Class Notes (1,100,000)
CA (620,000)
UOttawa (30,000)
ADM (3,000)
Lecture 2

ADM3322 Lecture 2: Chapter 1 Introduction to Services Marketing


Department
Administration
Course Code
ADM 3322
Professor
Marzena Cedzynski
Lecture
2

This preview shows pages 1-3. to view the full 30 pages of the document.
In#developed#countries#services#dominate#the#landscape.#Other#sectors#of#business#will#stimulate#the#
services#sector.
!"!#$%&#'()*&#'+,-./+'0
Services#account#for#more#than#60%#of#GDP#worldwide
Almost#all#economies#have#a#substantial#service#sector
Most#new#employment is#provided#by#services#
Strongest#growth#area#for#marketing
Services#dominate#most#economies#and#are#growing#rapidly:
Understanding#services#offers#you#a#personal#competitive#advantage
Gateway#to#China
!
Port
!
Hub#of#financial#
!
%12BC12B#
Tourism#industry#
!
D@E@F@9
Oil
!
'@7=5#G4@65@#
Developing#country#
!
'173E#H14:@
+935F@3:=#'5I:#18#':4;5<:#':<314#52#9:?:<3:=#<172345:9
!"J#AK$+,L)M#LK,/+'#G,+#(,GN'LK,O.N>#'+,-./+#OG,H+('
You#need#to#know#your#environment
You#need#to#watch#and#observe#you#environment#
You#are#one#player#in#a#large#environment#of#players#
Involves#us#and#other#players#
!
In#our#micro#analysis#we#analyze#ourselves,#our#company#
!
Customer#is#always#at#the#centre#of#any#marketing#analysis#
One#of#the#value#of#marketing#is#marketing#entails#exchange,#the#exchange#
b/w#the#company#and#the#customer#
Controllable#marketing#mix#element,#to#create#this#value,#to#be#able#to#trade#
and#engage#with#customers
We#have#to#analyse#our#customer#
!
Micro#environment,#company,#us,#customers.
!
MicroQenvironment#
Surrounded#by#macroQenvironment#
!
We're#all#affected#by#changing#cultural#factor#
!
Culture#
Changing#demographic#factor#
!
Demographic
Social
Technology
Economy
Politics#
/*#'(+A
!
MacroQenvironment
When#there#is#demand#for#something#companies#can#make#money.
Big#companies#are#switching#to#providing#services
They#know#to#be#competitive#they#have#to#improve#and#develop#new#services
When#competition#is#intense#individual#companies#offering#services#have#to#offer#
bunch#of#supplementary#services#
!
Competition#is#intense#in#new#services#
We#have#to#figure#out#what#our#money#is#going#to#be,#creation#value.
How#you#are#going#to#please#your#customer#and#what#kind#of#value#are#you#going#to#
create.#
We#have#to#learn#how#to#manage#and#learn#services#
L14<:9#34@29814F52B#3E:#9:4;5<:#:<121FP
Our#expectations#will#affect#social#changes
!
Companies#constantly#try#to#please#us#but#there#are#limits#with#what#they#try#to#do#
to#us#with#the#latest#technology#
!
These#days#companies#try#to#think#of#bottom#line
!
They#try#to#offer#high#quality#but#they#have#to#think#about#expenses
!
The#manufacturing#sector#moved#to#developing#countries#
!
Companies#like#profit#and#in#order#to#make#more#profit#they#have#to#think#of#
running#a#lean#operation
!
It#is#essential#to#have#a#webpage#for#companies.
!
Its#customized#so#you#have#designed#services#towards#that#
Software#Qyou#have#businesses#around#software
!
Generally#what#is#going#on#in#the#global#arena
!
Everything#becomes#global
!
What#kind#of#consequences#it#may#have#with#services#in#a#given#country
!
Offshoring#many#services#
!
Marketing#tasks#for#services#differ#from#those#involved#in#selling#goods#and#transferring#
ownership.
Services#involve#a#form#of#4:23@?,#offering#6:2:8539 without#transfer#of#1Q2:49E5R
E.g.#plumber
!
M@614#and#:SR:4359: rentals
E.g.#wedding#dress
!
Car#rental
!
Renting#objects
!
Rental#B11=9 services#
E.g.#renting#storage#space#
!
Designated#space
!
Defined#9R@<: and#R?@<: rentals
We#can#rent#access#to#some#physical#environments#
!
E.g.#amusement#park
!
Access#to#shared REP95<@?#:2;5412F:239
E.g.#bank
!
Going#to#banking#system,#using#their#network#services#
!
Access#to#and#usage#of#9P93:F9 and#2:3Q14C9
Five#broad#<@3:B145:9 within#212T1Q2:49E5R 84@F:Q14C of#which#two#or#more#may#be#
combined.#
Are#:<121F5<#@<35;535:9#offered#by#one#party#to#another
Most#commonly#employ#35F:T6@9:=#R4:8:4:2<:9 to#bring#about#desired#results#
Services##
Access#to#B11=9U#?@614U#8@<5?535:9U#:2;5412F:239,#professional#9C5??9,#2:3Q14C9#@2=#
9P93:F9;
Normally#=1#213#3@C:#1Q2:49E5R of#any#of#the#physical#elements#involved.#
In#exchange#for#their#F12:PU#35F:#@2=#:88143,#service#customers#expect#to#obtain#;@?7:
from
*:85253512#18#':4;5<:9
People#processing#
Possession#processing
Mental#stimulus#processing
Information#processing#
Based#on#differences#in#2@374:#18#9:4;5<: act#(tangible/intangible)#and#who#or#what#is#=54:<3#
4:<5R5:23#18#9:4;5<: (people/possessions),#there#are#four#categories#of#services:
When#you#are#on#the#bus#you#are#being#processed#
Your#possession#is#being#processed#when#it#comes#to#this#type#of#services
Physically#enter#the#service#factory
CoQoperate#actively#with#the#service#operation
Customers#must:
Time,#mental,#physical#effort
!
