Services Marketing

By- Valarie A. Zeithaml Mary Jo Bitner 4th edition

Services Marketing
Course Instructor

Sarif Mohammad Khan Assistant Professor Business Administration discipline Khulna University

Outline
Definition of service Example of service industries Categories of service mix Tangibility spectrum Service differentiation tools Why services marketing? Paradoxes of technological products Characteristics of services and its implications Service marketing mix

Definition of service
A service is any act or performance - one party can offer to another that is essentially intangible and does not result in the ownership of anything.
Its production may or may not tied to a physical product.

Example 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, Travel airlines, travel agencies, theme park Others: hair styling, counseling services, health club

Categories of service mix

Pure tangible goods Soap, salt, Pen etc.
Tangible goods with accompanying service computer, car

Hybrid Equal parts of goods and servicesPeople patronize restaurant.

Major services with accompanying minor goods and services Airlines passenger buy transportation service. Pure service Baby-setting, psychotherapy etc.
Source: Marketing Management by Philip Kotler - 11th edition Chapter-15

Tangibility spectrum
Salt Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets

Intangible Dominant

Tangible Dominant

Fast-food

Outlets Advertising Agencies Airlines Investment Management Consulting Teaching

Service differentiation tools

Ordering ease Delivery (Speed,
process)

accuracy & care attending delivery

Installation
operational)

(The work done to make a product

Customer training Customer consulting (Data, information, advice ) Maintenance and repair Miscellaneous services

Source: Marketing Management by Philip Kotler - 11th edition Chapter-11

Why services marketing?

A service-based economy
Service as a business imperative in manufacturing and IT Deregulated industry and professional service needs Service marketing is different

% of US labor force by industry

80 70
Percent of GDP

60 50

40
30 20 10 0

1929

1948

1969
Year

1977

1984

1996

Services

Manufacturing Mining & Agriculture

Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S. Economy, Scientific American, 244,3 (1981): 31-39.

% of US GDP by industry
70 Percent of GDP 60 50

40
30 20 10 0 1948 1959 1967 Year 1977 1987 1996
Services Manufacturing Mining & Agriculture

Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S. Economy, Scientific American, 244,3 (1981): 31-39.

Service and technology

Potential for new service offerings
New ways to deliver service Enabling both customers and employees Extending the global reach of service The internet is a service

Eight central paradoxes of technological products.

Control/chaos Freedom/enslavement New/obsolete Competence/incompetence Efficiency/inefficiency

Fulfills/creates needs Assimilation/isolation Engaging/disengaging

The dark side of technology and service

Privacy and confidentiality As substitute for human labor and perhaps eliminate their jobs There is a loss of human contact Payback in technology investment is often uncertain.

Differences in goods vs. services marketing

Goods
Tangible Standardized Production separate from consumption Nonperishable

Services
Intangible Heterogeneous Simultaneous production and consumption Perishable

Characteristics of services (1)

Intangibility: services can not be seen, felt, tasted or touched in the same manner that we can sense tangible goods. Example: Health care services

Heterogeneous: Result of human interaction May very day to day or even hour to hour Example: Banker

Characteristics of services (2)

Simultaneous production and consumption: Perishable: Can not be saved, stored, resold or returned; Example: An hour of a lawyer

Implication of Intangibility
Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult (actual cost of a unit of services are hard to determine)

Implication of Heterogeneity
Service delivery and customer satisfaction depend on employee actions Service quality depends uncontrollable factors on many

There is no sure knowledge that the service delivered matches what was planned and promoted

Implication 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

Implication of Perishability
Services cannot be inventoried It is difficult to synchronize supply and demand with services

Services cannot be returned or resold need strong recovery strategy..

Service marketing mix

Traditional marketing mix Expanded mix for services

Traditional marketing mix (1)

Product Place Promotion Price

Traditional marketing mix (2)

PRODUCT
Physical good features Quality level Accessories Packaging Warranties Product lines Branding

PLACE
Channel type

PROMOTION
Promotion blend

PRICE
Flexibility

Exposure Intermediaries Outlet location Transportation Storage

Salespeople Advertising Sales promotion Publicity

Price level Terms Differentiation Allowances

Expanded mix for services (1)

People Physical evidence Process

Expanded mix for services (2)

PEOPLE
Employees Customers Communicating culture and values Employee research

PHYSICAL EVIDENCE
Facility design Equipment Signage Employee dress Other tangibles

PROCESS
Flow of activities Number of steps Level of customer involvement

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.

Factors to Consider Regarding People:

Employees
Recruiting Training Motivation Rewards Teamwork

Customers
- Education - Training

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. Factors to Consider Regarding Physical Evidence :
Facility Design. Equipment Signage Employee dress. Other tangibles Reports. Business cards. Statements. Guarantees.

Process
The actual procedures, mechanisms and flow of activities by which the service is delivered- the service delivery and operating systems.

Factors to Consider Regarding Process:

Flow of activities: Standardized Customized Number of steps: Simple Complex Customer Involvement

Assign Reading
Southwest Airlines : Aligning People, Processes and Physical Evidence

Chapter 01: Page 28 Zeitham & Bitner (4th edition)

Holistic Marketing in Service Firms

Holistic marketing
design

concept:
and their

is

based

on
of and

development, that

implementation breadth

marketing programs, processes and activities recognizes interdependencies. It holds that everything

matters in marketing and a broad integrated

perspective is often necessary.

Holistic Marketing in Service Firms

Internal marketing
Senior management Marketing Department Other department Integrated marketing Product & services Communications Channels

Relationship marketing Customers Channels Partners

Social responsibility marketing Ethics Environment Legal Community