1. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Part 1 FOUNDATIONS FOR SERVICES MARKETING

2. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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

3. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Figure 1.1 Contributions of Service Industries to U.S. Gross Domestic Product Source: Inside Sam’s $100 Billion Growth Machine, by David Kirkpatrick, Fortune, June 14, 2004, p 86.

4. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 0 10 20 30 40 50 60 70 80 192919481969197719841999 Percent of U.S. Labor Force Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39. Year Services Manufacturing Mining & Agriculture Figure 1.3 Percent of U.S. Labor Force by Industry

5. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 0 10 20 30 40 50 60 70 80 194819591967197719871999 Percent of GDP Year Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39. Services Manufacturing Mining & Agriculture Figure 1.4 Percent of U.S. Gross Domestic Product by Industry

6. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Service Trends  Service and affluence  Technology  Specialization  Competitive advantage  Poor perception of service  Tiered services  Technology  Higher Expectations  Cost Cutting  Lack of skilled employees  Lip service

7. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Figure 1.2 Tangibility Spectrum Tangible Dominant Intangible Dominant Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines Investment Management Consulting Teaching Fast-food Outlets Fast-food Outlets

8. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Types of Service  Services as products  Customer service  Product Life Cycle  Derived service  Core product  Tangible product  Augmented Product

9. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Table 1.2 Goods versus Services Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing 49 (Fall 1985), pp. 41–50.

10. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Characteristics of Services Compared to Goods Intangibility Perishability Simultaneous Production and Consumption Heterogeneity

11. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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

12. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Implications of Intangibility  Services cannot be inventoried  Services cannot be easily patented  Services cannot be readily displayed or communicated  Pricing is difficult

13. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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

14. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Implications of Perishability  It is difficult to synchronize supply and demand with services  Services cannot be returned or resold

15. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Challenges for Services  Defining and improving quality  Designing and testing new services  Communicating and maintaining a consistent image  Accommodating fluctuating demand  Motivating and sustaining employee commitment  Coordinating marketing, operations, and human resource efforts  Setting prices  Finding a balance between standardization versus personalization  Ensuring the delivery of consistent quality

16. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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

17. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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.

18. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Table 1.3 Expanded Marketing Mix for Services

19. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Table 1.1 Eight Central Paradoxes of Technological Products Source: D. G. Mick and S. Fournier, “Paradoxes of Technology: Consumer Cognizance, Emotions, and Coping Strategies,” Journal of Consumer Research 25 (September 1998), pp. 123–47.