To#identify#benefits#created#and#nonQfinancial#costs:
Managers#should#think#about#process#and#output#from#customer's#perspective
A:1R?:#R41<:9952B
Laundry#and#dry#cleaning
Repair#maintenance##
Involvement#may#be#limited#to#just#dropping#off#the#possession
Customers#are#?:99#52;1?;:= compared#to#people#processing#services
One#of#the#main#characteristics#on#services#is#that#production#and#
consumption#takes#place#simultaneously
It#is#not#applicable#to#all#services#that#utilize#possession#processing#
Production#and#consumption#are#separable#
A199:99512#R41<:9952B
Your#mind#is#being#processed#not#your#physical#body
Processes#that#involve#a#form#of#manipulation#will#fall#into#this#category#
Providing#services#online#or#remotely#
Use#of#data,#data#can#be#delivered#without#a#particular#location
+3E5<@?#93@2=@4=9 required#when#customers#who#depend#on#such#services#can#
potentially#be#manipulated#by#suppliers.
AEP95<@?#R4:9:2<:#18#4:<5R5:239#213#4:V754:=
NonQperishable#
!
Can#be#"inventoried"#
Core#content#of#services#is#52814F@3512T6@9:=
O:23@?#935F7?79#
Services#that#create#intangible#assets#
Data#is#being#processed#
Information#is#3E:#F193#523@2B56?: form#of#service#output.
E.g.#bank#statement
Information#booklet#
May#be#34@29814F:=#5231#F14:#R:4F@2:23#814F9#of#services#output
Line#between#information#processing#and#mental#stimulus#processing#may#be#
blurred.#
.2814F@3512#R41<:9952B#
!"W#LK),#D,KG*#/G(+>K,.+'#KL#'+,-./+'#
!"X#/%GMM+N>+'#AK'+*#D&#'+,-./+'
Marketing#management#tasks#in#the#service#sector#differ#from#those#in#the#manufacturing#
sector.
Most#service#products#cannot#be#inventoried
Intangible elements#usually#dominate#value#creation
Services#are#often#difficult#to#visualize#and#understand
Customers#may#be#involved#in#coQproduction
People#may#be#part#of#the#service#experience
Operational#inputs#and#outputs#tend#to#vary more#widely
The#time#factor#often#assumes#great#importance
Distribution#may#take#place#through#nonphysical#channels
The#eight#common#differences#are:
':4;5<:9#A193#*59352<35;:#O@4C:352B#/E@??:2B:9#
Intangible##
Inseparable#
.%.A for#services
If#services#cannot#be#inventoried#they#are#perishable#
You#may#have#all# the#capacity#to#produce#services#e.g.#,#human#capacity,#
facilities,#etc.#
If#customers#do#not#come#all#these#facilities#are#going#to#go#to#waste#because#
you#cannot#produce#things#so#they#are#going#to#be#used#eventually
Whatever#you#do#at#this#moment#perish#
We#have#to#constantly#manage#capacity#and#demand#side#of#the#services#
Most#service#products#cannot#be#inventoried
Services#can#be#physically#intangible#
Intangible elements#usually#dominate#value#creation
Creating#visual#cues
Metaphors#explaining#what#the#services#able#
Mentally#intangible
Some#services#are#very#difficult#to#comprehend#what#they#are#about#if#you've#
never#been#such#a#service#before
Such#a#problem#creates#uncertainty,#it’s#a#perception#of#risk#
Services#are#often#difficult#to#visualize#&#understand
Service#is#inseparable#from#service#providers#
Customers#may#be#involved#in#coQProduction
People#may#be#part#of#service#experience
Operational#inputs#and#outputs#tend#to#vary#more#widely
Time#factor#often#assumes#great#importance
If#you#produce#goods#you#need#to#have#physical#channels#to#deliver#them#to#
customers
Distribution#may#take#place#through#nonphysical#channels
*588:4:2<:
Customers#may#be#turned#away
Harder#to#evaluate#services#and#distinguish#from#competitors#
Greater#risk#&#uncertainty#perceived#
Interaction#between#customer#and#provider;#but#poor#task#execution#could#affect#
satisfaction.
Behaviour#of#service#personnel#&#customers#can#affect#satisfaction
Hard#to#maintain#quality,#consistency,#reliability#
Difficult#to#shield#customers#from#failures
Time#is#money;#customers#what#service#at#convenient#times
Electronic#channels#or#voice#telecommunications
.FR?5<@35129
Use#pricing,#promotion,#reservations#to#smooth#demand;#work#with#ops#to#manage#
capacity
Emphasize#physical#clues,#employ#metaphors#and#vivid#images#in#advertising
Educate#customers#on#making#good#choices;#offer#guarantees#
Develop#userQfriendly#equipment,#facilities#&#systems;#train#customers,#provide#
good#support.
