Upload
dylan-roberts
View
215
Download
2
Tags:
Embed Size (px)
Citation preview
The Fundamentals of Services The Fundamentals of Services MarketingMarketing
Week 2Week 2
Reasons for studying services Reasons for studying services (Previous lecture)(Previous lecture)
Service sector dominates economy in most Service sector dominates economy in most nationsnations
Most new jobs are generated by servicesMost new jobs are generated by services
Powerful forces—government policies, social Powerful forces—government policies, social changes, business trends, IT advances, and changes, business trends, IT advances, and globalisation—are transforming service globalisation—are transforming service marketsmarkets
Defining services Defining services (1)(1)
The historical viewThe historical view
Smith (1776): Services are different from Smith (1776): Services are different from goods because they are goods because they are perishableperishable
Say (1803): As services are Say (1803): As services are immaterial, immaterial, consumption consumption cannot be separatedcannot be separated from from productionproduction
‘‘A service is any activity or A service is any activity or benefitbenefit that one that one party can offer to another which is essentially party can offer to another which is essentially intangibleintangible and does not result in the ownership and does not result in the ownership of anything’. of anything’. Kotler, Armstrong, Wong and Saunders (2008)Kotler, Armstrong, Wong and Saunders (2008)
Defining services Defining services (2)(2)
““Service Service benefits benefits are delivered through an are delivered through an interactive experienceinteractive experience involving the consumer to involving the consumer to a greater or lesser extent” a greater or lesser extent” (Bateson 1999)(Bateson 1999)
‘ ‘ Services are originally intangible and relatively Services are originally intangible and relatively quickly quickly perishableperishable activities whose buying, activities whose buying, which which does not always lead to material does not always lead to material possessionpossession, takes place in an , takes place in an interactive interactive processprocess aimed at creating customer satisfaction’ aimed at creating customer satisfaction’
((Kasper, Helsdingen and Gabbott 2006)Kasper, Helsdingen and Gabbott 2006)
Basic Characteristics of Basic Characteristics of services: The 5 I’s (1)services: The 5 I’s (1)
(In) Tangibility(In) Tangibility InseparabilityInseparability InconsistencyInconsistency InventoryInventory Inability to ownInability to own
Basic characteristics (2)Basic characteristics (2)
(In)tangibility- Service is an
experience, not a thing
- Enhanced perceived risk when a customer buys a service
Categories of service mix
- - Pure tangible good
- Tangible good with accompanying services
- Hybrid- Major service with
accompanying minor goods and services
- Pure service
Basic Characteristics Basic Characteristics (3)(3)
Pure tangible good ?
Tangible good with accompanying
service
Tangible good with accompanying
service
Hybrid
Major service accompanying goods and service
Pure service ?
Marketing implications: provision of tangible Marketing implications: provision of tangible evidence and brand buildingevidence and brand building
- - use of use of appropriateappropriate communication communication
symbols, messages, uniforms symbols, messages, uniforms
McDonald’s arches readily accepted worldwide - standardised McDonald’s arches readily accepted worldwide - standardised approachapproach
Thai Airlines’ uniforms are traditional conveying a Thai experienceThai Airlines’ uniforms are traditional conveying a Thai experience
Basic characteristics (4) - Basic characteristics (4) - InseparabilityInseparability
Production and consumption occurs simultaneously Consumer participation required in production of
service (In some cases) service production can begin in
presence of customer Role performance in service delivery
Invisible
to
customer
Visible
to customer
Marketing implicationsMarketing implications
Recruitment, training and remuneration Recruitment, training and remuneration becomes a significant activity and large becomes a significant activity and large part of the budgetpart of the budget
Staff are part of the visible evidence of the Staff are part of the visible evidence of the company brandcompany brand
Basic characteristics (5) –Basic characteristics (5) – Inconsistency/ variability/heterogeneity
Match service to customer requirementsMatch service to customer requirements Standardisation of service is a challengeStandardisation of service is a challenge- Balance employee control and customer’s
perceived needs- TimeTime spent on service delivery will varyspent on service delivery will vary- AdaptationAdaptation of service blue print of service blue print
Need for applying quality control systemsNeed for applying quality control systems
e.g. using a standardised franchising packagee.g. using a standardised franchising package
Basic characteristics (6) – Inventory (Degree of perishability)
Increased intangibility,lower opportunity to store service, increased perishability
Manage fluctuations in demand
Increase efficiency (reduce costs/increase sales)
Strategies to manage perishability
self service during busy periods
Differential pricing Complementary
services Reservation systems Part-time employees Peak-time efficiency Increased consumer
participation Shared services Facilities for future
expansion
Programmes to Programmes to Compensate for Uneven DemandCompensate for Uneven Demand
IndustryIndustry ProgrammeProgramme
Airlines Night rates, group and tour fares, family discounts, advance purchase super-savers, 24-hour round-trip discounts, and low-season fares
