6/25/2016Services Marketing

6/25/2016Services Marketing Course Outline  Intro-features and characteristics  Consumer Behaviour and STP  Services Marketing Mix – 7P’s  Service Quality and Demand Management  Relationship Marketing  Aligning Service Strategy to organization  Understanding specific service industries.  Intro-features and characteristics  Consumer Behaviour and STP  Services Marketing Mix – 7P’s  Service Quality and Demand Management  Relationship Marketing  Aligning Service Strategy to organization  Understanding specific service industries.

6/25/2016Services Marketing Why study services marketing?  Significantly different from goods marketing  Relatively new discipline with a strong interdisciplinary base  importance of services sector  70% - 80% GDP in highly dev. economies  Service sector in India approx 50%  Significantly different from goods marketing  Relatively new discipline with a strong interdisciplinary base  importance of services sector  70% - 80% GDP in highly dev. economies  Service sector in India approx 50%

6/25/2016Services Marketing Transformation of the service economy International -isation Government regulation Social changes Business trends Advances in technology Increased demand and competition Convergence of computers and telecommuni- cations Miniaturisation Digitalisation Enhanced software ‘Hollowing out’ effect Increased services trade Global customers Deregulation/ privatisation New trade agreements in services Increased consumer expectations Increased affluence and leisure time Working women Relaxation of professional assn. standards Marketing emphasis by non- profit organisations Outsourcing Quality movement Franchising Facilitated by information technology Growth and focus on service marketing and management

6/25/2016Services Marketing What is a Product?  Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.  Includes: Goods, services, events, persons, places, organizations, ideas, or some combination thereof.  Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.  Includes: Goods, services, events, persons, places, organizations, ideas, or some combination thereof.

6/25/2016Services Marketing Goods Vs Services G1 (Guys..\Clips\audi-quatro.mpeg)..\Clips\audi-quatro.mpeg G2 (Gals)..\Clips\cadbury's.mpg..\Clips\cadbury's.mpg S1..\Clips\service\qantas.mpg..\Clips\service\qantas.mpg S2..\Clips\service\HSBC-Soc.mpg..\Clips\service\HSBC-Soc.mpg S3..\Clips\service\interM1.mpeg..\Clips\service\interM1.mpeg S4..\Clips\service\nyl_insurance_store.wmv..\Clips\service\nyl_insurance_store.wmv G1 (Guys..\Clips\audi-quatro.mpeg)..\Clips\audi-quatro.mpeg G2 (Gals)..\Clips\cadbury's.mpg..\Clips\cadbury's.mpg S1..\Clips\service\qantas.mpg..\Clips\service\qantas.mpg S2..\Clips\service\HSBC-Soc.mpg..\Clips\service\HSBC-Soc.mpg S3..\Clips\service\interM1.mpeg..\Clips\service\interM1.mpeg S4..\Clips\service\nyl_insurance_store.wmv..\Clips\service\nyl_insurance_store.wmv

6/25/2016Services Marketing What is a Service? “A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.” “ Services are deeds, processes, and performances”. - Valarie Zeithaml & Mary Jo Bitner “A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.” “ Services are deeds, processes, and performances”. - Valarie Zeithaml & Mary Jo Bitner

6/25/2016Services Marketing “ Something that can be bought and sold but which cannot be dropped on your foot !”

6/25/2016Services Marketing Examples of Service Industries  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,  ski resort, rafting  Travel  airlines, travel agencies, theme park  Others:  hair styling, pest control, plumbing, lawn maintenance, counseling services, health club  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,  ski resort, rafting  Travel  airlines, travel agencies, theme park  Others:  hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

6/25/2016Services Marketing

6/25/2016Services Marketing Fed Ex Example Fed Ex Example Clip..\Clips\service\fedex.wmv..\Clips\service\fedex.wmv Fed Ex Example Fed Ex Example Clip..\Clips\service\fedex.wmv..\Clips\service\fedex.wmv

6/25/2016Services Marketing The Nature of A Service “ The service product is essentially a bundle of activities, consisting of the core product - which in Federal Express’ case consists of transporting packages overnight and delivering them next morning to the addressee, plus a cluster of supplementary services.”

