Copyright © 2007 McGraw-Hill Ryerson Limited., Introduction to Services Chapter 1
Copyright © 2007 McGraw-Hill Ryerson Limited.,
Introduction to Services
Chapter 1
Copyright © 2007 McGraw-Hill Ryerson Limited.,
Introduction to Services CHAPTER
1
• What are services?
• Why services marketing?
• Service and Technology
• Characteristics of Services Compared to Goods
• Services Marketing Mix
• Staying Focused on the Customer
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Objectives for Chapter 1: Introduction to Services
Explain what services are and identify important trends in services.
Explain the need for special services marketing concepts and practices and why the need has developed and is accelerating.
Explore the profound impact of technology on services.
Outline the basic differences between goods and services and the resulting challenges and opportunities for service businesses.
Introduce the expanded marketing mix for services and the philosophy of customer focus as powerful frameworks and themes that are fundamental to the rest of the text.
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Examples 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 and 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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Contributions of Service Industries to Canadian Gross Domestic Product
Contributions of Service Industries to Canadian Gross Domestic Product
FIGURE 1.1
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Four Distinctions in Services
Service industries and companies
Services and products
Customer service
Derived service
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Tangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
Figure 1.2
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Service Sector Contribution to Selected Economies Worldwide
Country Percent of GDP Attributed to Services
Bahamas 90
United States 79
Japan 74
United Kingdom 73
France 73
Canada 71
Sweden 69
Australia 68
Germany 68
Singapore 67
Brazil 51
India 48
China 33Source: The World Factbook 2004, published by the Central Intelligence Agency, www.cia.go/cia/publications/factbook/geos
TABLE 1.1
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Why Study Services Marketing?
Service-based economies
Service as a business imperative in manufacturing and IT
Deregulated industries and professional service needs
Services marketing is different
Service equals profits
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Service and Technology
Potential for new service offerings
New ways to deliver service
Enabling both customers and employees
Extending the global reach of services
The Internet
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Characteristics of Services Compared to Goods
Intangibility
Perishability
SimultaneousProduction
andConsumption
Heterogeneity
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Implications of Intangibility
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or communicated
Pricing is difficult
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Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee and customer actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted
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Implications of Simultaneous Production and Consumption
Customers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
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Implications of Perishability
It is difficult to synchronize supply and demand with services
Services cannot be returned or resold
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Challenges 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
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Traditional 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
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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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WestJet: Aligning People, Processes and Physical Evidence
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Ways to Use the 7 Ps
Overall strategic assessment
How effective is a firm’s services marketing mix?
Is the mix well-aligned with overall vision and strategy?
What are the strengths and weaknesses in terms of the 7 Ps?
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Ways to Use the 7 Ps
Specific service implementation
Who is the customer?
What is the service?
How effectively does the services marketing mix for a service communicate its benefits and quality?
What changes/ improvements are needed?