Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

A Note on the PowerPoint Slides...  These PowerPoint slides contain selected exhibits, figures, and tables from the chapters as well as objectives for the chapters. For some chapters, we include extra lecture slides and in-class exercises that we have compiled and used in our classes. The lecture slides are not intended to provide full outlines or complete lectures for the chapters, but rather may be used selectively to enhance class sessions. 1-2

Part 1 FOUNDATIONS FOR SERVICES MARKETING 1-3

Introduction to Services  What are Services?  Why Service Marketing?  Service and Technology  Characteristics of Services  Service Marketing Mix  Staying Focused on the Customer Chapter1 1-4

Objectives for Chapter 1: Introduction to Services  Explain what services are and identify important trends in services.  Explain the need for special service marketing concepts and practices and why the need has developed and is accelerating.  Explore the profound impact of technology on service.  Outline the basic differences between goods and services and the resulting challenges and opportunities for service businesses.  Introduce the expanded marketing mix for services and the philosophy of customer focus as powerful frameworks and themes that are fundamental to the rest of the text. 1-5

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  airline, travel agency, theme park  Others  hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design 1-6

Contributions of Service Industries to U.S. Gross Domestic Product 1-7

Tangibility Spectrum 1-8

Why Service Marketing?  Services dominate U.S. and worldwide economies  Service as a business imperative in goods- focused businesses  Deregulated industries and professional service needs  Service marketing is different  Service leads to profits 1-9

Percent of U.S. Labor Force by Industry 1-10

Percent of U.S. Gross Domestic Product by Industry 1-11

Examples of Goods Companies that are Expanding into Services Boeing 1-12

Eight Central Paradoxes of Technological Products 1-13

Characteristics of Services Compared to Goods Intangibility Perishability Simultaneous Production and Consumption Heterogeneity 1-14

Comparing Goods and Services 1-15

Implications of Intangibility  Services cannot be inventoried  Services cannot be easily patented  Services cannot be readily displayed or communicated  Pricing is difficult 1-16

Implications of Heterogeneity  Service delivery and customer satisfaction depend on employee and customer actions  Service quality depends on many uncontrollable factors  There is no sure knowledge that the service delivered matches what was planned and promoted 1-17

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 1-18

Implications of Perishability  It is difficult to synchronize supply and demand with services  Services cannot be returned or resold 1-19

Search, Experience, and Credence Qualities 1-20

Challenges and Questions for Service Marketers  Defining and improving quality  Designing and testing new services  Communicating and maintaining a consistent image  Accommodating fluctuating demand  Motivating and sustaining employee commitment  Setting prices  Organizing to facilitate strategic and tactical decision-making  Finding a balance between standardization and personalization  Protecting new service concepts from competitors  Communicating quality and value to customers  Ensuring the delivery of consistent quality service 1-21

Traditional Marketing Mix  Elements an organization controls that can be used to satisfy or communicate with customers:  Product  Price  Place  Promotion 1-22

Expanded Mix for Services – The 7 Ps  Product  Price  Place  Promotion  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.  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.  Process  The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems. 1-23

Expanded Marketing Mix for Services 1-24

Ways to Use the 7 Ps Overall Strategic Assessment  How effective is a firm’s service marketing mix?  Is the mix well-aligned with overall vision and strategy?  What are the strengths and weaknesses in terms of the 7 Ps? Specific Service Implementation  Who is the customer?  What is the service?  How effectively does the service marketing mix for a service communicate its benefits and quality?  What changes/ improvements are needed? 1-25