6/25/2016Services Marketing The Nature of A Service The Example of Federal Express Overnight Transportation and Delivery of Packages Advice and Communication Order Taking Supplies Pick-up Documentation Tracking Bill Statements Problem Solving

6/25/2016Services Marketing Characteristics of Services

6/25/2016Services Marketing

6/25/2016Services Marketing Tangibility of goods and services

6/25/2016Services Marketing Implications of Intangibility Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult

6/25/2016Services Marketing High in search qualities High in experience qualities High in credence qualities Clothing Furniture Motor vehicle Restaurant meals Vacation Computer repair Legal services Medical surgery Consultancy project Lawn Fertiliser Easy to evaluate Difficult to evaluate Product qualities affect ease of evaluation

6/25/2016Services Marketing Strategies for intangibility  provide tangible evidence  symbolic cues (i.e. uniforms, logos)  tangible cues (i.e. membership cards, ticket, certificates)  reduce risk  emphasise reputation and qualifications  service guarantees  inform and educate customers  provide tangible evidence  symbolic cues (i.e. uniforms, logos)  tangible cues (i.e. membership cards, ticket, certificates)  reduce risk  emphasise reputation and qualifications  service guarantees  inform and educate customers

6/25/2016Services Marketing

6/25/2016Services Marketing

6/25/2016Services Marketing Heterogeneity (Variable)  service quality varies across service encounters  service encounter is the interaction between service employee and customer  ‘moments of truth’  service people are central to service delivery  service is delivered in ‘real’ time  service quality varies across service encounters  service encounter is the interaction between service employee and customer  ‘moments of truth’  service people are central to service delivery  service is delivered in ‘real’ time

6/25/2016Services Marketing Implications 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 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

6/25/2016Services Marketing Strategies for Variability  customer surveys and feedback  training in interpersonal and technical skills  provide product knowledge  ensure back-stage systems support front line staff  use standardisation strategies  franchising, scripts  build quality into all processes  customer surveys and feedback  training in interpersonal and technical skills  provide product knowledge  ensure back-stage systems support front line staff  use standardisation strategies  franchising, scripts  build quality into all processes

6/25/2016Services Marketing

6/25/2016Services Marketing

6/25/2016Services Marketing InseparableInseparable  simultaneous production and consumption  the service provider is the product  the customer is involved (partial employee)  other customers may be present  simultaneous production and consumption  the service provider is the product  the customer is involved (partial employee)  other customers may be present

6/25/2016Services Marketing Implications 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 Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

6/25/2016Services Marketing Strategies for inseparability  manage the service encounter  scripts and roles  front-line staff need both technical and interpersonal skills (recruit & train)  educate the customer (provider –marketer)  manage customer interactions  manage the physical evidence  develop customer service policies and service recovery procedures  manage the service encounter  scripts and roles  front-line staff need both technical and interpersonal skills (recruit & train)  educate the customer (provider –marketer)  manage customer interactions  manage the physical evidence  develop customer service policies and service recovery procedures

6/25/2016Services Marketing

6/25/2016Services Marketing Perishable  services cannot be stored  need to manage supply and demand  services cannot be stored  need to manage supply and demand

6/25/2016Services Marketing

6/25/2016Services Marketing Implications of Perishability It is difficult to synchronize supply and demand with services Services cannot be returned or resold It is difficult to synchronize supply and demand with services Services cannot be returned or resold

6/25/2016Services Marketing How can demand be managed?  accurate demand forecasting  develop off-peak and on-peak strategies  use reservation systems and differential pricing  employ part-time staff  extend hours of operation  Provide self-service options (i.e. ATMs, internet banking)  accurate demand forecasting  develop off-peak and on-peak strategies  use reservation systems and differential pricing  employ part-time staff  extend hours of operation  Provide self-service options (i.e. ATMs, internet banking)

