1ChapterChapter

Introduction to ServicesIntroduction to Services

Services (p. 4): ________________________

• include all economic activities whose output is not a physical product or construction, • is generally consumed at the time it is

produced, • provides added value in forms (such as

convenience, amusement, timeliness, comfort, or health) that are essentially intangible

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Examples of Service IndustriesExamples of Service Industries

Health Care hospital, medical practice, dentistry, eye care

Professional Services accounting, legal, architectural

Financial Services banking, investment advising, insurance

Hospitality restaurant, hotel/motel, bed & breakfast ski resort, rafting

Travel airline, travel agency, theme park

Others hair styling, pest control, plumbing, lawn maintenance, counseling

services, health club, interior design

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Figure 1.2

Tangibility SpectrumFigure 1.2

Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Exercise - What are the tangible and intangible components provided by a hotel?

Exercise - What are the tangible and intangible components provided by a hotel?

TANGIBLE Furniture Lighting Cleanliness Carpeting Parking spaces

INTANGIBLE

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Why Services Marketing?(pp. 8-15)

Why Services Marketing?(pp. 8-15)

Better services mean higher profits: Rapid changes in technology Increasing competition More demanding customers

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Perception: Service Stinks! (pp. 12-15)Perception: Service Stinks! (pp. 12-15)

1. Increasing use of self-service and technology-based service – _____________________________

2. Technology-based services hard to implement – failures and poorly designed systems

3. Customer expectations are higher because of excellent service received from some companies – ___________

______________________________________

4. Delivering consistent, high quality service is not easy, but companies promise it

5. etc.

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Paradoxes and Dark Side of Technology and Service (p. 20-21)

Paradoxes and Dark Side of Technology and Service (p. 20-21)

Some customers are not interested or ready to use technology

Employees are often reluctant to accept and integrate technology into their work life

Technology infusion means loss of human contact Payback in technology investments is often uncertain

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Table 1.2

Goods versus ServicesTable 1.2

Goods versus Services

Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing 49 (Fall 1985), pp. 41–50.

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Characteristics of ServicesCompared to Goods

Characteristics of ServicesCompared to Goods

Intangibility

Perishability

SimultaneousProduction

andConsumption

Heterogeneity

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Characteristics of Services Compared to Goods

Characteristics of Services Compared to Goods

Intangibility – services cannot be seen, felt, tasted, or touched in the same manner that you can sense tangible goods

Implications: Services cannot be readily displayed or communicated -

therefore, difficult for consumers to assess

Need to add ___________________________________

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Characteristics of Services Compared to GoodsCharacteristics of Services Compared to Goods

Heterogeneity – no two services will be precisely alike

Implications: Service delivery and customer satisfaction depend on

__________ and _____________ actions Service quality depends on many _____________ factors Need to ___________________ service

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Characteristics of Services Compared to GoodsCharacteristics of Services Compared to Goods

Simultaneous Production and Consumption – most services are sold first, then produced and consumed simultaneously

Implications: ________________ participate in and affect the transaction Customers affect each other _________________ affect the service outcome Mass production is difficult

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Characteristics of Services Compared to GoodsCharacteristics of Services Compared to Goods

Perishability – services cannot be saved, stored, resold, or returned

Implications: It is difficult to _____________ supply and demand with services Services cannot be ________________________

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Traditional Marketing MixTraditional Marketing Mix

All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services: Product Price Place Promotion

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Expanded Mix for Services --The 7 Ps

Expanded Mix for Services --The 7 Ps

Product Price Place Promotion People

All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.

Physical Evidence The environment in which the service is delivered and where the firm and

customer interact, and any tangible components that facilitate performance or communication of the service.

Process The actual procedures, mechanisms, and flow of activities by which the

service is delivered—the service delivery and operating systems.

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Table 1.3

Expanded Marketing Mix for ServicesTable 1.3

Expanded Marketing Mix for Services

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Challenges for ServicesChallenges for Services

Defining and improving 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 resource

efforts Setting prices Finding a balance between standardization versus

personalization Ensuring the delivery of consistent quality