intro and ch01

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Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # "

A Framework For Developing EffectiveService Marketing Strategies: Overview

Understanding Customer Needs, Decision Making,and Behavior in Service Encounters

Chapter 2

Building the Service ModelPart II: Chapters 3-7

Managing the Customer Interface

Part III: Chapters 8-11

Implementing Profitale Service Strategies

Part IV: Chapters 12-15



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # 2

Framework for Developing EffectiveService Marketing Strategies: Part I

I! Understanding Customer Needs, Decision Making,and Behavior in Service Encounters

Differences among Services "ffect CustomerBehavior

#hree$Stage Model of Service Consumption

Prepurchase Stage!Search, evaluation ofalternatives, decision

Service Encounter Stage!%ole in high$contact vs&

lo'$contact deliver(

Post$Encounter Stage!Evaluation against

e)pectations, futureintentions

(Chapter 2)



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # $

Chapter 1:

New PerspectivesonMarketing in the

Service Economy



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # %

Overview of Chapter 1

h! St"#! Services$

hat are Services$

%he Marketing Challenges Pose# &! Services'

%he E(pan#e# Marketing Mi( )e*"ire# for Services'

Integration with Other Management F"nctions'



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # &

h! St"#! Services$




h! St"#! Services$ +1,

Services #ominate econom! in most nations

-n#erstan#ing services offers !o" personal competitivea#vantages

Importance of service sector in econom! is growingrapi#l!:

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


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h! St"#! Services$ +.,

Most new /o&s are generate# &! services

astest growth e!pected in knowledge"based industries

Significant training and educational #ualifications re#uired$

but employees will be more highly compensated

%ill service &obs lost to lower"cost countries' (es$ some service &obs

can be e!ported


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Changing Str"ct"re of Emplo!ment asEconomic Development Evolves

Industry

Services

Agriculture

Time, per Capita Income

S hare of

mp!o"ment

So#rce: I$%, 1&&7


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hat Are Services$


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Defining Services

Services Are economic activities offered by one party to another

Most commonly employ time"based performances to bring aboutdesired results in)

) recipients themselves) o&/ects or other assets for which p"rchasers have responsi&ilit!

In e(change for their mone!0 time0 an# effort0 servicec"stomers e(pect to o&tain val"e from

Access to goods$ labor$ facilities$ environments$ professional skills$networks$ and systems

*ut they do not normally take ownership of any of the physicalelements involved


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Service Pro#"cts vers"s C"stomer Servicean# AfterSales Service

A firm2s market offerings are #ivi#e# into core pro#"ctelements an# s"pplementar! service elements

Is ever!one in service$ 3ee# to #isting"ish &etween:

Marketing of services

Marketing goods through added"value service

4oo# service increases the val"e of a core ph!sical goo#

Man"fact"ring firms are reform"lating an# enhancinge(isting a##e#val"e services to market them as stan#alone core pro#"cts



Challenges Pose# &! Services'


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Services Pose DistinctiveMarketing Challenges

Marketing management tasks in the service sector#iffer from those in the man"fact"ring sector

%he eight common #ifferences are:

+, Most service products cannot be inventoried

-, .ntangible elements usually dominate value creation

/, Services are often difficult to visualie and understand

1, 2ustomers may be involved in co"production

3, People may be part of the service e!perience

6, 4perational inputs and outputs tend to vary more widely

5, he time factor often assumes great importance

7, Distribution may take place through nonphysical channels

hat are marketing implications$


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Differences0 Implications0 an#Marketing)elate# %asks +1,' 8able +,+9

