Service Marketing
Marketing Basics
What is Marketing???
Think about organizations/companies (Google,
Trader Joe’s, The San Jose Chamber of
Commerce, World Wildlife Fund, …) as well as
individuals (politicians, professional athletes, …)
 They all do marketing! How and why?
Marketing Basics
Marketing consists of activities designed to
generate and facilitate exchanges intended to
satisfy human or organizational needs or wants.
Marketing Basics
Importance of Marketing:
Personally - in daily life, in career aspirations, in better
informed consumer purchases
Organizationally - only marketing directly produces
revenue; marketing success depends on customer
satisfaction
Domestically - employment and costs, creation of utility
Globally - closed, national markets no longer exist and
companies compete in markets worldwide
Marketing Basics
Evolution of Marketing:
Product-orientation Stage
“make all you can”
1. Demand exceeds available supply.
2. All that is made can be sold.
3. Focus is on engineering and generating output, not the customer.
4. Epitomized between late 1800s and early 1930s.
“The American public can have any color car it wants so long as it’s black.”
Henry Ford, referring to the Model T.
Sales-orientation Stage
“sell all you make”
1. Supply frequently exceeds demand.
2. Focus is on promotion and pricing; objective is to sell all the inventory.
3. Hard-sell techniques create stereotype of pushy, annoying salesperson.
4. Epitomized between early 1930s and 1950s.
Marketing Basics
Evolution of Marketing:
Market-orientation Stage
“make what you can
sell”
1. Variety in markets, variety in products.
2. Employs full marketing mix.
3. Focus is on customer needs and satisfaction; profitability over volume.
4. Most typical current orientation.
“make it together with
the customer”
Service Dominant Logic
1. Service industries gain more and more importance
2. Ideas generated in the service field spread to other sectors (like industrial
marketing, marketing for consumer goods, …)
3. “Intangible product features”
Marketing Goals
There are three main objectives that are followed by
the marketing discipline:
1. Customer satisfaction and (service) quality
2. Stimulation of market exchanges and
customer retention
3. Branding of services, products, and companies
Marketing Goals
1. Customer satisfaction and (service) quality
delivered (perceived)
service/product
≥
expected
service/product*
<
expected
service/product*
 customer satisfaction
delivered (perceived)
service/product
 customer dissatisfaction
* requires a “positive expectation”
Marketing Goals
2. Stimulation of market exchanges and customer
retention
- Customer satisfaction is a main determinant for
stable and voluntary buying relationships
- Compliance management plays an important role in
retaining customers
- Stimulation of market exchanges and customer
retention is supported by a strong
service/product/company brand
Marketing Goals
3. Branding of services, products, and companies
Brand contacts
by Gronroos (2000), p.288
The GAP Model
Causes of Gaps
Promoted
Expectation
Service
Quality
Management’s
Perceived
Customer
Expectation
Inflated Expectation
G4
Communication
Real Expectation
G1
Marketing
G2
Design
G3
Conformance
Service
Design Spec.
Service
Delivered
Service Provider’s
Assessment
Service Received
Customer’s
Assessment
Requirements of a Service Marketing approach
- Closing the “Gaps” (and thereby achieving customer satisfaction,
retention, and brand building) with the help of the marketing
instruments
- The “classic” marketing concept consists of 4 instruments (“4Ps”):
- Product
- Price
- Promotion (also communication)
- Place (also distribution)
- Due to the specialties of services (intangibility, inseparability,
heterogeneity, perishability) some speak of the 5P-approach by
adding a 5th instrument: “People”
Co-Creation
- One of the (if not THE) essential advantage(s) of service
management and service marketing is that service development in
most of the cases requires the participation of both the supplying
company and the customer
- Thus, services are “co-created”
- Impact on the marketing goals:
- Easier to anticipate and to react to customer expectations
 stimulation of market exchanges and customer retention
- Direct contact with employees of the service provider impacts
the customer’s brand building process
- However, co-creation depends on the abilities of the customer
and the provider to express, anticipate, and react to the needs of
the counterpart!
The Integrated Service Marketing Model
Level of
Information
Initial Market Research
Idea generation
Initial market
research
Market
information
Service expectations
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Marketing process of service
companies
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Initial Market Research
- Capturing market trends, market sizes, market
potentials
- What do customers expect?
