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Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 1
SServices marketing
Presented by
Dr.R.Angayarkanni
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 2
CHAPTER 1
Introduction to
Services Marketing
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 3
Overview of Chapter 1
 Why study services?
 Powerful forces that are transforming service
Markets
 What are services?
 Four broad categories of services
 Challenges posed by services
 Expanded marketing mix for services
 Framework for effective services marketing
strategies
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 4
Why Study Services?
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 5
Why Study Services?
 Services Dominate Economy in Most Nations
 Most New Jobs are Generated by Services
Fastest Growth Expected in Knowledge-Based Industries
Many New Jobs are Well-Paid Positions Requiring Good
Educational Qualifications
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 6
Contribution of Services Industries to
Global GDP
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 7
Estimated Size of Service Sector in
Selected Countries
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 8
Powerful Forces Are
Transforming Service
Markets
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 9
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
Innovation in service products & delivery systems, stimulated by better technology
Customers have more choices and exercise more power
Success hinges on:
● Understanding customers and competitors
● Viable business models
● Creation of value for customers and firm
● New markets and product categories
● Increase in demand for services
● More intense competition
Forces Transforming the Service Economy
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 10
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
●Changes in regulations
●Privatization
●New rules to protect customers,
employees, and the environment
●New agreement on trade in services
Forces Transforming the Service Economy (1)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 11
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
●Rising consumer expectations
●More affluence
●Personal Outsourcing
●Increased desire for buying experiences vs.
things
●Rising consumer ownership of high tech
equipment
●Easier access to more information
●Immigration
●Growing but aging population
Forces Transforming the Service Economy (2)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 12
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
●Push to increase shareholder value
●Emphasis on productivity and cost savings
●Manufacturers add value through service and sell
services
●More strategic alliances
●Focus on quality and customer satisfaction
●Growth of franchising
●Marketing emphasis by nonprofits
Forces Transforming the Service Economy (3)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 13
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
●Growth of Internet
●Greater bandwidth
●Compact mobile equipment
●Wireless networking
●Faster, more powerful software
●Digitization of text, graphics, audio, video
Forces Transforming the Service Economy (4)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 14
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
●More companies operating on transnational basis
●Increased international travel
●International mergers and alliances
●“Offshoring” of customer service
●Foreign competitors invade domestic markets
Forces Transforming the Service Economy (5)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 15
What Are Services?
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 16
What are Services? (1)
Services involve a form of rental, offering benefits
without transfer of ownership
Include rental of goods
Marketing tasks for services differ from those involved in
selling goods and transferring ownership
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 17
What are Services? (2)
 Five broad categories within non-ownership framework:
1. Rented goods services
2. Defined space and place rentals
3. Labor and expertise rentals
4. Access to shared physical environments
5. Systems and networks: access and usage
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 18
What are Services? (3)
Implications of Renting Versus Owning (Service Insights
1.1)
Markets exist for renting durable goods rather than selling them
Renting portions of larger physical entity (e.g., office space,
apartment) can form basis for service
Customers more closely engaged with service suppliers
Time plays central role in most services
Customer choice criteria may differ between rentals and outright
purchases
Services offer opportunities for resource sharing
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 19
Four Broad Categories
of Services
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 20
Four Broad Categories of Services
Based on differences in nature of service act
(tangible/intangible) and who or what is direct recipient
of service (people/possessions), there are four
categories of services:
People processing
Possession processing
Mental stimulus processing
Information processing
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 21
Four Categories Of Services (Fig 1.10)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 22
Four Categories Of Services
 People Processing
 Customers must:
physically enter the service
factory
co-operate actively with the
service operation
 Managers should think about
process and output from
customer’s perspective
to identify benefits created and
non-financial costs:
- Time, mental, physical effort
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 23
Possession Processing
Possession Processing
Customers are less physically
involved compared to people
processing services
Involvement is limited
Production and consumption
are separable
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 24
Mental Stimulus Processing
● Mental Stimulus Processing
● Ethical standards required when
customers who depend on such
services can potentially be
manipulated by suppliers
● Physical presence of recipients
not required
● Core content of services is
information-based
Can be ‘inventoried’
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 25
Information Processing
 Information Processing
 Information is the most
intangible form of service
output,
 But may be transformed into
enduring forms of service output
 Line between information
processing and mental stimulus
processing may be blurred.
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 26
Value Added by Physical, Intangible Elements
Helps Distinguish Goods and Services (Fig 1.16)
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 27
Defining Services
 Services
 Are economic activities offered by one party to another
 Most commonly employ time-based performances to bring about
desired results in:
- Recipients themselves
- Objects or other assets for which purchasers have responsibility
 In exchange for their money, time, and effort, service customers
expect to obtain value from
 Access to goods, labor, facilities, environments, professional skills,
networks, and systems;
 But they do not normally take ownership of any of the physical
elements involved.
