Introducing Services MKT 412 – Services Marketing

Services as part of GDP

Bowen & Ford ‘it seems reasonable to expect that there are differences between managing an organization that produces something that can be seen, touched and held and managing an organization that produces something that is perceived, sensed and experienced’

Rathmell A good is a thing It is an object, an article, a device or a material A service is an act It is a deed, a performance, or an effort

What is a Service? You don’t own the hotel room in which you stayed the night before You don’t get to bring Bono home from his concert There is no transfer of ownership

What have you got to show for your money, time and effort involved? Where is the value ?

Lovelock Services involve a form of rental Customers obtain benefits by “renting” the right to ◦ use a physical object ◦ To hire the labor and expertise of personnel ◦ To pay for access to facilities and networks Value is created when customers benefit from obtaining desired experiences and solutions.

Definition: Services Services are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility. In exchange for their money, time and effort, service customers expect to obtain value from access to goods, labor, professional skills, facilities, networks and systems; but they do not normally take ownership of any of the physical elements involved.

5 Categories of Services Rented goods services - enables customers to obtain the temporary right to exclusive use of a physical good that they prefer not to own.

5 Categories of Services Defined space and place rentals – customers obtain use of a defined portion of a larger space in a building, vehicle or other area, sharing its use with other customers under varying levels of privacy.

5 Categories of Services Labor and expertise rentals – customers hire other people to perform work that they either choose not to do for themselves or are unable to do because they lack the necessary expertise, tools or skills.

5 Categories of Services Access to shared physical environments – it may take place either indoors or outdoors, or a combination of both.

5 Categories of Services Systems and networks: access and usage – customers rent the right to participate in a specified network such as telecommunications, utilities, banking, insurance or specialized information services.

Goods-Service Continuum Salt Dog Food House Car Suit Food Fast TV Airlines Theatre Nursing Teaching

Characteristics of Services Intangibility Inseparability (simultaneous production & consumption) Variability (heterogeneity) Perishability

Differences: Products & Services Most services cannot be inventoried Intangible elements usually dominate value creation Services are often difficult to visualize and understand Customers may be involved in co-production

Differences: Products & Services People may be part of the service experience Operational inputs and outputs tend to vary more widely The time factor often assumes great importance Distribution may take place through non- physical channels

The 4Ps of Marketing

Extended Marketing Mix Physical Env Process Productivity & Quality People Price Product Promotion Place

Process How a firm does things – the underlying processes – is often as important as what it does, particularly if the product is a rather mundane one offered by many competitors. Example: Think about depositing a cheque in HSBC, and another in Janata Bank.

People Most services will always require direct interaction between customers and contact personnel. The nature of these interactions strongly influences how customers perceive service quality.

Physical Environment The appearance and interior designs of buildings, landscaping, vehicles, interior furnishing, equipment, staff members’ uniforms, signs, printed materials, and other visible cues all provide tangible evidence of a firm’s service quality.

Productivity and Quality They are flips sides of a coin – often one comes at the cost of another. Striking a proper balance between the two is very important. ◦ Improving productivity by causing inappropriate cuts in service is undesirable. ◦ Similarly, in trying to improve quality, if we make it too expensive for the customers, we shall lose business.