Challenging Our Own and Others ’ SERVICES MARKETING ::: Challenging Our Own and Others ’Assumptions Christopher Lovelock Yale School of Management AMA ServSIG Doctoral Consortium

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TEACHING SERVICES MARKETINGTEACHING SERVICES MARKETING::::::::Challenging Our Own and OthersChallenging Our Own and Others AssumptionsAssumptionsChristopher LovelockChristopher LovelockYale School of ManagementYale School of ManagementAMA AMA ServSIGServSIG Doctoral ConsortiumDoctoral ConsortiumW.P. Carey School of BusinessW.P. Carey School of BusinessArizona State University, October 8, 2005Arizona State University, October 8, 2005Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockOverview: Questions for Discussion and Overview: Questions for Discussion and Debate Debate No Easy Answers for PedagogyNo Easy Answers for Pedagogy1. Is business education in trouble? If so, what does it mean for teaching services marketing (SM)?2. Intellectual ferment in academic marketingwhere is it taking us?3. How is teaching SM courses constrained by what comes earlier ?4. How should SM pedagogy be shaped by degree structure and course format? 5. Are we doing enough in SM courses to teach skills in market analysis and competitive strategy?6. What do you see as SMs foundation disciplines?(1)(1)Is Business Education in Trouble? Is Business Education in Trouble? if so, what does it mean for teaching if so, what does it mean for teaching services marketing ?services marketing ?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockIs Business Education in Trouble ?Is Business Education in Trouble ?Some External Perspectives from U.S.A.Some External Perspectives from U.S.A. Business school education attacked for lacking relevance Enrollment falling in many MBA programs in U.S.A. Would-be students cant justify $ cost (+ time) vs. pay-off Professors are criticized for: lacking real-world experience to bring to classroom Inhabiting overly-specialized departmental silos, being too focused on publishing narrow, theoretical, quantitatively-based research studies in little-read journals Part-time/ extension programs are proliferating. Are these: genuine responses to learning needs of working adults? or exploitative, low-cost, cash cows where sponsoring institution lends its brand name but exercises minimal quality control?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockWhat Does This Mean for Services Marketing ?What Does This Mean for Services Marketing ?Are We Part of the ProblemAre We Part of the Problemor the Solution ?or the Solution ? What institutional constraints do we need to challenge? What goals should we set to improve our teaching? Up-to-date theoretical structure, concepts, frameworks Real-world applications Breadth of examples from different service industries, countries Student exercises, projects that will boost excitement and learning Skill development in pedagogiesavoid over-reliance on PPT lectures Case discussions, Student presentations (group or individual) Interactive dialogue Computerrelated exercises Guest speakers What external relationships should we forge outside school?(2)(2)Intellectual ferment in academic Intellectual ferment in academic marketingmarketingwhere is it taking us?where is it taking us?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockIntellectual Ferment is Shaking Up Academic Intellectual Ferment is Shaking Up Academic Marketing TodayMarketing TodayThatThats Healthy !s Healthy ! Marketing has been redefined to emphasize processes involved in creating, communicating, and delivering value to customers (AMA, 2004) Will that lead to a change in how introductory marketing courses are taught (e.g., value exchange approach?) In Services Marketing, old perspectives are being dusted off and new ones advanced to shake up traditional assumptions about goods and services (and whether they are different) What are implications for teaching? Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockChallenging LongChallenging Long--held Assumptions Can Be held Assumptions Can Be Uncomfortable, Inconvenient, Liberating..Uncomfortable, Inconvenient, Liberating..Are you evolving teaching to move away from goods are different from services to include discussion of following perspectives (or even rebuild course around one of them)? all products create service-- goods are simply service-creating appliances (Vargo & Lusch, 2004) everyone is in service (Levitt, 1973); we should emphasize service not services (Rust, 1998) Distinction between manufacturing and service industries often emotional, no longer relevant (The Economist , 2005-10-01) Services, unlike goods, do not involve transfer of ownership (Judd 1964, Rathmell 1974) - a long-ignored perspective More useful to distinguish marketing exchanges according to whether involve