FOUNDATIONS FOR SERVICES MARKETING
DEFINITION:
Services are deeds, processes, and performances provided or coproduced by one entity or person for another entity or
person. Services are activities or benefits offered for sale that are essentially intangible and don’t result in the ownership
of anything
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
Overview: Why Services Matter
1. Services dominate U.S. and worldwide economies
2. Services are growing dramatically
3. Service leads to customer retention and loyalty
4. Service leads to profits
5. Services help manufacturing companies differentiate themselves
Comparing Goods and Services
Why do firms focus on Services?
Services can provide higher profit margins and growth potential than products
Customer satisfaction and loyalty are driven by service excellence
Services can be used as a differentiation strategy in competitive markets
Why study Services Marketing?
Service-based economies
Service as a business imperative in manufacturing and IT
Deregulated industries and professional service needs
Services marketing is different
Service equals profits
What is Service?
The Old View: Service is a technical after-sale function that is provided by the service department.
The New View: Service includes every interaction between any customer and anyone representing the company,
including:
Service Can Mean all of These:
Service as a product, Customer service, Services as value add for goods, Service embedded in a tangible product
Characteristics of Services Compared to Goods
1. Intangibility
2. Heterogeneity
3. Simultaneous production and consumption
4. Perishability
Implications of Intangibility
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or communicated
Pricing is difficult
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
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
Implications of Perishability
It is difficult to synchronize supply and demand with services
Services cannot be returned or resold
Challenges for Services
1. Defining and improving quality
2. Ensuring the delivery of consistent quality
3. Designing and testing new services
4. Communicating and maintaining a consistent image
5. Accommodating fluctuating demand
6. Motivating and sustaining employee commitment
7. Coordinating marketing, operations, and human resource efforts
8. Setting prices
9. Finding a balance between standardization versus customization
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
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.
Expanded Marketing Mix for Services
Chapter 2 The Gaps Model of Service Quality
The Gaps Model of Service Quality
The Customer Gap
Key Factors Leading to the Customer Gap
Gaps Model of Service Quality
Customer Gap: difference between customer expectations and perceptions
Provider Gap 1 (Knowledge Gap): not knowing what customers expect
Provider Gap 2 (Service Design & Standards Gap): not having the right service designs and standards
Provider Gap 3 (Service Performance Gap): not delivering to service standards
Provider Gap 4 (Communication Gap): not matching performance to promises
Provider Gap 1
Provider Gap 2
Provider Gap 3
Provider Gap 4
Ways to Use Gap Analysis
Chapter 3 Customer Behavior in Services
Search Qualities: attributes a consumer can determine prior to purchase of a product e.g.
Experience Qualities: Aspects of a service such as (courtesy, attention, satisfaction) can determine after purchase (or
during consumption) of a product.
Credence Qualities: characteristics that may be impossible to evaluate even after purchase and consumption e.g.
medical procedures, automobiles repairs & dietary supplements
Continuum of Evaluation for Different Types of Products
Stages in Consumer Decision Making and Evaluation of Services
The stages in consumer decision-making and evaluation of services typically include the following five steps:
1. *Problem Recognition*: The consumer identifies a need or problem that requires a solution, prompting the search for
a service.
2. *Information Search*: The consumer seeks information about available services, which may involve online research,
asking for recommendations, or reviewing advertisements.
3. *Evaluation of Alternatives*: The consumer compares different service options based on criteria such as price, quality,
reputation, and customer reviews to determine which service best meets their needs.
4. *Purchase Decision*: The consumer makes the final decision to select a service and proceeds with the purchase,
which may involve booking, subscribing, or engaging the service provider.
5. *Post-Purchase Evaluation*: After using the service, the consumer reflects on their experience, assessing satisfaction
and determining if it met or exceeded their expectations. This evaluation influences future purchasing behavior
and brand loyalty.
Need Recognition
Information Search
Purchase Decision Model
Issues to Consider in Examining the Consumer’s Service Experience
Services as processes
Involve a sequence of steps
Service provision as drama
Involve various roles to play, actors, directors and settings
Service roles and scripts
Must have ready made roles and scripts written
The compatibility of service customers
Roles, scripts and setting much match with the audience and viewers
Customer coproduction
Customers play a major role to provide feedback and comments
Emotion and mood
Total customer experience
