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McGraw-Hill McGraw-Hill
2000 The McGraw-Hill Companies
2000 The McGraw-Hill Companies
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Chapter 1
INTRODUCTION
TO
SERVICES
McGraw-Hill McGraw-Hill
2000 The McGraw-Hill Companies
2000 The McGraw-Hill Companies
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These PowerPoint slides contain selected exhibits, figures and tables from the chapters as well as objectives for the chapters. For many chapters, we include extra lecture slides and in-class exercises that we have compiled and used in our classes. The lecture slides are not intended to provide full outlines or complete lectures for the chapters, but rather may be used selectively to enhance class sessions.
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Objectives for Chapter 1: Introduction to Services
Explain what services are and identify service trends Explain the need for special services marketing concepts and practices Outline the basic differences between goods and services and the resulting challenges for service businesses Introduce the service marketing triangle Introduce the expanded services marketing mix Introduce the gaps model of service quality
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Challenges for Services
Defining and improving quality
Communicating and testing new services Communicating and maintaining a consistent image Motivating and sustaining employee commitment Coordinating marketing, operations and human resource efforts Setting prices Standardization versus personalization
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Examples of Service Industries
hospital, medical practice, dentistry, eye care
Health Care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Hospitality
restaurant, hotel/motel, bed & breakfast, ski resort, rafting
Travel
airlines, travel agencies, theme park
Others:
hair styling, pest control, plumbing, lawn maintenance, counseling services, health club
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Salt
Figure 1-1
Tangibility Spectrum
Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets
Fast-food Outlets
Intangible Dominant
Tangible Dominant
Advertising Agencies Airlines Investment Management Consulting
Teaching
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Figure 1-2
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Percent of GDP
Percent of U.S. Labor Force by Industry
80
70
60 50 40 30 20 10 0
1929 1948 1969 1977 1984 1996
Year
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. McGraw-Hill
Services Manufacturing Mining & Agriculture
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Figure 1-3
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Percent of GDP
Percent of U.S. Gross Domestic Product by Industry
80 70 60 50 40 30 20 10 0 1948 1959 1967 1977 1987 1996 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.
Services Manufacturing Mining & Agriculture
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Differences Between Goods and Services
Intangibility
Heterogeneity
Simultaneous Production and Consumption
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Perishability
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Implications of Intangibility
Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult
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Implications of Heterogeneity
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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Implications of Simultaneous Production and Consumption
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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Implications of Perishability
It is difficult to synchronize supply and demand with services Services cannot be returned or resold
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Goods
Tangible
Table 1-2
Services are Different
Services
Intangible
Resulting Implications
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 delivered matches what was planned and promoted. Simultaneous production and consumption Customers participate in and affect the transaction. Customers affect each other. Employees affect the service outcome. Decentralization may be essential. Mass production is difficult. It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.
Production separate from consumption
Nonperishable Perishable
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing, Journal of Marketing 49 (Spring 1985): 33-46. McGraw-Hill 2000 The McGraw-Hill Companies
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Figure 1-5
The Services Marketing Triangle
Company (Management)
Internal Marketing External Marketing
setting the promise
enabling the promise
Employees
Interactive Marketing
delivering the promise
Customers
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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Services Marketing Triangle Applications Exercise
Focus on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle? How is each type of marketing being carried out currently? Are the three sides of the triangle well aligned? Are there specific challenges or barriers in any of the three areas?
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Ways to Use the Services Marketing Triangle
Specific Service Implementation
What is being promoted and by whom? How will it be delivered and by whom? Are the supporting systems in place to deliver the promised service?
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Overall Strategic Assessment
How is the service organization doing on all three sides of the triangle? Where are the weaknesses? What are the strengths?
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Figure 1-6
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The Services Triangle and Technology
Company
Technology
Providers
Source: Adapted from A. Parasuraman
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Customers
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Services Marketing Mix: 7 Ps for Services
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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Traditional Marketing Mix
All elements within the control of the firm that communicate the firms capabilities and image to customers or that influence customer satisfaction with the firms product and services: Product Price
Place
Promotion
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Expanded Mix for Services -the 7 Ps
Product Price Place Promotion
People Process Physical Evidence
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Table 1-3
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Expanded Marketing Mix for Services
PLACE PROMOTION PRICE
Promotion blend Salespeople Advertising Flexibility
PRODUCT
Physical good Channel type features Quality level Accessories Packaging Warranties Product lines Branding Exposure Intermediaries
Price level Terms Differentiation Allowances
Outlet location Sales promotion Transportation Publicity Storage
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Table 1-3 (Continued)
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Expanded Marketing Mix for Services
PEOPLE PHYSICAL EVIDENCE
Facility design Equipment Signage Employee dress Other tangibles
PROCESS
Flow of activities Number of steps Level of customer involvement
Employees Customers Communicating culture and values Employee research
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Ways to Use the 7 Ps
Specific Service Implementation
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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Overall Strategic Assessment
How effective is a firms 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?
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