Transcript Chapter 1, Introduction

Part 1
FOUNDATIONS
FOR SERVICES
MARKETING
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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
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Figure 1.1
Contributions of Service Industries to
U.S. Gross Domestic Product
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Source: Inside Sam’s $100 Billion Growth Machine, by David Kirkpatrick, Fortune,
June
14, 2004, pCompanies,
86.
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Figure 1.3
Percent of U.S. Labor Force
Percent of U.S. Labor Force by Industry
80
70
60
50
40
30
20
10
0
1929 1948 1969 1977 1984 1999
Year
 Services
 Manufacturing
 Mining & Agriculture
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.
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Figure 1.4
Percent of U.S. Gross Domestic
Product by Industry
80
Percent of GDP
70
60
50
40
30
20
10
0
1948 1959 1967 1977 1987 1999
Year
 Services
 Manufacturing
 Mining & Agriculture
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.
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Service Trends
 Service and affluence
 Technology
 Specialization
 Competitive advantage
 Poor perception of service






Tiered services
Technology
Higher Expectations
Cost Cutting
Lack of skilled employees
Lip service
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Figure 1.2
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets

Tangible
Dominant
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
Intangible
Dominant

Fast-food
Outlets
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching




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Types of Service
 Services as products
 Customer service
 Product Life Cycle
 Derived service
 Core product
 Tangible product
 Augmented Product
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Table 1.2
Goods versus Services
Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of
Marketing 49 (Fall 1985), pp. 41–50.
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Characteristics of Services
Compared to Goods
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Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability
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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
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Implications of Intangibility
 Services cannot be inventoried
 Services cannot be easily patented
 Services cannot be readily displayed or communicated
 Pricing is difficult
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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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Challenges for Services
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
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Defining and improving quality
Designing and testing new services
Communicating and maintaining a consistent image
Accommodating fluctuating demand
Motivating and sustaining employee commitment
Coordinating marketing, operations, and human resource
efforts
 Setting prices
 Finding a balance between standardization versus
personalization
 Ensuring the delivery of consistent quality
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Traditional Marketing Mix
 All elements within the control of the firm that
communicate the firm’s capabilities and image to
customers or that influence customer satisfaction with the
firm’s product and services:




Product
Price
Place
Promotion
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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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Table 1.3
Expanded Marketing Mix for Services
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Table 1.1
Eight Central Paradoxes of Technological
Products
Source: D. G. Mick and S. Fournier, “Paradoxes of Technology: Consumer Cognizance, Emotions, and Coping Strategies,” Journal of Consumer
Research 25 (September 1998), pp. 123–47.
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