Managing

Services

SERVICES GET REAL!

Services are now a larger part of the U.S.

gross domestic product (GDP)

THE UNIQENESS OF SERVICES

THE FOUR IS OF SERVICES

Four Is of Services
Intangibility Cannot perceive
with 5 senses
Inseparability cannot separate from
provider
Inconsistency can vary with each occasion
Inventory in people based services,
inventory goes home each night
The result - Idle Production Capacity

Singapore Airlines, American Express, and Allstate

What 4 Is of services element?

Inventory carrying costs of services depend

on the cost of employees and equipment

THE UNIQENESS OF SERVICES

THE CONTINUUM & CLASSIFICATION OF SERVICES

Service Continuum

Classifying Services
Delivery by People or Equipment
Profit or Nonprofit Organizations
Government Sponsored

The service continuum shows how offerings

can vary in their balance of goods and
services

Services can be classified as equipmentbased or people-based

Red Cross, Unicef, and

Susan G. Komen Race for the Cure
What is the classification of each service?

HOW CONSUMERS
PURCHASE SERVICES

The Purchase Process

Search Properties

Experience Properties

Credence Properties

Consumers use search, experience, and

credence properties to evaluate services

The five dimensions of service quality

HOW CONSUMERS
PURCHASE SERVICES

Customer Contact and

Relationship Management
Service Encounters
Customer Contact Audit
A Customers Car Rental Activities
Relationship Marketing

Customer contact audit for a car rental

agency (green boxes = customer activity;
orange boxes = employee activity)

MANAGING THE MARKETING OF SERVICES

THE EIGHT Ps OF SERVICES

Eight Ps of Services Marketing

Product (Service)
Branding

Price
Off-Peak Pricing

MANAGING THE MARKETING OF SERVICES

THE EIGHT Ps OF SERVICES

Place (Distribution)

Promotion

Publicity
Public Service Announcements (PSAs)

MANAGING THE MARKETING

OF SERVICES

People
Internal Marketing
Customer Experience Management (CEM)

Physical Environment

Process

Productivity
Capacity Management

Different prices and packages help match

demand to capacity

MANAGING THE MARKETING

OF SERVICES -PRICING
Price plays two essential roles regarding

the pricing of services:

1. To affect consumer perceptions and
2. To be used in capacity management.

Off-peak pricing consists of charging different

prices during different times of the day or days
of the week to reflect variations in demand for
the service.

MANAGING THE MARKETING

OF SERVICES -PLACE
Place

or distribution is a major factor in

developing a service marketing strategy
because of the inseparability of services from
the producer.
As competition grows, the value of convenient
location becomes more important.
The availability of electronic distribution through
the World Wide Web now provides global
coverage for travel services, banking,
entertainment, and many other informationbased services.

MANAGING THE MARKETING

OF SERVICES -PROMOTION
In

most cases promotional concerns of

services are similar to those of products.
value of promotion (advertising) is to
stress:
Heart by-pass
availability
Surgery
20% discount for
location
weekend
consistent quality
procedures
and efficient, courteous
service

The

MANAGING THE MARKETING

OF SERVICES -PROMOTION
PROFESSIONAL SERVICES
A Supreme Court case in 1976 struck down
constraints by professional organizations to
constrain the advertising of professional services,
specifically the American Medical Association and
the American Bar Association.
Although opposition to advertising still remains in
some professional groups, the barriers to
promotion are being broken down, mostly
in response to competitive pressures.

MANAGING THE MARKETING

OF SERVICES -PROMOTION
Publicity

has played a major role in the

promotional strategies of nonprofit services and
some professional services.
Many nonprofit groups have relied on Public
Service Announcements (PSAs) as the
foundation of their media plan because they are
free.

LO6

USING MARKETING DASHBOARDS

Are JetBlues Flights Profitably Loaded?

Airline Operating Income (Loss) per Available Seat Flown One Mile (ASM)
Operating Income (Loss)
= Yield Load Factor
Flown ASM

Operating Expense

SERVICES IN THE FUTURE

Technological Advances
Mobility

Personalization

Convergence

Collaboration

Expanding Global Economy