1. 1 Chapter Introduction to Services Services (p. 4): ________________________ include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, provides added value in forms (such as convenience, amusement, timeliness, comfort, or health) that are essentially intangible

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 1.2 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

4. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Exercise - What are the tangible and intangible components provided by a hotel?  TANGIBLE  Furniture  Lighting  Cleanliness  Carpeting  Parking spaces INTANGIBLE

5. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Why Services Marketing? (pp. 8-15) Better services mean higher profits:  Rapid changes in technology  Increasing competition  More demanding customers

6. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Perception: Service Stinks! (pp. 12-15) 1. Increasing use of self-service and technology-based service – _____________________________ 2. Technology-based services hard to implement – failures and poorly designed systems 3. Customer expectations are higher because of excellent service received from some companies – ___________ ______________________________________ 4. Delivering consistent, high quality service is not easy, but companies promise it 5. etc.

7. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Paradoxes and Dark Side of Technology and Service (p. 20-21)  Some customers are not interested or ready to use technology  Employees are often reluctant to accept and integrate technology into their work life  Technology infusion means loss of human contact  Payback in technology investments is often uncertain

8. © 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.

9. © 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

10. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Characteristics of Services Compared to Goods Intangibility – services cannot be seen, felt, tasted, or touched in the same manner that you can sense tangible goods Implications:  Services cannot be readily displayed or communicated - therefore, difficult for consumers to assess  Need to add ___________________________________

11. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Characteristics of Services Compared to Goods Heterogeneity – no two services will be precisely alike Implications:  Service delivery and customer satisfaction depend on __________ and _____________ actions  Service quality depends on many _____________ factors  Need to ___________________ service

12. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Characteristics of Services Compared to Goods Simultaneous Production and Consumption – most services are sold first, then produced and consumed simultaneously Implications:  ________________ participate in and affect the transaction  Customers affect each other  _________________ affect the service outcome  Mass production is difficult

13. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Characteristics of Services Compared to Goods Perishability – services cannot be saved, stored, resold, or returned Implications:  It is difficult to _____________ supply and demand with services  Services cannot be ________________________

14. © 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

15. © 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.

16. © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Table 1.3 Expanded Marketing Mix for Services

17. © 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