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Services Marketing,MTG 410Fall 2000Prof: 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 Carehospital, medical practice, dentistry, eye careProfessional Servicesaccounting, legal, architecturalFinancial Servicesbanking, investment advising, insuranceHospitalityrestaurant, hotel/motel, bed & breakfast, ski resort, raftingTravelairlines, travel agencies, theme parkOthers:hair styling, pest control, plumbing, lawn maintenance, counseling services, health club,Figure 1-2 Percent of U.S. Labor Force by Industry,0,10,20,30,40,50,60,70,80,1929,1948,1969,1977,1984,1996,Percent of GDP,Source: Survey of Current Business, 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. Economy,” Scientific American, 244,3 (1981): 31-39.,Year,Services Manufacturing Mining & Agriculture,0,10,20,30,40,50,60,70,80,1948,1959,1967,1977,1987,1996,Figure 1-3 Percent of U.S. Gross Domestic Product by Industry,Percent of GDP,Year,Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.,Services Manufacturing Mining & Agriculture,Importance of Service Sector,$3.52 trillion of U.S. GDP 53.2% of U.S. GDP71% of total employment91% of new jobs from 1992 to 2005,Services,Fast growing services for the next decade,Health servicesBusiness servicesFinance, insurance, real estateResidential care,Computer & data processingChild day-careSocial servicesTransportation services,Factors Contributing to Growth,Movement to information ageShift to industrialized economyAging populationLonger life expectanciesIncrease leisure timeHigh per capita incomeChanging social and cultural valuesAdvances in technology,Challenges for Services,Defining and improving qualityCommunicating and testing new servicesCommunicating and maintaining a consistent imageMotivating and sustaining employee commitmentCoordinating marketing, operations and human resource effortsSetting pricesStandardization versus personalization,Differences Between Goods and Services,Intangibility,Perishability,SimultaneousProductionandConsumption,Heterogeneity,Figure 1-1Tangibility Spectrum,TangibleDominant,IntangibleDominant,Salt,Soft Drinks,Detergents,Automobiles,Cosmetics,AdvertisingAgencies,Airlines,InvestmentManagement,Consulting,Teaching,Fast-foodOutlets,Fast-foodOutlets,Implications of Intangibility,Services cannot be inventoriedServices cannot be patentedServices cannot be readily displayed or communicatedPricing is difficult,Implications of Heterogeneity,Service delivery and customer satisfaction depend on employee actionsService quality depends on many uncontrollable factorsThere 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 transactionCustomers affect each otherEmployees affect the service outcomeDecentralization may be essentialMass production is difficult,Implications of Perishability,It is difficult to synchronize supply and demand with servicesServices cannot be returned or resold,Table 1-2 Services are Different,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 1-5The Services Marketing Triangle,Internal Marketing,Interactive Marketing,External Marketing,Company(Management),Customers,Employees,“enabling thepromise”,“delivering the promise”,“setting thepromise”,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 AssessmentHow is the service organization doing on all three sides of the triangle?Where are the weaknesses?What are the strengths?,Specific Service ImplementationWhat is being promoted and by whom?How will it be delivered and by whom?Are the supporting systems in place to deliver the promised service?,Source: Adapted from A. Parasuraman,Company,Customers,Providers,Technology,Figure 1-6 The Services Triangle and Technology,Services Marketing Mix:7 Ps for Services,Traditional Marketing MixExpanded Mix for Services: 7 PsBuilding Customer Relationships Through People, Processes, and Physical EvidenceWays to Use the 7 Ps,Traditional Marketing Mix,All elements within the control of the firm that communicate the firms capabilities and image to customers or that influence customer satisfaction with the firms product and services: Product Price Place Promotion,Expanded Mix for Services -the 7 Ps,ProductPricePlacePromotionPeopleProcessPhysical Evidence,Table 1-3Expanded Marketing Mix for Services,Table 1-3 (Continued)Expanded Marketing Mix for Services,Ways to Use the 7 Ps,Overall Strategic AssessmentHow effective is a firms services marketing mix?Is the mix well-aligned with overall vision and