Recruit,#train#employees#to#reinforce#service#concept
Shape#customer#behaviour
Redesign#for#simplicity#and#failure#proofing
Institute#good#service#recovery#procedures#
Find#ways#to#compete#on#speed#of#delivery;#offer#extended#hours
Create#userQfriendly,#secure#website#and#free#access#by#telephone#
O@4C:352BT,:?@3:=#(@9C9#
*588:4:2<:9U#.FR?5<@35129U#@2=#O@4C:352B#,:?@3:=#(@9C9#
G==:=#6P#AEP95<@?#.23@2B56?:#+?:F:239#%:?R9#*59352B759E#>11=9#@2=#':4;5<:9
Half#of#value#comes#from#tangible#elements#and#other#half#comes#from#intangible#
elements#
Left#Q>#value#from#tangible#elements
Right#Q>#intangible#elements#
It#is#accompanied#by#very#few#tangible#elements
Internet#banking#
!"Y#(%+#Z#A9#KL#'+,-./+'#OG,H+(N>#[NK(#.N#+\GO#T9:R@4@3:#<E@R3:49]
GRR?P52B#3E:#W#A9#18#O@4C:352B#31#':4;5<:9
Service#products are#at#the#heart#of#services#marketing#strategy
Marketing#mix#begins#with#creating#service#concept that#offers#value
Core#products#meet#primary#needs
Supplementary#elements#are#valueQadded#enhancements
Service#product#consists#of#core and#supplementary elements
Product#elements
Service#distribution can#take#place#through#physical and#nonQphysicalchannels
Some#firms#can#use#electronic#channels#to#deliver#all (or#at#least#some)#of#their#service#elements
InformationQbased#core#services can#be#delivered#almost#instantaneously#electronically
Delivery#Decisions:#Where,#When,#How
Time is#of#great#importance#as#customers#are#physically#present
Convenience#of#place#and#time become#important#determinants#of#effective#service#delivery
Place#and#time
From#the#firm’s#perspective,#pricing#generates#income and#creates#profits
From#the#customer’s#perspective,#pricing#is#key#part#of#costs#to#obtained#wanted#benefits
Marketers#must#recognize#that#customer#costs involve#more#than#price#paid#to#seller
Additional#monetary#costs#associated#with#service#usage#(e.g.,#travel#to#service#location,#
parking,#phone,#babysitting,#etc.)
NonQmonetary#costs#incurred#by#users:
Time expenditures,#especially#waiting#
Unwanted#mental#and#physical#effort
Negative#sensory#experiences
Price#and#other#user#outlays
Revenue#management#is#an#important#part#of#pricing
Provide#information#and#advice
Persuades the#target#customers#of#merit#of#service#product#or#brand
Encourages customer#to#take#action at#specific#time
Plays#three#vital#roles:
Teach#customer how#to#move#effectively#through#the#service#process
Shape#customers’#roles and#manage#their#behavior
Customers#may#be#involved#in#coQproduction#so:
Promotion#and#Education
+S3:2=:=#O5S#814#O@2@B52B#3E:#/7931F:4#.23:48@<:
How firm#does#things#may#be#as#important#as#what it#does
Customers often#actively#involved#in#processes,#especially#when#acting#as#coQproducers of#
service
Operational#inputs#and#outputs#vary more#widely
Demand#and#capacity need#to#be#balanced
Process
Design#servicescape and#provide#tangible#evidence of#service#performances
Manage#physical#cues carefullycan#have#profound#impact#on#customer#impressions
Buildings/landscaping
Interior#design/furnishings
Vehicles/equipment
Staff#grooming/clothing
Sounds#and#smells
Other#tangibles#
Create#and#maintain#physical#appearances
Physical#environment
Interactions between#customers#and#contact#personnel#strongly#influence#customer#
perceptions#of#service#quality
WellQmanaged#firms#devote#special#care#to#selecting,#training#and#motivating#service#employees
Other#customers can#also#affect#one’s#satisfaction#with#a#service
People
Service#sector#dominates#economy#in#most#nations
Powerful#forcesgovernment#policies,#social#changes,#business#trends,#IT#advances,#and#
globalizationare#transforming#service#markets
Reasons#for#studying#services
Services#offer#benefits#without#transfer#of#ownership
Customers#expect#value#from#access#to#goods,#facilities,#labor,#professional#skills,#
environments,#networks#&#systems#in#return#for#money,#time,#effort
Four#broad#categories#of#services#people#processing,#possession#processing,#mental#
stimulus#processing#and#information#processing
The#service#concept#and#its#definition:
Expanded#marketing#mix#comprising#7Ps#instead#of#traditional#4Ps
Services#present#distinctive#marketing#challenges#relative#to#goods,#requiring:
Understanding#service#products,#consumers#&#markets
Applying#the#4#Ps#of#marketing#to#services
Designing#and#managing#the#customer#interface
Developing#customer#relationships
Striving#for#service#excellence
Framework#for#developing#effective#services#marketing#strategies:
/%GA(+,#!#')OOG,&^#.N(,K*)/(.KN#(K#'+,-./+'#OG,H+(.N>
Lecture'2')Chapter'1'Introduction'to'Services'Marketing
Tuesday,# September# 15,#2015
3:05#AM

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

In#developed#countries#services#dominate#the#landscape.#Other#sectors#of#business#will#stimulate#the#
services#sector.
