SERVICES
MARKETING
CHAPTER 1
INTRODUCTION
TO
SERVICES
What is services?

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 amusement, health)
that are essentially intangible concern.
Services are divided into four distinct
categories.
1) Services industries and companies
2) Services as a product.
3) Customer services.
4) Derived services.
1) Services industries
and companies

Including those industries and
companies typically classified with in
the service sector whose core product
is service. All of the following
companies considered pure service
companies…
Marriot international (lodging),
American Airlines (Transportation),
Mayo clinic (Health care). etc
2) Services as Product

Represent a wide range of intangible
product offering that customers value
and pay for it in market place. Services
products can sell by services and non
services companies such as
manufacturers and technology
companies. (e.g.) IBM offer information
and technology consulting services to
the marketplace. Macy’s that sell
services such as a gift wrapping and
shipping.
3) Customer Services

Customer service is the services
provided in support of a company’s core
products. Company typically do not
charge for customer service. Customer
service can occur on sites (as when a
retail employee helps a customer find a
desired item or answers a question), or
it can occur via phone or via the
internet.
4) Derived Service


Steve vargo and Bob Lusch argue for a new
dominant logic for Marketing that suggests
that all product and physical goods are
valued for for the services they provide. Two
other authors suggests that the value derived
from physical goods is really the service
provided by the goods, not the good itself.
For Example, they suggest that a
pharmaceutical provides medical services,
Tangibility Spectrum

The broad definition of services implies that
intangibility is a key determinant whether an
offering is a service. Although this is true, that very
few product are very purely intangible are very
totally tangible. Instead services tend to be more
intangible than manufactured products than to be
more tangible than services.
For example, the fast food industry, while classified
as a services, also has many tangible components
such as the food the packing, and so on. Auto
mobiles, while classified with in the manufacturing
sector, also many intangibles, such as
transportation.

TANGIBILITY SPECTRUM
SALT
SOFT DRINK
DETERGENT
AUTOMOBILES
COSMETIC
INTANGIBILE DOMINANT
TANGIBILE DOMINANT
ADVERTISING
AGENCIES AIRLINES
INVESTMENT
MANAGEMENT
CONSULTING
TEACHING
Importance of Services Marketing
OR
Services in Business
1)
First, services marketing concepts strategies have
developed in response to the tremendous growth of
service industries, resulting in their increase
importance to the U.S and world economies. As
was noted, in 2003 the service sector represented
just over 80 percent of employment and gross
domestic product of the united states. Although all
the absolute growth in numbers of jobs and the fast
growth rates in Job formation are in service
industries.
2)
Another indicator of economic importance of
services is that trade in services is growing world
wide. In fact, while the U.S balance of trade in
goods remain in the red, in 2000 there was an $81
billion trade surplus in services. World class
providers of services such as American Express,
McDonald’s and Marriott Hotels, together with many
small services companies, are exporting
information, Knowledge, Creativity, and technology
that the world badly needs.
3)
There is a growing market for services and
increasing dominance of services in economies
worldwide, not just in the united states. The
tremendous growth and economic contributions of
the services sector industries worldwide.
Country
Percent of GDP
Attributed to services
United States
80
United Kingdom
74
Australia
72
France
71
Brazil
54
China
34
4)
Services as a Business Imperative in
Manufacturing and IT.
Early in the development of the field of services
marketing and management, most of the impetus
came from service industries such as Banking,
transportation, and health care. As these service
industries evolve and become more competitive,
the need for effective services management and
marketing strategies continues. Now, however,
manufacturing and technology industries such as
automobiles, computers and software are also
recognizing the need to provide quality service and
revenue producing services in order to compete
worldwide.
Deregulated Industries
and Professional
Service Needs
Specific demand for services marketing concepts
has come from the deregulated industries and
professional services as both these groups have
gone through rapid changes in the way they do
business.
For example, until 1978 all airline fares, routes, and
commission paid to travel agents were determined
and monitored by the government. Since that time
airlines have been free to set their own pricing
structures and determine which routes they will fly.

Services Marketing is
different


As the forces described above coincided and
evolved, business people realized that Marketing
and managing services issues and challenges not
faced in manufacturing and packaged goods
companies. These differences and challenges were
captured in a series of interviews by Management
consultant Garry knisely in 1979.
People buy product because they believe they
work. But with services, people deal with people
they like and they tend to buy because they believe
they will like them.
Services and
Technology

Looking to the recent past, it is apparent
how technology has been the basic force
behind service innovations how taken for
granted. Automated voice mail, fax
machine, ATMs, and other common
services were possible only because of new
technologies. Just think how dramatically
different your world would be without these
basic technology services.
Characteristics Of Services
Compared To Goods




Intangibility.
Heterogeneity.
Simultaneous Production and
Consumption.
Perish ability.
Intangibility
The most distinguishing characteristics
of services is intangibility. Because services
are performances rather than objects, They
cannot be seen, felt, tasted, or touched in
the same manner that you can sense
tangible goods.
Heterogeneity
Because services are performances,
frequently produced by humans, no two services
will be precisely alike. The employees delivering the
service frequently are the services in the customer’s
eyes, and people may differ in their performance
from day to day are even hour to hour.
Heterogeneity also result because no two
customers are precisely alike, each will have
unique demands or experience the service in a
unique way. Thus the heterogeneity connected with
services is largely the result of human interaction
(between and among employees and customers)
and all of the vagaries that company it.
Simultaneous Production and
Consumption
Whereas most goods are produced first, then
sold and consumed, most services are sold first and
then produced and consumed simultaneously. For
Example, an auto mobile can be manufactured in
Detroit, shipped to Scan Francisco, sold two
months later, and consumed over a period of years.
But restaurant services cannot be provided until
they have been sold, and the dining experience is
essentially produced and consumed at the same
time.
Perishability
Parishibility refers to the fact that services
cannot be saved, stored, resold, or returned. A seat
on an airplane or in a restaurant, an hour of a
lawyer’s time, or telephone line capacity not used
cannot be reclaimed and used or resold at a later
time. Perishability is in contrast to goods that can
be stored in inventory or resold another day, or
even returned if the consumer is unhappy.
Wouldn’t it be nice if a bad haircut could be
returned or resold to another customer?
SERVICES MARKETING
MIX
Traditional Marketing Mix
One of the basic concepts in marketing
is title marketing mix, defined as the
elements an organization controls that can
be used to satisfy or communicate with
customers. The traditional marketing mix is
composed of the four Ps product, price,
place, and promotion. The notion of a mix
implies that all the variables are interrelated
and depend on each other to some extent.
Price
Product
Customers
Place
Promotion
However, the strategies for the four Ps require
some modifications when applied to services. For
example, traditionally promotion is through of as
involving decisions related to sales, advertising,
sales promotions, and publicity. In services these
factors are also important, because services are
produced and consumed simultaneously, Services
delivery people (such as clerks, ticket takers,
nurses, and phone personnel) are involved in real
time promotion of the service even if their jobs are
typically defined in terms of the operational function
they perform.
Communication
Product/Service
Producer/Seller
Money
Feedback
Consumer

Expanded Mix for Services
Because services are usually produced and
consumed simultaneously, customers are often
present in the firm’s factory, interact directly with
the firm’s personnel, and are actually part of the
service production process. Also, because services
are intangible, customers will often be looking for
any tangible cue to help them understand the
nature of the service experience. For example, in
the hotel industry the design and decor of the hotel
as well as well as the appearance of its employees
will influence customer perceptions and
experiences.
Any
Question