transfers of ownership than whether product is manufactured or not (Lovelock & Gummesson, 2004)Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockImplications of Implications of NonNon--Ownership of ServicesOwnership of Services Renting durable goods can form the basis for a service business Service may take form of selling temporary use of portions of a larger physical entity Customers using a suppliers own goods, facilities, or networks are more closely engaged with the firm than those using things they own themselves Time plays a central role in most services Customers may have different choice criteria for rentals than for outright purchases Services offer potential for resource sharing(3)(3)How is teaching SM courses How is teaching SM courses constrained by what comes earlier ?constrained by what comes earlier ?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockHow is Teaching SM Courses How is Teaching SM Courses Constrained by What Comes Earlier ?Constrained by What Comes Earlier ?Content/pedagogy of MBA Services Marketing elective cannot ignore: Content of prior courses students have taken (especially required intro marketing course) Student exposure to different pedagogies (e.g., case teaching, group work, presentations) Content of related courses outside marketing (especially operations management) Distribution requirementsSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockIntroductory Textbooks Are the Introductory Textbooks Are the Received Received WisdomWisdom of Marketingof Marketingis that OK ?is that OK ? Very slow to evolve: Competition stimulates packaging and supplements, not conceptual development All influenced by Kotler structure, heavy 4Ps orientation Services marketing gets a special chapter (in 4 texts), typically very out dated in terms of concepts, frameworks But this is all most MBAs will ever learn about services marketing. Inference: its a narrow niche field where most basic marketing concepts work fine The real niche field in todays economy is actually distribution and sale of consumer packaged goods About 6 per cent of GDP in U.S. But thats where many jobs for marketing MBAs traditionally lieSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockWhatWhats Wrong With Intro Marketing Courses ?s Wrong With Intro Marketing Courses ?(at least at some schools)(at least at some schools) Oriented around marketing in a manufacturing economy Primarily focused on consumer goods rather than industrial products Typically more emphasis on packaged goods than durables Services marketing treated as special case Retailing not well portrayed as the service industry it actually is(4)(4)How should SM pedagogy be shaped by How should SM pedagogy be shaped by degree structure and course format ?degree structure and course format ?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockTeaching MBA Courses is Constrained by Teaching MBA Courses is Constrained by Degree Length and RequirementsDegree Length and RequirementsHow much demand will there be for an SM course? How much content can you include? Semester, quarter, half-semester, other academic format No. of courses required for degree may vary widely, even within institution, e.g., EMBA: 12 courses MBA: 16 courses Advanced MBA: 20 coursesNote: the MBA degree is no longer an equivalent intellectual commitment within the same institution, let alone across institutions!Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockSM Pedagogy Must Adjust to Class Size, SM Pedagogy Must Adjust to Class Size, Schedules and FormatsSchedules and Formats Class size affects ability to interact with students. Cases best taught to 16-40 students, but less or more is feasible Class format often varies widely; 30 contact hours might be split: 2 x 90-minute daytime classes per week for10 weeks 1 x 3-hour evening class per week, 10 weeks 2 weekends of 7-1/2 hour Sat + Sun classesQuestions:1. How many cases can you teach under each format?2. What can you do in a 3-hour evening class that would be more difficult in a 90-min daytime class?3. What can you in a full day that you couldnt in 4 x 90-min classes?4. Learning and forgetting: How important is class frequencyInsight: Adjust pedagogy and content to maximize learning!Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockWhich is the Right Priority for Which is the Right Priority for SM Course Content and Delivery ?SM Course Content and Delivery ? What the students want What the students need What you want, like to teach What the dean or senior colleagues think you ought (or ought not) to teach What knowledge, problem solving skills, and real-world exposure employers are seeking(5)(5)Are we doing enough in SM courses to Are we doing enough in SM courses to teach skills in market analysis and teach skills in market analysis and competitive strategy?competitive strategy?