Introduction of service marketing

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SERVICESMARKETING

Chapter 1:

New PerspectivesonMarketing in the

ServiceEcono!

Mr" Ma#har


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Overview of Chapter 1

Why study services? Powerful forces that are transforming

service Markets

What are services? Four broad categories of services Challenges posed by services !panded marketing mi! for services

Framework for e"ective services marketingstrategies


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Why #tudy #ervices? $1%#ervices dominate economy in most nations

&nderstanding services o"ers you personal competitive

advantages'mportance of service sector in economy is growing

rapidly(#ervices account for more than )* percent of +,P worldwide

-lmost all economies have a substantial service sector

Most new employment is provided by services

#trongest growth area for marketing


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stimated #i.e of #ervice #ector in

#elected Countries (Fig 1.2—updated10/06)

Services as Percent of GDP

Poland (66%), South Africa (65%)

Japan (74%), France (73%), U.. (73%), !anada (7"%)

Saudi Ara#ia (33%)

!hina (4$%)

ndia (4&%)

Ar'entina (53%), rail (5"%)

Pana*a (&$%), USA (7+%)

u-e*#our' (&3%)

!a*an /land/ (+5%), Jer/e (+3%)

aha*a/ (+$%), er*uda ( &+%)

0e-ico (6+%), Au/tralia (6&%), 1er*an (6&%)

/rael (6$%), 2u//ia (5&%), S. orea (56%)

30 40 50 60 70 80 90 20 10


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/hree Ma0or sectors(

/he structure of an economy is dened by the shares of these

sector2s in total output3 total employment3 total trade etc4

/here is a denite relationship between economicdevelopment and structural changes of an economy4

-s the economy is on the development path3 the structure ofthe economy shifts away from agriculture to industry andthen from industry to services4

Changing #tructure of

sectors as conomic,evelopment volves

Primary(agriculture)

Secondary(manufacturin

g)

Tertiary(serices)


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Changing #tructure of

mployment as conomic,evelopment volves

Industry

Services

Agriculture

Time, per Capita Income

S hare of

E mployment

Source: IMF, 1!


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/ransformation of the #erviceconomy

1oern*ent

Policie/

u/ine//

rend/

Social

!han'e/

Adance/ in

1lo#aliation

nnoation in /erice product/ delier //te*/, /ti*ulated # #etter technolo'

!u/to*er/ hae *ore choice/ and e-erci/e *ore poer

Succe// hin'e/ on

Under/tandin' cu/to*er/ and co*petitor/

8ia#le #u/ine// *odel/

!reation of alue for cu/to*er/ and fir*

9e *ar:et/ and product cate'orie/

ncrea/e in de*and for /erice/

0ore inten/e co*petition


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conomic sectors in

PakistanSector !"Pcomposition

#y sector

S$are of%a#or

-griculture 56417 897

'ndustry514:7 1:7

#ervices6:4)7 8*7

#ource( C'- World Fact ;ook 5*1: and 5*18


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Contribution of total #ervice #ectorin +,P

#ource ;angladesh conomic >eview3 5*1*


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Why #tudy #ervices? $5%Most new 0obs are generated by services

Fastest growth e!pected in knowledgebasedindustries

#ignicant training and educational @ualicationsre@uired3 but employees will be more highlycompensated

Will service 0obs lost to lowercost countries? Aes3some service 0obs can be e!ported


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Factors #timulating

/ransformation of the#ervice conomy $1%

1oern*entPolicie/

u/ine//

rend/

Social

!han'e/

Adance/ in

1lo#aliation

!han'e/ in re'ulation/

Priatiation

9e rule/ to protect cu/to*er/,e*ploee/, and the eniron*ent

9e a'ree*ent on trade in /erice/


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Factors #timulating


1oern*ent

Policie/

u/ine//

rend/

Social

!han'e/

Adance/ in

1lo#aliation

2i/in' con/u*er e-pectation/

0ore affluence

0ore people /hort of ti*e

ncrea/ed de/ire for #uin' e-perience/er/u/ thin'/

2i/in' con/u*er oner/hip of hi'h teche;uip*ent


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Factors #timulating

/ransformation of the#ervice conomy $:%

1oern*ent

Policie/

u/ine//

rend/

Social

!han'e/

Adance/ in

1lo#aliation

Pu/h to increa/e /hareholder alue


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Factors #timulating


1oern*ent

Policie/

u/ine//

rend/

Social

!han'e/

Adance/ in

1lo#aliation

1roth of the nternet

1reater #andidth

!o*pact *o#ile e;uip*ent

=irele// netor:in'

Fa/ter, *ore poerful /oftare

>i'itiation of te-t, 'raphic/, audio, ideo


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Factors #timulating


1oern*ent

Policie/

u/ine//

rend/

Social

!han'e/

Adance/ in

1lo#aliation

0ore co*panie/ operatin' on tran/national#a/i/

ncrea/ed international trael

nternational *er'er/ and alliance/

“?ff/horin'” of cu/to*er /erice

Forei'n co*petitor/ inade do*e/tic *ar:et/


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Categories ofServices


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Four Categories Of #ervices$14B%

Information processin"

(/erice/ directed atintan'i#le a//et/)

Accountin'

an:in'

#ature of the Service $ct People Po//e//ion/

an'i#le Action/ People processin"

(/erice/ directed at

people’/ #odie/)

ar#er/

@ealth care

%ho or %hat Is the Direct &ecipient of the Service'

Possession processin"

(/erice/ directed at

ph/ical po//e//ion/)

2efuelin'

>i/po/alrecclin'

Mental stimulus

processin" (/erice/ directed at

people’/ *ind/)


