chap01- ppt

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Services Marketing

MTG 410MTG 410

Fall 2000Fall 2000Prof: Donna J. Hill, Ph.D.Prof: Donna J. Hill, Ph.D.

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What Are Services?

s Services are deeds, processes, andServices are deeds, processes, andperformances.performances.

Nature of product.Nature of product.

Greater involvement of customers in theGreater involvement of customers in the

production process.production process.

People as part of the product.People as part of the product. Greater difficulties in maintaining qualityGreater difficulties in maintaining quality

control standards.control standards.

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A Different Context for Services

Marketings Narrow definition of marketing by otherNarrow definition of marketing by other

managers.managers.

s Limited appreciation for marketing skills.Limited appreciation for marketing skills.s Different organizational structure.Different organizational structure.

s A relative lack of competitive data.A relative lack of competitive data.

s Problems determining costs.Problems determining costs.s Constraints and opportunities facingConstraints and opportunities facing

marketers of public and nonprofits.marketers of public and nonprofits.

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Examples of Service IndustriesExamples of Service Industries

s Health CareHealth Care hospital, medical practice, dentistry, eye carehospital, medical practice, dentistry, eye care

s Professional ServicesProfessional Services

accounting, legal, architecturalaccounting, legal, architectural

s Financial ServicesFinancial Services

banking, investment advising, insurancebanking, investment advising, insurance

s HospitalityHospitality

restaurant, hotel/motel, bed & breakfast,restaurant, hotel/motel, bed & breakfast,

ski resort, raftingski resort, rafting

s TravelTravel

airlines, travel agencies, theme parkairlines, travel agencies, theme park

s Others:Others:

hair styling, pest control, plumbing, lawn maintenance, counselinghair styling, pest control, plumbing, lawn maintenance, counseling

services, health clubservices, health club

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Figure 1-2Figure 1-2

Percent ofPercent of

U.S. Labor Force by IndustryU.S. Labor Force by Industry

0

10

20

30

40

50

60

70

80

1929 1948 1969 1977 1984 1996

Percentof

GDP

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.

Yea

r

ServicesManufacturingMining & Agriculture

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0

10

20

30

40

50

60

70

80

1948 1959 1967 1977 1987 1996


Percent of U.S. Gross DomesticPercent of U.S. Gross Domestic

Product by IndustryProduct by Industry

Percen

tofGDP

Year

Source: Survey of Current Business, August 1996, Table 11, April 1998, Table

B.3; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S.Economy, Scientific American, 244,3 (1981): 31-39.

ServicesManufacturingMining & Agriculture

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Importance of Service Sector

s $3.52 trillion of U.S. GDP$3.52 trillion of U.S. GDPs 53.2% of U.S. GDP53.2% of U.S. GDP

s 71% of total employment71% of total employments 91% of new jobs from 1992 to91% of new jobs from 1992 to

20052005

Services

Fast growing services for the next decadeHealth servicesBusiness servicesFinance, insurance, real estateResidential care

Computer & data processingChild day-careSocial servicesTransportation services

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Factors Contributing to Growth

s Movement to information ageMovement to information age

s Shift to industrialized economyShift to industrialized economy

s

Aging populationAging populations Longer life expectanciesLonger life expectancies

s Increase leisure timeIncrease leisure time

s High per capita incomeHigh per capita income

s Changing social and culturalChanging social and culturalvaluesvalues

s Advances in technologyAdvances in technology

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Challenges for ServicesChallenges for Services

s Defining and improving qualityDefining and improving qualitys Communicating and testing new servicesCommunicating and testing new services

s Communicating and maintaining a consistentCommunicating and maintaining a consistent

imageimages Motivating and sustaining employeeMotivating and sustaining employee

commitmentcommitment

s Coordinating marketing, operations andCoordinating marketing, operations and

human resource effortshuman resource efforts

s Setting pricesSetting prices

s Standardization versus personalizationStandardization versus personalization

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Differences BetweenDifferences Between

Goods and ServicesGoods and Services

Intangibility

Perishability

SimultaneousProduction

andConsumption

Heterogeneity

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Tangibility SpectrumTangibility Spectrum

TangibleDominant

Intangible

Dominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

Management

ConsultingTeaching

Fast-foodOutlets

Fast-foodOutlets

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Implications of IntangibilityImplications of Intangibility

Services cannot be inventoriedServices cannot be inventoried

Services cannot be patentedServices cannot be patentedServices cannot be readilyServices cannot be readilydisplayed or communicateddisplayed or communicated

Pricing is difficultPricing is difficult

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Implications of HeterogeneityImplications of Heterogeneity

Service delivery and customerService delivery and customersatisfaction depend on employee actionssatisfaction depend on employee actions

Service quality depends on manyService quality depends on manyuncontrollable factorsuncontrollable factors

There is no sure knowledge that theThere is no sure knowledge that the

service delivered matches what wasservice delivered matches what wasplanned and promotedplanned and promoted

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Implications of SimultaneousImplications of Simultaneous

Production and ConsumptionProduction and Consumption

Customers participate in andCustomers participate in and

affect the transactionaffect the transactionCustomers affect each otherCustomers affect each other

Employees affect the serviceEmployees affect the service

outcomeoutcomeDecentralization may be essentialDecentralization may be essential

Mass production is difficultMass production is difficult

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Implications of PerishabilityImplications of Perishability

It is difficult to synchronize supplyIt is difficult to synchronize supplyand demand with servicesand demand with services

Services cannot be returned orServices cannot be returned orresoldresold

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Table 1-2Table 1-2

Services are DifferentServices are DifferentGoods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.

Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.

Standardized Heterogeneous Service delivery and customer satisfaction depend on

employee actions.Service quality depends on many uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.

Productionseparate fromconsumption

Simultaneousproduction andconsumption

Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.

Decentralization may be essential.Mass production is difficult.

Nonperishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.

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 Services Marketing TriangleThe 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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Services Marketing TriangleServices Marketing Triangle

Applications ExerciseApplications Exercises Focus on a service organization. In the contextFocus on a service organization. In the context

you are focusing on, who occupies each of theyou are focusing on, who occupies each of thethree points of the triangle?three points of the triangle?

s How is each type of marketing being carriedHow is each type of marketing being carried

out currently?out currently?

s Are the three sides of the triangle well aligned?Are the three sides of the triangle well aligned?

s Are there specific challenges or barriers in anyAre there specific challenges or barriers in anyof the three areas?of the three areas?

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Ways to Use theWays to Use the

Services Marketing TriangleServices Marketing TriangleOverall StrategicOverall Strategic

AssessmentAssessment

How is the serviceHow is the serviceorganization doing on allorganization doing on all

three sides of the triangle?three sides of the triangle?

Where are theWhere are theweaknesses?weaknesses?

What are the strengths?What are the strengths?

Specific Service ImplementationSpecific Service Implementation What is being promoted and byWhat is being promoted and by

whom?whom?

How will it be delivered and byHow will it be delivered and by

whom?whom?

Are the supporting systems inAre the supporting systems inplace to deliver the promisedplace to deliver the promisedservice?service?

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Source: Adapted from A. Parasuraman

Company

CustomersProviders

Technology


The Services TriangleThe Services Triangle

and Technologyand Technology

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Services Marketing Mix:Services Marketing Mix:

7 Ps for Services7 Ps for Services

s Traditional Marketing MixTraditional Marketing Mix

s Expanded Mix for Services: 7 PsExpanded Mix for Services: 7 Pss Building Customer RelationshipsBuilding Customer Relationships

Through People, Processes, andThrough People, Processes, and

Physical EvidencePhysical Evidence

s Ways to Use the 7 PsWays to Use the 7 Ps

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Traditional Marketing MixTraditional Marketing Mix

s All elements within the control of the firmAll elements within the control of the firm

that communicate the firms capabilities andthat communicate the firms capabilities and

image to customers or that influence customerimage to customers or that influence customersatisfaction with the firms product and services:satisfaction with the firms product and services:

ProductProduct

PricePrice PlacePlace

PromotionPromotion

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Expanded Mix for Services --Expanded Mix for Services --

the 7 Psthe 7 Ps

s ProductProduct

s PricePrice

s

PlacePlaces PromotionPromotion

s PeoplePeople

s ProcessProcesss Physical EvidencePhysical Evidence

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Table 1-3Table 1-3

Expanded Marketing Mix forExpanded Marketing Mix forServicesServices

PRODUCT PLACE PROMOTION PRICE

Physical goodfeatures

Channel type Promotionblend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Salespromotion

Differentiation

Warranties Transportation Publicity Allowances

Product lines Storage

Branding

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PEOPLE PHYSICAL

EVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customer involvement

Employee research Employee dress

Other tangibles

Table 1-3 (Continued)Table 1-3 (Continued)

Expanded Marketing Mix forExpanded Marketing Mix for

ServicesServices

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Ways to Use the 7 PsWays to Use the 7 Ps

Overall StrategicOverall StrategicAssessmentAssessment

s How effective is a firmsHow effective is a firmsservices marketing mix?services marketing mix?

s Is the mix well-aligned withIs the mix well-aligned withoverall vision andoverall vision and

strategy?strategy?

s What are the strengths andWhat are the strengths andweaknesses in terms ofweaknesses in terms of

the 7 Ps?the 7 Ps?

Specific ServiceSpecific ServiceImplementationImplementation

s Who is the customer?Who is the customer?

s What is the service?What is the service?

s How effectively does theHow effectively does theservices marketing mix for aservices marketing mix for a

service communicate itsservice communicate its

benefits and quality?benefits and quality?

s WhatWhatchanges/improvements arechanges/improvements areneeded?needed?

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Characteristics of Servicess Intangibility - Lack of tangible assets which can beIntangibility - Lack of tangible assets which can be

seen, touched, or smelled prior to purchase.seen, touched, or smelled prior to purchase.

s Perishability - Inability of a service to be inventoriedPerishability - Inability of a service to be inventoriedor stored.or stored.

s Inseparability - Simultaneous production andInseparability - Simultaneous production andconsumption of a service.consumption of a service.

s Variability - Unwanted or random levels of serviceVariability - Unwanted or random levels of service

quality customers receive when they patronize aquality customers receive when they patronize aservice firm.service firm.

Documents

chap01- ppt