!"!#$%&#'()*&#'+,-./+'0
Services#account#for#more#than#60%#of#GDP#worldwide
Almost#all#economies#have#a#substantial#service#sector
Most#new#employment is#provided#by#services#
Strongest#growth#area#for#marketing
Services#dominate#most#economies#and#are#growing#rapidly:
Understanding#services#offers#you#a#personal#competitive#advantage
/12345673512#18#9:4;5<:9#52=79345:9#31#>?16@?#>*A
Gateway#to#China
!
Port
!
Hub#of#financial#
!
%12BC12B#
Tourism#industry#
!
D@E@F@9
Oil
!
'@7=5#G4@65@#
Developing#country#
!
'173E#H14:@
+935F@3:=#'5I:#18#':4;5<:#':<314#52#9:?:<3:=#<172345:9
!"J#AK$+,L)M#LK,/+'#G,+#(,GN'LK,O.N>#'+,-./+#OG,H+('
You#need#to#know#your#environment
You#need#to#watch#and#observe#you#environment#
You#are#one#player#in#a#large#environment#of#players#
Involves#us#and#other#players#
!
In#our#micro#analysis#we#analyze#ourselves,#our#company#
!
Customer#is#always#at#the#centre#of#any#marketing#analysis#
One#of#the#value#of#marketing#is#marketing#entails#exchange,#the#exchange#
b/w#the#company#and#the#customer#
Controllable#marketing#mix#element,#to#create#this#value,#to#be#able#to#trade#
and#engage#with#customers
We#have#to#analyse#our#customer#
!
Micro#environment,#company,#us,#customers.
!
MicroQenvironment#
Surrounded#by#macroQenvironment#
!
We're#all#affected#by#changing#cultural#factor#
!
Culture#
Changing#demographic#factor#
!
Demographic
Social
Technology
Economy
Politics#
/*#'(+A
!
MacroQenvironment
When#there#is#demand#for#something#companies#can#make#money.
Big#companies#are#switching#to#providing#services
They#know#to#be#competitive#they#have#to#improve#and#develop#new#services
When#competition#is#intense#individual#companies#offering#services#have#to#offer#
bunch#of#supplementary#services#
!
Competition#is#intense#in#new#services#
We#have#to#figure#out#what#our#money#is#going#to#be,#creation#value.
How#you#are#going#to#please#your#customer#and#what#kind#of#value#are#you#going#to#
create.#
We#have#to#learn#how#to#manage#and#learn#services#
L14<:9#34@29814F52B#3E:#9:4;5<:#:<121FP
Our#expectations#will#affect#social#changes
!
Companies#constantly#try#to#please#us#but#there#are#limits#with#what#they#try#to#do#
to#us#with#the#latest#technology#
!
These#days#companies#try#to#think#of#bottom#line
!
They#try#to#offer#high#quality#but#they#have#to#think#about#expenses
!
The#manufacturing#sector#moved#to#developing#countries#
!
Companies#like#profit#and#in#order#to#make#more#profit#they#have#to#think#of#
running#a#lean#operation
!
It#is#essential#to#have#a#webpage#for#companies.
!
Its#customized#so#you#have#designed#services#towards#that#
Software#Qyou#have#businesses#around#software
!
Generally#what#is#going#on#in#the#global#arena
!
Everything#becomes#global
!
What#kind#of#consequences#it#may#have#with#services#in#a#given#country
!
Offshoring#many#services#
!
Marketing#tasks#for#services#differ#from#those#involved#in#selling#goods#and#transferring#
ownership.
Services#involve#a#form#of#4:23@?,#offering#6:2:8539 without#transfer#of#1Q2:49E5R
E.g.#plumber
!
M@614#and#:SR:4359: rentals
E.g.#wedding#dress
!
Car#rental
!
Renting#objects
!
Rental#B11=9 services#
E.g.#renting#storage#space#
!
Designated#space
!
Defined#9R@<: and#R?@<: rentals
We#can#rent#access#to#some#physical#environments#
!
E.g.#amusement#park
!
Access#to#shared REP95<@?#:2;5412F:239
E.g.#bank
!
Going#to#banking#system,#using#their#network#services#
!
Access#to#and#usage#of#9P93:F9 and#2:3Q14C9
Five#broad#<@3:B145:9 within#212T1Q2:49E5R 84@F:Q14C of#which#two#or#more#may#be#
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Are#:<121F5<#@<35;535:9#offered#by#one#party#to#another
Most#commonly#employ#35F:T6@9:=#R4:8:4:2<:9 to#bring#about#desired#results#
Services##
Access#to#B11=9U#?@614U#8@<5?535:9U#:2;5412F:239,#professional#9C5??9,#2:3Q14C9#@2=#
9P93:F9;
Normally#=1#213#3@C:#1Q2:49E5R of#any#of#the#physical#elements#involved.#
In#exchange#for#their#F12:PU#35F:#@2=#:88143,#service#customers#expect#to#obtain#;@?7:
from
*:85253512#18#':4;5<:9
People#processing#
Possession#processing
Mental#stimulus#processing
Information#processing#
Based#on#differences#in#2@374:#18#9:4;5<: act#(tangible/intangible)#and#who#or#what#is#=54:<3#
4:<5R5:23#18#9:4;5<: (people/possessions),#there#are#four#categories#of#services:
When#you#are#on#the#bus#you#are#being#processed#
Your#possession#is#being#processed#when#it#comes#to#this#type#of#services
Physically#enter#the#service#factory
CoQoperate#actively#with#the#service#operation
Customers#must:
Time,#mental,#physical#effort
!
