serv. mkting _01
TRANSCRIPT
-
8/11/2019 Serv. Mkting _01
1/26
The service sector
The services sector has been growing at a rate of 8%per annum in recent years
More than half of our GDP is accounted for from theservices sector
This sector dominates with the best jobs, best talentand best incomes and Services dominate economy in
most nations
-
8/11/2019 Serv. Mkting _01
2/26
Defining Services
In exchange for their money, time, and effort,service customers expect to obtain value from
Access to goods, labor, facilities, environments,professional skills, networks, and systems
But they do not normally take ownership of any of
the physical elements involved
-
8/11/2019 Serv. Mkting _01
3/26
The service sector
Understanding services offers you personalcompetitive advantages
Importance of service sector in economy is growingrapidly: Services account for more than 60 percent of GDP worldwide
Almost all economies have a substantial service sector
Most new employment is provided by services Strongest growth area for marketing
-
8/11/2019 Serv. Mkting _01
4/26
-
8/11/2019 Serv. Mkting _01
5/26
I T I S T H E P A R T O F T H E P R O D U C T O R T H E
F U L L P R O D U C T F O R W H I C H T H E C U S T O M E R
I S W I L L I N G T O S E E V A L U E A N D P A Y F O R I T .
What is services?
-
8/11/2019 Serv. Mkting _01
6/26
What is a service?
It is intangible.
It does not result in ownership.
It may or may not be attached with a physical
product
-
8/11/2019 Serv. Mkting _01
7/26
Difference between physical goods andservices
Physical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution are
separated from consumption
Production, distribution and
consumption are simultaneousprocesses
A thing An activity or process
Core value processed in factory Core value produced in the buyer-seller
interaction
Customers do not participate in the
production process
Customers participate in production
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership
-
8/11/2019 Serv. Mkting _01
8/26
Table 1-2
Services are DifferentGoods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.
Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.
Standardized Hetero eneous Service delivery and customer satisfaction depend on
employee actions.Service quality depends on many uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.
Productionseparate fromconsumption
Simultaneousproduction andconsumption
Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.
Decentralization may be essential.Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing,
Journal of Marketing 49 (Spring 1985): 33-46.
-
8/11/2019 Serv. Mkting _01
9/26
Services could meet
Personal needs haircuts, tuition, beauty parlours
Business needs courier services, office cleaningservices, delivering fresh flowers
-
8/11/2019 Serv. Mkting _01
10/26
Nature /Characteristics of services
Intangibility
Inseparability
Perishability Variability
-
8/11/2019 Serv. Mkting _01
11/26
-
8/11/2019 Serv. Mkting _01
12/26
Services Dominate the U.S. Economy(Fig 1.1)
Services, 68% Agriculture, Forestry, Mining,Fishing, 2.3%
Manufacturing andConstruction,
17.3%
Government, 12.4%(mostly Services)
Source: Bur eau of Econom ic Analysis , Survey of Cu rrent Bus iness, May 2005, Table 1
INSIGHTS
Private sector service industries account for over two-thirds of GDP
Adding government services, total is almost four-fifths of GDP
-
8/11/2019 Serv. Mkting _01
13/26
Estimated Size of Service Sector inSelected Countries (Fig 1.2updated 10/06)
Services as Percent of GDP
Poland (66%), South Africa (65%)
Japan (74%), France (73%), U.K. (73%), Canada (71%)
Saudi Arabia (33%)
China (40%)
India (48%)
Argentina (53%), Brazil (51%)
Panama (80%), USA (79%)
Luxembourg (83%)
Cayman Islands (95%), Jersey (93%)
Bahamas (90%), Bermuda ( 89%)
Mexico (69%), Australia (68%), Germany (68%)
Israel (60%), Russia (58%), S. Korea (56%)
30 40 50 60 70 80 902010
-
8/11/2019 Serv. Mkting _01
14/26
Changing Structure of Employment as EconomicDevelopment Evolves
Industry
Services
Agriculture
Time, per Capita Income Sou rc e: IMF, 1997
-
8/11/2019 Serv. Mkting _01
