Services Marketing: Chapter 1

Services Marketing - BBA36MM2

• The course covers services marketing for BBA students.

Chapter 1: Introduction to Services Marketing

• Internal services are elements within an organization that add value to the final output.
• Examples of internal services include accounting, payroll, recruitment, training, legal services, transportation, catering, and cleaning/landscaping.
• Internal services are increasingly outsourced.

Major Trends in the Service Sector

• Government policies (regulations, trade agreements) influence service sectors.
• Social changes (affluence, lack of time, desire for experiences) affect service demands.
• Growing trends include manufacturers offering services, chain expansion, more strategic alliances. Increased emphasis on productivity, quality, and marketing by nonprofits.
• Technological advances in IT (speed, digitization, wireless, internet), and internationalization (travel, multinational companies) are important trends.

Impacts of Technological Change

• Technology fundamentally alters how service firms operate, impacting customer interactions and internal processes.
• Technology enables the development of relational databases to understand customer needs and behavior.
• Employee capabilities are leveraged and mobility enhanced using technology
• Customer service is centralized for faster responses.
• Internet-based business models are created.

Differences Between Goods and Services

• A service is an act or performance offered by one party to another, typically not leading to ownership.
• Services are ephemeral, intangible, and produce benefits in facilitating change. Services' values vary based on customer interactions and experiences.
• Customers are often involved in the service production process, making service experiences vary widely.
• Services are hard to inventory and evaluate, and time is often a critical factor.
• Tangible elements contribute to the perceived value of goods, while intangible factors contribute to the perceived value of services, such as convenience and reputation.

Defining the Essence of a Service:

• A service is an act or performance offered by one party to another, without transferring ownership.
• It's an economic activity that doesn't result in ownership.
• Services create benefits by facilitating a desired change in customers (personally) or their possessions.

Distinguishing Characteristics of Services

• Customers do not acquire ownership of services.
• Services are ephemeral, or transitory, and cannot be inventoried.
• Intangible elements significantly influence value creation.
• Customers are often involved in the production process.
• Services are often difficult to evaluate, making customer perception and experience critical.
• Time is important - speed often is valuable.
• Delivery channels can be electronic or physical.

Marketing Implications (1)

• Services often cannot be inventoried after production, leading to critical considerations regarding handling demand and supply.
• Pricing can be time-based depending on service usage.
• Customer criteria may differ between renting and buying services.

Marketing Implications (2)

• Customers can be involved in service production, and customer behavior must be understood.
• The intangible value created by service personnel is significant, requiring strong HR management.
• Intangible elements are significant and should be "concrete-ized" to build quality through physical images and tangible clues.

Marketing Implications (3)

• Other people are often part of the service experience.
• Employee quality impacts customer perception— consistency, ability to meet standards, and customer experience are key.
• Strategies are needed to manage the impact of other customers on customer experience.
• Service recovery policies are vital to address potential failures in the service provision, which are more difficult to hide from customers.

Marketing Implications (4)

• Customers find it difficult to evaluate services, needing education to make better choices.
• Ethical behavior and building a reputation are necessary to develop trust.
• Time is often a critical factor for customers, demanding extended operating hours and convenient times.
• Finding ways to offer speed is important for businesses.
• Distribution channels must be efficiently adapted for both tangible and intangible service components while considering customer priorities.

Value Added by Tangible vs. Intangible Elements

• Visual representations compare the mix of tangible and intangible elements that customers associate with goods and services.

Marketing Relevant Differences Between Goods and Services

• Summary of key differences between services and goods

Marketing Implications, Differences and Tasks (1) and (2)

• Summarized tables that relate the differences, implications, and tasks of customers/services

Expanded Marketing Mix for Services

• The 8Ps of services marketing are needed to develop strategies that meet customer needs profitably.

The 8Ps of Services Marketing

• Product Elements: Core product offering, supplementary services to enhance value. Businesses must define their product correctly, noting all associated services
• Place and Time: Service delivery locations, delivery schedules, accessibility.
• Price and Other User Outlays: Price paid, additional costs, payment methods, cost impacts. Customers need to understand both obvious costs (cash, discounts) and hidden costs (waiting time, travel time)
• Promotion and Education: Communicating service benefits, educating customers, building trust.
• Process: Steps in delivering service, customer involvement, efficient operation, process quality.
• Physical Environment: Service encounter environment, physical cues, design, impact on customers.
• People: Interactions, role of employees, customer interaction, customer responsibility, and staff training.
• Productivity and Quality: Strategies to create high payoff, must be user friendly, and should deliver and create valued customer experiences to maximize satisfaction.

The Services Marketing Triangle

• A framework to describe the relationships between organizations, service providers, and customers.
• Marketing processes for service (internal, external, interactive) link these components to create a strong customer experience.

Marketing Must Be Integrated With Other Management Functions:

• Marketing, operations, and HR management must be integrated to support the needs of service customers efficiently.

Introduction to services marketing, covering internal services (accounting, payroll, recruitment, etc.) and major trends in the service sector. Discusses the impacts of government policies, social changes, and technological advancements on service demands.