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Chapter 1:
New Perspectives On
Marketing in the
Service Economy
Chapter 1 Page 1
Services Marketing
Chapter 1 Page 2
Services Marketing
Chapter 1 Page 3
Services Marketing
Services 64%
Agriculture 4%
Chapter 1 Page 4
Services Marketing
20
30
40
50
60
70
80
90
Chapter 1 Page 5
Services Marketing
Business Services
12%
Transport, Utilities
& Communications
9%
SERVICES
Chapter 1 Page 6
Services Marketing
Casino Hotels
Environmental Consulting
Satellite Telecommunications
Telemarketing Bureaus
Chapter 1 Page 7
Services Marketing
Chapter 1 Page 8
Services Marketing
Agriculture
Share of
Employment
Services
Industry
Time, per Capita Income
Chapter 1 Page 9
Services Marketing
Demand
Supply
Chapter 1 Page 10
Transformation of the
Service Economy
Social
Changes
Government
Policies
Services Marketing
Business
Trends
Advances
In IT
Globalization
Chapter 1 Page 11
Business
Trends
Services Marketing
Advances
In IT
Government
Policies
Globalization
Changes in regulations
Privatization
New rules to protect customers, employees,
and the environment
New agreement on trade in services
Chapter 1 Page 12
Business
Trends
Services Marketing
Advances
In IT
Government
Policies
Globalization
Chapter 1 Page 13
Business
Trends
Services Marketing
Advances
In IT
Government
Policies
Globalization
Push to increase shareholder value
Emphasis on productivity and cost savings
Manufacturers add value through service and
sell services
More strategic alliances and outsourcing
Focus on quality and customer satisfaction
Growth of franchising
Marketing emphasis by nonprofits
Chapter 1 Page 14
Business
Trends
Services Marketing
Advances
In IT
Government
Policies
Globalization
Growth of Internet
Greater bandwidth
Compact mobile equipment
Wireless networking
Faster, more powerful software
Digitization of text, graphics, audio, video
Chapter 1 Page 15
Business
Trends
Services Marketing
Advances
In IT
Government
Policies
Globalization
More companies operating on transnational
basis
Increased international travel
International mergers and alliances
Offshoring of customer service
Foreign competitors invade domestic markets
Chapter 1 Page 16
Services Marketing
Chapter 1 Page 17
Services Marketing
Chapter 1 Page 18
Services Marketing
Defined space
and place rentals
Access to shared
physical
environments
Slide 2011 by Lovelock & Wirtz
Labor and
expertise rentals
Access to and
usage of systems
and networks
Chapter 1 Page 19
Definition of Services
Services Marketing
Services
Chapter 1 Page 20
Services Marketing
Physical Elements
High
Salt
Detergents
CD Player
Wine
Golf Clubs
New Car
Tailored clothing
Fast-Food Restaurant
Plumbing Repair
Health Club
Airline Flight
Landscape Maintenance
Consulting
Life Insurance
Internet Ba
Low
Source; Adapted from Lynn Shostack
Slide 2011 by Lovelock & Wirtz
Intangible Elements
Services Marketing 7/e
High
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Services Marketing
Chapter 1 Page 22
Services Marketing
People processing
Possession processing
Information processing
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4 Categories of Services
Services Marketing
Chapter 1 Page 24
People Processing
Services Marketing
Customers must:
physically enter the service factory
cooperate actively with the service operation
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Possession Processing
Services Marketing
Involvement is limited
Less physical involvement
Production and consumption are separable
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Services Marketing
Chapter 1 Page 27
Information Processing
Services Marketing
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Services Marketing
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Services Marketing
Chapter 1 Page 30
Implications
Services Marketing
Marketing-Related Tasks
Most service
products
cannot be inventoried
Customers may be
turned away
Intangible elements
usually dominate
value creation
Harder to evaluate
service & distinguish
from competitors
Educate customers on
making good choices; offer
guarantees
Customers may be
involved in coproduction
Interaction between
customer & provider;
poor task execution
could affect satisfaction
Develop user-friendly
equipment, facilities &
systems; train customers,
provide good support
Chapter 1 Page 31
Implications
Services Marketing
Marketing-Related Tasks
Behavior of service
personnel & customers
can affect satisfaction
Operational inputs
and
outputs tend to vary
more widely
Hard to maintain
quality,
consistency, reliability
Difficult to shield
customers from failures
Time is money;
customers want service
at convenient times
Electronic channels
or
voice communications
failure proofing
Institute good service
recovery procedures
Find ways to compete on
speed of delivery; offer
extended hours
Create user-friendly,
secure websites and free
access by telephone
Chapter 1 Page 32
Services Marketing
Chapter 1 Page 33
Services Require
An Extended Marketing Mix
Services Marketing
Chapter 1 Page 34
Services Marketing
Product (Chapter 4)
Price (Chapter 6)
Chapter 1 Page 35
Services Marketing
Chapter 1 Page 36
Services Marketing
Marketing
Management
Customers
Human Resources
Management
Slide 2011 by Lovelock & Wirtz
Chapter 1 Page 37
Services Marketing
Chapter 1 Page 38
Overview of Framework
Services Marketing
Chapter 1 Page 39
Framework - Part I
Services Marketing
Chapter 1 Page 40
Framework - Part II
Services Marketing
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Services Marketing
Chapter 1 Page 42
Framework - Part IV
Services Marketing
Chapter 1 Page 43
Summary
Services dominate
the economy in many
Services Marketing
Unique
Why Study
Services?
Characteristics
involved in co-production.
CHAPTER 1
of rental (not
ownership). They are
performances that
What are
Services?
Extended
Marketing
Mix
result.
Chapter 1 Page 44