Introduction to Services…

Stanley S. RodrickStanley S. Rodrick

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ServicesServices are a combination of deeds, processes, and performances which may or may not produce final tangible outcome and do not result to any transfer of ownership.

What are Services??? What are Services???

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Introduction to Services??? Introduction to Services???

Services are deeds, processes and

performance

Intangible, but may have a tangible

component

Generally produced and consumed at the

same time

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Challenges to Services…Challenges to Services…Defining and improving qualityCommunicating and testing new servicesCommunicating and maintaining a consistent

imageMotivating and sustaining employee

commitmentCoordinating marketing, operations and

human resource effortsSetting pricesStandardization versus personalization

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Examples of Service IndustriesExamples of Service IndustriesHealth Care

hospital, medical practice, dentistry, eye careProfessional Services

accounting, legal, architecturalFinancial Services

banking, investment advising, insuranceHospitality

restaurant, hotel/motel, bed & breakfast, ski resort, rafting

Travelairlines, travel agencies, theme park

Others:hair styling, pest control, plumbing, lawn

maintenance, counseling services, health club5

Tangibility SpectrumTangibility Spectrum

All tangible goods have some All tangible goods have some intangible services, while all services intangible services, while all services include some tangible goods. include some tangible goods.

Hence some products are tangible Hence some products are tangible dominant, while some are intangible dominant, while some are intangible dominant and there are some dominant and there are some products which fall in the middle. products which fall in the middle.

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Tangibility SpectrumTangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

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0

10

20

30

40

50

60

70

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1929 1948 1969 1977 1984 1996

Percent of GDP

Year

Services Manufacturing Mining & Agriculture

Percent of U.S. Labor Force by IndustryPercent of U.S. Labor Force by Industry

Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.

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Percent of U.S. Labor Force by IndustryPercent of U.S. Labor Force by Industry

0

10

20

30

40

50

60

70

80

1948 1959 1967 1977 1987 1996

Perc

ent o

f G

DP

Year

Services Manufacturing Mining & Agriculture

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Industries in BangladeshIndustries in Bangladesh

Why Services Marketing???Why Services Marketing???

The growth of the services industries across the world.

Services marketing is different. Because of the nature of the services,

it requires special focus. Shift in the paradigm of marketing

studies is required due to the very nature of the services concerns.

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Differences in Goods & Services…Differences in Goods & Services…Intangibility: Intangibility: Because services are

performances, or actions rather than objects, they cannot be seen, felt, tasted or touched in the same manner that we can sense tangible goods. Resulting marketing implications: Intangibility presents several

marketing challenges:

a) Services cannot be inventoried therefore difficult to manage fluctuation of demand,

b) Services cannot be easily patented and new service concepts can easily be copied

c) Services cannot be easily displayed or communicated to the customers, therefore the quality of the services is difficult to demonstrate.

d) Pricing is difficult.

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Differences in Goods & Services…Differences in Goods & Services…• Heterogeneity: Heterogeneity: Because services are performances, frequently produced by humans, no two services will be precisely alike. Again, no two customers are precisely alike.

Service delivery and customer satisfaction depend on employee actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

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Differences in Goods & Services…Differences in Goods & Services… Simultaneous Production and ConsumptionSimultaneous Production and Consumption: : whereas most goods are produced first and then sold and consumed, most services are sold first and then produced and consumed simultaneously. Because of the simultaneous production and consumption service producers find themselves playing a role of the product itself and as an essential ingredient in the service experience for the consumers.

Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

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Differences in Goods & Services…Differences in Goods & Services…

• Perishability: Perishability: Refers to the fact that services cannot be saved, stored, resold, or returned.

It is difficult to synchronize supply and demand with services

Services cannot be returned or resold

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The Services Marketing TriangleThe Services Marketing Triangle

Internal Marketing

Interactive Marketing

External Marketing

Company(Management)

CustomersEmployees

“enabling the promise”

“delivering the promise”

“setting the promise”

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler16

Services Marketing Mix: Services Marketing Mix: 7 Ps of Marketing7 Ps of Marketing

Traditional Marketing Mix

Expanded Mix for Services: 7 Ps

Building Customer Relationships Through People, Processes, and Physical Evidence

Ways to Use the 7 Ps

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Expanded Mix for Services --Expanded Mix for Services --the 7 Psthe 7 Ps

ProductPricePlacePromotion

PeopleProcessPhysical Evidence

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Expanded Marketing Mix for ServicesExpanded Marketing Mix for Services

People: People: All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely the firm’s personnel, the customers and other customers in the service environment.

Process: Process: The actual procedures, mechanisms, and flow of activities by which the service is delivered – the service delivery and operating systems.

Physical Evidence: 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.

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Expanded Marketing Mix for ServicesExpanded Marketing Mix for ServicesPRODUCT PLACE PROMOTION PRICE

Physical good features

Channel type Promotion blend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Sales promotion

Differentiation

Warranties Transportation Publicity Allowances

Product lines Storage

Branding

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Expanded Marketing Mix for ServicesExpanded Marketing Mix for ServicesPEOPLE PHYSICAL

EVIDENCEPROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customerinvolvement

Employee research Employee dress

Other tangibles

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Expanded Marketing Mix for ServicesExpanded Marketing Mix for Services

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Ways to use the 7PsWays to use the 7Ps

Overall Strategic Overall Strategic AssessmentAssessment

How effective is a firm’s services 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 Specific Service ImplementationImplementation

Who is the customer?What is the service?How effectively does the

services marketing mix for a service communicate its benefits and quality?

What changes/ improvements are needed?

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The Beginning of the Chapters…The Beginning of the Chapters…

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