- Market research can be performed in a formal
way (e.g. standardized questionnaires, telephone
interviews, …) or informally (checking
competitors’ websites, ask experts, visit trade
shows, …)
- Design of marketing instruments relies on
adequate market and customer information
The Integrated Service Marketing Model
Level of
Information
Strategic Service Definition
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Marketing process of service
companies
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Strategic Service Definition
- Dominated by product, price, and distribution decisions
- Product: service design including the service environment
(service encounter), service components, service production
process (including communication)
- Price: setting prices on the basis of costs, competitor prices,
and demand; price segmentation as major pricing tool (also:
Yield Management)
- Distribution: importance of the service location varies
(where do customers and producers meet?),
services cannot be distributed like products
- The service definition impacts expectations and
perceptions of consumers!
The Integrated Service Marketing Model
Level of
Information
Initial Service Communication
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Marketing process of service
companies
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Initial Service Communication
- Raising awareness and “convincing customers”
- Typical instruments are:
- TV commercials
- Advertisements in newspapers, magazines (also billboards)
- Direct marketing
- Events (incl. trade shows)
- Sponsoring
- Sales promotions
- Online marketing
- Public relations
- Word-of-mouth
- Instruments have to be adjusted to each other!
- Initial service communication has a huge
impact on consumer expectations!
The Integrated Service Marketing Model
Level of
Information
Service Production
(Co-Creation)
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Service production
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Marketing process of service
companies
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Service Production (Co-Creation)
- Mainly impacted by the service encounter and
interpersonal communications
- Service performing employees often have a huge influence
on the customer’s service perception
- It is not only important to communicate the service to
consumers (external communication) but also within the
organization (internal communication) - the latter is also
called “internal marketing”
- Important to balance employee behavior with initial
communication instruments (“integrated marketing
communication”)
The Integrated Service Marketing Model
Level of
Information
After Sales Support
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Service production
After sales support
Marketing process of service
companies
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
After Sales Support
- Communicative instruments to ensure customer
satisfaction and to stimulate customer retention
- Ensure that customer perceptions have at least
met their expectations
- Otherwise: compliance management
The Integrated Service Marketing Model
Marketing implementation
Level of
Information
Marketing Implementation
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Service production
After sales support
Marketing process of service
companies
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Marketing Implementation
- Information management plays a crucial role in service
marketing
- Information is not only gathered during initial market
research but also during the whole service (marketing)
process
- Also, information can be spread not only during the initial
communication phase but also (and especially) during the
service production process
- Important to ensure an effective information flow within the
company
The Integrated Service Marketing Model
Marketing implementation
Level of
Information
Information gathering
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Service production
After sales support
Marketing process of service
companies
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Marketing implementation
Level of
Information
Information transfer
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Service production
After sales support
Marketing process of service
companies
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Buying process of the customer (to
be influenced by the service firm)
The Integrated Service Marketing Model
Marketing implementation
Level of
Information
Internal information processing
Idea generation
Initial market
research
Market
information
Service expectations
Strategic service
definition
Initial service
communication
Service production
After sales support
Marketing process of service
companies
Buying decision
Integration into the
service production
process
quality perception/
(dis-) satisfaction
Buying process of the customer (to
be influenced by the service firm)
Conclusion
- Coordination of all marketing instruments
- Achievement of marketing goals:
- Service marketing offers several opportunities to balance
customer expectations with customer perceptions
- Customer satisfaction (service quality) is a main factor
that impacts customer retention
- Continuous and constant service quality accompanied by
continuous, constant, and balanced communication
efforts lead to the development of a strong brand image
- Growing impact of service marketing on the whole marketing
field
Case Study Questions
1. Evaluate the Zipcar venture. What are the strengths, opportunities,
weaknesses, and threats of the business model?
2. How does the Zipcar idea fit the “Integrated Service Marketing Model”?
Please apply the case to the several marketing instruments that are
discussed in the model.
3. What are the main drivers of customer satisfaction at Zipcar?
4. Describe the process of co-creation at Zipcar!
5. What are the success factors of Zipcar’s promotional strategy? Please
consider also the impact of environmental issues on the marketing
success of Zipcar.
6. Imagine that Zipcar aims on entering the Chinese market. What factors
have to be covered in an according market research study? Would you
recommend China as target market?
Please search for additional information to answer the case study questions!