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Chapter 1
An Introduction to Services
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Chapter Objectives
• Introduces the basic differences between goods and services.
• Highlights the importance of managing the customer's overall service experience.
• Establishes the importance of the service sector in the global economy.
• Introduces the concept of technologically-based e-services
• Discusses the need to develop sustainable service business practices.
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Opening Vignette: Seth Godin
• The Purple Cow was inspired by a drive through the French countryside. There are a lot of great companies out there, but they have become boring.
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What is a Service?
• Services: deeds, efforts, or performances
• Goods: objects, devices, or things
• The distinction between goods and services is not perfectly clear.
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Figure 1.1: Scale of Market Entities
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Scale of Market Entities
• The scale that displays a range of products along a continuum based on their tangibility ranging from
– Tangible dominant• Goods that possess physical properties that
can be felt, tasted, and seen prior to the consumer’s purchase decision.
– Intangible dominant• Services that lack the physical properties
that can be sensed by consumers prior to the purchase decision©2011 Cengage Learning. All rights reserved.
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Figure 1.2: Molecular Model
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• Benefit concept: Encapsulation of benefits of a product in the consumer’s mind
• Tide’s core benefit concept– Might simply be Cleaning or
• Cleanliness• Whiteness• Motherhood
What is benefit concept?
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What is the Servuction model?
Servuction ModelA framework
for understandingthe consumer’s
experience
Servuction ModelA framework
for understandingthe consumer’s
experience
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Figure 1.3: Servuction Model
Customer
Other Customer
Invisible Organization
s and Systems
Servicescape
Contact Personnel/
Service Providers
Source: Adapted from E. Langeard, J. Bateson, C. Lovelock, and P. Eiglier, Marketing of Services: New Insights from Consumers and Managers, Report No 81-104, (Cambridge, MA: Marketing Sciences Institute, 1981).©2011 Cengage Learning. All rights reserved.
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(1) The Servicescape
• The use of physical evidence to design service environments– Ambient conditions: room temperature
and music– Inanimate objects: furnishings– Other physical evidence: signs, symbols
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(2) Contact Personnel / Service Producers
Contact Personnel• Employees other than the primary service
provider who briefly interact with the customer
Service Providers• The primary providers of a core service
– Waiter or waitress– Dentist– Physician– College instructor
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(3) Other Customers
• Customers that share the primary customer’s service experience.
• The presence of other customers can enhance or detract from an individual’s service experience.
• For example unruly customers in a restaurant or a night club, children crying during a church service, or theatergoers carrying on a conversation during a play©2011 Cengage Learning. All rights reserved.
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(4) Organizations and Systems
• Invisible organization and systems– That part of a firm
that reflects the rules, regulations, and processes upon which the organization is based
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Why Study Services?
1. The growth of the global service economy in terms of contributions to Gross Domestic Products (GDP)
2. The growth of the global service workforce
3. The emergence of technologically based e-services that have transformed many service industries
4. The importance of developing sustainable service marketing business practices
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COUNTRY % COUNTRY %
1. Hong Kong2. Bahamas3. West Bank4. France5. United States6. Lebanon7. Japan8. Taiwan9. United Kingdom10.Cuba
92.390.081.078.976.976.275.475.275.074.8
11. Belgium12. Singapore13. Denmark14. Italy15. Portugal16. Germany17. Australia18. New
Zealand19. Canada20. Poland
74.773.273.172.972.872.071.369.769.667.3
Figure 1.4: Worldwide GDP by Service Sector
Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bf.html
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Figure 1.5: Worldwide GDP by Service Labor Force
COUNTRY % COUNTRY %
1. Hong Kong2. Bahamas3. Israel4. United Kingdom5. Canada6. Singapore7. United States8. Argentina9. Norway10.Australia
91.690.082.080.479.077.476.676.076.075.0
11. New Zealand
12. Switzerland13. Belgium14. Denmark15. France16. Ecuador17. Finland18. Germany19. South Korea20. Austria
74.073.273.072.771.870.469.967.867.767.0
Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bf.html
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INDUSTRY SECTOR:
% INDUSTRY SECTOR: %
Agriculture, forestry, fishing, and hunting
1.0 Information 4.4
Mining 2.3 Finance, insurance, real estate, rental, and leasing
20.0
Utilities 2.1 Professional and business services
12.7
Construction 4.1 Educational services, health care, and social assistance
8.1
Manufacturing 11.5 Arts, entertainment, recreation, accommodation, & food service
3.8
Wholesale Trade 5.7 Other services 2.3
Retail Trade 6.2 Government 12.9
Transportation, &Warehousing
2.9
Figure 1.6: Worldwide GDP by Industry Sector
Source: https://www.bea.gov/industry©2011 Cengage Learning. All rights reserved.
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What are E-Services?
• E-services: an electronic service available via the net that completes tasks, solve problems, or conducts transactions.
• E-services have become more commonly known as self-service technologies.– Auto rental chains, banks, insurance
companies, hotels, movie rental chains and theaters, and a variety of other retail operations©2011 Cengage Learning. All rights reserved.
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mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright © 2011 Cengage Learning.
©2011 Cengage Learning. All rights reserved.
