Introduction to Services Marketing Lecture 1

What is a Service? “Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser” (Quinn, Baruch and Paquette, 1987).

Point to Ponder Is IBM considered a provider of a “service” or a maker of a “product?”

General Discussion First things first: Do you understand the difference between a “primary service” and a “secondary service?” ACTIVITY: NAME SERVICES

Variations of a Service Service Industries and Companies: For example, Adamjee Life Insurance (Industry Bracket: Insurance). These companies sell services as their CORE offering. Services as a Product: IBM and HKB. These companies sell services in relation to products or vice versa. Customer Service: Waridtel. This is provided in conjunction with the primary service, being telecommunications. Derived Service: The value or use derived (obtained) from the product. For example, Razors and Medicines.

Characteristics of Services 1. Intangibility – that cannot be touched. 2. Production (or performing the service) and Consumption (using the service) - happens at the same time 3. Heterogeneity - services are not always delivered the same way 4. Perishability - cannot be put in inventory or stored for later use

Characteristics of Services 1. Intangibility Services cannot be stored Services cannot be protected through patents - therefore an attractive travel package and service can be copied In comparison, a physical object can be patented, and NOT allowed to be copied Prices are difficult to set - depends on customers expectations

Characteristics of Services Intangibility - Marketing Strategies stress tangible cues, eg. Smiling face use personal information, sources, references use word-of-mouth contact customers after they buy to stimulate continued enthusiasm and hope they “talk it up”

Characteristics of Services 2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time Marketing Strategies Emphasize how much you train your people - so their ability to give you good service will be high Have many locations so customers can get to you E.g. Door to door salespeople. Train Ticket

Characteristics of Services 3. Heterogeneity - services are not always delivered the same way It is very difficult to standardize services. In other words, you cannot obtain the same benefit/quality from the service on each occasion and get various results.

Characteristics of Services 4. Perishability - cannot be put in inventory or stored for later use. Demand fluctuates and changes, sometimes depending on the season, or weather E.g. Taxi in the rain, vacation in summer

Service Providers Mastercard insurance telephone services cable services ISPs - internet service providers airlines, first class, economy class banks ?