SERVICES MARKETING

(2nd semester, 2012 -2013)

Lecturer: Nguyen Huyen Minh, PhDhuyenminh@yahoo.co.uk | http://twitter.com/huyenminh

FOREIGN TRADE UNIVERSITY Faculty of Economics and International Business

mailto:huyenminh@yahoo.co.ukhttp://twitter.com/huyenminh

References

1. Marketing Management (Kotler, Keller), Prentice Hall, 14th

edition, 2012 (Chapter 13).

2. Principles of Marketing (Kotler, Armstrong), Prentice Hall, 14th edition, 2012 (Chapter 8).

3. International Marketing (Cateora, Gilly, Graham), McGraw-Hill | Irwin, 15 th edition, 2011 (Chapter 13, Chapter 14).

4. Services Marketing (Zeithaml, Bitner, Gremler), McGraw-Hill, 5th edition, 2009.

5. Services Marketing (Lovelock, Wirtz), Prentice Hall, 6th

edition, 2007.

What is a 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 be tied to a physical product.

Increasingly, manufacturers, distributors, and retailers are providing value-added services, or simply excellent customer service, to differentiate themselves. Many pure service firms are now using the Internet to reach customers; some are purely online.

WTO/OMC 4

The GATS Modes of Supply (1/2)

COUNTRY A COUNTRY B

Mode 1 : Cross- border

Mode 2: Consumption abroad

Mode 3: Commercial presence

CompanyCommercialpresence

Direct investment

ConsumerService supplier

The service crosses the border

The consumer is abroad

Servicesupply

Consumerin C

Consumer ConsumerService supplier

Consumer

$ $ $ $ $

Servicesupply

Servicesupply

Establish commercial presence

WTO/OMC 5

Mode 4: Presence of natural persons

Juridical person

Natural person

An independent goes to country A

COUNTRY A COUNTRY B

An employee is sent by a company of country B

Commercialpresence

intra - corporate transferee

Consumer in C

Consumer

Consumer

The GATS Modes of Supply (2/2)

Servicesupply

Servicesupply

Service(s), as defined by the American Marketing Association

1. Products, such as a bank loan or home security, that are intangible or at least substantially so . If totally intangible, they are exchanged directly from producer to user, cannot be transported or stored, and are almost intantlyperishable. Service products are often difficult to identify, because they come into existence at the same time they are bought and consumed. They comprise intangible elements that are inseparable; they usually involve customer participation in some important way; they cannot be sold in the sense of ownership transfer; and they have no title. Today, however, most products are partly tangible and partly intangible, and the dominant form is used to classify them as either goods or services (all are products). These common, hybrid forms, whatever they are called, may or may not have the attributes just given for totally intangible services. 2. Services, as a term, is also used to describe activities performed by sellers and others that accompany the sale of a product and aid in its exchange or its utilization (e.g., shoe fitting, financing, an 800 number). Such services are either presale or post-sale and supplement the product, not comprise it. If performed during sale, they are considered to be intangible parts of the product.

The following definition was approved by the American

Marketing Association Board of Directors:

Marketing is the activity, set of institutions , and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.(Approved October 2007)

Product/Service, by 3|5 level model analysis

Categories of Service MixThe service component can be a minor or a major part of the total offering. We distinguish five categories of offerings:

1. Pure tangible good a tangible good such as soap, toothpaste, or salt with no accompanying services.

2. Tangible good with accompanying services a tangible good, like a car, computer, or cell phone, accompanied by one or more services. Typically, the more technologi-cally advanced the product, the greater the need for high-quality supporting services.

3. Hybrid an offering, like a restaurant meal, of equal parts goods and services. People patronize restaurants for both the food and its preparation.

4. Major service with accompanying minor goods and services a major service, like air travel, with additional services or supporting goods such as snacks and drinks. This offering requires a capital-intensive good an airplane for its realization, but the primary item is a service.

5. Pure service primarily an intangible service, such as babysitting, psychotherapy, or massage.

Basic Focus Strategies for Services

BREADTH OF SERVICE OFFERINGS

NUMBER OF

MARKETS

SERVED

Narrow

Many

Few

Wide

Service

Focused

Unfocused

(Everything

for everyone)

Market

Focused

Fully Focused

(Service and

market

focused)

Reading: Competing Strategically through Service

THE SERVICE CONTINUUM

(1)

THE SERVICE CONTINUUM (2)

MAJOR SERVICE CHARACTERISTICS

(Heterogeneity)

(Simultaneity)

Resulting Implications (1)

1. Services can not be inventoried nor easily patented

2. Services can not be readily displayed or communicated

3. Pricing is difficult

4. Service delivery and customer satisfaction depend on employee and customer actions

5. Service quality depends on many uncontrollable factors

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

Resulting Implications (2)

7. Customer participate in and affect the transaction

8. Customer affect each other

9. Employees affect the service outcome

10. Decentralization may be essential; mass servuction

11. It is difficult to synchronize supply and demand with services

12. Services cannot be returned or resold.

Reading: The Expanded Marketing -Mix for Services

Services Marketing: Three -In -One Story

Service Quality: The Gaps Model

Reading: How UPS Closes the Gaps with Technology

Customer Perceptions of Service Quality and Customer Satisfaction

Reading: Culture Influences Marketing Research

Reading:

The Tip of the Iceberg Problem

Customer Complaints Behavior

Why do customers complain?

Restitution and compensation

Vent their anger

Help to improve the service

Altruistic reasons

Will not take the time to write, phone etc.

Do not believe that the company will be willing to resolve it!

Do not know were to go or what to do.

Customer Complaint ActionsFollowing Service Failure

SERVICE RECOVERY

Effective recovery from a failure can restore the standing of an organisation

To be effective, recovery should be rapid, appropriate and empathetic

Recovery facilitated by empowerment of staff

Recovery may be facilitated by blueprints

Reading: Service Recovery across Cultures

Service Recovery Strategies

Service

Recovery

Strategies

Service Blueprinting

Visual representation of a service process that can show:

Principle functions

Timing and sequencing

Participants involved

Tolerance levels

Feedback loops

Building a Service Blueprint

Step 1

Identify the

process to

be blue-

printed.

Step 2

Identify the

customer

or

customer

segment.

Step 3

Map the

process

from the

point of

view.

Step 4

Map

contact

employee

actions,

onstage

and back-

stage.

Step 5

Link

customer

and contact

person

activities to

needed

support

functions.

Step 6

Add

evidence

of service

at each

customer

action

step.

Service Blueprint Components

CUSTOMER ACTIONS

line of interaction

line of visibility

line of internal interaction

SUPPORT PROCESSES

Service Blueprint Components

Service Blueprint: an Example for Hotel

Yield Management: Four Demand States

Excess demand - Demand exceeds capacity constraints of the organisation

Demand exceeds optimum capacity - A rule of thumb is that quality degrades if more than 75% of capacity is used (Heskett, 1986)

Demand and supply balanced

Excess capacity - Productive resources under utilised

34Capacity Management