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People ProcessingCustomers must(

Physically enter the servicefactory

Cooperate actively with theservice operation

Managers should thinkabout process and outputfrom customer2sperspective /o identify benets created

and nonnancial costs( /ime3 mental3 physical e"ort

Four Categories Of #ervices


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Possession Processing

Possession Processing

Customers are lessphysically involvedcompared to people

processing services Involvement is limited

Production andconsumption are

separable


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Mental #timulus Processing

Mental Stimulus Processing

Ethical standards requiredwhen customers whodepend on such services

can potentially bemanipulated by suppliers

Physical presence ofrecipients not required

Core content of services isinformation-based Can be “inventoried


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'nformation Processing

Information Processing

Information is the mostintangible form of serviceoutput

!ut may be transformedinto enduring forms ofservice output

"ine between information

processing and mentalstimulus processing maybe blurred#


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What areServices?


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#ervicesCombination of outcomes and experiences

delivered to and received by customers4

,eeds3 processes3 performances4

-ll economic activities whose output is not a physical

product4+enerally consumed at the time it is produced

Provides added value in forms that are essentiallyintangible4

#ervices deal with processes rather than withthings and are experienced than consumed4

&sually cover a vast array of di"erent and oftencomple! activities4


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Challenges

Posed by

Services


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*plication/

ehaior of /ericeper/onnel and cu/to*er/

can affect /ati/faction

@ard to *aintain ;ualit,con/i/tenc, relia#ilit

>ifficult to /hieldcu/to*er/ fro* failure/

i*e i/ *oneCcu/to*er/ ant /erice

at conenient ti*e/

ifference

People *a #e partof

/erice e-perience

?perational input/and

output/ tend to ar

*ore idel

i*e factor oftena//u*e/ 'reat

i*portance

>i/tri#ution *a ta:e

place throu'hnonph/ical channel/

0ar:etin'B2elated a/:/

2ecruit, train e*ploee/ to

reinforce /erice conceptShape cu/to*er #ehaior

n/titute 'ood /ericerecoer procedure/

Find a/ to co*pete on/peed of delierC offer

e-tended hour/

!reate u/erBfriendl,/ecure e#/ite/ and free


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Expanded MarketingMix

for Services


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B P2s of #ervicesMarketingProduct

Price

PlacePromotion

Physical evidenceEenvironment

People

Process

Productivity and uality


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$1% Product lements

mbrace all aspects of service performance thatcreate value

Core product responds to customer’s primary need

-rray of supplementary service elements

Gelp customer use core product e"ectively

-dd value through useful enhancements

Planning marketing mi! begins with creating aservice concept that(

Will o"er value to target customers

#atisfy their needs better than competition


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$5% Place and /ime

,elivery decisions( Where, When, How

+eographic locations served

#ervice schedulesPhysical channels

lectronic channels

Customer control and convenience

Channel partnersEintermediaries


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$8% Promotion and

ducation'nforming3 educating3 persuading3 reminding customersMarketing communication tools

Media elements $print3 broadcast3 outdoor3 retail3 the 'nternet3etc4%

Personal selling3 customer service#ales promotion

PublicityEP>

'magery and recognition;randing

Corporate design

Content 'nformation3 advice

Persuasive messages

Customer educationEtraining


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$6% ProcessHow rm does things may be as important as what it

does

Customers often actively involved in processes3especially when acting as coproducers of service

Process involves choices of method and se@uence inservice creation and delivery,esign of activity HowsDumber and se@uence of actions for customersDature of customer involvement

>ole of contact personnel>ole of technology3 degree of automation

;adly designed processes waste time3 create poore!periences3 and disappoint customers


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$)% Physical nvironment

,esign servicescape and provide tangible evidence ofservice performances

Create and maintain physical appearances

;uildingsElandscaping'nterior designEfurnishingsehiclesEe@uipment#ta" groomingEclothing#ounds and smellsOther tangibles

Manage physical cues carefullyI can have profoundimpact on customer impressions


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$9% People'nteractions between customers and contact personnel

strongly inHuence customer perceptions of service @uality

/he right customercontact employees performing tasks well Job design>ecruiting /rainingMotivation

/he right customers for rm2s missionContribute positively to e!perience of other customersPossess—or can be trained to have— needed skills $co

production%Can shape customer roles and manage customer behavior


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$B% Productivity and

ualityProductivity and @uality must work hand in hand

'mproving productivity key to reducing costs

'mproving and maintaining @uality is essential forbuilding customer satisfaction and loyalty

'deally3 strategies should be sought to improve bothproductivity and @uality simultaneouslyItechnologyoften the key /echnologybased innovations have potential to create high

payo"s

;ut3 must be user friendly and deliver valued customer benets


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Chapter 1 #ummary( Dew

Perspectiveson Marketing in the #erviceconomy>easons for studying services(

#ervice sector dominates economy in most nations3 manynew industries

Most new 0obs created by services

Powerful forces—government policies3 social changes3business trends3 '/ advances3 and globali.ation—are

transforming service markets

&nderstanding services o"ers personal competitiveadvantage


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Chapter 1 #ummary( Dew

Perspectiveson Marketing in the #erviceconomy /he service concept and its denition(

#ervices create benets without transfer of ownership

Most employ timebased performances to bring about desired results inrecipients or in assets for which they have responsibility

Customers e!pect value from access to goods3 facilities3 labor3professional skills3 environments3 networks K systems in return formoney3 time3 e"ort

#ervices present distinctive marketing challengesrelative to goods3 re@uiring( !panded marketing mi! comprising BPs instead of traditional 8Ps

'ntegration of marketing function with operations and human resources

Introduction of service marketing

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