To#identify#benefits#created#and#nonQfinancial#costs:
Managers#should#think#about#process#and#output#from#customer's#perspective
A:1R?:#R41<:9952B
Laundry#and#dry#cleaning
Repair#maintenance##
Involvement#may#be#limited#to#just#dropping#off#the#possession
Customers#are#?:99#52;1?;:= compared#to#people#processing#services
One#of#the#main#characteristics#on#services#is#that#production#and#
consumption#takes#place#simultaneously
It#is#not#applicable#to#all#services#that#utilize#possession#processing#
Production#and#consumption#are#separable#
A199:99512#R41<:9952B
Your#mind#is#being#processed#not#your#physical#body
Processes#that#involve#a#form#of#manipulation#will#fall#into#this#category#
Providing#services#online#or#remotely#
Use#of#data,#data#can#be#delivered#without#a#particular#location
+3E5<@?#93@2=@4=9 required#when#customers#who#depend#on#such#services#can#
potentially#be#manipulated#by#suppliers.
AEP95<@?#R4:9:2<:#18#4:<5R5:239#213#4:V754:=
NonQperishable#
!
Can#be#"inventoried"#
Core#content#of#services#is#52814F@3512T6@9:=
O:23@?#935F7?79#
Services#that#create#intangible#assets#
Data#is#being#processed#
Information#is#3E:#F193#523@2B56?: form#of#service#output.
E.g.#bank#statement
Information#booklet#
May#be#34@29814F:=#5231#F14:#R:4F@2:23#814F9#of#services#output
Line#between#information#processing#and#mental#stimulus#processing#may#be#
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.2814F@3512#R41<:9952B#
!"W#LK),#D,KG*#/G(+>K,.+'#KL#'+,-./+'#
!"X#/%GMM+N>+'#AK'+*#D&#'+,-./+'
Marketing#management#tasks#in#the#service#sector#differ#from#those#in#the#manufacturing#
sector.
Most#service#products#cannot#be#inventoried
Intangible elements#usually#dominate#value#creation
Services#are#often#difficult#to#visualize#and#understand
Customers#may#be#involved#in#coQproduction
People#may#be#part#of#the#service#experience
Operational#inputs#and#outputs#tend#to#vary more#widely
The#time#factor#often#assumes#great#importance
Distribution#may#take#place#through#nonphysical#channels
The#eight#common#differences#are:
':4;5<:9#A193#*59352<35;:#O@4C:352B#/E@??:2B:9#
Intangible##
Inseparable#
.%.A for#services
If#services#cannot#be#inventoried#they#are#perishable#
You#may#have#all# the#capacity#to#produce#services#e.g.#,#human#capacity,#
facilities,#etc.#
If#customers#do#not#come#all#these#facilities#are#going#to#go#to#waste#because#
you#cannot#produce#things#so#they#are#going#to#be#used#eventually
Whatever#you#do#at#this#moment#perish#
We#have#to#constantly#manage#capacity#and#demand#side#of#the#services#
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Services#can#be#physically#intangible#
Intangible elements#usually#dominate#value#creation
Creating#visual#cues
Metaphors#explaining#what#the#services#able#
Mentally#intangible
Some#services#are#very#difficult#to#comprehend#what#they#are#about#if#you've#
never#been#such#a#service#before
Such#a#problem#creates#uncertainty,#it’s#a#perception#of#risk#
Services#are#often#difficult#to#visualize#&#understand
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People#may#be#part#of#service#experience
Operational#inputs#and#outputs#tend#to#vary#more#widely
Time#factor#often#assumes#great#importance
If#you#produce#goods#you#need#to#have#physical#channels#to#deliver#them#to#
customers
Distribution#may#take#place#through#nonphysical#channels
*588:4:2<:
Customers#may#be#turned#away
Harder#to#evaluate#services#and#distinguish#from#competitors#
Greater#risk#&#uncertainty#perceived#
Interaction#between#customer#and#provider;#but#poor#task#execution#could#affect#
satisfaction.
Behaviour#of#service#personnel#&#customers#can#affect#satisfaction
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Difficult#to#shield#customers#from#failures
Time#is#money;#customers#what#service#at#convenient#times
Electronic#channels#or#voice#telecommunications
.FR?5<@35129
Use#pricing,#promotion,#reservations#to#smooth#demand;#work#with#ops#to#manage#
capacity
Emphasize#physical#clues,#employ#metaphors#and#vivid#images#in#advertising
Educate#customers#on#making#good#choices;#offer#guarantees#
Develop#userQfriendly#equipment,#facilities#&#systems;#train#customers,#provide#
good#support.
