Mktg 358 - Chapter 1 - Introduction to Service Marketing
Mktg 358 - Chapter 1 - Introduction to Service Marketing Mktg 358
Popular in Service marketing
Popular in Marketing
This 10 page Class Notes was uploaded by Caroline Goumy on Thursday September 15, 2016. The Class Notes belongs to Mktg 358 at University of Mississippi taught by Kathy Wachter in Fall 2016. Since its upload, it has received 4 views. For similar materials see Service marketing in Marketing at University of Mississippi.
Reviews for Mktg 358 - Chapter 1 - Introduction to Service Marketing
Report this Material
What is Karma?
Karma is the currency of StudySoup.
Date Created: 09/15/16
CHAPTER 1 – INTRODUCTION TO SERVICES MARKETING Why Study Services? Services Dominate the Economy in Most Nations Most New Jobs Are Generated by Services Powerful Forces Are Transforming Service Markets What Are Services? Benefits without Ownership Defining Service Four Broad Categories of Services—A Process Perspective People Processing Possession Processing Mental Stimulus Processing Information Processing Services Pose Distinct Marketing Challenges The 7 Ps of Services Marketing The Traditional Marketing Mix Applied to Services The Extended Services Marketing Mix for Man aging the Customer Interface A Framework for Developing Effective Services Marketing Strategies Understanding Service Prod ucts, Consumers, and Markets Applying the 4 Ps of Marketing to Services Designing and Managing the Customer Interface Developing Customer Relationships Striving for Service Excellence CHAPTER 1 – INTRODUCTION TO SERVICES MARKETING « Work ethic is better than expreience. If someone is a hard worker, they can be taught anything. Don’t hire someone because they have a great resume. Hire someone you can trust that will do all they can he lp your customers and grow your business. » What exactly is service marketing and why study it? v Given 21st century : -‐ Global with technnology -‐ Services dominate most economies and are growing rapidly: ⇒ Services account for more than 60% of GDP worldwide (31% for industry ; 6% for agriculture) ⇒ Almost all economies have a substantial service sector ⇒ Most new employment is provided by services ⇒ Strongest growth area for marketing ⇒ Majority of jobs will be in this area -‐ Can be form of competitive advantage (Banyan Tree-‐ case 4) How does services marketing differ from physical goods marketing ? Areas and industries Powerful Forces Are Transforming Service Markets These industries and processes are influenced by : Ø Policies of government ⇒ Changes in regulations ⇒ Privatization ⇒ New rules to protect customers, employees, and the environment ⇒ New agreement on trade in services Ø Social environment ⇒ Increased desire for buying experiences vs. things ⇒ Rising consumer ownership of high tech equipment ⇒ Easier access to more information ⇒ Migration ⇒ Growing but aging population Ø Business trends ⇒ Push to increase shareholder value ⇒ Emphasis on productivity and cost savings ⇒ Manufacturers add value through service and sell services ⇒ More strategic alliances ⇒ Focus on quality and customer satisfaction ⇒ Growth of franchising ⇒ Marketing emphasis by nonprofits Ø Technology ⇒ Growth of Internet ⇒ Greater bandwidth ⇒ Compact mobile equipment ⇒ Wireless networking ⇒ Faster, more powerful software ⇒ Digitization of text, graphics, audio, video Ø Globalization ⇒ More companies operating on transnational basis ⇒ Increased international travel ⇒ International mergers and alliances ⇒ “Offshoring” of customer service ⇒ Foreign competitors invade domestic markets But they are also influenced by : Ø B2B Ø Outsourcing Ø Offshoring Ø Business core business Ø Specialization Ø R&D productivity What are services ? v Services ⇒ are economic activities offered by one party to another ⇒ most commonly employ time -‐based performances to bring about desired results v 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; ⇒ normally do not take ownership of any of the phy sical elements involved . v A fresh perspective : benefits whithout ownership à rental of goods : o Payment made for using or accessing something – usually for a defined period of time – instead of buying it outright o Allows participation in network systems that individuals and organizations could not afford à Typically the services are done : to you + for you + by you à Services are perishable à Do not confuse merkating of services (when service is the core product) and marketing through service (when good service inreases the value of a core physical good The challenges with services are characterized by : • Intangibility • Can’t inventory • Variability • Physically intangible and these elements are dominate with (heterogeneity) services value (experience) • Inseparable (ex : the • Can be hard to fathom hotel and the room • You can be