Embed Size (px)
Citation preview
Services Marketing
MTG 410MTG 410
Fall 2000Fall 2000
Prof: Donna J. Hill, Ph.D.Prof: Donna J. Hill, Ph.D.
What Are Services?
Services are deeds, processes, and Services are deeds, processes, and performances.performances.– Nature of product.Nature of product.– Greater involvement of customers in the Greater involvement of customers in the
production process.production process.– People as part of the product.People as part of the product.– Greater difficulties in maintaining quality Greater difficulties in maintaining quality
control standards.control standards.
A Different Context for Services Marketing
Narrow definition of marketing by other Narrow definition of marketing by other managers.managers.
Limited appreciation for marketing skills.Limited appreciation for marketing skills. Different organizational structure.Different organizational structure. A relative lack of competitive data.A relative lack of competitive data. Problems determining costs.Problems determining costs. Constraints and opportunities facing Constraints and opportunities facing
marketers of public and nonprofits.marketers of public and nonprofits.
Examples of Service IndustriesExamples of Service Industries Health CareHealth Care
– hospital, medical practice, dentistry, eye carehospital, medical practice, dentistry, eye care Professional ServicesProfessional Services
– accounting, legal, architecturalaccounting, legal, architectural Financial ServicesFinancial Services
– banking, investment advising, insurancebanking, investment advising, insurance HospitalityHospitality
– restaurant, hotel/motel, bed & breakfast, restaurant, hotel/motel, bed & breakfast, – ski resort, raftingski resort, rafting
TravelTravel– airlines, travel agencies, theme parkairlines, travel agencies, theme park
Others:Others:– hair styling, pest control, plumbing, lawn maintenance, hair styling, pest control, plumbing, lawn maintenance,
counseling services, health clubcounseling services, health club
Figure 1-2 Figure 1-2
Percent of Percent of U.S. Labor Force by IndustryU.S. Labor Force by Industry
0
10
20
30
40
50
60
70
80
1929 1948 1969 1977 1984 1996
Per
cent
of
GD
P
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
0
10
20
30
40
50
60
70
80
1948 1959 1967 1977 1987 1996
Figure 1-3 Figure 1-3
Percent of U.S. Gross Domestic Percent of U.S. Gross Domestic Product by IndustryProduct by Industry
Perc
ent o
f G
DP
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
Importance of Service Sector
$3.52 trillion of U.S. GDP $3.52 trillion of U.S. GDP 53.2% of U.S. GDP53.2% of U.S. GDP 71% of total employment71% of total employment 91% of new jobs from 1992 to 91% of new jobs from 1992 to
20052005
Services
Fast growing services for the next decadeHealth servicesBusiness servicesFinance, insurance, real estateResidential care
Computer & data processingChild day-careSocial servicesTransportation services
Factors Contributing to Growth
Movement to information ageMovement to information age Shift to industrialized economyShift to industrialized economy Aging populationAging population Longer life expectanciesLonger life expectancies Increase leisure timeIncrease leisure time High per capita incomeHigh per capita income Changing social and cultural Changing social and cultural
valuesvalues Advances in technologyAdvances in technology
Challenges for ServicesChallenges for Services Defining and improving qualityDefining and improving quality Communicating and testing new servicesCommunicating and testing new services Communicating and maintaining a consistent Communicating and maintaining a consistent
imageimage Motivating and sustaining employee Motivating and sustaining employee
commitmentcommitment Coordinating marketing, operations and Coordinating marketing, operations and
human resource effortshuman resource efforts Setting pricesSetting prices Standardization versus personalizationStandardization versus personalization
Differences BetweenDifferences Between Goods and Services Goods and Services
Intangibility
PerishabilitySimultaneous
Productionand
Consumption
Heterogeneity
Figure 1-1Figure 1-1
Tangibility SpectrumTangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
Implications of IntangibilityImplications of Intangibility
Services cannot be inventoriedServices cannot be inventoried Services cannot be patentedServices cannot be patented Services cannot be readily Services cannot be readily
displayed or communicateddisplayed or communicated Pricing is difficultPricing is difficult
Implications of HeterogeneityImplications of Heterogeneity
Service delivery and customer Service delivery and customer satisfaction depend on employee satisfaction depend on employee actionsactions
Service quality depends on many Service quality depends on many uncontrollable factorsuncontrollable factors
There is no sure knowledge that the There is no sure knowledge that the service delivered matches what was service delivered matches what was planned and promotedplanned and promoted
Implications of Simultaneous Implications of Simultaneous Production and ConsumptionProduction and Consumption
Customers participate in and affect Customers participate in and affect the transactionthe transaction
Customers affect each otherCustomers affect each other Employees affect the service Employees affect the service
outcomeoutcome Decentralization may be essentialDecentralization may be essential Mass production is difficultMass production is difficult
Implications of PerishabilityImplications of Perishability
It is difficult to synchronize supply It is difficult to synchronize supply and demand with servicesand demand with services
Services cannot be returned or Services cannot be returned or resoldresold
Table 1-2 Table 1-2
Services are DifferentServices are DifferentGoods Services Resulting ImplicationsTangible Intangible Services cannot be inventoried.
