McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Part 1

FOUNDATIONS
FOR SERVICES
MARKETING

1-2

Chapter

1
Introduction to Services
What are Services?
Why Service Marketing?
Service and Technology
Characteristics of Services
Service 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 service marketing concepts
and practices and why the need has developed and is
accelerating.
Explore the profound impact of technology on service.
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 & 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
U.S. Gross Domestic Product

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Tangibility Spectrum

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In-class Learning Activity:

(Refer to the yellow-colour pile
of in-class learning acts)
Ranking services by tangibility
Each group is to rank its list in terms of goods/services, starting with
the product that is the best example of a good at the top and ending
with the product that is the best example of a service at the bottom.
This task should take approximately 15 minutes. A member of each
group then writes its rankings on the board or on an overhead.
The following questions can be asked during a whole class discussion
to bring closure to the exercise:
What do the products at the top of the list (or the left of the
continuum) have in common?
What do the products at the bottom (or the right of the continuum)
have in common?
What do the products in the middle have in common?

Why Service Marketing?

Services dominate U.S. and worldwide
economies
Service as a business imperative in
goods-focused businesses
Deregulated industries and
professional service needs
Service marketing is different
Service leads to profits
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Percent of U.S. Labor Force by

Industry

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Percent of U.S. Gross Domestic

Product by Industry

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Examples of Goods Companies

that are Expanding into Services

Boeing

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Characteristics of Services
Compared to Goods
Intangibility

Heterogeneity
(khng ng nht)

Simultaneous
Production
and
Consumption

Perishability
(d hng)

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Comparing Goods and Services

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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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Search, Experience, and

Credence Qualities

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Challenges and Questions for

Service Marketers
Defining and improving quality
Designing and testing new services
Communicating and maintaining a consistent image
Accommodating fluctuating demand
Motivating and sustaining employee commitment
Setting prices
Organizing to facilitate strategic and tactical
decision-making
Finding a balance between standardization and
personalization
Protecting new service concepts from competitors
Communicating quality and value to customers
Ensuring the delivery of consistent quality service
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Traditional Marketing Mix

Elements an organization controls that
can be used to satisfy or communicate
with customers:

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 buyers perceptions: namely, the firms 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 deliveredthe service delivery and operating
systems.
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Expanded Marketing Mix for

Services

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Ways to Use the 7 Ps

Overall Strategic
Assessment
How effective is a
firms service
marketing mix?
Is the mix wellaligned with overall
vision and strategy?
What are the
strengths and
weaknesses in terms
of the 7 Ps?

Specific Service
Implementation
Who is the customer?
What is the service?
How effectively does
the service marketing
mix for a service
communicate its
benefits and quality?
What changes/
improvements are
needed?
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Preparation for Week-1

Tuitorial (refer to the greencolor pile of tuitorial matierals)
Q4.
One of the underlying frameworks for the text is the
service marketing mix. Discuss why each of the three
new mix elements (process, people, and physical
evidence) is included.
With reference to an example of how Southwest Airlines
develops its positioning strategy around the three new
Ps (as shown in Exhibit 1.2), how might each of these
communicate with or help to satisfy an organizations
customers?

Preparation for Week-1

Tuitorial
Q2.
Read the major section of chapter 1 titled Service and
Technology, and comment on how is technology
changing the nature of customer service and service
offerings?
With reference to the Technology Spotlight on the
Changing Face of Customer Service, how does
technology enable new ways to deliver services?

Eight Central Paradoxes of

Technological Products

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