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 28
Challenges Posed by
Services
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 29
Services Pose Distinctive Marketing Challenges
 Marketing management tasks in the service sector differ from those in
the manufacturing sector.
 The eight common differences are:
 Most service products cannot be inventoried
 Intangible elements usually dominate value creation
 Services are often difficult to visualize and understand
 Customers may be involved in co-production
 People may be part of the service experience
 Operational inputs and outputs tend to vary more widely
 The time factor often assumes great importance
 Distribution may take place through nonphysical channels
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 30
Differences, Implications, and
Marketing-Related Tasks (1) (Table 1.1)
Difference
 Most service products
cannot be inventoried
 Intangible elements
usually dominate
value creation
 Services are often
difficult to visualize &
understand
 Customers may be
involved in co-
Production
Implications
 Customers may be
turned away
 Harder to evaluate
service & distinguish
from competitors
 Greater risk &
uncertainty perceived
 Interaction between
customer & provider;
but poor task execution
could affect satisfaction
Marketing-Related Tasks
 Use pricing, promotion,
reservations to smooth
demand; work with ops to
manage capacity
 Emphasize physical clues,
employ metaphors and vivid
images in advertising
 Educate customers on
making good choices; offer
guarantees
 Develop user-friendly
equipment, facilities &
systems; train customers,
provide good support
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 31
Expanded Marketing
Mix for Services
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 32
Services Require An Expanded Marketing Mix
● Marketing can be viewed as:
A strategic and competitive thrust pursued by top management
A set of functional activities performed by line managers
A customer-driven orientation for the entire organization
● Marketing is only function to bring operating revenues into
a business; all other functions are cost centers.
● The “7 Ps” of services marketing are needed to create
viable strategies for meeting customer needs profitably in
a competitive marketplace
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 33
The 7 Ps of Services Marketing
●Product elements
●Place and time
●Price
●Promotion
●Process
●Physical environment
●People
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 34
Traditional 4 Ps Applied to Services (1)
Product elements
Service products are at the heart of services marketing strategy
Marketing mix begins with creating service concept that offers
value
Service product consists of core and supplementary elements
- Core products meet primary needs
- Supplementary elements are value-added enhancements
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 35
Traditional 4 Ps Applied to Services (2)
Place and time
Service distribution can take place through physical and non-
physical channels
Some firms can use electronic channels to deliver all (or at least
some) of their service elements
Information-based services can be delivered almost
instantaneously electronically
Delivery Decisions: Where, When, How
Time is of great importance as customers are physically present
Convenience of place and time become important determinants of
effective service delivery
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 36
Traditional 4 Ps Applied to Services (3)
Price and (other user outlays)
Marketers must recognize that customer costs involve more than
price paid to seller
Identify and minimize non-monetary costs incurred by users:
- Additional monetary costs associated with service usage (e.g.,
travel to service location, parking, phone, babysitting, etc.)
- Time expenditures, especially waiting
- Unwanted mental and physical effort
- Negative sensory experiences
Revenue management is an important part of pricing
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 37
Traditional 4 Ps Applied to Services (4)
Promotion and Education
Plays three vital roles:
- Provide information and advice
- Persuades the target customers of merit of service product or brand
- Encourages customer to take action at specific time
Customers may be involved in co-production so:
- Teach customer how to move effectively through the service process
- Shape customers’ roles and manage their behavior
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 38
Extended Mix for Managing the Customer
Interface (1)
 Process
 How firm does things may be as important as what it does
 Customers often actively involved in processes, especially when acting as co-
producers of service
 Operational inputs and outputs vary more widely
- Quality and content varies among employees, between employees
- Variations can be with different customers
- Variations from time of the day
 Variability can be reduced by:
- Standardized procedures
- Implementing rigorous management of service quality
- Training employees more carefully
- Automating tasks
- Train employees in service recovery procedures
 Manage process design and “flow of customers
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 39
Extended Mix for Managing the Customer
Interface (2)
 Physical environment
 Design servicescape and provide tangible evidence of service
performances
 Create and maintain physical appearances
- Buildings/landscaping
- Interior design/furnishings
- Vehicles/equipment
- Staff grooming/clothing
- Sounds and smells
- Other tangibles
 Manage physical cues carefully— can have profound impact on customer
impressions
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 40
Extended Mix for Managing the Customer
Interface (3)
People
Interactions between customers and contact personnel strongly
influence customer perceptions of service quality
Well-managed firms devote special care to selecting, training and
motivating service employees
Other customers can also affect one’s satisfaction with a service

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Angayarkanni.ppt

  • 1. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 1 SServices marketing Presented by Dr.R.Angayarkanni
  • 2. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 2 CHAPTER 1 Introduction to Services Marketing
  • 3. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 3 Overview of Chapter 1  Why study services?  Powerful forces that are transforming service Markets  What are services?  Four broad categories of services  Challenges posed by services  Expanded marketing mix for services  Framework for effective services marketing strategies
  • 4. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 4 Why Study Services?