Recruit,#train#employees#to#reinforce#service#concept
Shape#customer#behaviour
Redesign#for#simplicity#and#failure#proofing
Institute#good#service#recovery#procedures#
Find#ways#to#compete#on#speed#of#delivery;#offer#extended#hours
Create#userQfriendly,#secure#website#and#free#access#by#telephone#
O@4C:352BT,:?@3:=#(@9C9#
*588:4:2<:9U#.FR?5<@35129U#@2=#O@4C:352B#,:?@3:=#(@9C9#
G==:=#6P#AEP95<@?#.23@2B56?:#+?:F:239#%:?R9#*59352B759E#>11=9#@2=#':4;5<:9
Half#of#value#comes#from#tangible#elements#and#other#half#comes#from#intangible#
elements#
Left#Q>#value#from#tangible#elements
Right#Q>#intangible#elements#
It#is#accompanied#by#very#few#tangible#elements
Internet#banking#
!"Y#(%+#Z#A9#KL#'+,-./+'#OG,H+(N>#[NK(#.N#+\GO#T9:R@4@3:#<E@R3:49]
GRR?P52B#3E:#W#A9#18#O@4C:352B#31#':4;5<:9
Service#products are#at#the#heart#of#services#marketing#strategy
Marketing#mix#begins#with#creating#service#concept that#offers#value
Core#products#meet#primary#needs
Supplementary#elements#are#valueQadded#enhancements
Service#product#consists#of#core and#supplementary elements
Product#elements
Service#distribution can#take#place#through#physical and#nonQphysicalchannels
Some#firms#can#use#electronic#channels#to#deliver#all (or#at#least#some)#of#their#service#elements
InformationQbased#core#services can#be#delivered#almost#instantaneously#electronically
Delivery#Decisions:#Where,#When,#How
Time is#of#great#importance#as#customers#are#physically#present
Convenience#of#place#and#time become#important#determinants#of#effective#service#delivery
Place#and#time
From#the#firm’s#perspective,#pricing#generates#income and#creates#profits
From#the#customer’s#perspective,#pricing#is#key#part#of#costs#to#obtained#wanted#benefits
Marketers#must#recognize#that#customer#costs involve#more#than#price#paid#to#seller
Additional#monetary#costs#associated#with#service#usage#(e.g.,#travel#to#service#location,#
parking,#phone,#babysitting,#etc.)
NonQmonetary#costs#incurred#by#users:
Time expenditures,#especially#waiting#
Unwanted#mental#and#physical#effort
Negative#sensory#experiences
Price#and#other#user#outlays
Revenue#management#is#an#important#part#of#pricing
Provide#information#and#advice
Persuades the#target#customers#of#merit#of#service#product#or#brand
Encourages customer#to#take#action at#specific#time
Plays#three#vital#roles:
Teach#customer how#to#move#effectively#through#the#service#process
Shape#customers’#roles and#manage#their#behavior
Customers#may#be#involved#in#coQproduction#so:
Promotion#and#Education
+S3:2=:=#O5S#814#O@2@B52B#3E:#/7931F:4#.23:48@<:
How firm#does#things#may#be#as#important#as#what it#does
Customers often#actively#involved#in#processes,#especially#when#acting#as#coQproducers of#
service
Operational#inputs#and#outputs#vary more#widely
Demand#and#capacity need#to#be#balanced
Process
Design#servicescape and#provide#tangible#evidence of#service#performances
Manage#physical#cues carefullycan#have#profound#impact#on#customer#impressions
Buildings/landscaping
Interior#design/furnishings
Vehicles/equipment
Staff#grooming/clothing
Sounds#and#smells
Other#tangibles#
Create#and#maintain#physical#appearances
Physical#environment
Interactions between#customers#and#contact#personnel#strongly#influence#customer#
perceptions#of#service#quality
WellQmanaged#firms#devote#special#care#to#selecting,#training#and#motivating#service#employees
Other#customers can#also#affect#one’s#satisfaction#with#a#service
People
Service#sector#dominates#economy#in#most#nations
Powerful#forcesgovernment#policies,#social#changes,#business#trends,#IT#advances,#and#
globalizationare#transforming#service#markets
Reasons#for#studying#services
Services#offer#benefits#without#transfer#of#ownership
Customers#expect#value#from#access#to#goods,#facilities,#labor,#professional#skills,#
environments,#networks#&#systems#in#return#for#money,#time,#effort
Four#broad#categories#of#services#people#processing,#possession#processing,#mental#
stimulus#processing#and#information#processing
The#service#concept#and#its#definition:
Expanded#marketing#mix#comprising#7Ps#instead#of#traditional#4Ps
Services#present#distinctive#marketing#challenges#relative#to#goods,#requiring:
Understanding#service#products,#consumers#&#markets
Applying#the#4#Ps#of#marketing#to#services
Designing#and#managing#the#customer#interface
Developing#customer#relationships
Striving#for#service#excellence
Framework#for#developing#effective#services#marketing#strategies:
/%GA(+,#!#')OOG,&^#.N(,K*)/(.KN#(K#'+,-./+'#OG,H+(.N>
Lecture'2')Chapter'1'Introduction'to'Services'Marketing
Tuesday,# September# 15,#2015 3:05#AM

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

In#developed#countries#services#dominate#the#landscape.#Other#sectors#of#business#will#stimulate#the#
services#sector.
!"!#$%&#'()*&#'+,-./+'0
Services#account#for#more#than#60%#of#GDP#worldwide
Almost#all#economies#have#a#substantial#service#sector
Most#new#employment is#provided#by#services#
Strongest#growth#area#for#marketing
Services#dominate#most#economies#and#are#growing#rapidly:
Understanding#services#offers#you#a#personal#competitive#advantage
/12345673512#18#9:4;5<:9#52=79345:9#31#>?16@?#>*A
Gateway#to#China
!