Difference

Most serviceproducts

cannot e inventoried

Intangile elements

usuall( dominate

value creation

Services are often

difficult to visuali*eand understand

Customers ma( e

involved in co$

production

Implications

Customers ma( e

turned a'a(

+arder to evaluate

service and distinguish

from competitors

reater risk and

uncertaint( perceived

Interaction et'een

customer and provider-

ut poor task e)ecution

could affect satisfaction

Marketing$%elated #asks

Use pricing, promotion,and

reservations to smoothdemand- 'ork 'ith ops to

manage capacit(

Emphasi*e ph(sical clues,emplo( metaphors and vividimages in advertising

Educate customers on

making good choices- offerguarantees

Develop user$friendl(

e.uipment, facilities, and

s(stems- train customers,

provide good support


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Implications

Behavior of service

personnel and customers

can affect satisfaction

+ard to maintain .ualit(,consistenc(, reliailit(

Difficult to shieldcustomers from failures

#ime is mone(-

customers 'ant serviceat convenient times

Electronic channels or

voice telecommunications

Difference

People ma( e partof

service e)perience

/perational inputsand

outputs tend to var(

more 'idel(

#ime factor oftenassumes great

importance

Distriution ma( take

place through

nonph(sical channels

Marketing$%elated #asks

%ecruit, train emplo(ees to

reinforce service concept

Shape customer ehavior

Institute good servicerecover( procedures

0ind 'a(s to compete onspeed of deliver(- offer

e)tended hours

Create user$friendl(,

secure 'esites and freeaccess ( telephone

Differences0 Implications0 an#Marketing)elate# %asks +.,' 8able +,+9



5al"e A##e# &! Ph!sical0 Intangi&le Elements6elps Disting"ish 4oo#s an# Services 8ig +,69

Ph"sica!!ements

+igh

1o' Intan'i!e !ements +igh

Salt

Detergents

CD Pla(er 2ine

olf ClusNe' Car

#ailored clothing

0ast$0ood %estaurantPluming %epair

+ealth Clu

"irline 0light1andscape Maintenance

Consulting

1ife Insurance

Internet Banking

Source; Adapted from Lynn Shostack



Progressive an# )EI: %wo %!pes ofe&site )eflecting Core Pro#"ct 8ig +,79

*I+s campin' 'ear m#st e e!ierethro#'h ph"sica! channe!s to c#stomersafter the" hae #se the .esite to ma/e

choices, orer, an pa"

0esites can e!ier info-aseserices !i/e Pro'ressie+s carins#rance #t


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E(pan#e# Marketing Mi(for Services'


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Services )e*"ireAn E(pan#e# Marketing Mi(

Marketing can &e viewe# as: A strategic and competitive thrust pursued by top management

A set of functional activities performed by line managers

A customer"driven orientation for the entire organiation

%he 78Ps9 of services marketing are nee#e# to createvia&le strategies for meeting c"stomer nee#s profita&l!in a competitive marketplace


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%he 8Ps of Services Marketing

Product :lements (Chapter 3)

Place and ime (Chapter 4)

Price and 4ther ;ser 4utlays (Chapter 5)

Promotion and :ducation (Chapter 6)

Process +Chapter 8)*

Physical :nvironment (Chapter 10)*

People (Chapter 11)*

Productivity and <uality (Chapter 14)* %i' 1& 0or/in' innison: The 8Ps ofSerices $ar/etin'


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%he 8Ps of Services Marketing:+1, Pro#"ct Elements

Em&race all aspects of service performance thatcreate val"e

Core pro#"ct respon#s to c"stomer2s primar! nee#

Arra! of s"pplementar! service elements =elp customer use core product effectively

Add value through useful enhancements

Planning marketing mi( &egins with creating a service

concept that:

%ill offer value to target customers

Satisfy their needs better than competing alternatives




%he 8Ps of Services Marketing:+., Place an# %ime

Deliver! #ecisions: Where, When, How

4eographic locations serve#

Service sche#"les

Ph!sical channels

Electronic channels

C"stomer control an# convenience

Channel partnersinterme#iaries



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # 2$

%he 8Ps of Services Marketing:+;, Price an# Other -ser O"tla!s

Marketers m"st recogni<e that c"stomer o"tla!sinvolve more than price pai# to seller

%ra#itional pricing tasks:

Selling price$ discounts$ premiums Margins for intermediaries 8if any9 2redit terms

I#entif! an# minimi<e other costs inc"rre# &! "sers:

