service marketing - overview of services
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SERVICE
MARKETING
MODULE COORDINATOR:
MS PETULA WHITE
OFFICE: Building 5C
E-MAIL: [email protected]
OVERVIEW OF SERVICES
mailto:[email protected]:[email protected] -
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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
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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.
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CUSTOMER SATISFACTION Satisfaction a
persons feelings ofpleasure or
disappointmentresulting fromcomparing a productsperceived performanceto his/her expectations
Result - satisfied,dissatisfied, ordelighted customer
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CUSTOMER VALUE Customer perceived
value the differencebetween customers
evaluation of all thebenefits and all thecosts of an offeringrelative to those ofcompeting offers
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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
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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
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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)
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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)
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What are Services? Service Sectorthe portion of a nations
economy represented by services of all
kinds, including those offered by public andnon-profit organisations
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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
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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)
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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
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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.
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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
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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.
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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
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Tangibility Spectrum
TangibleDominant
Intangible
Dominant
SaltSoft Drinks
Detergents
Automobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
Management
ConsultingTeaching
Fast-foodOutlets
Fast-foodOutlets
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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
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WHY STUDY SERVICES?2. Growth of global service labour force
contributing to employment
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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
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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
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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)
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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
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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
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EVOLVING SERVICE
ENVIRONMENT Advances in information technology
Convergence of computers and
telecommunications Miniaturization creates more compact mobile
equipment
Wireless networking
Growth of the internet
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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
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CLASSIFICATION OF SERVICES
InstrumentalService
Service is performedby others to achievegoals without directinvolvement of theconsumer in thetask. e.g. hiring agardener
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CLASSIFICATION OF SERVICES Consummatory
Service
The consumer isdirectly involved andis immediatelygratified by serviceperformed. e.g.going to the moviesor on a cruise
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SERVICE CHARACTERISTICS INTANGIBILITY
VARIABILITY
INSEPARABILITY
PERISHABILITY
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INTANGIBILITY Intangibility a service
cannot be touched or sensed in
the same manner as physicalgoods can
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INTANGIBILITY Challenges
Lack of service inventories,
Lack of patent protection, Difficulty in displaying, communicating
services
Difficulty in pricing services
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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)
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INSEPARABILITY(contd)
Inseparability/Simultaneityservices cannot be separated
from their providers whether aperson/device
- they are produced andconsumed at the same time
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INSEPARABILITY(contd)
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
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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)
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INSEPARABILITY(contd)
Solutions to the challenges ofInseparability
Proper selection & training of serviceproviders
Consumer management
Use of Multi-sitelocations/enhancethrough technology
Effective Service recovery strategies
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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
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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
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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
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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)
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PERISHABILITY 4. Perishability services
cannot be stored or their
unused capacity cannot bereserved, inventoried for futureuse. Services are timesensitive.
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PERISHABILITYChallenges: Difficulty matching supply & demand
Long waiting periods whendemand is high
Idle service in times of low
demand Services cannot be returned or resold
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PERISHABILITY(contd)
Solutions to the challenges ofPerishability:
Demand Strategy Creative pricing
Reservation systems
Developing complementary servicesand nonpeak demand
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PERISHABILITY(contd)
Solutions to the challenges ofPerishability(contd):
Supply Strategy Utilise part-time employees,
Capacity sharing,
Utilise third parties, Increase customer participation,
Planned expansion
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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.
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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
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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
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WHATS NEXT? SERVICE MIX STRATEGY &
POSITIONING