Port
!
Hub#of#financial#
!
%12BC12B#
Tourism#industry#
!
D@E@F@9
Oil
!
'@7=5#G4@65@#
Developing#country#
!
'173E#H14:@
+935F@3:=#'5I:#18#':4;5<:#':<314#52#9:?:<3:=#<172345:9
!"J#AK$+,L)M#LK,/+'#G,+#(,GN'LK,O.N>#'+,-./+#OG,H+('
You#need#to#know#your#environment
You#need#to#watch#and#observe#you#environment#
You#are#one#player#in#a#large#environment#of#players#
Involves#us#and#other#players#
!
In#our#micro#analysis#we#analyze#ourselves,#our#company#
!
Customer#is#always#at#the#centre#of#any#marketing#analysis#
One#of#the#value#of#marketing#is#marketing#entails#exchange,#the#exchange#
b/w#the#company#and#the#customer#
Controllable#marketing#mix#element,#to#create#this#value,#to#be#able#to#trade#
and#engage#with#customers
We#have#to#analyse#our#customer#
!
Micro#environment,#company,#us,#customers.
!
MicroQenvironment#
Surrounded#by#macroQenvironment#
!
We're#all#affected#by#changing#cultural#factor#
!
Culture#
Changing#demographic#factor#
!
Demographic
Social
Technology
Economy
Politics#
/*#'(+A
!
MacroQenvironment
When#there#is#demand#for#something#companies#can#make#money.
Big#companies#are#switching#to#providing#services
They#know#to#be#competitive#they#have#to#improve#and#develop#new#services
When#competition#is#intense#individual#companies#offering#services#have#to#offer#
bunch#of#supplementary#services#
!
Competition#is#intense#in#new#services#
We#have#to#figure#out#what#our#money#is#going#to#be,#creation#value.
How#you#are#going#to#please#your#customer#and#what#kind#of#value#are#you#going#to#
create.#
We#have#to#learn#how#to#manage#and#learn#services#
L14<:9#34@29814F52B#3E:#9:4;5<:#:<121FP
Our#expectations#will#affect#social#changes
!
Companies#constantly#try#to#please#us#but#there#are#limits#with#what#they#try#to#do#
to#us#with#the#latest#technology#
!
These#days#companies#try#to#think#of#bottom#line
!
They#try#to#offer#high#quality#but#they#have#to#think#about#expenses
!
The#manufacturing#sector#moved#to#developing#countries#
!
Companies#like#profit#and#in#order#to#make#more#profit#they#have#to#think#of#
running#a#lean#operation
!
It#is#essential#to#have#a#webpage#for#companies.
!
Its#customized#so#you#have#designed#services#towards#that#
Software#Qyou#have#businesses#around#software
!
Generally#what#is#going#on#in#the#global#arena
!
Everything#becomes#global
!
What#kind#of#consequences#it#may#have#with#services#in#a#given#country
!
Offshoring#many#services#
!
Marketing#tasks#for#services#differ#from#those#involved#in#selling#goods#and#transferring#
ownership.
Services#involve#a#form#of#4:23@?,#offering#6:2:8539 without#transfer#of#1Q2:49E5R
E.g.#plumber
!
M@614#and#:SR:4359: rentals
E.g.#wedding#dress
!
Car#rental
!
Renting#objects
!
Rental#B11=9 services#
E.g.#renting#storage#space#
!
Designated#space
!
Defined#9R@<: and#R?@<: rentals
We#can#rent#access#to#some#physical#environments#
!
E.g.#amusement#park
!
Access#to#shared REP95<@?#:2;5412F:239
E.g.#bank
!
Going#to#banking#system,#using#their#network#services#
!
Access#to#and#usage#of#9P93:F9 and#2:3Q14C9
Five#broad#<@3:B145:9 within#212T1Q2:49E5R 84@F:Q14C of#which#two#or#more#may#be#
combined.#
Are#:<121F5<#@<35;535:9#offered#by#one#party#to#another
Most#commonly#employ#35F:T6@9:=#R4:8:4:2<:9 to#bring#about#desired#results#
Services##
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In#exchange#for#their#F12:PU#35F:#@2=#:88143,#service#customers#expect#to#obtain#;@?7:
from
*:85253512#18#':4;5<:9
People#processing#
Possession#processing
Mental#stimulus#processing
Information#processing#
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4:<5R5:23#18#9:4;5<: (people/possessions),#there#are#four#categories#of#services:
When#you#are#on#the#bus#you#are#being#processed#
Your#possession#is#being#processed#when#it#comes#to#this#type#of#services
Physically#enter#the#service#factory
CoQoperate#actively#with#the#service#operation
Customers#must:
Time,#mental,#physical#effort
!