Additional monetary costs associated with service usage 8e,g,$travel to service location$ parking$ phone$ babysitting$ etc,9

ime e!penditures$ especially waiting ;nwanted mental and physical effort >egative sensory e!periences



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # 2%

%he 8Ps of Services Marketing:+=, Promotion an# E#"cation

Informing0 e#"cating0 pers"a#ing0 remin#ing c"stomers

Marketing comm"nication tools

Media elements 8print$ broadcast$ outdoor$ retail$ the .nternet$ etc,9 Personal selling$ customer service Sales promotion

Publicity?P@

Imager! an# recognition

*randing 2orporate design

Content

.nformation$ advice Persuasive messages 2ustomer education?training



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # 2&

%he 8Ps of Services Marketing:+>, Process

How firm #oes things ma! &e as important as what it #oes

C"stomers often activel! involve# in processes0 especiall!when acting as copro#"cers of service

Process involves choices of metho# an# se*"ence in servicecreation an# #eliver!

Design of activity flows

>umber and se#uence of actions for customers

>ature of customer involvement

@ole of contact personnel

@ole of technology$ degree of automation

?a#l! #esigne# processes waste time0 create poore(periences0 an# #isappoint c"stomers




%he 8Ps of Services Marketing:+@, Ph!sical Environment

Design servicescape an# provi#etangi&le evi#ence of serviceperformances

Create an# maintain ph!sicalappearances

*uildings?landscaping

.nterior design?furnishings

ehicles?e#uipment

Staff grooming?clothing

Sounds and smells

4ther tangibles

Manage ph!sical c"es caref"ll!can have profo"n# impact onc"stomer impressions




%he 8Ps of Services Marketing:+B, People

Interactions &etween c"stomers an# contact personnel strongl!infl"ence c"stomer perceptions of service *"alit!

%he right c"stomercontact emplo!ees performing tasks well

Bob design @ecruiting raining Motivation

%he right c"stomers for firm2s mission

2ontribute positively to e!perience of other customers

PossessCor can be trained to haveC needed skills 8co"production9

2an shape customer roles and manage customer behavior



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # 2'

%he 8Ps of Services Marketing:+8, Pro#"ctivit! an# "alit!'

Pro#"ctivit! an# *"alit! m"st work han# in han#

Improving pro#"ctivit! ke! to re#"cing costs

Improving an# maintaining *"alit! essential for &"il#ingc"stomer satisfaction an# lo!alt!

I#eall!0 strategies sho"l# &e so"ght to improve &othpro#"ctivit! an# *"alit! sim"ltaneo"sl!technolog!often the ke!

echnology"based innovations have potential to create high payoffs

*ut$ must be user friendly and deliver valued customer benefits



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # 2(

Marketing M"st ?e Integrate# withOther Management F"nctions'



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # $0

Three mana'ement f#nctions p!a" centra! an interre!ate ro!es

in meetin' nees of serice c#stomers

Marketing M"st ?e Integrate# withOther Management F"nctions 8ig +,+09

Customers

/perations

Management

Marketing

Management

+uman %esources

Management



Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6! Chapter " # $"

A Framework for Developing

Effective Service Marketing

Strategies 8ig +,++9



Chapter 1 S"mmar!: 3ew Perspectiveson Marketing in the Service Econom!

)easons for st"#!ing services: Service sector dominates economy in most nations$ many new industries Most new &obs created by services Powerful forcesCgovernment policies$ social changes$ business trends$ .

advances$ and globaliationCare transforming service markets

;nderstanding services offers personal competitive advantage

%he service concept an# its #efinition:

Services create benefits without transfer of ownership Most employ time"based performances to bring about desired results in

recipients or in assets for which they have responsibility

2ustomers e!pect value from access to goods$ facilities$ labor$ professionalskills$ environments$ networks systems in return for money$ time$ effort

Services present #istinctive marketing challenges relative to goo#s0re*"iring:

:!panded marketing mi! comprising 7Ps instead of traditional 1Ps .ntegration of marketing function with operations and human resources

intro and ch01

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