15/26
Figure 1-1
Tangibility Spectrum
TangibleDominant
Intangible
Dominant
Salt
Soft Dri nks
Detergents
Automobiles
Cosmetics
AdvertisingAgencies
Airlines
I nvestmentManagement
ConsultingTeaching
Fast-foodOutlets
Fast-foodOutlets
-
8/11/2019 Serv. Mkting _01
16/26
Transformation of the Service Economy
Government
Policies
BusinessTrends
SocialChanges
Advances inIT
Globalization
Innovation in service products & delivery systems, stimulated by better technology
Customers have more choices and exercise more power
Success hinges on:
Understanding customers and competitors
Viable business models
Creation of value for customers and firm
New markets and product categories
Increase in demand for services More intense competition
i l i f i f h
-
8/11/2019 Serv. Mkting _01
17/26
Factors Stimulating Transformation of theService Economy (1)
Government
Policies
BusinessTrends
SocialChanges
Advances inIT
Globalization
Changes in regulations
Privatization
New rules to protect customers,employees, and the environment
New agreement on trade in services
S i l i f i f h
-
8/11/2019 Serv. Mkting _01
18/26
Factors Stimulating Transformation of theService Economy (2)
Government
Policies
BusinessTrends
SocialChanges
Advances inIT
Globalization
Rising consumer expectations
More affluence
More people short of time
Increased desire for buying experiencesversus things
Rising consumer ownership of high techequipment
Easier access to information
Immigration
Growing but aging population
F S i l i T f i f h
-
8/11/2019 Serv. Mkting _01
19/26
Factors Stimulating Transformation of theService Economy (3)
Government
Policies
BusinessTrends
SocialChanges
Advances inIT
Globalization
Push to increase shareholder value
Emphasis on productivity and cost savings
Manufacturers add value through service andsell services
More strategic alliances and outsourcing
Focus on quality and customer satisfaction
Growth of franchising
Marketing emphasis by nonprofits
F S i l i T f i f h
-
8/11/2019 Serv. Mkting _01
20/26
Factors Stimulating Transformation of theService Economy (4)
Government
Policies
BusinessTrends
SocialChanges
Advances inIT
Globalization
Growth of the Internet
Greater bandwidth
Compact mobile equipment
Wireless networking
Faster, more powerful software
Digitization of text, graphics, audio, video
F t Sti l ti T f ti f th
-
8/11/2019 Serv. Mkting _01
21/26
Factors Stimulating Transformation of theService Economy (5)
Government
Policies
BusinessTrends
SocialChanges
Advances inIT
Globalization
More companies operating on transnationalbasis
Increased international travel
International mergers and alliances
Offshoringof customer service
Foreign competitors invade domestic markets
-
8/11/2019 Serv. Mkting _01
22/26
Traditional Marketing Mix
All elements within the control of the firmthat communicate the firms capabilities and
image to customers or that influence customersatisfaction with the firms product and services:
Product
Price
Place
Promotion
-
8/11/2019 Serv. Mkting _01
23/26
Expanded Mix for Services --the 7 Ps
Product
Price
Place Promotion
People
ProcessPhysical Evidence
-
8/11/2019 Serv. Mkting _01
24/26
Table 1-3
Expanded Marketing Mix forServices
PRODUCT PLACE PROMOTION PRICE
Ph sical oodfeatures
Channel type Promotionblend
Flexibility
Quality level Exposure Salespeople Price level
Accessories Intermediaries Advertising Terms
Packaging Outlet location Salespromotion
Differentiation
Warranties Trans ortation Publicity Allowances
Product lines Storage
Branding
-
8/11/2019 Serv. Mkting _01
25/26
Table 1-3 (Continued)
Expanded Marketing Mix forServices
PEOPLE PHYSICALEVIDENCE
PROCESS
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicatingculture and values
Signage Level of customer involvement
Employee research Employee dress
Other tangibles
-
8/11/2019 Serv. Mkting _01
26/26
Figure 1-5
The Services Marketing Triangle
Internal
Marketing
I nteractive Marketing
External
Marketing
Company
(Management)
CustomersEmployees
enabling thepromise
delivering the promise
setting thepromise
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler