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Agenda for Day One 1. 2. 3. 4. Welcome and Introduction Why are you here ? Discuss course outline Introduction to the subject Background to Services Marketing • Growing number of school graduates are recruited in service industries. • Service sector as a percentage of Gross National Product is substantial and has grown significantly in most countries including Ghana. • Inadequacy of manufacturing or product based Marketing models • Services Marketing course seeks to teach students the concepts, frameworks and analytical procedures that are best suited to examine and resolve challenges faced by managers in service businesses. Course Objectives • Explain important concepts, principles, theories, models and tools of services marketing and apply them to specific business cases. • Explain the frameworks for developing service policy and service marketing strategy and apply the frameworks in developing service policies and service marketing strategies. Learning Outcomes • Create a service policy • Appraise service delivery and quality of organizations and recommend remedies for delivering outstanding service. • Craft a service marketing strategy or plan. Teaching/Learning Activities 1. “ Learning is not a spectator sport. Students do not learn much just by sitting in class listening to teachers, memorizing pre-packaged assignments, and spitting out answers. They must talk about what they are learning, write about it, relate it to past experiences, apply it to their daily lives. They must make what they learn part of themselves.” (Chickering and Gamson, 1987, p. 3) 2. “One must learn by doing the thing, for though you think you know it—you have no certainty until you try” (Sophocles, 5th c. B.C.) Teaching/Learning Activities Achieve Active Learning Bonwell and Eison (1991) describe active learning as “ involving students in doing things and thinking about the things they are doing.” “Doing” refers to activities such as debates, simulations, guided design, group problem solving and case studies. “Thinking” refers to reflections about the meaning of what students learn or about learning process itself Learning Activities for Holistic, Active Learning Getting Information & Ideas • Lectures • Textbooks • Articles • Guest Speakers Experience Doing Reflection Reflection Case Studies Papers Tutorials Role Play Team Journaling Projects/Assignme nt • Fair Observing • Industrial Visit • Stories: Films/Oral • Mystery Shopping • • • • Ashesi University COURSE TITLE : SERVICES MARKETING SEMESTER : SECOND, 2011/2012 MODULE 8: Introduction to Services Marketing Lecturer: Ebow Spio Learning Objectives • Explain service and services marketing • Understand the growing role of the service sector in the economy • Appreciate marketing challenges associated with services relative to goods • Build a case for an expanded marketing mix for services • Explain the framework for developing and implementing service marketing strategies Defining Services “ Something that can be bought and sold but that cannot be dropped on your foot” The Economist “ The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need” Palmer 2007 “ A service is an activity or series of activities of a more or less intangible nature that normally take place in interactions between the customer and the service employee or systems of the provider, which are provided as solutions to customer needs or problems” Hinson 2004 “Services are deeds, processes, and performance provided or coproduced by one entity or person for another entity or person” Zeithaml et al Defining Services • Services – Are economic activities offered by one party to another – Most commonly employ time-based performances to bring about desired results to: • 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 Estimated Size of Service Sector in Selected Countries Cayman Islands (95%), Jersey (93%) Bahamas (90%), Bermuda ( 89%) Luxembourg (83%) Panama (80%), USA (79%) Japan (74%), France (73%), U.K. (73%), Canada (71%) Mexico (69%), Australia (68%), Germany (68%) Poland (66%), South Africa (65%) Israel (60%), Russia (58%), S. Korea (56%) Argentina (53%), Brazil (51%) India (48%) China (40%) Saudi Arabia (33%) 10 20 Services as Percent of GDP 30 40 50 60 70 80 90 Ghana :GDP & Labour Composition GDP Composition Sector Labour Force Composition 2010 Est. 29.9 % Sector 2005 Est. Agriculture 2006 Est. 33.6 % Agriculture 56 % Industry 25.1 % 18.6 % Industry 15 % Services 41.2 % 51.4 % Services 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: 1. Most service products cannot be inventoried 2. Intangible elements usually dominate value creation 3. Services are often difficult to visualize and understand 4. Customers may be involved in co-production 5. People may be part of the service experience 6. Operational inputs and outputs tend to vary more widely 7. The time factor often assumes great importance 8. Distribution may take place through nonphysical channels • What are marketing implications? Differences, Implications, and Marketing-Related Tasks (1) (Table 1.1) Difference Implications Marketing-Related Tasks Most service products cannot be inventoried Customers may be turned away Use pricing, promotion, and reservations to smooth demand; work with ops to manage capacity Intangible elements usually dominate value creation Harder to evaluate service and distinguish from competitors Emphasize physical clues, employ metaphors and vivid images in advertising Services are often difficult to visualize and understand Greater risk and uncertainty perceived Educate customers on making good choices; offer guarantees Customers may be involved in coproduction Interaction between customer and provider; but poor task execution could affect satisfaction Develop user-friendly equipment, facilities, and systems; train customers, provide good support Differences, Implications, and