Hotels Off-season and group rates, theme weekends, Valentinegetaway, sports packages, family and senior citizens discounts
Telephone Evening, night and weekend rates Barber shops Evening appointments and family rates Automobile repair Specials – tyre balancing, tune-ups and lubrication Dentists Call-back reminders and family discounts Education Weekend classes, adult education and military
programmes Entertainment Matinee specials and midnight ShowTime specials (Movies) Recreation Midday specials, family night, teen night, and all-
night (Bowling) rates Recreation Off-season specials, group and senior citizens rates,
(Parks) family rates, late-night rates, and advance purchase discounts
Basic characteristics (7) Basic characteristics (7) Inability Inability to ownto own
Does not result in transfer of titleDoes not result in transfer of title- A package tour?A package tour?- A services marketing lecture?A services marketing lecture?- Renting a carRenting a car- A life insurance policy: possession of a A life insurance policy: possession of a
policy is not the core service,policy is not the core service,
but the security provided inbut the security provided in
case of illness or a fire at homecase of illness or a fire at home
Criteria for classifying services (1)Criteria for classifying services (1) Strategic in natureStrategic in nature
OwnershipOwnership: rented, : rented, leased or ownedleased or owned (In) Tangibility(In) Tangibility continuum continuum eg. Information boxes in eg. Information boxes in tourist areas, after tourist areas, after sales servicesales service Profit vs not for profitProfit vs not for profit: who : who sets the price or who sets the price or who regulates the service regulates the service offering?offering? Markets and industriesMarkets and industries: use of: use of Standard Industry Codes Standard Industry Codes (SICs) to define service at (SICs) to define service at an industry level such as an industry level such as gas, electricity and watergas, electricity and water supplysupply Service delivery processService delivery process: tailor-made: tailor-made vs. standardised delivery, levelvs. standardised delivery, level of customer participationof customer participation External and internal marketsExternal and internal markets
Operational in natureOperational in nature
Customer’s buying behaviourCustomer’s buying behaviour - speciality or convenience - speciality or convenience servicesservices Relationship between service Relationship between service
provider and customerprovider and customer - subscription-based services - subscription-based services - membership-based services- membership-based services
Service provider’s knowledge/skills & Service provider’s knowledge/skills & capacitycapacity
-- Assets and capabilitiesAssets and capabilities - standardised or customised ser.- standardised or customised ser. - knowledge-based services, - knowledge-based services, property-based services, property-based services, facilitating services, etc facilitating services, etc Physical site of service deliveryPhysical site of service delivery - attending a class at university- attending a class at university - home visit by a doctor- home visit by a doctor
Classifying services (2)Classifying services (2)
low budget
airlinesPizza Hut
Five star resorts, private jetsDoctors, accountants
Marketing services
Marketing services – External Marketing services – External market (Customers)market (Customers)
Managing differentiationManaging differentiation Offering
Primary service package Secondary service features
Faster and Better Delivery Reliability Resilience/flexibility Innovativeness
Image Managing Service QualityManaging Service Quality
Perceived service – management perceptions of
customer expectations Expected service - functions of customer's past experience
personal needs and word of mouth communication by consumers
Managing services – External market Managing services – External market (customers)(customers)
Five gaps that cause unsuccessful delivery Gap between consumer
expectation and management perception
Gap between management perception and service-quality specification
Gap between service-quality specification and service delivery
Gap between service delivery and external communications
Gap between perceived service and expected service
Solutions Customer surveys Vision, commitment
and systems to manage the process
Defining role, clarity in communication about products, customers and service
Keeping promises to customers
Marketing services – Internal Marketing services – Internal Marketing (Employees)Marketing (Employees)
Employees are seen as customersEmployees are seen as customers
- the best possible people need to be - the best possible people need to be
employed and retainedemployed and retained
- they will do the best possible work- they will do the best possible work Satisfied employees a vehicle for staff Satisfied employees a vehicle for staff
acquisition, motivation and retentionacquisition, motivation and retention Satisfied employees a vehicle for Satisfied employees a vehicle for
promotion of customer-oriented behaviourpromotion of customer-oriented behaviour
Empowerment of employees – Empowerment of employees – Interactive marketingInteractive marketing
Level ofProvider discretion
Low
High
Degree of customisation
Low High
Service productionLinee.g. public transportfast food, cinema
Menu Service
e.g. personal bankingSatellite TV
Performance Servicee.g. Large scale education, theatre Performance, healthcare
Professional servicee.g. legal adviceconsultancyspecialist jobs
SummarySummary
Key characteristics of services (5I’s)
Classifying different services
Marketing service to key stakeholders