marketing services [compatibility mode]

7/28/2019 Marketing Services [Compatibility Mode]

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Services Marketing Chapter 1

Services MarketingServices Marketing

Presented ByPresented ByNeha GuptaNeha Gupta

"Marketing is not an event, but a process... It has abeginning, a middle, but never an end, for it is a process. You

improve it, perfect it, change it, even pause it. But you never

stop it completely."

---- Jay Conrad Levinson.Jay Conrad Levinson.Jay Conrad Levinson.Jay Conrad Levinson.

WHAT IS SERVICEWHAT IS SERVICE

MARKETINGMARKETING

It is the process of researching and promoting to aIt is the process of researching and promoting to a

market with nonphysical goods known as services.market with nonphysical goods known as services.

Introduction to Services

What are services?

Why services marketing?

Service and Technology

Characteristics of Services Compared to Goods

Services Marketing Mix

Staying Focused on the Customer

What are services? Put in the most simple terms services are

deeds, processes and performances.

Services Industries

Services as products

Customer service

Derived service

How Important is the Service Sector inOur Economy?

In most countries, services add more economic value thanagriculture, raw materials and manufacturing combined

In developed economies, employment is dominated byservice jobs and most new job growth comes from services

Jobs range from high-paid professionals and techniciansto minimum-wage positions

Service organizations can be any sizefrom huge globalcorporations to local small businesses

Most activities by government agencies and nonprofitorganizations involve services


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The services sector is remarkably diverse. At one endof the scale are large industries like airlines, banking,

insurance, telecommunication, hospitality, road and rail

transport etc.

At the other end are small businesses like restaurant,healthcare, fitness centers, event management and

other B2B services.

Services dominate the United States Economy:GDP by Industry, 2001

Finance, Insurance,Finance, Insurance,

Real EstateReal Estate20%20%

Wholesale andWholesale and

Retail TradeRetail Trade16%16%

Transport, Utilities,Transport, Utilities,

CommunicationsCommunications8%8%HealthHealth

6%6%

BusinessBusiness

ServicesServices5%5%

Other Services 11%Other Services 11%

GovernmentGovernment

(mostly services)(mostly services)13%13%

Manufacturing 14%Manufacturing 14%

Agriculture, Forestry,Agriculture, Forestry,Mining, Construction 8%Mining, Construction 8%

SERVICESSERVICES

During 2009-10 and 2010-11, automobiles, rubber andplastics, fabricated metal products, machinery and equipmentand radio, TV and communication equipment segments hadwitnessed double digit growth.

The share of services sector in countrys Gross DomesticProduct (GDP) has risen from 50.4 per cent in 2000-01 to59.0% in 2011-12 (advance estimates).

Internal Services

Service elements within an organization that facilitatecreation of--or add value to--its final output

Includes:

accounting and payroll administration

recruitment and training

legal services

transportation

catering and food services

cleaning and landscaping

Increasingly, these services are being outsourced

Major Trends in Service Sector Government Policies (e.g., regulations, trade

agreements)

Social Changes (e.g., affluence, lack of time, desire forexperiences)

Business Trends Manufacturers offer service

Growth of chains and franchising

Pressures to improve productivity and quality

More strategic alliances

Marketing emphasis by nonprofits

Innovative hiring practices

Advances in IT (e.g., speed, digitization, wireless,Internet)

Internationalization (travel, transnational companies)

Some Impacts of Technological

Change Radically alter ways in which service firms do business:

with customers (new services, more convenience)

behind the scenes (reengineering, new value chains)

Create relational databases about customer needs andbehavior, mine databanks for insights

Leverage employee capabilities and enhance mobility

Centralize customer servicefaster and more responsive

Develop national/global delivery systems

Create new, Internet-based business models


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Marketing RelevantMarketing RelevantDifferences Between GoodsDifferences Between Goods

and Servicesand Services

Defining the Essence of a Service

An act or performance offered by one party to

another

An economic activity that does not result inownership

A process that creates benefits by facilitating adesired change in:

customers themselves

physical possessions

intangible assets

Distinguishing Characteristics ofServices

Customers do not obtain ownership of services

Service products are ephemeral and cannot be inventoried

Intangible elements dominate value creation

Greater involvement of customers in production process

Other people may form part of product experience

Greater variability in operational inputs and outputs

Many services are difficult for customers to evaluate

Time factor is more important--speed may be key

Delivery systems include electronic and physical channels

Marketing Implications - 1

No ownership

Customers obtain temporary rentals, hiring of personnel, or access to

facilities and systems

Pricing often based on time

Customer choice criteria may differ for renting vs. purchase--may includeconvenience, quality of personnel