Marketing-Related Tasks (2) (Table 1.1) Difference Implications Marketing-Related Tasks People may be part of service experience Behavior of service personnel and customers can affect satisfaction Recruit, train employees to reinforce service concept Shape customer behavior Operational inputs and outputs tend to vary more widely Hard to maintain quality, consistency, reliability Difficult to shield customers from failures Redesign for simplicity and failure proofing Institute good service recovery procedures Time factor often assumes great importance Time is money; customers want service at convenient times Find ways to compete on speed of delivery; offer extended hours Distribution may take place through nonphysical channels Electronic channels or voice telecommunications Create user-friendly, secure websites and free access by telephone Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services (Fig 1.6) Physical Elements High Salt Detergents CD Player Wine Golf Clubs New Car Tailored clothing Fast-Food Restaurant Low Source; Adapted from Lynn Shostack Plumbing Repair Health Club Airline Flight Landscape Maintenance Consulting Life Insurance Internet Banking Intangible Elements High The 8Ps of Services Marketing • Product Elements • Place and Time • Price and Other User Outlays • Promotion and Education • Process • Physical Environment • People • Productivity and Quality Fig 1.9 Working in Unison: The 8Ps of Services Marketing The 8Ps of Services Marketing: (1) Product Elements • Embrace all aspects of service performance that create value • Core product responds to customer’s primary need • Array of supplementary service elements – Help customer use core product effectively – Add value through useful enhancements • Planning marketing mix begins with creating a service concept that: – Will offer value to target customers – Satisfy their needs better than competing alternatives The 8Ps of Services Marketing: (2) Place and Time • Delivery decisions: Where, When, How • Geographic locations served • Service schedules • Physical channels • Electronic channels • Customer control and convenience • Channel partners/intermediaries The 8Ps of Services Marketing: (3) Price and Other User Outlays • • Marketers must recognize that customer outlays involve more than price paid to seller Traditional pricing tasks: – Selling price, discounts, premiums – Margins for intermediaries (if any) – Credit terms • Identify and minimize other 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 The 8Ps of Services Marketing: (4) Promotion and Education • Informing, educating, persuading, reminding customers • Marketing communication tools – – – – Media elements (print, broadcast, outdoor, retail, the Internet, etc.) Personal selling, customer service Sales promotion Publicity/PR • Imagery and recognition – Branding – Corporate design • Content – Information, advice – Persuasive messages – Customer education/training • The 8Ps of Services Marketing: (5) 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 • Process involves choices of method and sequence in service creation and delivery – Design of activity flows – Number and sequence of actions for customers – Nature of customer involvement – Role of contact personnel – Role of technology, degree of automation • Badly designed processes waste time, create poor experiences, and disappoint customers The 8Ps of Services Marketing: (6) 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 The 8Ps of Services Marketing: (7) People • Interactions between customers and contact personnel strongly influence customer perceptions of service quality • The right customer-contact employees performing tasks well – Job design – Recruiting – Training – Motivation • The right customers for firm’s mission – Contribute positively to experience of other customers – Possess—or can be trained to have— needed skills (coproduction) – Can shape customer roles and manage customer behavior The 8Ps of Services Marketing: (8) Productivity and Quality • Productivity and quality must work hand in hand • Improving productivity key to reducing costs • Improving and maintaining quality essential for building customer satisfaction and loyalty • Ideally, strategies should be sought to improve both productivity and quality simultaneously—technology often the key – Technology-based innovations have potential to create high payoffs – But, must be user friendly and deliver valued customer benefits Marketing Must Be Integrated with Other Management Functions (Fig 1.10) Three management functions play central and interrelated roles in meeting needs of service customers Operations Management Marketing Management Customers Human Resources Management A Framework For Developing Effective Service Marketing Strategies: Overview Understanding Customer Needs, Decision Making, and Behavior in Service Encounters Building the Service Model Managing the Customer Interface Implementing Profitable Service Strategies Key Points • The role of services sector – Service sector dominates economy in most nations, many new industries • The service concept and its definition: – Services create benefits without transfer of ownership – Most employ time-based performances to bring about desired results in recipients or in assets for which they have responsibility – Customers expect value from access to goods, facilities, labor, professional skills, environments, networks & systems in return for money, time, effort • Services present distinctive marketing challenges relative to goods, requiring: – Expanded marketing mix comprising 8Ps instead of traditional 4Ps – Integration of marketing function with operations and human resources Tutorial Assignments 1. A debate “In today’s world, every firm is a service firm” 2. What is so distinctive about services marketing that it requires a special approach, set of concepts, and body of knowledge?