service marketing

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service marketing

  1. 1. 1 SMMcGraw-Hill © 2000 The McGraw-Hill Companies McGraw-Hill © 2000 The McGraw-Hill Companies
  2. 2. 2 SM Chapter 1 INTRODUCTION TO SERVICESMcGraw-Hill © 2000 The McGraw-Hill Companies McGraw-Hill © 2000 The McGraw-Hill Companies
  3. 3. 3SM A note on the PowerPoint Slides... These PowerPoint slides contain selected exhibits, figures and tables from the chapters as well as objectives for the chapters. For many chapters, we include extra lecture slides and in-class exercises that we have compiled and used in our classes. The lecture slides are not intended to provide full outlines or complete lectures for the chapters, but rather may be used selectively to enhance class sessions.McGraw-Hill © 2000 The McGraw-Hill Companies
  4. 4. 4 Objectives for Chapter 1:SM Introduction to Services • Explain what services are and identify service trends • Explain the need for special services marketing concepts and practices • Outline the basic differences between goods and services and the resulting challenges for service businesses • Introduce the service marketing triangle • Introduce the expanded services marketing mix • Introduce the gaps model of service qualityMcGraw-Hill © 2000 The McGraw-Hill Companies
  5. 5. 5SM Challenges for Services • Defining and improving quality • Communicating and testing new services • Communicating and maintaining a consistent image • Motivating and sustaining employee commitment • Coordinating marketing, operations and human resource efforts • Setting prices • Standardization versus personalizationMcGraw-Hill © 2000 The McGraw-Hill Companies
  6. 6. 6 Examples of ServiceSM 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 – airlines, travel agencies, theme park • Others: – hair styling, pest control, plumbing, lawnMcGraw-Hill maintenance, counseling services, health club Companies © 2000 The McGraw-Hill
  7. 7. 7 Figure 1-1 SM Tangibility Spectrum Salt  Soft Drinks  Detergents  Automobiles  Cosmetics Fast-food  Outlets  Intangible DominantTangible Dominant Fast-food Outlets  Advertising Agencies  Airlines  Investment Management  Consulting  McGraw-Hill Teaching © 2000 The McGraw-Hill Companies
  8. 8. Figure 1-2 8SM Percent of U.S. Labor Force by Industry 80 70 Percent of GDP 60 50 40 30 20 10 0  Services 1929 1948 1969 1977 1984 1996  Manufacturing  Mining & Agriculture Yea r 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.McGraw-Hill © 2000 The McGraw-Hill Companies
  9. 9. Figure 1-3 9SM Percent of U.S. Gross Domestic Product by Industry 80 Percent of GDP 70 60 50 40 30 20 10 0  Services 1948 1959 1967 1977 1987 1996  Manufacturing Year  Mining & Agriculture 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.McGraw-Hill © 2000 The McGraw-Hill Companies
  10. 10. 10 Differences BetweenSM Goods and Services Intangibility Heterogeneity Simultaneous Production Perishability and ConsumptionMcGraw-Hill © 2000 The McGraw-Hill Companies
  11. 11. 11SM Implications of Intangibility  Services cannot be inventoried  Services cannot be patented  Services cannot be readily displayed or communicated  Pricing is difficultMcGraw-Hill © 2000 The McGraw-Hill Companies
  12. 12. 12SM Implications of Heterogeneity Service delivery and customer satisfaction depend on employee actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promotedMcGraw-Hill © 2000 The McGraw-Hill Companies
  13. 13. 13 Implications of SimultaneousSM 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 difficultMcGraw-Hill © 2000 The McGraw-Hill Companies
  14. 14. 14SM Implications of Perishability  It is difficult to synchronize supply and demand with services  Services cannot be returned or resoldMcGraw-Hill © 2000 The McGraw-Hill Companies
  15. 15. 15SM Table 1-2 Services are Different Goods Services Resulting Implications Tangible 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 on employee actions. Service quality depends on many uncontrollable factors. There is no sure knowledge that the service delivered matches what was planned and promoted. Production Simultaneous Customers participate in and affect the transaction. separate from production and Customers affect each other. consumption consumption Employees affect the service outcome. Decentralization may be essential. Mass production is difficult. Nonperishable Perishable It is difficult to synchronize supply and demand with services. 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.McGraw-Hill © 2000 The McGraw-Hill Companies
  16. 16. 16 Figure 1-5SM The Services Marketing Triangle Company (Management) Internal External Marketing Marketing “enabling the “setting the promise” promise” Employees Interactive Marketing Customers “delivering the promise” Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip KotlerMcGraw-Hill © 2000 The McGraw-Hill Companies
  17. 17. 17 Services Marketing TriangleSM Applications Exercise • Focus on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle? • How is each type of marketing being carried out currently? • Are the three sides of the triangle well aligned? • Are there specific challenges or barriers in any of the three areas?McGraw-Hill © 2000 The McGraw-Hill Companies
  18. 18. 18 Ways to Use theSM Services Marketing Triangle Overall Strategic Specific Service Assessment Implementation • How is the service • What is being promoted organization doing and by whom? on all three sides of • How will it be delivered the triangle? and by whom? • Where are the • Are the supporting weaknesses? systems in place to deliver the promised • What are the service?McGraw-Hill strengths? © 2000 The McGraw-Hill Companies
  19. 19. 19 Figure 1-6SM The Services Triangle and Technology Company Technology Providers Customers Source: Adapted from A. ParasuramanMcGraw-Hill © 2000 The McGraw-Hill Companies
  20. 20. 20SM Services Marketing Mix: 7 Ps for Services • Traditional Marketing Mix • Expanded Mix for Services: 7 Ps • Building Customer Relationships Through People, Processes, and Physical Evidence • Ways to Use the 7 PsMcGraw-Hill © 2000 The McGraw-Hill Companies
  21. 21. 21SM 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  PromotionMcGraw-Hill © 2000 The McGraw-Hill Companies
  22. 22. 22SM Expanded Mix for Services -- the 7 Ps • Product • Price • Place • Promotion • People • Process • Physical EvidenceMcGraw-Hill © 2000 The McGraw-Hill Companies
  23. 23. 23 Table 1-3SM Expanded Marketing Mix for Services PRODUCT PLACE PROMOTION PRICE Physical good Channel type Promotion Flexibility features blend Quality level Exposure Salespeople Price level Accessories Intermediaries Advertising Terms Packaging Outlet location Sales Differentiation promotion Warranties Transportation Publicity Allowances Product lines Storage BrandingMcGraw-Hill © 2000 The McGraw-Hill Companies
  24. 24. 24 Table 1-3 (Continued)SM Expanded Marketing Mix for Services PEOPLE PHYSICAL PROCESS EVIDENCE Employees Facility design Flow of activities Customers Equipment Number of steps Communicating Signage Level of customer culture and values involvement Employee research Employee dress Other tangiblesMcGraw-Hill © 2000 The McGraw-Hill Companies
  25. 25. 25SM Ways to Use the 7 Ps Overall Strategic Specific Service Assessment Implementation • How effective is a firm’s • Who is the customer? services marketing mix? • What is the service? • Is the mix well-aligned • How effectively does the with overall vision and services marketing mix for a strategy? service communicate its • What are the strengths and benefits and quality? weaknesses in terms of the • What 7 Ps? changes/improvements are needed?McGraw-Hill © 2000 The McGraw-Hill Companies

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