Introduction to Management

What is Services MarketingInstructor: Syed M. Zubair Azam1www.Twitter.com/syedzubairazamTopics to be exploredWhat are services?Why study services marketing?Goods vs. ServicesCharacteristics of ServicesServices Marketing Mix

2www.Twitter.com/syedzubairazamMarketing DefinedMarketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.www.Twitter.com/syedzubairazam3Marketing ManagementDefinedMarketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value..www.Twitter.com/syedzubairazam4Basic Marketing conceptsCustomer NeedStated needsReal needsUnstated needsDelight needsSecret needsCustomer WantCustomer Demandwww.Twitter.com/syedzubairazam5Demand StatesNonexistentLatentDecliningIrregularFullUnwholesomeOverfullNegative6Basic Marketing conceptsCustomer ValueValue PropositionDifferentiationCustomer satisfactionCustomer Delightwww.Twitter.com/syedzubairazam7www.Twitter.com/syedzubairazam8GoodsServicesEvents & ExperiencesPersonsPlaces & PropertiesOrganizationsInformationIdeasMarket OfferingCaution!!!Dont beMyopicServicesAnything that cannot be dropped on your foot.

The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified needwww.Twitter.com/syedzubairazam9Services Industrieswww.Twitter.com/syedzubairazam10Health Carehospital, medical practice, dentistry, eye careProfessional Servicesaccounting, legal, architecturalFinancial Servicesbanking, investment advising, insuranceHospitalityrestaurant, hotel/motel, bed & breakfast, ski resort, raftingTravelairlines, travel agencies, theme parkOthers:hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

Goods vs. Serviceswww.Twitter.com/syedzubairazam11

Tangibility SpectrumTangibleDominantIntangibleDominantSaltSoft DrinksDetergentsAutomobilesCosmeticsAdvertisingAgenciesAirlinesInvestmentManagementConsultingTeachingFast-foodOutletsFast-foodOutletsllllllllllllFigure Growth of Services Sectorwww.Twitter.com/syedzubairazam135.5 million Tourists (11 % Increase)81 percent Hotel Occupancy Rate (81,492 Rooms)7.9 million Hotel visitors$184 billion Non-Oil TradeDubais Real GDP rose to Dh 169 Billion in 2013SectorGrowthHotels and Restaurants13.7 % (Dh 8.9 Billion)Trade sector4.1 % (29.2% of Real GDP)Manufacturing Sector13.3 %Transport & Telecommunication4.9 %Real Estate13 %Financial Sector2.7 %Electricity, Gas and Water4.3 %4 Ps of Marketing

www.Twitter.com/syedzubairazam14The 8Ps of Services Marketing: (5) ProcessHow firm does things may be as important as what it doesCustomers often actively involved in processes, especially when acting as co-producers of serviceProcess involves choices of method and sequence in service creation and deliveryDesign of activity flowsNumber and sequence of actions for customersNature of customer involvementRole of contact personnelRole of technology, degree of automationBadly designed processes waste time, create poor experiences, and disappoint customers15The 8Ps of Services Marketing: (6) Physical EnvironmentDesign servicescape and provide tangible evidence of service performancesCreate and maintain physical appearancesBuildings/landscapingInterior design/furnishingsVehicles/equipmentStaff grooming/clothingSounds and smellsOther tangibles Manage physical cues carefully can have profound impact on customer impressions

16The 8Ps of Services Marketing: (7) PeopleInteractions between customers and contact personnel strongly influence customer perceptions of service quality The right customer-contact employees performing tasks wellJob designRecruitingTrainingMotivationThe right customers for firms missionContribute positively to experience of other customersPossessor can be trained to have needed skills (co-production)Can shape customer roles and manage customer behavior

17The 8Ps of Services Marketing: (8) Productivity and QualityProductivity and quality must work hand in hand Improving productivity key to reducing costsImproving and maintaining quality essential for building customer satisfaction and loyaltyIdeally, strategies should be sought to improve both productivity and quality simultaneouslytechnology often the keyTechnology-based innovations have potential to create high payoffsBut, must be user friendly and deliver valued customer benefits

18Transformation of the Service EconomyGovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationInnovation in service products & delivery systems, stimulated by better technologyCustomers have more choices and exercise more powerSuccess hinges on:Understanding customers and competitorsViable business modelsCreation of value for customers and firmNew markets and product categoriesIncrease in demand for servicesMore intense competition19Factors Stimulating Transformation of the Service Economy (1) GovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationChanges in regulationsPrivatizationNew rules to protect customers, employees, and the environment New agreement on trade in services20Factors Stimulating Transformation of the Service Economy (2) GovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationRising consumer expectationsMore affluenceMore people short of timeIncreased desire for buying experiences versus thingsRising consumer ownership of high tech equipmentEasier access to informationImmigrationGrowing but aging population 21Factors Stimulating Transformation of the Service Economy (3)GovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationPush to increase shareholder valueEmphasis on productivity and cost savingsManufacturers add value through service and sell servicesMore strategic alliances and outsourcingFocus on quality and customer satisfactionGrowth of franchisingMarketing emphasis by nonprofits 22Factors Stimulating Transformation of the Service Economy (4)GovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationGrowth of the InternetGreater bandwidthCompact mobile equipmentWireless networkingFaster, more powerful softwareDigitization of text, graphics, audio, video23Factors Stimulating Transformation of the Service Economy (5)GovernmentPoliciesBusinessTrendsSocial ChangesAdvances inITGlobalizationMore companies operating on transnational basisIncreased international travelInternational mergers and alliancesOffshoring of customer serviceForeign competitors invade domestic markets24www.Twitter.com/syedzubairazam25Thanks!!!HomeWorkVisit a restaurant and Note its Services.www.Twitter.com/syedzubairazam26GoodsServicesResulting Implications

TangibleIntangibleServices cannot be inventoried.

Services cannot be patented.

Services cannot be readily displayed or communicated.

Pricing is difficult.

StandardizedHeterogeneousService delivery and customer satisfaction depend on employee actions.

Service quality depends on many uncontrollable factors.

There is no sure knowledge that the service delivered matches what was planned and promoted.

Production separate from consumptionInseparabilityCustomers participate in and affect the transaction.

Customers affect each other.

Employees affect the service outcome.

Decentralization may be essential.

Mass production is difficult.

NonperishablePerishableIt is difficult to synchronize supply and demand with services.

Services cannot be returned or resold.