Services cannot be patented.Services cannot be readily displayed or communicated.Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend onemployee actions.Service quality depends on many uncontrollable factors.There is no sure knowledge that the service deliveredmatches what was planned and promoted.
Productionseparate fromconsumption
Simultaneousproduction andconsumption
Customers participate in and affect the transaction.Customers affect each other.Employees affect the service outcome.Decentralization may be essential.Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand withservices.Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,” Journal of Marketing 49 (Spring 1985): 33-46.
Figure 1-5Figure 1-5
The Services Marketing TriangleThe Services Marketing Triangle
Internal Marketing
Interactive Marketing
External Marketing
Company(Management)
CustomersEmployees
“enabling thepromise”
“delivering the promise”
“setting thepromise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Services Marketing Triangle Services Marketing Triangle Applications ExerciseApplications Exercise
Focus on a service organization. In the Focus on a service organization. In the context you are focusing on, who occupies context you are focusing on, who occupies each of the three points of the triangle?each of the three points of the triangle?
How is each type of marketing being carried How is each type of marketing being carried out currently?out currently?
Are the three sides of the triangle well Are the three sides of the triangle well aligned?aligned?
Are there specific challenges or barriers in Are there specific challenges or barriers in any of the three areas?any of the three areas?
Ways to Use the Ways to Use the Services Marketing TriangleServices Marketing Triangle
Overall Strategic Overall Strategic AssessmentAssessment
• How is the service How is the service organization doing on organization doing on all three sides of the all three sides of the triangle?triangle?
• Where are the Where are the weaknesses?weaknesses?
• What are the strengths?What are the strengths?
Specific Service Specific Service ImplementationImplementation
• What is being promoted and What is being promoted and by whom?by whom?
• How will it be delivered and How will it be delivered and by whom?by whom?
• Are the supporting systems Are the supporting systems in place to deliver the in place to deliver the promised service?promised service?
Source: Adapted from A. Parasuraman
Company
CustomersProviders
Technology
Figure 1-6 Figure 1-6
The Services Triangle The Services Triangle and Technologyand Technology
Services Marketing Mix:Services Marketing Mix:7 Ps for Services7 Ps for Services
Traditional Marketing MixTraditional Marketing Mix
Expanded Mix for Services: 7 PsExpanded Mix for Services: 7 Ps
Building Customer Relationships Building Customer Relationships Through People, Processes, and Through People, Processes, and Physical EvidencePhysical Evidence
Ways to Use the 7 PsWays to Use the 7 Ps
Traditional Marketing MixTraditional Marketing Mix
All elements within the control of the firm All elements within the control of the firm that communicate the firm’s capabilities and that communicate the firm’s capabilities and image to customers or that influence customer image to customers or that influence customer satisfaction with the firm’s product and services:satisfaction with the firm’s product and services:
ProductProduct
PricePrice
PlacePlace
PromotionPromotion
Expanded Mix for Services --Expanded Mix for Services --the 7 Psthe 7 Ps
ProductProduct PricePrice PlacePlace PromotionPromotion PeoplePeople ProcessProcess Physical EvidencePhysical Evidence
Table 1-3Table 1-3
Expanded Marketing Mix for Expanded Marketing Mix for ServicesServices
PRODUCT PLACE PROMOTION PRICE
Physical goodfeatures
Channel type Promotionblend
Flexibility
Quality level Exposure Salespeople Price level
Accessories Intermediaries Advertising Terms
Packaging Outlet location Salespromotion
Differentiation
Warranties Transportation Publicity Allowances
Product lines Storage
Branding
PEOPLE PHYSICALEVIDENCE
PROCESS
Employees Facility design Flow of activities
Customers Equipment Number of steps
Communicatingculture and values
Signage Level of customerinvolvement
Employee research Employee dress
Other tangibles
Table 1-3 (Continued)Table 1-3 (Continued)
Expanded Marketing Mix for Expanded Marketing Mix for ServicesServices
Ways to Use the 7 PsWays to Use the 7 PsOverall Strategic Overall Strategic
AssessmentAssessment How effective is a firm’s How effective is a firm’s
services marketing mix?services marketing mix? Is the mix well-aligned Is the mix well-aligned
with overall vision and with overall vision and strategy?strategy?
What are the strengths What are the strengths and weaknesses in and weaknesses in terms of the 7 Ps?terms of the 7 Ps?
Specific Service Specific Service ImplementationImplementation
Who is the customer?Who is the customer? What is the service?What is the service? How effectively does the How effectively does the
services marketing mix for a services marketing mix for a service communicate its service communicate its benefits and quality?benefits and quality?
What What changes/improvements are changes/improvements are needed?needed?
Characteristics of Services Intangibility - Lack of tangible assets which can Intangibility - Lack of tangible assets which can
be seen, touched, or smelled prior to purchase.be seen, touched, or smelled prior to purchase. Perishability - Inability of a service to be Perishability - Inability of a service to be
inventoried or stored.inventoried or stored. Inseparability - Simultaneous production and Inseparability - Simultaneous production and
consumption of a service.consumption of a service. Variability - Unwanted or random levels of Variability - Unwanted or random levels of
service quality customers receive when they service quality customers receive when they patronize a service firm.patronize a service firm.