involved in production (co -‐creating) if people are not separable, involved w/b inseparable same with haircut) • Services employees (people) c/b part of the experience • Perishable • Operation input and output can vary (heterogeneity) • IHIP • Time (demand and capacity) • Distribution and variety of channels (physical vs non physical/virtual) Four broad categories of services Lovelock’s classification v Tangible acts on a person’s body : services such as health care, hotels, airlines, beauty salons ans fitness centers. v Intangible acts on a person’s mind : services such as education, advertising, entertainnment and broadcasting v Tangible acts on physical possess ions : services such as laundry, landscaping, repair and maintenance, and freight transportaiton v Intangible acts directed at intangible assets : services such as accounting, banking, insurance and legal services Understanding service products, consume rs ans market vehicules • Extending 4P framework (351) with 3Ps of service : People + process + physical environment/evidence • Building relationships to develop and manage (loyalty, equity) over the long term • The strategy to deliver : service excellence • It is about delivering « value » to user (whether « for » profit or « non » profit) Framework for service (non ownership) Ø Labor, skills, expertise You pay/hire to get service (check -‐up, concult, repair/maintain…) Ø Rental goods Use for a defined period of tim e & return (books, costumes, tuxedos..) Ø Facility/space Portions of larger facility (gym, airline seat, storage units (your stuff -‐my extra closet)) Ø Shared facility access ‘in/out or virtual) Themes parks, golf course/clubs, bowling… Ø Noetwork systems Telecoms, UTILITIES, BANKING, SOCIAL media (app/games)… à also consider : rent vs own vs lease (if you were looking at a car & criteria for it ?) 7P extending the framework (4P) to include services Product element Place and time Price and other user outlays Promotion and education Process Physical environment People Ø Product elements A « core product » to meet needs ans suppleme ntary services elements to reinforce core use ans ADD VALUE Ø Place and time elements Physical ans/or electronic/mobile channels à e.g. education (class) vs online ; insurance Ø Time speed and convenience Be it virtual, transportation Ø Price and « outlays » à psychic costs = time, energy, effort *People pay higher for convenience * ⇒ Payments : dynamic = demand & capacity constraints (physical facility e.g. restaurant, hotel, classroom…) ⇒ Target segment(s) Process to create « value » • Involve « trade offs » • Time and effort (energy) • « Cost » • Psychic vs monetary • Experience Value = benefits – (price + hassle factors) http://www.cnbc.com/the-‐profit/ http://www.cnbc.com/shark-‐tank/ Types of process involved : Ø People : tangible (you participate) Hair, nails, health, bus/taxi, airline…) Ø Possessions : tangible Goods transport e.g. Amazon ; dry cleaning, Ø Mental stimulus : intangible Religion Ø Information : intangible Accounting, banking Involves decision making • Based on information • Modeling attributes (credence *, search, experience) • Belief systems • Trade-‐offs (« everything is a trade-‐off today ») • Often not the « most important » upon which the decision is made *Credence attitude is your believes about something. You hope but you don’t know (ex :education) Analyzing services another p.o.v. aka : the 7Ps of services : ⇒ Product elements ⇒ Place and time ⇒ Price and hassle factors ⇒ Education and promotion ⇒ Processes (input/output ; co-‐production ; demand and capacity) ⇒ Physical environment (servicescape ans servuction system) ⇒ People (FLE’s* – so very very cruciall) *FLE’s : front line employes Who owns what ? Services and… • Labor & skills • Rental goods • Shared space and facilities • Access to space • Networks and systems Video : « An introduction to the Apple retail store » What is being sold ? How does this relate to this class/course ? What would you say ? « In today’s world, every firm is a service firm. » à Debate : ⇒ What concepts from the first 2 chapters would you include in the debate ? ⇒ Put yourselves into groups for this exercise, appoint a recorder, discuss ans summerize including examples to support. Marketing perceptions Ø Traditional marketing ⇒ Product ⇒ Place ⇒ Promotion ⇒ Price Ø 21st century marketing ⇒ Creating ⇒ Communicating ⇒ Delivering ⇒ Exchanging à Value = benefits – (price+hassle) Ø Services ⇒ Processes ⇒ Physical environment/evidence ⇒ People Ø Relationship building ⇒ Branding ⇒ Loyalty ⇒ Bonding CASE Susan Lee : student comsumption v People -‐ Hair -‐ Bus -‐ Made an appointment v Possessions -‐ Pizza delivery (something you ordered – tangible) v Mental -‐ Education v Information -‐ Weather -‐ Banking Framework for effective services marketing strategies