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Mktg 358 - Chapter 1 - Introduction to Service Marketing

by: Caroline Goumy

Mktg 358 - Chapter 1 - Introduction to Service Marketing Mktg 358

Marketplace > University of Mississippi > Marketing > Mktg 358 > Mktg 358 Chapter 1 Introduction to Service Marketing
Caroline Goumy
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About this Document

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...
Service marketing
Kathy Wachter
Class Notes
service, Marketing, Introduction




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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.

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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)­‐profit/­‐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 


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