Cant own people (no slavery!) but can hire expertise and labor

Services cannot be inventoried after production

Service performances are ephemeraltransitory, perishableException: some information-based output can be recorded

in electronic/printed form and re-used many times

Balancing demand and supply may be vital marketing strategy

Key to profits: target right segments a t right times at right price

Need to determine whether benefitsare perishable or durable


Customers may be involved in production process

Customer involvement includes self-service and cooperation withservice personnel

Think of customers in these settings as partial employees

Customer behavior and competence can help or hinder productivity,so marketers need to educate/train customers

Changing the delivery process may affect role played by customers

Design service facilities, equipment, and systems with customers inmind: user-friendly, convenient locations/schedules


Intangible elements dominate value creation

Understand value added by labor and expertise of personnel

Effective HR management is critical to achieve service quality

Make highly intangible services more concrete by creating andcommunicating physical images or metaphors and tangible c lues


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Value Added by Tangible vsIntangibleElements in Goods and Services

Fast food restaurantFast food restaurantPlumbing repairPlumbing repair

Office cleaningOffice cleaning

Health clubHealth club

Airline flightAirline flight

Retail bankingRetail banking

InsuranceInsurance

Weather forecastWeather forecast

SaltSalt

Soft drinksSoft drinks

CD PlayerCD PlayerGolf clubsGolf clubs

New carNew carTailored clothingTailored clothing

Furniture rentalFurniture rental

LoLo HiHi

HiHi

Intangible ElementsIntangible Elements

Marketing Implications - 4 Other people are often part of the service product

Achieve competitive edge through perceived quality of employees Ensure job specs and standards for frontline service personnel reflect

both marketing and operational criteria

Recognize that appearance and behavior of other customers caninfluence service experience positively or negatively

Avoid inappropriate mix of customer segments at same time

Manage customer behavior (the customer is notalways right!)

Greater variability in operational inputs and outputs

Must work hard to control quality and achieve consistency

Seek to improve productivity through standardization, and by trainingboth employees and customers

Need to have effective service recovery policies in place because it is

more difficult to shield customers from service failures


Often difficult for customers to evaluate services Educate customers to help them make good choices, avoid risk Tell customers what to expect, what to look for Create trusted brand with reputation for considerate, ethical behavior Encourage positive word-of-mouth from satisfied customers

Time factor assumes great importance Offer convenience of extended service hours up to 24/7 Understand customers time constraints and priorities Minimize waiting time

Look for ways to compete on speed Distribution channels take different forms

Tangible activities must be delivered through physical channels Use electronic channels to deliver intangible, information-based

elements instantly and expand geographic reach

Important Differences ExistImportant Differences Existamong Servicesamong Services

Four Categories of Services

Employing Different Underlying Processes

People ProcessingPeople Processing Possession ProcessingPossession Processing

Mental StimulusMental Stimulus

ProcessingProcessing

Information ProcessingInformation Processing(directed at intangible assets)(directed at intangible assets)

e.g., airlines, hospitals,e.g., airlines, hospitals,haircutting, restaurants hotels,haircutting, restaurants hotels,

fitness centersfitness centers

e.g., freight, repair,e.g., freight, repair,

cleaning, landscaping,cleaning, landscaping,retailing, recyclingretailing, recycling

e.g., broadcasting, consulting,e.g., broadcasting, consulting,education, psychotherapyeducation, psychotherapy

e.g., accounting, banking,e.g., accounting, banking,insurance, legal, researchinsurance, legal, research

TANGIBLETANGIBLEACTSACTS

INTANGIBLEINTANGIBLE

ACTSACTS

DIRECTED AT PEOPLEDIRECTED AT PEOPLE DIRECTED AT POSSESSIONSDIRECTED AT POSSESSIONS

What is theWhat is theNature of theNature of theService Act?Service Act?

Who or What is the Direct Recipient of the Service?Who or What is the Direct Recipient of the Service?

The ServicesThe Services

Marketing MixMarketing Mix


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Elements of The Services Marketing Mix:7Ps vs. the Traditional 4Ps

Rethinking the original 4Ps

Product elements

Place and time

Promotion and education

Price and other user outlays

Adding Three New Elements

Physical environment

Process

People

The 7Ps:(1) Product Elements

All Aspects of Service Performance that Create Value

Core product featuresboth tangible and intangibleelements

Bundle of supplementary service elements

Performance levels relative to competition

Benefits delivered to customers (customers dont buy ahotel room, they buy a good nights sleep)

Guarantees

The 7Ps:(2) Place and TimeDelivery Decisions: Where, When, and How

Geographic locations served

Service schedules

Physical channels

Electronic channels

Customer control and convenience

Channel partners/intermediaries

The 7Ps:(3) Promotion and Education

Informing, Educating, Persuading, and Reminding Customers Marketing communication tools

media elements (print, broadcast, outdoor, retail, Internet, etc.)

personal selling, customer service

sales promotion

publicity/PR

Imagery and recognition

branding

corporate design

Content

information, advice

persuasive messages

customer education/training

The 7Ps:(4) Price and Other User Outlays

Marketers Must Recognize that Customer Outlays Involve

More than the Price Paid to Seller

Traditional Pricing Tasks

Selling price, discounts, premiums

Margins for intermediaries (if any)

Credit terms

Identify and Minimize Other Costs Incurred by Users

Additional monetary costs associated with service usage (e.g., travel to service location,parking, phone, babysitting,etc.)

