CHAPTER 7 SERVICE PRODUCTS part three: the marketing mix

an opening challenge You are the marketing manager for a company that makes office furniture. Despite being one of the best recognised brands in your home, business-to-business market, you have recently lost a couple of big orders to a foreign rival whose prices are much lower. To make matters worse, their furniture is just as well designed and as good quality as yours. Their brand name is as well recognised too. The production manager has shown that there is no way your company can match their low prices. You need a way to make customers value your products more highly. What are the possibilities?

agenda the services sector the nature of services the 7Ps service quality branding services service recovery

definitions ‘A service is an activity which benefits recipients even though they own nothing extra as a result.’ (Masterson and Pickton, 2010: 241) ‘[A service is] The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need.’ (Palmer, 2005: 2–3)

some service product examples personal – hairdressing – nail bars medical – dentistry – physiotherapy business – consultancy – maintenance financial – banking – insurance electronic – shopping – gaming – social networking leisure – leisure centres – sports facilities hospitality – hotels – restaurants cleaning car servicing

service sector growth more employment in knowledge-based industries consumers have more leisure time and so demand more leisure services popularity of outsourcing services redundant workers setting up their own small businesses, often consultancy, training and coaching complex modern products requiring support services the service element is often the key way to differentiate goods

the intangibility of services AQ – re-set figure type

total service product model AQ – re-set figure type

services are intangible have benefits are time and place dependent – cannot be stored or transported are often inconsistent – especially personal services, e.g. hairdressing cannot be owned the service provider is part of the service the consumer is part of the service

service convenience decision convenience access convenience transaction convenience benefit convenience post-benefit convenience (Berry et al., 2002)

services marketing mix the 7Ps product promotion place price people process physical evidence

people the face of a service business – skills are often what you are selling a key determinant of success – skills, attitudes, efficiency relationship marketing in overseas markets, use expatriates or locals?

physical evidence most services have a tangible element – peripheral products house style and livery facilities ambience

process how service is provided – e.g. self-service or table service customer journey – e.g. through webpages bookings and order processing customer enquiries integration – problems of outsourcing quality control standards

servicescapes ‘The environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service.’ (Bitner and Booms, 1981: 56)

luxury servicescape: the Orient Express (photo courtesy of Dave Pickton)

online servicescapes the website the situation in which they are used – home or office or internet cafe? – hardware – operating system (

service quality know that service intangibility increases perceived risk – cannot usually return a service reassure customers in advance of service delivery build trust

SERVQUAL quality of tangibles – physical evidence service reliability – how dependable is the service? service provider responsiveness – speed of response and helpfulness customer assurance – confidence in the service offering staff empathy – good customer understanding (Parasuraman et al., 1988)

branding services emphasise the tangible add value harder to be consistent – largely dependent on people can’t be sure of quality in advance

service recovery things go wrong more frequently with services bad service encounters can lead to – customer complaints – expensive corrections – loss of business – bad word of mouth a complaint is an opportunity to provide great service recover well, and customers are even happier

summary there are 7Ps in services marketing customers perceive services as risky – inconsistent – unpredictable – and therefore harder to brand some services are more product-reliant – e.g. restaurants, retail some services are more skill-reliant – e.g. photography, car cleaning good service recovery is essential

references Berry, L.L., Seiders, K. and Grewal, D. (2002) ‘Understanding service convenience’, Journal of Marketing, 66 (3): 1–17. Booms, B.H. and Bitner, M.J. (1981) ‘Marketing strategies and organization structures for service firms’, in J.H. Donnelly and W.R. George (eds) Marketing of Services. Chicago: American Marketing Association, pp. 51–67. Masterson, R. and Pickton, D. (2010) Marketing: An Introduction, 2nd edn. London: SAGE. Palmer, A. (2005) Principles of Services Marketing, 4th edn. Maidenhead: McGraw-Hill. Parasuraman, A., Zeitham, V.A. and Berry, L.B. (1988) ‘SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality’, Journal of Retailing, 64 (1): 12–40.