2. Slide 15.2
Introduction
• Phenomenal growth of services, with the
resultant shift towards a service economy
attributed to rising affluence, more leisure time
and growing complexity of products that
require servicing.
• In major European countries, USA and Japan,
private and public sector services account for
60-75% of gross domestic output.
3. Slide 15.3
Introduction
• Service industries vary greatly from
governmental organisations such as the
National Health Service of the United Kingdom
to private non profit organisations such as
museums and charities.
4. Slide 15.4
The nature of services
• A service is defined as any activity or benefit that one
party can offer to another which is essentially
intangible and does not result in the ownership of
anything.
• The same general principles of marketing apply to
both products and services, but services have
characteristics that mean that instead of four P's,
there are seven in a services marketing mix.
5. Slide 15.5
Services defined
• A service is any activity or benefit that one
party can offer to another which is essentially
intangible and does not result in the ownership
of anything. Its production may or may not be
tied to a physical product.
6. Slide 15.6
Services defined
• Most company offerings to customers contain an
element of service and this is illustrated by the
service continuum.
Figure 15.1 The tangible–intangible continuum for goods and services
7. Slide 15.7
Categorising offerings along the service continuum
• Pure tangible goods
– toothpaste
• Tangible goods accompanied by one or more service
– computer and warranty
• Hybrid offer consists of equal parts of goods and
services
– restaurants
• Service with accompanying minor goods
– air travel
• Pure service
– haircut
8. Slide 15.8
Service characteristics
• Intangibility
• Inseparability
• Variability
• Perishability
• Lack of ownership
Produktion och konsumtion är förenat
Sällan exakt likadan – kvalitet?
Kan ej lagras
Går ej att känna osv
Upphör att existera efter
konsumtion
9. Slide 15.9
Intangibility
– Cannot be seen, tasted, felt, heard or smelt
before they are bought.
– Service providers need to manage the
evidence by providing evidence of the benefits.
10. Slide 15.10
Inseparability
– Services produced and consumed
simultaneously.
– Cannot be separated from providers, whether
people or machines.
– Customers are always involved
11. Slide 15.11
Variability
– Quality may vary greatly depending on who
provides the service, when and how.
– Staff need to know how to do something well.
– Staff must be well motivated to maintain high
standards of service.
13. Slide 15.13
Lack of ownership
– No physical product is exchanged and therefore
nothing owned.
14. Slide 15.14
Marketing strategies for service firms
• The service component and support
processes of product offerings are rapidly
becoming the competitive advantage in
winning customer loyalty.
15. Slide 15.15
The service–profit chain
• Internal service quality
– Superior selection and training of staff
• Satisfied and productive service employees
• Greater service value
• Satisfied and loyal customers
• Healthy service – profits and growth
16. Slide 15.16
Three types of interdependent marketing
in service industries
• Internal marketing
• External marketing
• Interactive marketing
F
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17. Slide 15.17
Internal marketing
– Marketing conducted by a service firm to train
and effectively motivate its customer contact
employees and all the supporting service
people to work as a team to provide customer
satisfaction.
18. Slide 15.18
External marketing
– Traditional marketing incorporating the 7Ps
• Price
• Product/service
• Place
• Promotion
• People
• Processes
• Physical environment
– of the services marketing mix.
19. Slide 15.19
Interactive marketing
– Marketing that recognises that the perceived
service quality depends heavily on the buyer-
seller interaction.
– Emphasis on relationship marketing.
20. Slide 15.20
Major tasks of service industries
• Service companies are faced with three major
marketing tasks; they need to:
– increase competitive differentiation
– increase service quality
– increase productivity
21. Slide 15.21
Managing differentiation
• Intensive price competition has resulted in service
differentiation to increase competitiveness.
• The 3 Ps, people, processes and physical
environment of service marketing and service
delivery
– form the core differential and competitive
advantage.
• Service intangibility and variability means that a
consistent brand is not easily built.
22. Slide 15.22
Managing service quality
• The key to success is to exceed customer
service quality expectations.
• Customer satisfaction is achieved if the
delivered service quality exceeds the
customer’s expectation.
• However, expectation is a variable component
and depends upon the perception and
expectations of the individual customer.
23. Slide 15.23
Ten key determinants of
perceived service quality (1)
• Concerned with the quality outcome of the
service
– Access
– Credibility
– Knowledge
– Reliability
– Security
24. Slide 15.24
Ten key determinants of
perceived service quality (2)
• Related to the delivery process
– Competence
– Communication
– Courtesy
– Responsiveness
– Tangibles
25. Slide 15.25
Characteristics of service organisations
• Customer obsession
• Management commitment to quality
• High service quality standards
• Scrutinise service performance
• Good service recovery and management of
disgruntled customers
• Empowerment of employees, especially front-line
staff
• Satisfy and reward employees as well as customers
26. Slide 15.26
Managing productivity
• Training and development of staff.
• Service providers can increase the quantity of
service by reducing some quality.
• Industrialise the service.
• Design more effective service delivery mechanisms.
• Customers are given incentives to substitute
company labour.
• Introduce new technology to save time and costs
and increase efficiencies.
27. Slide 15.27
International services marketing
• The global economy is dominated by services!
• The World Trade Organisation estimates that commercial–service
trade is now worth over one trillion Euros, approximately 25% of
global trade.
• Worldwide growth of services is 16% per annum over the past
decade and double the growth rate of manufacturing.
• The trend is towards the outsourcing of skilled professional
services to overseas locations.
• The General Agreement on Tariffs and Trade (GATT) has
extended international trade rules to address services as well as
manufactured goods, but these are in their infancy.
