Services Marketing

By- Valarie A. Zeithaml Mary Jo Bitner4th edition

Services Marketing

Course InstructorSarif Mohammad KhanAssistant ProfessorBusiness Administration disciplineKhulna 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.

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

Example of service industries

Categories of service mix

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

Computer, car Hybrid – Equal parts of goods and services-

People patronize restaurant. Major services with accompanying minor goods

and services – Airlines passenger buy transportation service.

Pure service – Baby-setting, psychotherapy etc.

Marketing Management – by Philip Kotler - 11th edition – Chapter-15

Tangibility spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgenciesAirlines

InvestmentManagement

ConsultingTeaching

Fast-foodOutlets

Fast-foodOutlets

Service differentiation tools Ordering ease Delivery (Speed, accuracy & care attending delivery

process) Installation (The work done to make a product

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

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

01020304050607080

1929 1948 1969 1977 1984 1996

Perc

ent

of G

DP

Year Services Manufacturing

Mining & AgricultureSource: 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 labor force by industry

% of US GDP by industry

010203040506070

1948 1959 1967 1977 1987 1996

Perc

ent

of G

DP

Year 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

Differences in goods vs. services marketing

Goods Services Tangible Intangible

Standardized Heterogeneous

Production separate from consumption

Simultaneous production and consumption

Nonperishable 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 lawer

Implication of Intangibility

Services cannot be patented Services cannot be readily displayed or

communicated Pricing is difficult (actual cost of a unite

of services are hard to determine)

Implication of Heterogeneity

• Service delivery and customer satisfaction depend on employee actions• Service quality depends on many uncontrollable factors• 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

Service marketing mix Traditional marketing mix Expanded mix for services

Traditional marketing mix (1) Product Place Promotion Price

Traditional marketing mix (2)PRODUCT PLACE PROMOTION PRICE Physical good features

Channel type

Promotion blend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Sales promotion Differentiation

Warranties Transportation Publicity Allowances

Product lines Storage

Branding

Expanded mix for services (1)

People Physical evidence Process

Expanded mix for services (2)PEOPLE PHYSICAL

EVIDENCE PROCESS

Employees

Facility design

Flow of activities

Customers Equipment

Number of steps

Communicating culture and values

Signage Level of customer involvement

Employee research Employee dress

Other tangibles

PeopleAll human actors who play a part in service delivery and thus influence the buyers perceptions: namely the firm’s 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 EvidenceThe 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.

ProcessThe 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:

StandardizedCustomized

Number of steps:SimpleComplex

Customer Involvement

Assign Reading

Southwest Airlines : Aligning People, Processes and Physical Evidence

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

Holistic Marketing in Service Firms

Holistic marketing concept: is based on development, design and implementation ofmarketing programs, processes and activitiesthat recognizes their breadth and interdependencies. It holds that “everythingmatters” in marketing and a broad an integrated perspective is often necessary

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

Holistic Marketing in Service Firms