  • 5. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 5 Why Study Services?  Services Dominate Economy in Most Nations  Most New Jobs are Generated by Services Fastest Growth Expected in Knowledge-Based Industries Many New Jobs are Well-Paid Positions Requiring Good Educational Qualifications
  • 6. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 6 Contribution of Services Industries to Global GDP
  • 7. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 7 Estimated Size of Service Sector in Selected Countries
  • 8. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 8 Powerful Forces Are Transforming Service Markets
  • 9. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 9 Government Policies Business Trends Social Changes Advances in IT Globalization Innovation in service products & delivery systems, stimulated by better technology Customers have more choices and exercise more power Success hinges on: ● Understanding customers and competitors ● Viable business models ● Creation of value for customers and firm ● New markets and product categories ● Increase in demand for services ● More intense competition Forces Transforming the Service Economy
  • 10. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 10 Government Policies Business Trends Social Changes Advances in IT Globalization ●Changes in regulations ●Privatization ●New rules to protect customers, employees, and the environment ●New agreement on trade in services Forces Transforming the Service Economy (1)
  • 11. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 11 Government Policies Business Trends Social Changes Advances in IT Globalization ●Rising consumer expectations ●More affluence ●Personal Outsourcing ●Increased desire for buying experiences vs. things ●Rising consumer ownership of high tech equipment ●Easier access to more information ●Immigration ●Growing but aging population Forces Transforming the Service Economy (2)
  • 12. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 12 Government Policies Business Trends Social Changes Advances in IT Globalization ●Push to increase shareholder value ●Emphasis on productivity and cost savings ●Manufacturers add value through service and sell services ●More strategic alliances ●Focus on quality and customer satisfaction ●Growth of franchising ●Marketing emphasis by nonprofits Forces Transforming the Service Economy (3)
  • 13. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 13 Government Policies Business Trends Social Changes Advances in IT Globalization ●Growth of Internet ●Greater bandwidth ●Compact mobile equipment ●Wireless networking ●Faster, more powerful software ●Digitization of text, graphics, audio, video Forces Transforming the Service Economy (4)
  • 14. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 14 Government Policies Business Trends Social Changes Advances in IT Globalization ●More companies operating on transnational basis ●Increased international travel ●International mergers and alliances ●“Offshoring” of customer service ●Foreign competitors invade domestic markets Forces Transforming the Service Economy (5)
  • 15. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 15 What Are Services?
  • 16. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 16 What are Services? (1) Services involve a form of rental, offering benefits without transfer of ownership Include rental of goods Marketing tasks for services differ from those involved in selling goods and transferring ownership
  • 17. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 17 What are Services? (2)  Five broad categories within non-ownership framework: 1. Rented goods services 2. Defined space and place rentals 3. Labor and expertise rentals 4. Access to shared physical environments 5. Systems and networks: access and usage
  • 18. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 18 What are Services? (3) Implications of Renting Versus Owning (Service Insights 1.1) Markets exist for renting durable goods rather than selling them Renting portions of larger physical entity (e.g., office space, apartment) can form basis for service Customers more closely engaged with service suppliers Time plays central role in most services Customer choice criteria may differ between rentals and outright purchases Services offer opportunities for resource sharing
  • 19. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 19 Four Broad Categories of Services
  • 20. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 20 Four Broad Categories of Services Based on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services: People processing Possession processing Mental stimulus processing Information processing
  • 21. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 21 Four Categories Of Services (Fig 1.10)
  • 22. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 22 Four Categories Of Services  People Processing  Customers must: physically enter the service factory co-operate actively with the service operation  Managers should think about process and output from customer’s perspective to identify benefits created and non-financial costs: - Time, mental, physical effort
  • 23. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 23 Possession Processing Possession Processing Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable
  • 24. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 24 Mental Stimulus Processing ● Mental Stimulus Processing ● Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers ● Physical presence of recipients not required ● Core content of services is information-based Can be ‘inventoried’
  • 25. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 25 Information Processing  Information Processing  Information is the most intangible form of service output,  But may be transformed into enduring forms of service output  Line between information processing and mental stimulus processing may be blurred.
