BEM 120 Chapter 1 PDF

2024/07/24 Chapter 1 Service Marketing in Perspective 1 LEARNING OUTCOMES After studying this chapter, you should be able to: Explain the nature of the service marketing exchange process and its relation to information requirements. Define the concept ‘servi...

2024/07/24 Chapter 1 Service Marketing in Perspective 1 LEARNING OUTCOMES After studying this chapter, you should be able to: Explain the nature of the service marketing exchange process and its relation to information requirements. Define the concept ‘service’. Differentiate between the marketing of physical goods and the marketing of intangible services. Discuss the different approaches that can be used to classify services. Identify the unique distinguishing characteristics or features of services. Explain the marketing problems and associated solutions of each one of service marketing’s distinguishing characteristics. Provide practical examples to illustrate any of the theoretical issues discussed in this chapter. Provide service management-related solutions to any marketing problems discussed in this chapter. Grasping Service Marketing. 3rd Edition. 2 1  2024/07/24 “Marketing is the art of creating genuine customer value. It is the art of helping your customer become better off. The marketer's watchwords are quality, service, and value.” -Philip Kotler- 3 INTRODUC TION 4 2  2024/07/24 Overview: Basic concepts of service marketing 5 What is Marketing A social and managerial process by which individuals and businesses obtain what they need and want through creating and exchanging value with others. Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Source:Lappeman, J., Egan, P., Rightford, G. & Ramogase, T. 2021. Marketing to South African consumers. Cape Town: UCT Liberty Institute of Strategic Marketing & UCT Libraries 6 3  2024/07/24 Service Marketing As An Exchange Process Marketing exchange process Is a complex process where the organisation identifies the expectations of their target market and find innovative ways to satisfy the important needs of their customers. 7 Service Marketing As An Exchange Process Value for money offering can be severely affected by: High More interest demanding rates customers Lower Rising disposable petrol price income 8 4  2024/07/24 Three environments: To be successful in competitive markets organisations needs to scan the environment: Market Micro- environment Macro- environment (conduct SWOT environment analysis) 9 Micro environment Includes organisation’s vision and mission statements, its competencies and capabilities 10 5  2024/07/24 Market environment The special emphasis is on the organisation’s customers, competitors, suppliers and intermediaries 11 The analysis of the market environment should include: 12 6  2024/07/24 SWOT Analysis Internal STRENGTHS WEAKNESSES External OPPORTUNITIES THREATS Negative Positive 13 SWOT Analysis STRENGTHS o Internal capabilities that may help a company reach its objectives. o These include: o Market leader in the dry cat food market. o Access to the group’s leading world position in food technology. o Market leader in luxury pet foods. o The group’s excellent worldwide grocery distribution. o Pet food market leader in several big markets, including France, Italy, Spain and South o America. 14 7  2024/07/24 SWOT Analysis WEAKNESSES o Internal limitations that may interfere with a company’s ability to achieve its objectives o Excessive product range with several low- volume brands. o Relatively low advertising and promotions budget. o Product range needs many manufacturing skills. o Poor store presence in several large markets o Overall poor profit performance. 15 SWOT Analysis OPPORTUNITIES o External factors that the company may be able to exploit to its advantage o These include: o Economic climate o Demographic changes o Market o Technology 16 8  2024/07/24 SWOT Analysis THREATS o Current and emerging external factors that may challenge the company’s performance o These include: o Competitive activity o Channel pressure o Demographic changes o Politics 17 Macro environment Changes in this environment may result from shifts in the economic, political, legal, social, natural, technological and/or international environments (PEST) 18 9  2024/07/24 Service Marketing Mix 19 Product Physical evidence People The 7Ps Process of service Place marketing Pricing Promotion 20 10  2024/07/24 Product o Is the technical outcome of the service o Comprises the ‘what’ of the service o It is anything offered to a customer- tangible or intangible o It is difficult to standardise service (involves processes and people) 21 Physical evidence o Difficult to judge the nature of service before consumption to its intangible nature. o Tangible evidence of the service can be used; eg- Brochure o Customers quality of tangible aspects to quality of the service 22 11  2024/07/24 People People oThe staff of the organisation part of the process of service delivery oThe actions of the staff have direct impact on service quality 23 Process o Customer experience takes place in real time o This is viewed as ‘how’ the service provided will satisfy customer needs 24 12  2024/07/24 Place oDepends on the nature of the service and what customers value. oSeveral distribution channels can be utilized to distribute a service to customer 25 Pricing o Various terms are used to refer to pricing, such as charges, rents, commissions, tuition, fees, fares, rates and premiums o These are designed to cover costs and generate profits 26 13  2024/07/24 Promotion oThis is how the service organisation communicates with its target group to influence knowledge, attitude and behaviour oMarketers must actively communicate the benefits of their service to their target audience through the using appropriate communication channels 27 Service delivery exchange process Two levels Nature of How- interaction between service provider and interaction customer What we do- depends on technical, experience Core service and know-how 28 14  2024/07/24 Defining Services An act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. 29 The Goods-Versus-Service Continuum HYBRID Degrees of tangibility 30 15  2024/07/24 Degrees of tangibility o Pure tangible good o Toothpaste o Tangible goods with accompanying service o Car sold with maintenance plan o Hybrid service offers o Meal and services at Newscafe o Core service with accompanying minor goods and services o Airlines- purchase transport but also get meals o Pure services o Medical services 31 CLASSIFICATION OF SERVICES Level 1: Means of delivery Level 2: Degree of dependence on consumer presence Level 3: Personal versus business use 32 16  2024/07/24 CLASSIFICATION OF SERVICES Level 1: Means of delivery This focuses on whether the service is: Equipment-based services Can be automated or provided by unskilled or skilled provider. Eg: Movie theatres, airlines People-based services Can be performed by unskilled, skilled or professional staff. Eg: Law firms 33 CLASSIFICATION OF SERVICES Level 2: Degree of dependence on consumer presence Some services depends on the presence of the customer. Example: medical surgery In contrast, customer does not need to be presence to have the car repaired by the dealership. 34 17  2024/07/24 CLASSIFICATION OF SERVICES Level 3: Personal versus business use Service differ as to whether they meet they meet personal or business needs. 35 Distinguishing Features of Services Intangibility Inseparability Heterogeneity Perishability 36 18  2024/07/24 Distinguishing Features of Services Intangibility It is often impossible to taste, smell, feel, see or hear PROBLEMS SOLUTIONS Cannot be stored Stress tangible cues Cannot be patented Stimulate positive word-of- Complicates the mouth communication process Encourage employee to No physical goods to communicate with customers determine cost from Create strong corporate image 37 Distinguishing Features of Services Inseparability Services are often produced, delivered and consumed all at once PROBLEMS SOLUTIONS Physical connection to the Effective selection of contact service staff Customer involvement Effective customer Customer interaction management Mass production Investigate opportunities for mass production Support for frontline staff 38 19  2024/07/24 Distinguishing Features of Services Heterogeneity It is often difficult to completely standardise service delivery PROBLEMS SOLUTIONS Service standardisation Customisation Quality control Standardisation 39 Distinguishing Features of Services Perishability Inventory holding proves to be impossible PROBLEMS SOLUTIONS Demand > supply DEMAND SUPPLY Demand < supply Differential pricing Part-time employees during Demand = supply Non-peak demand can peak demand be cultivated Peak-time routines Complementary Increased customer participation services Shared services Facilities for future expansion 40 20