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Chapter
Introduction to Services
Services (p. 4): ________________________
•
•
•
include all economic activities whose output is
not a physical product or construction,
is generally consumed at the time it is
produced,
provides added value in forms (such as
convenience, amusement, timeliness, comfort,
or health) that are essentially intangible
1
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
 ski resort, rafting
 Travel
 airline, travel agency, theme park
 Others
 hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club, interior design
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Figure 1.2
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets

Tangible
Dominant
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
Intangible
Dominant

Fast-food
Outlets
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching




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Exercise - What are the tangible and intangible
components provided by a hotel?
 TANGIBLE
 Furniture
 Lighting
 Cleanliness
 Carpeting
 Parking spaces
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INTANGIBLE
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Why Services Marketing?
(pp. 8-15)
Better services mean higher profits:
 Rapid changes in technology
 Increasing competition
 More demanding customers
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Perception: Service Stinks! (pp. 12-15)
1. Increasing use of self-service and technology-based
service – _____________________________
2. Technology-based services hard to implement – failures
and poorly designed systems
3. Customer expectations are higher because of excellent
service received from some companies – ___________
______________________________________
4. Delivering consistent, high quality service is not easy, but
companies promise it
5. etc.
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Paradoxes and Dark Side of Technology and
Service (p. 20-21)
 Some customers are not interested or ready to use
technology
 Employees are often reluctant to accept and integrate
technology into their work life
 Technology infusion means loss of human contact
 Payback in technology investments is often uncertain
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Table 1.2
Goods versus Services
Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of
Marketing 49 (Fall 1985), pp. 41–50.
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Characteristics of Services
Compared to Goods
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Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability
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Characteristics of Services Compared to
Goods
Intangibility – services cannot be seen, felt, tasted, or
touched in the same manner that you can sense tangible
goods
Implications:
 Services cannot be readily displayed or communicated therefore, difficult for consumers to assess
 Need to add ___________________________________
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Characteristics of Services Compared to Goods
Heterogeneity – no two services will be precisely alike
Implications:
 Service delivery and customer satisfaction depend on
__________ and _____________ actions
 Service quality depends on many _____________ factors
 Need to ___________________ service
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Characteristics of Services Compared to Goods
Simultaneous Production and Consumption – most services
are sold first, then produced and consumed simultaneously
Implications:
 ________________ participate in and affect the transaction
 Customers affect each other
 _________________ affect the service outcome
 Mass production is difficult
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Characteristics of Services Compared to Goods
Perishability – services cannot be saved, stored, resold, or
returned
Implications:
 It is difficult to _____________ supply and demand with services
 Services cannot be ________________________
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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
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Expanded Mix for Services -The 7 Ps





Product
Price
Place
Promotion
People
 All human actors who play a part in service delivery and thus influence the
buyer’s perceptions: namely, the firm’s personnel, the customer, and other
customers in the service environment.
 Physical Evidence
 The environment in which the service is delivered and where the firm and
customer interact, and any tangible components that facilitate performance
or communication of the service.
 Process
 The actual procedures, mechanisms, and flow of activities by which the
service is delivered—the service delivery and operating systems.
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Table 1.3
Expanded Marketing Mix for Services
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Challenges for Services






Defining and improving quality
Designing and testing new services
Communicating and maintaining a consistent image
Accommodating fluctuating demand
Motivating and sustaining employee commitment
Coordinating marketing, operations, and human resource
efforts
 Setting prices
 Finding a balance between standardization versus
personalization
 Ensuring the delivery of consistent quality
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