Introducing ServicesMKT 412 – Services Marketing

Services as part of GDP

Series1

0 10 20 30 40 50 60 70 80

38

52.3

48

77

42

53.7

56.5Sri LankaPakistanNepalMaldivesIndiaBangladeshAfghanistan

Bowen & Ford‘it seems reasonable to expect that there are differences between managing an organization that produces something that can be seen, touched and held and managing an organization that produces something that is perceived, sensed and experienced’

Rathmell

A good is a thing

It is an object, an article, a device or a material

A service is an act

It is a deed, a performance, or an effort

What is a Service?You don’t own the hotel

room in which you stayed the night before

You don’t get to bring Bono home from his concert

There is no transfer of ownership

What have you got to show for your money, time and effort involved?

Where is the value?

LovelockServices involve a form of rentalCustomers obtain benefits by “renting”

the right to ◦use a physical object◦To hire the labor and expertise of

personnel◦To pay for access to facilities and networks

Value is created when customers benefit from obtaining desired experiences and solutions.

Definition: ServicesServices are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility.

In exchange for their money, time and effort, service customers expect to obtain value from access to goods, labor, professional skills, facilities, networks and systems; but they do not normally take ownership of any of the physical elements involved.

5 Categories of Services Rented goods services - enables customers to

obtain the temporary right to exclusive use of a physical good that they prefer not to own.

5 Categories of ServicesDefined space and place rentals –

customers obtain use of a defined portion of a larger space in a building, vehicle or other area, sharing its use with other customers under varying levels of privacy.

5 Categories of ServicesLabor and expertise rentals –

customers hire other people to perform work that they either choose not to do for themselves or are unable to do because they lack the necessary expertise, tools or skills.

5 Categories of ServicesAccess to shared physical

environments – it may take place either indoors or outdoors, or a combination of both.

5 Categories of ServicesSystems and networks: access and

usage – customers rent the right to participate in a specified network such as telecommunications, utilities, banking, insurance or specialized information services.

Goods-Service Continuum

SaltDog Food

HouseCar

SuitFood

FastTV

AirlinesTheatre

NursingTeaching

Characteristics of ServicesIntangibility

Inseparability (simultaneous production & consumption)

Variability (heterogeneity)

Perishability

Differences: Products & Services

Most services cannot be inventoriedIntangible elements usually dominate

value creationServices are often difficult to visualize

and understandCustomers may be involved in co-

production

Differences: Products & Services

People may be part of the service experience

Operational inputs and outputs tend to vary more widely

The time factor often assumes great importance

Distribution may take place through non-physical channels

The 4Ps of Marketing

Extended Marketing Mix

Physical Env

Process

Productivity &

QualityPeople

PriceProduct

PromotionPlace

ProcessHow a firm does things – the

underlying processes – is often as important as what it does, particularly if the product is a rather mundane one offered by many competitors.

Example: Think about depositing a cheque in HSBC, and another in Janata Bank.

PeopleMost services will always require

direct interaction between customers and contact personnel. The nature of these interactions strongly influences how customers perceive service quality.

Physical EnvironmentThe appearance and interior designs

of buildings, landscaping, vehicles, interior furnishing, equipment, staff members’ uniforms, signs, printed materials, and other visible cues all provide tangible evidence of a firm’s service quality.

Productivity and QualityThey are flips sides of a coin – often one

comes at the cost of another. Striking a proper balance between the two is very important.◦ Improving productivity by causing

inappropriate cuts in service is undesirable.◦ Similarly, in trying to improve quality, if we

make it too expensive for the customers, we shall lose business.