Services Marketing

5/3/2012

Dr. HG

What is a Service? Defining the Essence

An act or performance offered by one party to another.

(Performances are intangible, but may involve use of physical products.)

An economic activity that does not result in ownership

A process that creates benefits by facilitating a desired change

in customers themselves, physical possessions or intangible

assets
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Basic Differences between Goods and Services

Customers do not obtain ownership of services

Service products are intangible performances--not objects Customers often actively involved in production process Other people may form part of product experience
More variability in operational inputs and outputs--harder to improve productivity, control quality Often difficult for customers to evaluate Absence of inventories after production

Time factor is more important--speed may be key Delivery systems include electronic and physical channels
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5/3/2012

Characteristics of Services

Intangibility
Perishability

Inseparability
Variability

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Dr. HG

Triangle of Service
Skills (People)

Customer

Strategy
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System
Dr. HG

 This

model

inspires

four

relevant

questions

for

organizations seeking to create, or extend, a competitive

advantage through the delivery of high quality service.

From the deliverers perspective, they are:

How well do we understand our customers and their

expectations of us? Have we defined our mission our goal or strategy in terms of customer expectations?
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 Are our delivery systems accessible and approachable (designed to make us easy to do business with, or simply for our own operational convenience)? Are our people selected, trained, empowered and rewarded for providing exceptional customer? Finding answers to these questions is a challenge for any service to the

organization trying to survive, let alone thrive, in todays

service oriented economy.
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Service Decision
Five specific operating principles that are common, in varying degrees, to the service industry are: 1. Listen, understand, and respond -- often in unique and

creative ways -- to the evolving needs and constantly

shifting expectations of the customers. 2. 3. Establish a clear vision of what superior services is, Establish concrete standards of service quality and regularly measure them against those standards.
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4.

Hire good people, train them carefully and extensively so that they have the knowledge and skills to achieve the

service standards,
5. Recognize and reward service accomplishments sometimes

individually, sometimes as a group effort.

These factors are fundamental tactics used to build and

manage extraordinary levels of customer satisfaction and

loyalty.

5/3/2012

Dr. HG

Interdependence of Marketing, Operations and Human Resources

Operations Management Customers

Marketing Management

Human Resources Management

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Defining Three Functional Imperatives Marketing: move from tactical to innovative and strategic Target right customers and build relationships Offer solutions that meet their needs

Define quality package with competitive advantage

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Dr. HG

Operations imperative : move from reactive/cost oriented to focused, innovative, well coordinated with marketing and HR
Adhere to consistent quality standards.
Achieve productivity to ensure acceptable costs.

Seamless delivery organized around customer Continuous improvement, understand concept of ROQ Front-stage and backstage well integrated

Works with technology leaders to obtain first-mover advantages.

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Dr. HG

Human Resources: move from tight control of low-cost workers to quality of employees as strategic advantage Firm recognized as outstanding place to work, strong culture.

Employees
committed.

are

innovative,

empowered,

loyal,

Achieve both productivity and customer satisfaction.

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Dr. HG

SERVICE CLASSIFICATION Who / What is the direct recipient of the service

Nature of Service People
People Processing

Possession
Possession Processing
Repair and Maintenance Freight transportation Courier Service Laundry Service

Tangible

Passenger Freight Health Care Fitness Center Restaurant / Hotel

Mental Stimulus Processing

Information Processing
Software consulting Banking Insurance Research

Intangible

Education Advertising Management Consultancy Music Concerts

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Dr. HG

The 8Ps of Integrated Service Management

Product elements Place, cyberspace, and time Process Productivity and quality People Promotion and education Physical evidence Price and other user costs

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Dr. HG

8Ps: (1) Product Elements

All Aspects of Service Performance that Create Value

Core

product features of supplementary service elements

Bundle

Performance
Benefits

levels relative to competition

delivered to customers

Guarantees

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Dr. HG

8Ps: (2) Place, Cyberspace, and Time Delivery Decisions regarding : Place, Time, Methods, Channels
Geographic Physical

locations served

channels

Electronic channels Customer Channel

control and convenience

partners / intermediaries

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Dr. HG

8Ps: (3) Process

Method and Sequence in Service Creation and Delivery

Design

of activity flows and sequence of actions for customers

Number Nature Role

of customer involvement

of contact personnel

Role

of technology, degree of automation

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Dr. HG

8Ps: (4) Productivity and Quality

Synergy in Value Creation for Customers and the Firm Achieve productive transformation of inputs to outputs

efficiency (cost control, avoidance of waste)

effectiveness (value added, including quality and timeliness) Attain customer-defined quality standards reliability responsiveness

Competence / trust
human dimensions tangibles
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8Ps: (5) People

The Human Side of the Enterprise The right employees performing tasks well

job design
recruiting / selection training

motivation
evaluation / rewards empowerment teamwork
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8Ps: (5) People The right customers for the firms mission fit well with product / processes / corporate goals appreciate benefits and value offered possess (or can be educated to have) necessary skills

firm is able to manage customer behaviour for

productivity, satisfaction of other customers, employee protection

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Dr. HG

8Ps: (6) Promotion and Education

Informing / Educating, Persuading, and Reminding Customers

Marketing communication tools

media elements (print, broadcast, outdoor, retail, Internet, etc.) personal selling

sales promotion
publicity/PR Branding customer education / training

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8Ps: (7) Physical Evidence

Providing tangible evidence of service performances Create and maintaining physical appearances Buildings / landscaping interior design / furnishings Vehicles / equipment staff grooming / clothing

other tangibles
Select tangible metaphors for use in marketing communications
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8Ps: (8) Price and Other User Costs Managing Customer Outlays Relative to Corporate Revenues
Price levels Discount terms time sensitive user sensitive, Volume Sensitive etc. Price-setting mechanism Strategies to minimize other user costs out-of-pocket financial expenses (e.g., travel, phone) time investments and mental/physical effort negative sensory experiences
5/3/2012 24 Dr. HG