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Chapter 1:
New
Perspectives(viewpoints) On
Marketing in the
Service Economy
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 1
Overview of Chapter 1
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 2
Why Study Services?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 3
Why Study Services?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 4
Services Dominate the Global
Economy
Manufacturing 32%
Services 64%
Agriculture 4%
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 5
Estimated Size of Service Sector
in Selected Countries
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 7
Why Study Services?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 8
Transformation of the
Service Economy
Success hinges
(axes) on:
Changes in regulations
Privatization
New rules to protect customers, employees,
and the environment
New agreement on trade in services
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 10
Factors Stimulating Transformation
of the Service Economy
Government
Policies
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 11
Factors Stimulating Transformation
of the Service Economy
Government
Policies
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 12
Factors Stimulating Transformation
of the Service Economy
Government
Policies
Growth of Internet
Greater bandwidth
Compact mobile equipment
Wireless networking
Faster, more powerful software
Digitization of text, graphics, audio, video
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 13
Factors Stimulating Transformation
of the Service Economy
Government
Policies
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 14
What are Services?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 15
What Are Services?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 16
What Are Services?
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 17
Definition of Services
Services
are economic activities offered by one party to another
most commonly employ time-based performances to bring about
desired results
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 18
Value Creation is Dominated by
Intangible Elements
Physical Elements
High
Salt
Detergents
CD Player
Wine
Golf Clubs
New Car
Tailored clothing Plumbing Repair
Low High
Intangible Elements
Source; Adapted from Lynn Shostack
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 19
Service Products vs. Customer
Service & After-Sales Service
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 20
Service – A Process Perspective
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 21
4 Categories of Services
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 22
People Processing
Customers must:
physically enter the service factory
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 23
Possession Processing
Involvement is limited
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 24
Mental Stimulus Processing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 25
Information Processing
May be transformed:
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 26
Extended Marketing Mix for
Services
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 27
Services Require
An Extended Marketing Mix
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 28
The 7Ps of Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 29
Integration (mixing) of
Marketing with Other
Management Functions
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 30
Marketing to be Integrated with
Other Management Functions
Operations Marketing
Management Management
Customers
Human Resources
Management
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 1 – Page 31