involved andis immediatelygratified by serviceperformed. e.g.going to the moviesor on a cruise


30/49

30

SERVICE CHARACTERISTICS INTANGIBILITY

VARIABILITY

INSEPARABILITY

PERISHABILITY


31/49

31

INTANGIBILITY Intangibility a service

cannot be touched or sensed in

the same manner as physicalgoods can


32/49

32

INTANGIBILITY Challenges

Lack of service inventories,

Lack of patent protection, Difficulty in displaying, communicating

services

Difficulty in pricing services


33/49

33

INTANGIBILITY(contd)

Solutions to the challenges ofIntangibility:

Use of tangible clues Use of personal information, sources,references, word-of-mouth

(testimonials) Creation of a strong organizationalimage (service brand)


34/49

34

INSEPARABILITY(contd)

Inseparability/Simultaneityservices cannot be separated

from their providers whether aperson/device

- they are produced andconsumed at the same time


35/49

35


Challenge

Requires physical connection of

service provider to the service Employees affect the service

outcome

Special challenges in Massproduction of Services offeringservices to a geographicallywidespread target market


36/49

36

INSEPARABILITY(contd)Challenge

Involvement of customer and othercustomers in the production process

requires other considerations Design environment to accommodate

the customer

Difficulty in maintaining fixed scheduleswhich can affect level of efficiency

Effect of customer behaviour on serviceoutcome (controlling negative

behaviour)


37/49

37


Solutions to the challenges ofInseparability

Proper selection & training of serviceproviders

Consumer management

Use of Multi-sitelocations/enhancethrough technology

Effective Service recovery strategies


38/49

38

VARIABILITY3. Heterogeneity/Variability

variation in quality from one

service transaction to the next.Service may vary depending onthe who, where, when and howof the service


39/49

39

VARIABILITYChallenges: Service delivery and customer satisfaction

depend on employee actions It is very difficult to standardize services

Service quality depends on manyuncontrollable factors

There is no sure knowledge that theservice delivered matches what wasplanned and promoted


40/49

40

VARIABILITY(contd)

Solutions to the challenges ofVariability

Strategy of Standardization Requires careful selection of personnel and

extensive training

Automation of services where possible

Utilize quality monitoring tools Flowcharts and Service blueprints, Control

charts and Cause & Effect charts


41/49

41

VARIABILITY(contd)

Solutions to the challenges ofVariability

Strategy of Customization

Requires modifying service for eachindividual (customising)

However, customers may be unwillingto pay extra for customisation (it maytake extra time for service delivery)


42/49

42

PERISHABILITY 4. Perishability services

cannot be stored or their

unused capacity cannot bereserved, inventoried for futureuse. Services are timesensitive.


43/49

43

PERISHABILITYChallenges: Difficulty matching supply & demand

Long waiting periods whendemand is high

Idle service in times of low

demand Services cannot be returned or resold


44/49

44

PERISHABILITY(contd)

Solutions to the challenges ofPerishability:

Demand Strategy Creative pricing

Reservation systems

Developing complementary servicesand nonpeak demand


45/49

45

PERISHABILITY(contd)

Solutions to the challenges ofPerishability(contd):

Supply Strategy Utilise part-time employees,

Capacity sharing,

Utilise third parties, Increase customer participation,

Planned expansion


46/49

46

Services are Different

Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing,

Journal of Marketing49 (Spring 1985): 33-46.


47/49

47

The SERVUCTION MODEL A Model used to illustrate the factors that

influence the service experience, including

elements that are visible to the Customer andthose that are invisible.

Thevisible part consists of 3 parts1. The inanimate environment (physical evidence)

2. Contact personnel/service providers3. Other Customers

Theinvisible part consists of the back office &the firms systems e.g. processes, rules, policies


48/49

48

The Services Marketing Triangle

InternalMarketing

Interactive Marketing

ExternalMarketing

Company(Management)

CustomersEmployees

enabling thepromise

delivering the promise

setting thepromise

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler


49/49

WHATS NEXT? SERVICE MIX STRATEGY &

POSITIONING

service marketing - overview of services

Documents