OVERVIEW OF SERVICES
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Specific Objectives:
Customer Satisfaction/Value
Reason why Services Marketing is important Concept of & Classification of services Basic differences between goods and services and the resulting challenges and strategies for service businesses
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MARKETING ORIENTATION
Production, Product, Selling, Marketing, Societal marketing Concepts Marketing concept takes an outside-in perspective. It starts with a well defined market, focuses on customer needs, coordinates all the marketing activities affecting customers, and makes profits by creating long-term customer relationships based on customer value and satisfaction.
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CUSTOMER SATISFACTION
Satisfaction a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance to his/her expectations Result - satisfied, dissatisfied, or delighted customer
CUSTOMER VALUE
Customer perceived value the difference between customers evaluation of all the benefits and all the costs of an offering relative to those of competing offers
CUSTOMER VALUE
Total customer cost the bundle of costs (money, effort, time) customers expect to incur in evaluating, obtaining, using and disposing of an offering
Total customer value the perceived monetary value of the benefits (economic, functional, psychological) customers expect
Customer Value Marketing a principle of enlightened marketing that holds that a company should put most of its resources into customer value-building marketing investments eg. product quality improvement vs one-shot sales promotion
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What is a Service?
satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Its production may or may not be tied to a physical product. (Kotler)
create benefits for customers by bringing about a desired change in or on behalf of the recipient (Lovelock & Wright)
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What is a Service?
relatively quickly perishable activities whose buying, which does not lead to material possession, takes place in an interactive process aimed at creating customer satisfaction (Kasper, Gabbott, Helsdingen)
Service Sector the portion of a nations economy represented by services of all kinds, including those offered by public and non-profit organisations
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Classification of Services
(Fisk & Tansuhaj, 1985)
Financial Services Health Care Services Professional Services Hospitality, Travel & Tourism Services Sports, Arts and Entertainment Services Telecommunication Services
Educational & Research Services Channel, Physical Distribution, Rental & Leasing Services Personal, Repair & Maintenance Services Governmental, QuasiGovernmental & Nonprofit services
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Service Industries and companies include those industries and companies typically classified within the service sector whose core product is a service. Eg. Air Jamaica (transportation), The Jamaica Pegasus (lodging), UHWI (health care), Mayberry Investments (financial)
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Services as Products represent a wide range of intangible product offerings that customer value and pay for in the marketplace. Service products are sold by service companies and non service companies such as manufacturers and technology companies. Eg. Pharmacies providing consultancy and prescription delivery services; Hewlett Packard providing business consultancy
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Customer Service is a critical aspect of what we mean by service. Customer service is the service provided in support of a companys core products. It can be offered on-site, via telephone or via the internet. Some companies operate customer service call centers.
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Derived Service it is a view that all products and physical goods are valued for the services they provide. It suggests that the value derived from physical goods is really the service provided by the good, not the good itself. Eg. Pharmaceutical provides medical services, a razor provides barbering services and computers provide information and data manipulation services
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Service Continuum
provides another way of looking at the differences between goods & services. The scale displays a range of products along a continuum based on their degree of tangibility Pure goods are tangible dominant Pure services are intangible dominant Businesses e.g. fast foods or airlines, which contain both goods & services components fall in the middle of the continuum.
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Products/Services Continuum
Pure Tangible Good
Hybrid Offer
Pure Service
Soap
Auto With Airline Trip Accompanying Restaurant With Doctors Repair Accompanying Exam Services Snacks
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Tangibility Spectrum
Salt
Intangible Dominant
Tangible Dominant
Teaching 18
(profit & nonprofit) are now dominating global economies contributing to GDP a change in perspective from the industrial management model (location, sales promotion & advertising drives sales revenue) to a marketfocused model (where the focus is to serve the customer & to support the front-line employees).