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockReality Check for Your Students AND Reality Check for Your Students AND Colleagues: Size of Modern Service SectorColleagues: Size of Modern Service SectorContribution of Services to GDP of United States, 2004SERVICES 68.0%GOVERNMENT12.4%(mostly services)Manufacturing &Construction 17.3%Agriculture, forestry, mining, fishing 2.3%Source: Survey of Current Business,US Bureau of Economic Analaysi, May 2005Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockReality Check for Your Course Content:Reality Check for Your Course Content:Mix of Service Economy vs. Mix of Your ExamplesMix of Service Economy vs. Mix of Your Examples0%10%20%30%40%50%60%70%80%90%100%1 2 3 4Value added by Service Industry Categoriesto U.S. Gross Domestic Product, 2004 )Other (except government) 276Accommodation and food services 308Arts, entertainment, and recreation 119Healthcare and social assistance 804Educational services 100Professional and business services 1,341Real estate and rental and leasing 1,451Finance and insurance 972Information 547Transportation and warehousing 339Retail trade 798Wholesale trade 688 Source: Survey of Current Business, May 2005 (NAICS data)All data in $ billionsSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockWhat business are we in ?What business are we in ?Industry Analysis and Generic CompetitionIndustry Analysis and Generic Competition Customers can gain value from: purchasing goods renting those same goods without transfer of ownership renting a service provider who operates the item on your behalf Generic competition exists between industries, e.g, telecom vs. mail downloadable videos from cable vs rental video, vs. purchase of videos) Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockUsing Economic Data for Analysis of Using Economic Data for Analysis of Service Markets, Competition, and Trends Service Markets, Competition, and Trends Pedagogical Issue: Are we doing enough in Services Marketing courses to teach skills in market analysis and competitive strategy? (Requires data) NAICS (North American Industry Classification System now being used to compile, record national economic data in U.S., Canada, Mexico Replaces old SIC codes in USA Captures huge array of new service industries, each with its own NAICS code. U.S. data easily accessible on Web Information includes # establishments, employment New North American Product Classification System assigns productline code to thousands of service products Potential value for research, teaching, student projectsSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockInsights on the Nature of the Service Economy Insights on the Nature of the Service Economy from NA1CS from NA1CS NAICS (North American Industry Classification System) has replaced U.S. Standard Industrial Classification System (SIC) Jointly developed by U.S., Canada, and Mexico Will reshape how we view changing national economies Each sector is assigned a 2-digit code, can drill down by: Sub-sector 541: Professional, Scientific, and Technical Services Industry group 5416: Management, Scientific, & Technical Consulting Services Establishments 54161: Management consulting services Establishments 541613: Marketing consulting services A new North American Product Classification System (NAPCS) is being developed, with initial focus on products of service industrieseach product is assigned a product-line codeSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockExamples of Goods Rental Data Examples of Goods Rental Data from 2002 Economic Censusfrom 2002 Economic CensusNAICS Code 5324: Commercial and Industrial Machine and NAICS Code 5324: Commercial and Industrial Machine and Equipment Rental and LeasingEquipment Rental and LeasingProduct Line Code # Estabs Prod. line % of estabs.(NAPCS) revenues total revs 52587 Office furniture 438 $ 206m 24.7%52589 Medical machinery and equip. 2420 3071 83.452626 Party supplies 218 27 16.952584 Heavy equip. for construction, mining, forestry (with operators) 292 106 17.2 52585 Heavy equip. for construction,mining, forestry (w/out operators) 5074 9646 82.8 Source: 2002 Economic Census: Real Estate and Rental and Leasing Industry Series. Commercial and Industrial Machinery and Equipment Rental and Leasing: Table 3 Product Lines by Kind of Business for the U.S. 2002. Washington DC: U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census Bureau, 2004, p. 3.Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockRole of Cases and Student ProjectsRole of Cases and Student Projects Cases (supplemented by introductory lectures or post-discussion wrap ups) are best way to get students thinking about issues of market analysis and competitive positioning Decision-forcing cases require them to develop, defend competitive strategy Student projects on a particular company often emphasize market analysis and strategy formulation Group presentations add depth, interest to class learning(6)(6)What Do You See as What Do You See as SMSMssUnderlying Disciplines ?Underlying Disciplines ?Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockWhat Do You See as the Foundation Disciplines What Do You See as the Foundation Disciplines for Teaching Services Marketing?for Teaching Services Marketing?Apportion 100 points: among the following: Anthropology Economics Ethnography Political Science Psychology Social Psychology Sociology Other (1) specify: __________________________ Other (2) specify: __________________________Exclude hybrids and hyphenated fields (e.g., social anthropology)Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockIn Which of These Disciplines Do You Have In Which of These Disciplines Do You Have Formal Training?Formal Training?DISCIPLINE PhD degree Masters degree Individual Courses(major) (minor) Grad UgradAnthropologyEconomics EthnographyPolitical SciencePsychologySocial PsychologySociologyOther (1) specify: __________________________Other (2) specify: __________________________Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockA Potentially Awkward QuestionA Potentially Awkward QuestionIf you lack formal training in a discipline which you see as a foundation for teaching services marketing, how are you dealing with this so far? Find a way to learn what I need to know (personal reading, sit in on relevant course(s), dialogue with colleagues, etc.) Invite guest presenters Assign relevant background readings but dont elaborate on them in class Dont try to handle what I didnt learn in grad school (and maybe feel a twinge of guiltor maybe not)AppendixAppendixTexts by Christopher Lovelock Texts by Christopher Lovelock Relevant to Teaching Relevant to Teaching Services MarketingServices MarketingSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockCurrent and Forthcoming BooksCurrent and Forthcoming Bookswith Jochen Wirtzwith Jochen Wirtz Services Marketing: People-Technology-Strategy, 5/e (Prentice Hall, 2004) New 6th edition due mid-2006!TARGETED AT UNDERGRADUATE AND MBA MARKETSINCLUDES TEXT, CASES, AND READINGS + INSTRUCTORS RESOURCE MANUAL, PPTs, AND TEST BANKAlso Christopher Lovelock, Jochen Wirtz, Tat Hean Keh, and XiongwenLu, Services Marketing in Asia, 2/e (Singapore: Pearson, 2005) Jochen Wirtz and Christopher Lovelock, Services Marketing in Asia: A Casebook (Singapore: Pearson Education, 2005)Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockAdditional Books in PrintAdditional Books in Print Christopher Lovelock and Lauren Wright, Principles of Service Marketing and Management, 2/e (Prentice Hall, 2002) Christopher Lovelock, Paul Patterson & Rhett Walker, Services Marketing: An Asia Pacific and Australian Perspective, 3/e (Pearson Australia, 2004) Christopher Lovelock, Javier Reynoso, Luis Huete, y Guillermo DAndrea, Administracion de Servicios (Pearson Mexico, 2004) Christopher Lovelock, Jochen Wirtz et Denis Lapert, Marketing des Services 5/e (Pearson France, 2005)Plus translations in Chinese: Mandarin (China) and Traditional (Taiwan), Japanese, Portuguese, Russian, and ThaiSlide Slide 2005 Christopher Lovelock2005 Christopher LovelockChristopher Lovelock and Jochen Wirtz at Christopher Lovelock and Jochen Wirtz at Book Launch for Book Launch for Services MarketingServices Marketing 5/e 5/e Singapore, February 2004Singapore, February 2004Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockJochen Wirtz and Family at Awards Banquet Jochen Wirtz and Family at Awards Banquet for NUS Outstanding Educator Awardfor NUS Outstanding Educator AwardTTEACHING AWARDSNUS OutstandingEducator Award, 2003(university-wide:only two awardseach year among 2,700 NUS faculty)Previous teachingAwards at NUS Business School,1996, 1998, 1999, 2001, 2002, 2005Email: jochen@nus.edu.sgAssociate Professor, National University of Singapore Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockRecharging the little gray cellsRecharging the little gray cells(above), fishing trip, Cape Cod, with son Tim(below), India, 2004 with Tim and his fiance Eva(right) backpacking In Sierra Nevada Mountains, Calif. at 10,500 feet,August 2005(left) hiking at9000 feet inCajon de Maipo, Chile, with daughterLiz, Dec. 2003Slide Slide 2005 Christopher Lovelock2005 Christopher LovelockFor Further InformationFor Further Information Email: christopher.lovelock@yale.edu ch@lovelock.com Website: www.lovelock.com Bio Details of books, journal articles, other publications Downloadable conference PPT presentations For details of how to access videos of plenary presentations at ServSIG Service Research Conference, Singapore, June 2005, see ServSIG October 2005 newsletter on www.servsig.org

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