Chapter 1
Introduction to
Services
Chapter Objectives
• Understand the basic difference between goods and
services.
• Develop an appreciation for how service can be used as
a competitive advantage for both intangible and tangible
products.
• Appreciate the factors that create the customer’s service
experience and why it is important to manage the overall
experience.
• Comprehend the driving forces behind the importance of
the study of services marketing.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Opening Vignette:
The Burj al Arab Hotel
• The world’s only 7-star hotel offers guests a
remarkable service experience:
– Magnificent views
– Large rooms
– Rain showers and Jacuzzis are standard in every suite
– A fleet of chauffeur-driven Rolls Royce automobiles
– Personnel offer the finest in personal service
• The concepts that follow provide the keys for
delivering a truly remarkable service experience
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Introduction
• The new “global services era” is characterized by:
– Economies and labor force that are dominated by the service sector
– More customer involvement in strategic business decisions
– Products that are increasingly market-focused and much more
responsive to the changing needs of the marketplace
– The development of technologies that assist customers and employees
in the provision of services
– Employees who have been provided with more discretionary freedom to
develop customized solutions to special customer requests and solve
customer complaints on the spot with minimal convenience
– The emergence of new service industries and the “service imperative,”
where the intangible aspects of the product are becoming more and
more the key features that differentiate products in the marketplace
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
What Is a Service?
• The distinction between goods and
services is not always perfectly clear
• Goods: objects, devices, or things
• Services: deeds, efforts, or performances
• Products: either a good or a service
• Intangibility: a product that lacks physical
substance
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 1.1: Scale of Market Entities
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Scale of Market Entities
• The scale that displays a range of products along a
continuum based on their tangibility, ranging from tangible
dominant to intangible dominant
– Tangible dominant: goods that possess physical properties that
can be felt, tasted, and seen prior to the consumer’s purchase
decision
– Intangible dominant: services that lack the physical properties
that can be sensed by consumers prior to the purchase decision
• Service marketing myopia: condition of firms that
product tangible products and overlook the service
aspects of their products
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 1.2: The Progression of Value
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Figure 1.3: The Molecular Model
• Molecular model: conceptual model of the relationship between the tangible and
intangible components of a firm’s operation
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Creating the Service Experience
• Benefit concept: the encapsulation of the
benefits of a product in the consumer’s mind
• Example: an orange from the grocery store
– Unseen services encapsulated in the orange include:
• Planting of the orange tree
• Caring for the orange tree
• Harvesting by grove workers
• Directing of workers by management staff
• Packing/transporting/distributing to the grocery store
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Servuction Model
Servuction Model
A framework
for understanding
the consumer’s
experience
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Figure 1.4: The Servuction Model
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Servicescape
• Servicescape: the use of physical
evidence to design service environments
– Ambient conditions such as room temperature
and music
– Inanimate objects such as furnishings and
equipment
– Other physical evidence such as signs,
symbols, and personal artifacts such as family
pictures and personal collections
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Contact Personnel/Service Providers
• Contact personnel: employees other than the
primary service provider who briefly interact with
the customer
• Service providers: the primary providers of a
core service
–
–
–
–
Waiter or waitress
Dentist
Physician
College instructor
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Other Customers
• Other customers: customers who share
the primary customer’s service experience
– The presence of other customers can enhance
or detract from an individual’s service
experience
• Example: unruly customers in a restaurant or a
nightclub, children crying during a church service,
or theatergoers talking and texting during a movie
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Invisible Organizations and Systems
• Invisible organization and systems: that
part of a firm that reflects the rules, regulations,
and processes upon which the organization is
based
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The Servuction Model
• The servuction model demonstrates that
consumers are an integral part of the
service process
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Why Study Services?
1. The growth of the global service economy in
terms of contributions to gross domestic product
(GDP)
2. The growth of the global service work force
3. The emergence of technologically based eservices that have transformed many service
industries
4. The importance of developing sustainable
services marketing business practices
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Figure 1.5: U.S. Gross Domestic Product:
Composition by Industry Sector
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Figure 1.6: Worldwide Gross Domestic
Product: Composition by Service Sector
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 1.7: Worldwide Gross Domestic
Product: Composition by Service Labor Force
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
What Are E-Services?
• E-service: an electronic service available via the
Net that completes tasks, solve problems, or
conducts transactions
• Many e-services have become more commonly
known as self-service technologies—
technologically based services that help
consumers help themselves
– Auto rental chains, banks, insurance companies,
hotels, movie rental chains and theaters, and a variety
of other retail operations
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Figure 1.8: Worldwide Internet Users by
World Regions
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Serving It Up Green:
Sustainability Comes to Services
• Sustainability: the ability to meet current needs without
hindering the ability to meet the needs of future
generations in terms of economic, environmental, and
social challenges
• Pursuing sustainable business practices allows
companies to find areas of improvement and competitive
advantages in four areas:
1. Eco-efficiency
2. Environmental cost leadership
3. Beyond compliance leadership
4. Eco-branding strategies
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.