  • 26. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 26 Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services (Fig 1.16)
  • 27. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 27 Defining Services  Services  Are economic activities offered by one party to another  Most commonly employ time-based performances to bring about desired results in: - Recipients themselves - Objects or other assets for which purchasers have responsibility  In exchange for their money, time, and effort, service customers expect to obtain value from  Access to goods, labor, facilities, environments, professional skills, networks, and systems;  But they do not normally take ownership of any of the physical elements involved.
  • 28. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 28 Challenges Posed by Services
  • 29. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 29 Services Pose Distinctive Marketing Challenges  Marketing management tasks in the service sector differ from those in the manufacturing sector.  The eight common differences are:  Most service products cannot be inventoried  Intangible elements usually dominate value creation  Services are often difficult to visualize and understand  Customers may be involved in co-production  People may be part of the service experience  Operational inputs and outputs tend to vary more widely  The time factor often assumes great importance  Distribution may take place through nonphysical channels
  • 30. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 30 Differences, Implications, and Marketing-Related Tasks (1) (Table 1.1) Difference  Most service products cannot be inventoried  Intangible elements usually dominate value creation  Services are often difficult to visualize & understand  Customers may be involved in co- Production Implications  Customers may be turned away  Harder to evaluate service & distinguish from competitors  Greater risk & uncertainty perceived  Interaction between customer & provider; but poor task execution could affect satisfaction Marketing-Related Tasks  Use pricing, promotion, reservations to smooth demand; work with ops to manage capacity  Emphasize physical clues, employ metaphors and vivid images in advertising  Educate customers on making good choices; offer guarantees  Develop user-friendly equipment, facilities & systems; train customers, provide good support
  • 31. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 31 Expanded Marketing Mix for Services
  • 32. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 32 Services Require An Expanded Marketing Mix ● Marketing can be viewed as: A strategic and competitive thrust pursued by top management A set of functional activities performed by line managers A customer-driven orientation for the entire organization ● Marketing is only function to bring operating revenues into a business; all other functions are cost centers. ● The “7 Ps” of services marketing are needed to create viable strategies for meeting customer needs profitably in a competitive marketplace
  • 33. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 33 The 7 Ps of Services Marketing ●Product elements ●Place and time ●Price ●Promotion ●Process ●Physical environment ●People
  • 34. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 34 Traditional 4 Ps Applied to Services (1) Product elements Service products are at the heart of services marketing strategy Marketing mix begins with creating service concept that offers value Service product consists of core and supplementary elements - Core products meet primary needs - Supplementary elements are value-added enhancements
  • 35. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 35 Traditional 4 Ps Applied to Services (2) Place and time Service distribution can take place through physical and non- physical channels Some firms can use electronic channels to deliver all (or at least some) of their service elements Information-based services can be delivered almost instantaneously electronically Delivery Decisions: Where, When, How Time is of great importance as customers are physically present Convenience of place and time become important determinants of effective service delivery
  • 36. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 36 Traditional 4 Ps Applied to Services (3) Price and (other user outlays) Marketers must recognize that customer costs involve more than price paid to seller Identify and minimize non-monetary costs incurred by users: - Additional monetary costs associated with service usage (e.g., travel to service location, parking, phone, babysitting, etc.) - Time expenditures, especially waiting - Unwanted mental and physical effort - Negative sensory experiences Revenue management is an important part of pricing
  • 37. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 37 Traditional 4 Ps Applied to Services (4) Promotion and Education Plays three vital roles: - Provide information and advice - Persuades the target customers of merit of service product or brand - Encourages customer to take action at specific time Customers may be involved in co-production so: - Teach customer how to move effectively through the service process - Shape customers’ roles and manage their behavior
  • 38. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 38 Extended Mix for Managing the Customer Interface (1)  Process  How firm does things may be as important as what it does  Customers often actively involved in processes, especially when acting as co- producers of service  Operational inputs and outputs vary more widely - Quality and content varies among employees, between employees - Variations can be with different customers - Variations from time of the day  Variability can be reduced by: - Standardized procedures - Implementing rigorous management of service quality - Training employees more carefully - Automating tasks - Train employees in service recovery procedures  Manage process design and “flow of customers
  • 39. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 39 Extended Mix for Managing the Customer Interface (2)  Physical environment  Design servicescape and provide tangible evidence of service performances  Create and maintain physical appearances - Buildings/landscaping - Interior design/furnishings - Vehicles/equipment - Staff grooming/clothing - Sounds and smells - Other tangibles  Manage physical cues carefully— can have profound impact on customer impressions
  • 40. Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 40 Extended Mix for Managing the Customer Interface (3) People Interactions between customers and contact personnel strongly influence customer perceptions of service quality Well-managed firms devote special care to selecting, training and motivating service employees Other customers can also affect one’s satisfaction with a service