Chapter 10: Services Marketing

Intangible. Acts, performances or experiences. Services can also be described as economic activities that create experiential value and provide benefits to customers at a specific time and place.
– Fastest growing sector of NZ economy
Examples of Service Industries
Air Travel , Taxis, Banking, Electricity, Hairdresser, Child care, Insurance, Repairs, Doctor, Consulting, Legal advice, accounting, education.
Marketing an Artistic Product:
Step One
Should develop an operating statement, such as “We seek to be the premier provider of quality theatre in the region”
Marketing an Artistic Product:
Step Two
A SWOT analysis should consider that they are competing for the consumer’s discretionary dollar against concerts, rugby matches, and even TV at home.
Marketing an Artistic Product:
Step Three
The information from the SWOT analysis should be used to develop measurable objectives.
Marketing an Artistic Product:
Step Four
The organisation must develop marketing strategies, including defining a target market.
Characteristics of Services:
Means customers cannot see, touch or smell a service. This makes services more difficult to evaluate.
= Service marketers try to provide physical cues to reassure the buyer.
Characteristics of Services:
Means that it is impossible to separate the production of a service from its consumption.
e.g. the firm’s employees and facilities cannot be detached from the service offering.
This increases the importance of the service encounter, which is the interaction between the consumer and the service provider.
Characteristics of Services:
Means that it is impossible to store the product for later sale.
This increases the need to more precisely match supply and demand. This supply and demand matching process is referred to as capacity management.
Characteristics of Services: Variability
Means that the service may vary each time it is performed.
Service firms attempt to standardise their service offering.
Some firms do this via a total quality management (TQM) programme.
The Marketing Mix for Services
Product, Place, Promotion, Price
People, Process & Physical Facilities
Extra Elements: People
People (staff) are the service providers who co-produce and deliver the service product; service quality is often based on the customer’s contact with these people.
Extra Elements: Process
The process of delivering a service (i.e. its system) will affect the performance and experience, and therefore the satisfaction, of the service.
Extra Elements: Physical Facilities
This includes the layout, music and decor, that offer visual cues to create impressions about the service, in order to reduce pre-purchase risk.
Classification of Services
Understanding the characteristics of different services can allow marketers to develop better strategies.
– Whether the service affects the customer directly OR something that the customer owns.
– Whether the service is relatively tangible OR is mainly tangible.
Goods/ Services Continuum
Most products are really a combination of goods + service.
Products can be plotted on a good/service continuum, based on their level of intangibility.
This continuum shows that while products are predominantly either tangible or intangible, they will also always include elements of both a good and service.
Goods-Dominated Products
Most tangible products are accompanied by supporting services.
This may be as simple as a consumer helpline, an Internet site, or a warranty period.
Marketers of goods often add additional services in order to augment the product and gain a competitive advantage.
Equipment or Facility-Based Services
These are products with around an equal mix of tangible and intangible elements.
Equipment or Facility-Based Services: Operational
Involved making it easy for the customer to use the service.
Equipment or Facility-Based Services: Location
Service site should be conveniently located.
Equipment or Facility-Based Services: Environmental
Service environment must be pleasant and attractive.
People-Based Services
Highly intangible products
e.g. entertainment, medial & edu
– Consumers need to be part of the service process
– Sometimes the amount of benefit the the consumer receives from this type of service depends on their own input, such as in education and health/fitness.
– Due to the market becoming more time poor, people-based services are increasing in usage.
Differences between Goods & Services
– No customer ownership of services
– Variability in service delivery
– No inventories for services
– Service products = intangible
– Consumers involved in production of service
– Time factor (service= 24/7)
– Different distribution channels
– Can be difficult to evaluate (Search qualities, experience qualities, credence qualities)
Core Services
Benefit the customer gets from the service.
Augmented Service
Additional services that provide enhanced value.
Services on the Internet
Some services can be provided via the internet, without needing any other connection (or channel) with the customer:
– Banking services
– Travel
– Career-related sites
– Music
The Service Encounter
Occurs when a customer comes into contact with the organisation, usually with an employee.
(Sometimes referred to as the ‘moment of truth’)
Dimensions of the Service Encounter: Social Contact
Quality of service is tied to the company employees, and the customer will often judge overall service quality based on this encounter.
Dimensions of the Service Encounter: Physical Dimension
Physical surroundings can affect consumer’s mood, behaviour, and satisfaction.
This is referred to as servicescape and includes facilities, decor, colours, signage, parking and so on.
Providing Service Quality
This is the customer’s overall judgement about the service’s performance.
This view is established by comparison against the customer’s expectations and against competitors’ service quality.
Expectations are created through experience and word-of-mouth, and may not be realistic.
Therefore, service firms sometimes need to manage customer expectations.
Dimensions of Service Quality:
Search Qualities
Product characteristics that a consumer can easily examine prior to purchase; common for tangible products.
Dimensions of Service Quality:
Experience Qualities
Product characteristics that the customer can only determine during or after consumption, such as a holiday experience.
Dimensions of Service Quality:
Credence Qualities
Product characteristics that are difficult to evaluate even after the experience such as ‘Did I need all those expensive car repairs?’
Research model that was developed to measure service quality.
Measure difference between a customer’s expectations and what actually occurred = quality gaps
SERVQUAL’s Dimensions:
Dependable service performance
SERVQUAL’s Dimensions:
Prompt and helpful service
SERVQUAL’s Dimensions:
They physical facilities associated with providing the service
SERVQUAL’s Dimensions:
Confident and courteous service
SERVQUAL’s Dimensions:
Understanding how the service satisfies customer’s needs.
Critical Incident Technique
Another approach to measuring service quality – Where firm analyses specific customer complaints in some depth.
Try to identify the (critical) incidents that cause the greatest dissatisfaction.
They can solve these problems for future customer encounters.
Strategies for Services
Service quality is usually a goal.
The examination of critical incidents will assist in improving service quality.
– Firms need to set marketing objectives, select target markets, provide benefits, and devise a suitable strategy.
Marketing People
Politicians, sporting heroes, entertainers and other celebrities are often marketed.
People are ‘products’ that can be marketed.
Many traditional marketing strategies are used with ‘people products’.
Celebrities will also generally try to develop their brand identity.
Place Marketing
Activities designed to attract new businesses, residents or visitors to a particular region, or other site.
Idea Marketing
Tries to promote a concept, a philosophy, a belief or an issue.
(Drink driving, recycling, religious views, social attitudes)
The Future of Services: Changing Demographics
Older population requiring more services, and greater demand for recreational services.
The Future of Services:
Technology Advances
Particularly in telecommunications, health care, banking, and Internet Services.
The Future of Services:
Global deregulation within the finance sector, and the increasing need for global logistics, and broader tourism.
The Future of Services:
Shift to flow of information
Greater opportunities for database services, artificial intelligence, and communication systems.

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