Time expenditures, especially waiting

Unwanted mental and physical effort

Negative sensory experiences

The 7Ps:(5) Physical Environment

Designing the Servicescape and providing tangibleevidence of service performances

Create and maintaining physical appearances

buildings/landscaping

interior design/furnishings

vehicles/equipment

staff grooming/clothing

sounds and smells

other tangibles

Select tangible metaphors for use in marketingcommunications


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7Ps:(6) ProcessMethod and Sequence in Service Creation and Delivery

Design of activity flows

Number and sequence of actions for customers

Providers of value chain components

Nature of customer involvement

Role of contact personnel

Role of technology, degree of automation

The 7Ps:(7) People

Managing the Human Side of the Enterprise

The right customer-contact employees performing tasks well

job design

recruiting/selection

training

motivation

evaluation/rewards

empowerment/teamwork

The right customers for the firms mission

fit well with product/processes/corporate goals

appreciate benefits and value offered

possess (or can be educated to have) needed skills (co-production)

firm is able to manage customer behavior

Managing the 7Ps Requires Collaborationbetween Marketing, Operations, and HRFunctions

CustomersCustomers

OperationsOperations

ManagementManagementMarketingMarketing

ManagementManagement

Human ResourcesHuman ResourcesManagementManagement

Comparing Goods and Services

Examples of Service Industries

Health Carehospital, medical practice, dentistry, eye care

Professional Servicesaccounting, legal, architectural

Financial Servicesbanking, investment advising, insurance

Hospitality

restaurant, hotel, bed & breakfastresort, rafting

Travelairline, travel agency, theme park

Othershair styling, pest control, plumbing, lawn maintenance, counseling

services, health club, interior design

Why do firms focus on Services?

Services can provide higher profit margins and growthpotential than products

Customer satisfaction and loyalty are driven by serviceexcellence

Services can be used as a differentiation strategy in

competitive markets


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What is Service? The New View

Service includes every interaction between any customerand anyone representing the company, including:

Dealers

Salespeople

Receptionistsand

Schedulers

Managementand Executives

ServiceEmployees

Billing andAccountingPersonnel

Web site andany e-channel

Interaction

Customer

Service Can Mean all of These

Service as a product

Customer service

Services as valueadd for goods

Service embedded ina tangible product

Characteristics of ServicesCompared to Goods

Intangibility

Perishability

SimultaneousProduction

andConsumption

Heterogeneity

Examples of Goods Companies that areExpanding into Services

Boeing Kodak

Challenges for Services

Defining and improving quality

Ensuring the delivery of consistent 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 resourceefforts

Setting prices

Finding a balance between standardization versuscustomization

Gaps Model of Service Quality

Company perceptions of

consumer expectations

PerceivedPerceived

serviceservice

ExpectedExpected

sevicesevice

External communicationsExternal communicationsto customersto customers

CustomerCustomer--driven service designsdriven service designs

and standardsand standards

Service deliveryService delivery

Gap 4Gap 4

CustomerCustomer

gapgap

Gap 2Gap 2

Gap 3Gap 3

CustomerCustomer

CompanyCompany

gap 1gap 1


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CompanyCompany

External MarketingExternal MarketingMakingMaking

promisespromises

Internal MarketingInternal MarketingEnablingEnablingpromisespromises

Interactive MarketingInteractive MarketingKeeping promisesKeeping promises

ProvidersProviders CustomersCustomers

The Services Marketing TriangleThe Services Marketing Triangle

The company, customers and the providers. Company-( can be also SBU ,or Dept or management)

Providers ( can be firms employees, subcontractors, or outsourced entitieswho actually deliver the companys services)

External marketing efforts Efforts the firm engages in to setup its customers expectation and makes

promises to customers regarding what is to be d elivered.

Interactive marketing Keeping promises. Here is where the promises are kept or bro ken by the firms

employees , subcontractors, or agents.

Internal marketing Activities firm engages in to aid the providers in their ability to d eliver on the

service: recruiting, training, motivating, rewarding and providing equipmentand technology.

The Services Marketing TriangleThe Services Marketing Triangle

Thank YouThank You

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