1. 1 Marketing Services Arild Aspelund Associate Professor

2. 2 Outline What are services? The growth of services What differentiate service marketing from product marketing? Holistic marketing of services

3. 3 Defining services Any act of performance that one party can offer another that is essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a physical product.

4. 4 - Why services? - A global trend! 2004 (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products (S) Services: Value from enhancing the capabilities of things (customizing, distributing, etc.) and interactions between things Jim Spohrer (2005) The largest labor force migration in human history is underway, driven by urbanization, global communications, low cost labor, business growth and technology innovation.

5. 5 Service mix Pure tangible good Good w/ accompanying services Hybrid Service w/ accompanying goods Pure service

6. 6 The Goods – Service Continuum

7. 7 Distinguishing Characteristics of Services Intangibility –A service is not physical and you need to make some evidences Inseparability –A service is normally produced, consumed and evaluated simultaneously Variability –Services are heavily dependent on the person that provide them Perishability –Services can not be stored

8. 8 Service Characteristics - Intangibility Intangibility –“Manage the evidence” and “tangibilize the intangible” –Create physical image of service offer and add physical evidence The tangibilization and evidence check list: –Place –People –Equipment –Communication material –Symbols –Price

9. 9 Service Characteristics - Inseparability Inseparability –Typically produced, consumed and evaluated simultaneously If the availability of service-producers are constrained –Use pricing to reduce demand –Increase service efficiency Serving multiple customers simultaneously Increase speed of service providing Focus efforts on training of front staff for better service evaluation

10. 10 Service Characteristics - Variability Variability –Service quality depends heavily on the person that provides them How to secure service quality –Good hiring and training procedures –Identify customer service evaluation criteria –Standardize the service – performance process –Monitor customer satisfaction

11. 11 Service Characteristics - Perishability Perishability –Services cannot be stored –Vulnerable to fluctuations in demand Demand side Differential pricing Nonpeak demand Complementary services Reservation systems Supply side Part-time employees Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion

12. 12 Holistic Marketing in Service Firms Holistic marketing –Along the dimensions: Internal marketing Integrated marketing Relationship marketing Social responsibility marketing The special importance of internal marketing of services –Since service marketing is so dependent of the provider, internal marketing is especially important –The service marketing department is at its most valuable when it makes the rest of the organization better able to market the firm’s services

13. 13 Summary and Conclusions Summary –To extract value from service sciences are one of the major managerial challenges of the modern western economy –Services are different from goods Intangibility Inseparability Variability Perishability –These differences gives raise to certain differences in marketing priorities, but basic marketing principles still apply! Continuation –Product Strategy