CH 1 – Introduction to Services
Services are deeds, processes and performances; all economic activities whose output is not a physical
product or construction, is generally consumed at the time it is produced, and provides added value in
forms that are essentially intangible concerns of its first purchaser.
Service Industries, Services as Products, Customer Service, and Derived Service
Service industries and companies include those industries and companies typically classified within the
service sector whose core product is a service. EX: WestJet, Marriott International.
Services as products rep. a wide range of intangible product offerings that customers value and pay for
in the marketplace; they are sold by service companies and by non-service companies such as
manufacturers and technology companies. EX: Chapters- sell services like gift wrapping and shipping
Customer service is the service produced in support of a company’s core products. Typically companies
do not charge for customer service; it can occur on site, over the phone or internet.
Derived service – the value derived from physical goods is really the service provided by the good, not
the good itself.
Services tend to be more intangible than manufactured products, and manufactured products tend to
be more tangible than services. There are very few “pure services/goods”.
Why Services Marketing?
Service industries in Canada account for almost 75% of our country’s output and employment. Trade is
services are growing worldwide and Canada’s share of international share of service trade is increasing.
Service as a Business imperative in Manufacturing and IT
The quick pace of developing technologies and increasing competition make it difficult to gain strategic
competitive advantage through physical products alone, so companies are recognizing the opportunity
to grow and profit through services.
Deregulated Industries and Professional Service Needs
Deregulation means that marketing decisions once made by the government are now partially or totally
controlled by the industry. Professional services are now seeking ways to allow advertising because of
the increasing competition.
Services Marketing Is Different
Skills used in marketing for products were not directly transferable to market for services.
Service equals profits
Research has found that linking internal service and employee satisfaction to customer value and
ultimately to profits. Also, customer satisfaction often driven by service outcomes links to profits.
But “Service Stinks”
Plausible theories to why there is a decline in customer satisfaction with services:
- More tiered service based on the calculated profitability of diff. market segnments, many
customers are in fact getting less service
- Increasing use of self-service, and technology based service (no human
- Technology-based services (failures, automated)
- Customer expectations are higher
- Organizations have to cut costs
- Competitive job market results in less-skilled people working in front-line service jobs
- Companies giving lip service to customer focus and service quality but they fail to provide
training, compensation, and support needed to deliver quality service
- Consistency is not easy, but companies promise it Services can be profitable, and yet overall quality perceptions and customer satisfaction are
Service and Technology
Technology (Info. tech) is currently shaping the field of service marketing and profoundly influencing
the practice of services marketing.
Technology provides opportunities for new service offerings.
New Ways to Deliver Service: Technology is providing new ways to deliver service, more accessible,
convenient, and productive. Technology, specifically the Internet, provides an easy way for
customers to learn and research; access to info has never been easier.
Enabling Both Customers and Employees: technology enables both customers and employees to be
more effective in getting and providing service. (Self-service and customer relationship management
and sales support software)
Extending the Global Reach of Services: The Internet has no boundaries and therefore info,
customer service and transactions can move across counties, reaching any customer who has access
to the Web. It also allows employees of international companies to stay in touch easily—share info,
asking questions and serve on virtual teams together.
The Internet IS a Service: The Internet is one big service; all businesses and organizations that
operate on the Internet are providing services—whether giving info, performing basic customer