Increased competitiveness of service industries since the 1980s is forcing many service industries to be competitive adopt commercial principles
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Government policies Less regulated markets increased competition eg. Banking, telecommunications, universities Privatization Utility companies New agreements on Trade in Services (GATS) Movement of services across geographic borders are now being facilitated through several global and regional trade agreements (NAFTA, EU, CSM)
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Social changes
More people short of time childcare, house cleaning, laundry, food preparation Increased desire to buy experiences vs things more disposable income (vacation, travel, wellness Rising ownership of computers/mobile devices access services across the world
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Business trends
Hewlett Packard, Xerox, Ford, GE, uses what was once supplementary services as profit-seeking services for eg. Consultation, maintenance & repair, delivery & installation, training
Growth in franchising
Convergence of computers and telecommunications Miniaturization creates more compact mobile equipment Wireless networking Growth of the internet
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Internationalisation/globalisation More services are being delivered through national and global chains Domestic airlines have extended into foreign route networks, hotels (ritz), food chains (TGIF), body shop etc Increased international travel
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CLASSIFICATION OF SERVICES
Instrumental Service
Service is performed by others to achieve goals without direct involvement of the consumer in the task. e.g. hiring a
gardener
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CLASSIFICATION OF SERVICES
Consummatory Service
The consumer is directly involved and is immediately gratified by service performed. e.g.
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SERVICE CHARACTERISTICS
INTANGIBILITY
Intangibility a service cannot be touched or sensed in the same manner as physical goods can
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INTANGIBILITY
Challenges
Lack of service inventories, Lack of patent protection, Difficulty in displaying, communicating services Difficulty in pricing services
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INTANGIBILITY
(contd)
Solutions to the challenges of Intangibility: Use of tangible clues Use of personal information, sources, references, word-of-mouth (testimonials) Creation of a strong organizational image (service brand)
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INSEPARABILITY
(contd)
Inseparability/Simultaneity services cannot be separated from their providers whether a person/device - they are produced and consumed at the same time
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INSEPARABILITY
(contd)
Challenge Requires physical connection of service provider to the service Employees affect the service outcome Special challenges in Mass production of Services offering services to a geographically widespread target market
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INSEPARABILITY
(contd)
Challenge Involvement of customer and other customers in the production process requires other considerations Design environment to accommodate the customer Difficulty in maintaining fixed schedules which can affect level of efficiency Effect of customer behaviour on service outcome (controlling negative behaviour) 36
INSEPARABILITY (contd)
Solutions to the challenges of Inseparability Proper selection & training of service providers Consumer management Use of Multi-site locations/enhance through technology Effective Service recovery strategies
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VARIABILITY
3.
Heterogeneity/Variability variation in quality from one service transaction to the next. Service may vary depending on the who, where, when and how of the service
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VARIABILITY
Challenges: Service delivery and customer satisfaction depend on employee actions It is very difficult to standardize services Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted
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VARIABILITY
(contd)
Requires careful selection of personnel and extensive training Automation of services where possible
Flowcharts and Service blueprints, Control charts and Cause & Effect charts
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VARIABILITY
(contd)
Strategy of Customization Requires modifying service for each individual (customising) However, customers may be unwilling to pay extra for customisation (it may take extra time for service delivery)
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PERISHABILITY
4. Perishability services cannot be stored or their unused capacity cannot be reserved, inventoried for future use. Services are time sensitive.
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PERISHABILITY
Challenges: Difficulty matching supply & demand Long waiting periods when demand is high Idle service in times of low demand Services cannot be returned or resold
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PERISHABILITY
(contd)
Creative pricing Reservation systems Developing complementary services and nonpeak demand
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PERISHABILITY (contd)
Solutions to the challenges of Perishability (contd): Supply Strategy Utilise part-time employees, Capacity sharing, Utilise third parties, Increase customer participation, Planned expansion
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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.
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A Model used to illustrate the factors that influence the service experience, including elements that are visible to the Customer and those that are invisible. The visible part consists of 3 parts
1. 2. 3.
The inanimate environment (physical evidence) Contact personnel/service providers Other Customers
The invisible part consists of the back office & the firms systems e.g. processes, rules, policies
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External Marketing
setting the promise
Employees
Interactive Marketing
delivering the promise
Customers
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler 48
WHATS NEXT?
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