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Chapter 12
The Marketing of Services
Key Terms
Service Products, Services, Intangibility, Inseparability,
Perishability, Off Peak Pricing, Client Relationship, Customer
Effort, Uniformity, Tangibles, Reliability, Responsiveness,
Assurance, Empathy, Internal Marketing, Continual
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Services
 Service Products – A bank loan or home security
that are intangible
 Services – Activities by sellers and others that
accompany the sale of a product and that aid in its
exchange or its utilization
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Important Characteristics of
Services
 Intangibility – Without physical dimensions or
characteristics
 Inseparability – Service and seller are inseparable
 Perishability and Fluctuating demand – Seasonal,
days, time of day, vacant seats, waiting time on
phone
 Off-peak pricing
 Client Relationship – Similar to customer
relationship but typically more intense
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Important Characteristics of
Services
 Customer Effort – Customer involvement is at a
greater degree in production of many types of
services
 Uniformity – Quality of services can vary more than
the quality of goods
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Unique Characteristics
Distinguishing Services from Goods
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Quality Service
 Quality service generally suffers due to the gap
between
 Consumer expectations and management
perceptions of the consumer expectations
 Management perceptions of consumer expectations
and firm’s service quality specifications
 Service quality specifications and actual service
quality
 Actual service delivery and external communications
about the service
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Quality Service
 Determinants of service quality include
 Tangibles
 Reliability
 Responsiveness
 Assurance
 Empathy
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Customer Satisfaction Measurement
 Understand the expectations and requirements of the
customer
 Determine how well your company and its major
competitors are delivering these expectations and
requirements
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Customer Satisfaction
Measurement (CSM) – Research
 Common aspects
 Marketing and sales personnel primarily responsible for
designing CSM programs
 Top management and the marketing function championed
the programs
 Combination of qualitative and quantitative research
methods
 Evaluations included both the company’s and
competitor’s satisfaction performance
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Customer Satisfaction
Measurement (CSM) – Research
 Results of all research were made available to
employees, but not to customers
 Research was performed on continual basis
 Customer satisfaction was incorporated into the
strategic focus of the company
 Commitment to increasing service quality and customer
satisfaction from employees at all levels within the
organization
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The Importance of Internal Marketing
 Critical components
 Careful selection process in hiring frontline employees
 Clear and concrete message conveying a particular
service strategy
 Significant modeling by managers
 Energetic follow-through process
 Emphasis on teaching employees to have good
attitudes
 Emphasis should be placed on the word continual
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Obstacles in Service Marketing
 Four reasons for the lack of innovative marketing on
the part of service marketers
 Limited view of marketing
 Lack of strong competition
 Lack of creative management
 No obsolescence
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Service Challenge
 Constantly develop new services that will better meet
customer needs
 Improve on quality and variety of existing services
 Provide and distribute services in a manner that best
serves the customer
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Banking
 Banking is becoming an increasingly technologydriven business
 Home baking systems
 Banks have also learnt the value of bundling services
 ATM transactions
 Interest bearing checking accounts
 Most banks target some marketing activities towards
senior citizens
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Health Care
 Health Maintenance Organization – Alternative
delivery systems
 Benefits
 Ability to have all ailments treated at one facility
 Payment of fixed fees for services
 Encouragement of preventive versus remedial treatments
 Success of HMO has inspired similar programs for
dental and eye care
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Insurance
 Insurance industry offers several new products and
services
 Distribution of insurance services have increased
 Availability of travel auto insurance through AAA
 Group insurance written through employers and labor
unions
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Travel
 Airline industries have been the leaders in the use of
technology
 Use of Internet sites to dispense flight and fare
information
 Technology helps airlines to make strategic pricing
decisions through the use of yield management
 Use of elaborate computer programs enable
managers to determine customer segments
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Implications for Service Marketers
 Sum total of marketing mix elements represents the
total impact of the firm’s marketing strategy
 Services must be made available to prospective users
 Varying service bundles, new technology, and
alternative means of distributing the service enable
targeted marketing
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