Transcript Importance of Service Sector
Services Marketing
MTG 410 Fall 2000 Prof: Donna J. Hill, Ph.D.
What Are Services?
Services are deeds, processes, and performances.
– Nature of product.
– Greater involvement of customers in the production process.
– People as part of the product.
– Greater difficulties in maintaining quality control standards.
A Different Context for Services Marketing
Narrow definition of marketing by other managers.
Limited appreciation for marketing skills.
Different organizational structure.
A relative lack of competitive data.
Problems determining costs.
Constraints and opportunities facing marketers of public and nonprofits.
Examples of Service 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,
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ski resort, rafting Travel
–
airlines, travel agencies, theme park Others:
–
hair styling, pest control, plumbing, lawn maintenance, counseling services, health club
Figure 1-2 Percent of U.S. Labor Force by Industry 30 20 10 0 80 70 60 50 40 1929 1948 1969 1977 1984 1996
Year Services Manufacturing Mining & Agriculture Source:
Survey of Current Business,
Economy,”
Scientific American
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. , 244,3 (1981): 31-39.
Figure 1-3 Percent of U.S. Gross Domestic Product by Industry 80 70 60 50 40 30 20 10 0 1948 1959 1967 1977 1987 1996
Year Source:
Survey of Current Business,
Economy,”
Scientific American
August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. , 244,3 (1981): 31-39. Services Manufacturing Mining & Agriculture
Importance of Service Sector Services
$3.52 trillion of U.S. GDP 53.2% of U.S. GDP 71% of total employment 91% of new jobs from 1992 to 2005 Fast growing services for the next decade Health services Business services Finance, insurance, real estate Residential care Computer & data processing Child day-care Social services Transportation services
Factors Contributing to Growth
Movement to information age Shift to industrialized economy Aging population Longer life expectancies Increase leisure time High per capita income Changing social and cultural values Advances in technology
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 personalization
Differences Between Goods and Services
Intangibility Heterogeneity Simultaneous Production and Consumption Perishability
Figure 1-1
Tangibility Spectrum
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics
Fast-food Outlets
Intangible Dominant Tangible Dominant
Fast-food Outlets
Advertising Agencies
Airlines
Investment Management
Consulting
Teaching
Implications of Intangibility
Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult
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 promoted
Implications of Simultaneous 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 difficult
Implications of Perishability
It is difficult to synchronize supply and demand with services Services cannot be returned or resold
Table 1-2
Services are Different
Goods
Tangible Standardized Production separate from consumption
Services
Intangible
Resulting Implications
Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
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.
Simultaneous production and consumption Nonperishable Perishable Customers participate in and affect the transaction.
Customers affect each other.
Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
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.
Figure 1-5
The Services Marketing Triangle
Company (Management) Internal Marketing
“enabling the promise”
External Marketing
“setting the promise”
Employees Interactive Marketing
“delivering the promise”
Customers
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
Services Marketing Triangle 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?
Ways to Use the Services Marketing Triangle
Overall Strategic Assessment Specific Service Implementation
• How is the service • organization doing on all three sides of • the triangle?
What is being promoted and by whom?
How will it be delivered and by whom?
• Where are the weaknesses?
• Are the supporting systems in place to deliver the promised service?
• What are the strengths?
Figure 1-6 The Services Triangle and Technology Company Technology Providers
Source: Adapted from A. Parasuraman
Customers
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 Ps
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
Promotion
Expanded Mix for Services - the 7 Ps
Product Price Place Promotion
People
Process
Physical Evidence
Table 1-3
Expanded Marketing Mix for Services
PRODUCT Physical good features PLACE Channel type PROMOTION PRICE Promotion blend Flexibility Quality level Accessories Packaging Warranties Product lines Branding Exposure Salespeople Intermediaries Storage Advertising Outlet location Sales promotion Transportation Publicity Price level Terms Differentiation Allowances
PEOPLE Employees
Table 1-3 (Continued)
Expanded Marketing Mix for Services
PHYSICAL EVIDENCE Facility design PROCESS Flow of activities Customers Equipment Communicating culture and values Signage Employee research Employee dress Other tangibles Number of steps Level of customer involvement
Ways to Use the 7 Ps
Overall Strategic Assessment How effective is a firm’s services marketing mix?
Is the mix well-aligned with overall vision and strategy?
What are the strengths and weaknesses in terms of the 7 Ps?
Specific Service Implementation Who is the customer?
What is the service?
How effectively does the services marketing mix for a service communicate its benefits and quality?
What changes/improvements are needed?
Characteristics of Services
Intangibility - Lack of tangible assets which can be seen, touched, or smelled prior to purchase.
Perishability - Inability of a service to be inventoried or stored.
Inseparability - Simultaneous production and consumption of a service.
Variability - Unwanted or random levels of service quality customers receive when they patronize a service firm.