chap001.pptx

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

A Note on the
PowerPoint Slides...
 These PowerPoint slides contain selected exhibits,
figures, and tables from the chapters as well as
objectives for the chapters. For some 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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Part 1
FOUNDATIONS
FOR SERVICES
MARKETING
1-3

Introduction to Services
 What are Services?
 Why Service Marketing?
 Service and Technology
 Characteristics of Services
 Service Marketing Mix
 Staying Focused on the Customer
Chapter
1
1-4

Objectives for Chapter 1:
Introduction to Services
 Explain what services are and identify important trends in services.
 Explain the need for special service marketing concepts and practices and
why the need has developed and is accelerating.
 Explore the profound impact of technology on service.
 Outline the basic differences between goods and services and the
resulting challenges and opportunities for service businesses.
 Introduce the expanded marketing mix for services and the philosophy of
customer focus as powerful frameworks and themes that are
fundamental to the rest of the text.
1-5

If product is the body, service is the soul
of a business. So, start soul-searching.
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Examples of Service Industries
 Health Care
 hospital, medical practice, dentistry, eye care
 Professional Services
 accounting, legal, architectural
 Financial Services
 banking, investment advising, insurance
 Hospitality
 restaurant, hotel/motel, bed & breakfast
 ski resort, rafting
 Travel
 airline, travel agency, theme park
 Others
 hair styling, pest control, plumbing, lawn maintenance, counseling services, health
club, interior design
1-7

Contributions of Service Industries to
U.S. Gross Domestic Product
1-8

What are Services?
 Services are deeds, processes, and performances
provided or coproduced by one entity or person for
another entity or person. Although services may
include a final, tangible report, a website, or any kind
of tangible thing, broadly -------
 Services include all economic activities whose output is
not a physical product or construction, is generally
consumed at the time it is produced, and provides
added value in forms (such as convenience,
amusement, timeliness, comfort, or health) that are
essentially intangible concerns of its first purchaser.
1-9

Service as a Product, Customer Service, and
Derived Service
 Service as a product represents a wide range of intangible product
offerings that customers value and pay for in the marketplace. Service
products are sold by service companies (e.g., financial/IT services) and
nonservice/manufacturing companies. For example, a coffee selling
company can also offer barista training service.
 Customer service is the service provided in support of a company’s
core products. Companies typically do not charge for customer
service. For example, a supermarket employee may help a customer
find a product.
 Derived service is the value derived from physical goods is actually the
service provided by the good, not the good itself. For example, a tablet
or capsule provides medical service, a razor provides barbering
service, and a computer provides information and data manipulation
service.
1-10

Why Service Marketing?
Services dominate Bangladesh and worldwide
economies
Service as a business imperative in goods-
focused businesses
Deregulated industries and professional service
needs
Service marketing is different (Quality,
productivity are the issues)
Service leads to profits
1-12

Examples of Goods Companies that are
Expanding into Services
Boeing
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But “Service Stinks”
 We pay them to be rude to us. (Wall Street Journal)
 Companies offering tiered services actually cutting
services
 Increase of self-service and tech-based service that has
less human interaction
 Technology based services fail in many cases
 Customer expectations are higher
 Too much cost conscious
 Less skilled people
 Lip service only
1-14

Eight Central Paradoxes of Technological
Products
1-15

Characteristics of Services
Compared to Goods
Intangibility
Perishability
Simultaneous
Production
and
Consumption
Heterogeneity
1-16

Comparing Goods and Services
1-17

Implications of Intangibility
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or
communicated
Pricing is difficult
1-18

Implications of Heterogeneity
Service delivery and customer satisfaction
depend on employee and customer actions
Service quality depends on many uncontrollable
factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted
1-19

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
1-20

Implications of Perishability
It is difficult to synchronize supply and demand
with services
Services cannot be returned or resold
1-21

Search, Experience, and Credence Qualities
1-22

Challenges and Questions for Service
Marketers
 Defining and improving quality
 Designing and testing new services
 Communicating and maintaining a consistent image
 Accommodating fluctuating demand
 Motivating and sustaining employee commitment
 Setting prices
 Organizing to facilitate strategic and tactical decision-making
 Finding a balance between standardization and personalization
 Protecting new service concepts from competitors
 Communicating quality and value to customers
 Ensuring the delivery of consistent quality service
1-23

Traditional Marketing Mix
Elements an organization controls that can be
used to satisfy or communicate with customers:
 Product
 Price
 Place
 Promotion
1-24

Expanded Mix for Services – The 7 Ps
 Product
 Price
 Place
 Promotion
 People
 All human actors who play a part in service delivery and thus influence the buyer’s
perceptions: namely, the firm’s personnel, the customer, and other customers in
the service environment.
 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.
 Process
 The actual procedures, mechanisms, and flow of activities by which the service is
delivered—the service delivery and operating systems.
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Expanded Marketing Mix for Services
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Ways to Use the 7 Ps
Overall Strategic
Assessment
 How effective is a firm’s
service 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
Implementation
 Who is the customer?
 What is the service?
 How effectively does the
service marketing mix for a
service communicate its
benefits and quality?
 What changes/
improvements are needed?
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Discussion Questions
Think of a service job you have had or currently
have. How effective, in you opinion, was or is the
organization in managing the elements of the
service marketing mix?
Think of a service job you have had or currently
have. How did or does the organization handle
relevant challenges arising from characteristics of
services?
1-28

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