To#identify#benefits#created#and#nonQfinancial#costs:
Managers#should#think#about#process#and#output#from#customer's#perspective
A:1R?:#R41<:9952B
Laundry#and#dry#cleaning
Repair#maintenance##
Involvement#may#be#limited#to#just#dropping#off#the#possession
Customers#are#?:99#52;1?;:= compared#to#people#processing#services
One#of#the#main#characteristics#on#services#is#that#production#and#
consumption#takes#place#simultaneously
It#is#not#applicable#to#all#services#that#utilize#possession#processing#
Production#and#consumption#are#separable#
A199:99512#R41<:9952B
Your#mind#is#being#processed#not#your#physical#body
Processes#that#involve#a#form#of#manipulation#will#fall#into#this#category#
Providing#services#online#or#remotely#
Use#of#data,#data#can#be#delivered#without#a#particular#location
+3E5<@?#93@2=@4=9 required#when#customers#who#depend#on#such#services#can#
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AEP95<@?#R4:9:2<:#18#4:<5R5:239#213#4:V754:=
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!
Can#be#"inventoried"#
Core#content#of#services#is#52814F@3512T6@9:=
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Services#that#create#intangible#assets#
Data#is#being#processed#
Information#is#3E:#F193#523@2B56?: form#of#service#output.
E.g.#bank#statement
Information#booklet#
May#be#34@29814F:=#5231#F14:#R:4F@2:23#814F9#of#services#output
Line#between#information#processing#and#mental#stimulus#processing#may#be#
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.2814F@3512#R41<:9952B#
!"W#LK),#D,KG*#/G(+>K,.+'#KL#'+,-./+'#
!"X#/%GMM+N>+'#AK'+*#D&#'+,-./+'
Marketing#management#tasks#in#the#service#sector#differ#from#those#in#the#manufacturing#
sector.
Most#service#products#cannot#be#inventoried
Intangible elements#usually#dominate#value#creation
Services#are#often#difficult#to#visualize#and#understand
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People#may#be#part#of#the#service#experience
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The#eight#common#differences#are:
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Intangible##
Inseparable#
.%.A for#services
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If#customers#do#not#come#all#these#facilities#are#going#to#go#to#waste#because#
you#cannot#produce#things#so#they#are#going#to#be#used#eventually
Whatever#you#do#at#this#moment#perish#
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Services#can#be#physically#intangible#
Intangible elements#usually#dominate#value#creation
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Behaviour#of#service#personnel#&#customers#can#affect#satisfaction
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O@4C:352BT,:?@3:=#(@9C9#
*588:4:2<:9U#.FR?5<@35129U#@2=#O@4C:352B#,:?@3:=#(@9C9#
G==:=#6P#AEP95<@?#.23@2B56?:#+?:F:239#%:?R9#*59352B759E#>11=9#@2=#':4;5<:9
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Left#Q>#value#from#tangible#elements
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Internet#banking#
!"Y#(%+#Z#A9#KL#'+,-./+'#OG,H+(N>#[NK(#.N#+\GO#T9:R@4@3:#<E@R3:49]
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Marketing#mix#begins#with#creating#service#concept that#offers#value
Core#products#meet#primary#needs
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Service#product#consists#of#core and#supplementary elements
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InformationQbased#core#services can#be#delivered#almost#instantaneously#electronically
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Place#and#time
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From#the#customer’s#perspective,#pricing#is#key#part#of#costs#to#obtained#wanted#benefits
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Unwanted#mental#and#physical#effort
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Provide#information#and#advice
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Encourages customer#to#take#action at#specific#time
Plays#three#vital#roles:
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Shape#customers’#roles and#manage#their#behavior
Customers#may#be#involved#in#coQproduction#so:
Promotion#and#Education
+S3:2=:=#O5S#814#O@2@B52B#3E:#/7931F:4#.23:48@<:
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Customers often#actively#involved#in#processes,#especially#when#acting#as#coQproducers of#
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Operational#inputs#and#outputs#vary more#widely
Demand#and#capacity need#to#be#balanced
Process
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Manage#physical#cues carefullycan#have#profound#impact#on#customer#impressions
Buildings/landscaping
Interior#design/furnishings
Vehicles/equipment
Staff#grooming/clothing
Sounds#and#smells
Other#tangibles#
Create#and#maintain#physical#appearances
Physical#environment
Interactions between#customers#and#contact#personnel#strongly#influence#customer#
perceptions#of#service#quality
WellQmanaged#firms#devote#special#care#to#selecting,#training#and#motivating#service#employees
Other#customers can#also#affect#one’s#satisfaction#with#a#service
People
Service#sector#dominates#economy#in#most#nations
Powerful#forcesgovernment#policies,#social#changes,#business#trends,#IT#advances,#and#
globalizationare#transforming#service#markets
Reasons#for#studying#services
Services#offer#benefits#without#transfer#of#ownership
Customers#expect#value#from#access#to#goods,#facilities,#labor,#professional#skills,#
environments,#networks#&#systems#in#return#for#money,#time,#effort
Four#broad#categories#of#services#people#processing,#possession#processing,#mental#
stimulus#processing#and#information#processing
The#service#concept#and#its#definition:
Expanded#marketing#mix#comprising#7Ps#instead#of#traditional#4Ps
Services#present#distinctive#marketing#challenges#relative#to#goods,#requiring:
Understanding#service#products,#consumers#&#markets
Applying#the#4#Ps#of#marketing#to#services
Designing#and#managing#the#customer#interface
Developing#customer#relationships
Striving#for#service#excellence
Framework#for#developing#effective#services#marketing#strategies:
/%GA(+,#!#')OOG,&^#.N(,K*)/(.KN#(K#'+,-./+'#OG,H+(.N>
Lecture'2')Chapter'1'Introduction'to'Services'Marketing
Tuesday,# September# 15,#2015 3:05#AM
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