6/25/2016Services Marketing Goods versus Services

6/25/2016Services Marketing Classification of Services Based on Degree Of Cust. Involvement ( Lovelock) 1. People Processing 2. Possession Processing 3. Mental Stimulus Processing 4. Information Processing Based on Degree Of Cust. Involvement ( Lovelock) 1. People Processing 2. Possession Processing 3. Mental Stimulus Processing 4. Information Processing

6/25/2016Services Marketing Four Categories of Services Based on the Process Used  People Processing  Tangible Acts Directed Toward People  e.g. airlines, hospitals, hair stylists, fitness centers  Possession Processing  Tangible Acts Directed Toward Possessions  e.g. repair services, landscaping, house cleaning services  People Processing  Tangible Acts Directed Toward People  e.g. airlines, hospitals, hair stylists, fitness centers  Possession Processing  Tangible Acts Directed Toward Possessions  e.g. repair services, landscaping, house cleaning services  Mental Stimulus Processing  Intangible Acts Directed Toward People  e.g. consulting, education, psychotherapy, broadcasting  Information Processing  Intangible Acts Directed Toward Intangible Assets  e.g. accounting, banking, financial services  Mental Stimulus Processing  Intangible Acts Directed Toward People  e.g. consulting, education, psychotherapy, broadcasting  Information Processing  Intangible Acts Directed Toward Intangible Assets  e.g. accounting, banking, financial services

6/25/2016Services Marketing Levels of Customer Contact with Service Organizations Emphasizes encounters with service personnel Emphasizes encounters with equipment High Low

6/25/2016Services Marketing Other Classification of Services  Degree of Tangibility e.g  Based on Skills and Expertise Required-e.g. Professional & non professional  Business Orientation of service provider  Type of end user  Degree of Tangibility e.g  Based on Skills and Expertise Required-e.g. Professional & non professional  Business Orientation of service provider  Type of end user

6/25/2016 Services Marketing Services Marketing Mix

6/25/2016Services Marketing Traditional Marketing Mix  All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:  Product  Price  Place  Promotion  All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:  Product  Price  Place  Promotion

6/25/2016Services Marketing An expanded marketing mix for services CustomersPrice Place & Time Promotion Product (service) People Process Physical evidence Customers Price Customers Place, cyber- space & time

6/25/2016Services Marketing People  All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. People  All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. customer service employees other customers

6/25/2016Services Marketing Physical Evidence  The 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. Physical Evidence  The 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. atmosphere décor, music etc. equipment facilities uniforms

6/25/2016Services Marketing Process  The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems. Process  The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems. service delivery systems back stage front stage procedures policies

6/25/2016Services Marketing Expanded Marketing Mix for Services

6/25/2016Services Marketing Expanded Marketing Mix for Services

6/25/2016Services Marketing The Services Marketing Triangle Internal Marketing Interactive Marketing External Marketing Company(Management) CustomersEmployees “enabling the promise” “delivering the promise” “setting the promise”

6/25/2016Services Marketing Ways to Use the Services Marketing Triangle Overall Strategic Assessment How is the service organization doing on all three sides of the triangle? Where are the weaknesses? What are the strengths? Overall Strategic Assessment How is the service organization doing on all three sides of the triangle? Where are the weaknesses? What are the strengths? Specific Service Implementation What is being promoted and by whom? How will it be delivered and by whom? Are the supporting systems in place to deliver the promised service? Specific Service Implementation What is being promoted and by whom? How will it be delivered and by whom? Are the supporting systems in place to deliver the promised service?

6/25/2016Services Marketing Marketing Analysis Framework 3 C’s C ustomers C ompetitors C ompany S ( Segment )T ( Target) P ( Position ) Market Intelligence 4 P’s Product Price Place Promotion

6/25/2016Services Marketing Challenges for Services  Defining and improving quality  Communicating and testing new services  Communicating and maintaining a consistent image  Motivating and sustaining employee commitment  Coordinating marketing, operations and human resource efforts  Setting prices  Standardization versus personalization  Defining and improving quality  Communicating and testing new services  Communicating and maintaining a consistent image  Motivating and sustaining employee commitment  Coordinating marketing, operations and human resource efforts  Setting prices  Standardization versus personalization

6/25/2016Services Marketing