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Module1 Introduction

The document discusses key aspects of services marketing. It notes that services now make up the majority of economic activity globally. Services are intangible and involve performances rather than physical products. They are also heterogeneous, produced and consumed simultaneously, and perishable. The challenges of marketing services relate to their intangibility, quality issues, and matching supply and demand. The 7Ps framework incorporates the traditional 4Ps along with People, Process, and Physical Evidence to account for service characteristics.

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0% found this document useful (0 votes)
23 views

Module1 Introduction

The document discusses key aspects of services marketing. It notes that services now make up the majority of economic activity globally. Services are intangible and involve performances rather than physical products. They are also heterogeneous, produced and consumed simultaneously, and perishable. The challenges of marketing services relate to their intangibility, quality issues, and matching supply and demand. The 7Ps framework incorporates the traditional 4Ps along with People, Process, and Physical Evidence to account for service characteristics.

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Introduction

Ahmad A. Maiyaki, PhD


Dept. of Business Admin. BUK
[email protected]
Introduction
• Services make up the bulk of today's economy,
not only in the United States and Canada
where they account for more than 73% and 67
% of the GDP, respectively, but also in other
nations throughout the world
• This trend is also similar in the developing
countries such as Thailand
Introduction
• The rise in the global significance of services are
associated with dynamic changes in the world
economy, customer expectations and demands, and
the opportunities offered by new technologies.
• The collapse of former centrally planned economies
and/or their replacement with market-based
economies:highly educated middle-class consumers
• Transfer of many manufacturing operations to less
developed countries with reduced labour costs
What is service?
• Is an intangible offering involving deeds,
process and performances provided by one
party for another
• Basically are intangible that can’t be toughed,
seen or felt such as consulting and other
professional services
• Services offered by financial institutions, hotels,
hospital, educational institution are
performance co-produced with consumers
• Services have been defined to include all
economic activities whose output is not a
physical product or construction, is generally
consumed at the time it is produced and
provides value that are essentially intangible.
• Although the process may be tied to a physical
product, the performance is essentially
intangible and does not normally result in
ownership of any tangible product.
• Services are economic activities that create
value and provide benefits for customers at
specific times and places, as a result of
bringing about a desired change in the
recipient’s situation.
Categories of service
• Service industries and companies
– Are industries and coys whose core offering is
service
– This sector dominates the modern economy in
terms of GDP, employment etc
– Example of such industries: financial,
wholesale/retail trades, transportation, education
and professional services, health, government etc
• Service offerings
– This include the variety of service being offered by
the coys in the service sector
– Although intangible in nature but service provide
value to customers and thus willing to pay
– Sometimes even coys in other sectors provide
array of service
• Customer service
– Complementary service provided to support the coy’s
core products
– This takes place on the site during service encounter, after
the transaction using phones or internet
– Call centres’ staff work round the clock to provide
customer service
– is the support you offer your customers both before and
after they buy and use your prodcuts or servives that will
help them have an easy and enjoyable esxperiance with
you
• Derived service
– It has been argued that value derived from
products is actually the service they produced
– E.g. pharmaceutical coys provide medical services,
computer provides information service etc
– This definition provides a broader meaning of
service
Tangibility continuum
• Considering various definition of services,
intangibility stands out as the main feature
• Similarly, it’s the main distinguishing factor
between products and service
• However, it should be noted that very few
pure services and pure products exist
• Instead products tend to be more tangible
than services and vice-versa
Tangibility Spectrum
Salt
l Soft Drinks
l Detergents
l Automobiles
l CosmeticsFast-food
l Outlets
l Intangible
Dominant

Tangible
Dominant l
Fast-food
Outlets l
Advertising
Agencies
l
Airlines l
Investment
Managementl
Consultingl
Teaching
Most Goods Most Services

Easy Difficult
to evaluate to evaluate*
Clothing Restaurant meals Computer repair
Chair Lawn fertilizer Education
Motor vehicle Haircut Legal services
Foods Entertainment Complex surgery

High in search High in experience High in credence


attributes attributes attributes
*NOTE: Difficulty of evaluation tends to decrease with broad exposure Source:
to a service category and frequency of use of a specific supplier Adapted from Zeithaml
Why service marketing
• Service-dominated economies
– As noted earlier many modern economies tend to be
service-based
– Example, the contribution of service to the economy in
terms of GDP and employment more than 80% most
developed economies
– Growth in the global trade of service, while trade of
manufactured product remains in deficit, service trade
posts surplus
– Exportation of services such as knowledge, information and
creativity by both the big and small coys continue to grow
• An edge for competition in manufacturing
• Initially service was thought to be restricted to
coys in the service sector
• But with increased competition and consumer
demand, service is used by manufacturing and IT
coys as competitive tool
• Based on the above, service marketing continue to
flourish
• Service marketing is unique
– Marketing and management of services presented
challenges not faced in mktg of goods
– Service marketers that were formerly engaged in
mktg goods realised that they needed new skills
– So, academics, practitioners and marketers put
head together to develop the field of service mktg
Characteristics of services
• Intangibility
– The most basic differentiating factor between
products and service
– Generally, service can’t be seen, touched, tasted,
felt etc even though certain equipments used to
deliver service can be touched
– So, service is difficult to comprehend and assess
Marketing Challenges
• Can easily be imitated because services
cannot be patented
• Services cannot be readily displayed or
communicated, so quality becomes hard to
assess
• Pricing is difficult
Heterogeneity
• This arises due the fact that services are co-
produced as a result of human interactions
(between and among employees and cust.)
• Just like two different service employees can’t
produce the same service, so also the output
of the same employee fluctuates
• Similarly, different customers perceive the
same service differently
Marketing Challenges
• Service delivery and customer Satisfaction
depend on employee actions
• Service quality depends on many
uncontrollable factors (articulating needs,
other customers)
• There is no sure knowledge that the service
delivered matches what was planned and
promoted
Simultaneous production and consumption

• Services are usually produced and consumed at


the same time
• While for most products they’re produced first,
then sold and consumed; services are sold first
then produced and consumed
• This implies that the consumers frequently interact
with service employee to co-produce the service
• Similarly, consumers not only influence service
delivery but service experience by other cust.
Marketing implication
• Customers participate in and affect the
transaction
• Customers affect each other
• Being part of the service, employees affect the
service outcome
• Mass production is difficult, hence economics
of scale can’t be achieved
Perishability
• Most services can’t be saved, stored for future
use and can’t be returned
• A failed appointment of a medical doctor has
gone forever
• A customer who failed to pay for a room
booked in hotel or airline
Marketing implications
• It is difficult to synchronize supply and
demand with services
• Difficulty in matching demand with supply as
services cannot be inventoried
• What size of plane to use for particular route
• Services cannot be returned or resold and
therefore, making recovery difficult
7Ps of service (4Ps plus 3Ps)

• These include the traditional 4ps of product


marketing in addition to 3ps peculiar to service
• Due to the intangibility of service, customers
often fall back to tangible cues for assessment
• Similarly, the active role played by service
employee makes it part and parcel of the
offering
• Hence the need for more elements in the mix
7ps…
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical Evidence
People
• For being part and parcel of service delivery
humans greatly influence it
• Employees attitudes and behaviours to a large
extent affect the perception of service
• Customers also affect the service delivery
process due to “co-production”
• Customers affect the service experience of
other customers e.g. class rooms etc
Physical Evidence
• This include the environment where the service
interactions take place
• Visible cues that provide tangible evidence of a
firm's service style and quality.
• The appearance of buildings, landscaping,
vehicles, interior furnishing, equipment, staff
members, signs, printed materials etc
• For instance, an umbrella may symbolize
protection, and a fortress, security.
Process
• A particular method of operations or series of
actions, typically involving steps that need to
occur in a defined sequence.
• Consists of procedures, mechanisms and flow
of activities by which the service is delivered
• The less the complicated the service the
better and easier for the customer to assess
the quality
Expanded mix
Expanded mix

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