Advanced Services Marketing MARK 5065

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Advanced Services Marketing (MARK 5065)
Study Period 3, 2007
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Course coordinator

• Vivien Chanana
• Contact Details
• Y4-33, School of Marketing
• City West Campus
• Phone [phone]
• Vivien.chanana_at_unisa.edu.au

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Administrative Stuff

• Course Information Booklet
• Readings
• Course Website
• http//www.unisanet.unisa.edu.au/courses/course.as
  p?Course100057
• Online resources
• Textbook
• Zeithaml, VA Bitner, MJ Gremler, DD 2006,
  Services Marketing Integrating Customer Focus
  Across the Firm, 4th edn, McGraw-Hill/Irwin,
  Boston.

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• Assessment
• Format for classes
• Subject outline
• Expectations (yours and ours)
• Academic Requirements
• Referencing
• Plagiarism

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Assessments
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Graduate Qualities

• Operates with and upon a body of knowledge
• Preparation of lifelong learning toward personal
  development and professional practice
• Effective problem solver applying logical,
  critical and creative thinking
• Can work both autonomously and collaboratively
• Committed to ethical action and social
  responsibility
• Communicates effectively
• Demonstrates international perspectives

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• FOUNDATIONS FOR SERVICES MARKETING

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Introduction to Services

• What are services?
• Why services marketing?
• Service and Technology
• Unique characteristics of services Services
  Compared to Goods
• Services Marketing Mix
• Staying Focused on the Customer
• To understand the importance and growth of
  service industries

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Examples of Service Industries

• Health Care
• hospital, medical practice, dentistry, eye care
• Professional Services
• accounting, legal, architectural
• Financial Services
• banking, investment advising, insurance
• Hospitality
• restaurant, hotel/motel, bed breakfast
• ski resort, rafting
• Travel
• airline, travel agency, theme park
• Others
• hair styling, pest control, plumbing, lawn
  maintenance, counseling services, health club,
  interior design

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Figure 1.1Contributions of Service Industries
toU.S. Gross Domestic Product
Source Inside Sams 100 Billion Growth Machine,
by David Kirkpatrick, Fortune, June 14, 2004, p
86.
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Services in Australia

• Service industries are the largest component of
  the Australian economy in terms of number of
  businesses, employment and gross value added
  (GVA).
• In 2003-04 the largest service industry, in terms
  of industry GVA (in current prices) was the
  property and business services industry, which
  accounted for 10.5 of GDP, followed by the
  finance and insurance services industry (7.6)
• In 2003-04, 9.5 million people were employed
  across all industries.
• The retail trade industry 1.4m or 15
• Property and business services 1.1m or 12
• manufacturing (11),
• health and community services (10),
• construction (8)
• education (7) industries.

Source ABS
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Figure 1.2Tangibility Spectrum
Salt
?
Soft Drinks
?
Detergents
?
Automobiles
?
Cosmetics
?
Fast-food Outlets
Intangible Dominant
?
Tangible Dominant
?
?
Fast-food Outlets
?
Advertising Agencies
?
Airlines
?
Investment Management
?
Consulting
Teaching
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Figure 1.3Percent of U.S. Labor Force by Industry
80
70
60
50
Percent of U.S. Labor Force
40
30
20
10
0

• Services
• Manufacturing
• Mining Agriculture

1929
1948
1969
1977
1984
1999
Year
Source Survey of Current Business, April 1998,
Table B.8, July 1988, Table 6.6B, and July 1992,
Table 6.4C Eli Ginzberg and George J. Vojta,
The Service Sector of the U.S. Economy,
Scientific American, 244,3 (1981) 31-39.
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Figure 1.4Percent of U.S. Gross Domestic
Product by Industry
80
70
60
50
40
Percent of GDP
30
20
10

• Services
• Manufacturing
• Mining Agriculture

0
1948
1959
1967
1977
1987
1999
Year
Source Survey of Current Business, August 1996,
Table 11, April 1998, Table B.3 Eli Ginzberg
and George J. Vojta, The Service Sector of the
U.S. Economy, Scientific American, 244,3 (1981)
31-39.
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Table 1.1Eight Central Paradoxes of
Technological ProductsSource D. G. Mick and S.
Fournier, Paradoxes of Technology Consumer
Cognizance, Emotions, and Coping Strategies,
Journal of Consumer Research 25 (September 1998),
pp. 12347.
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Table 1.2Goods versus ServicesSource A.
Parasuraman, V.A. Zeithaml, and L. L. Berry, A
Conceptual Model of Service Quality and Its
Implications for Future Research, Journal of
Marketing 49 (Fall 1985), pp. 4150.
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Why study Services Marketing?

• Service-based economies
• Service as a business imperative in manufacturing
  and IT
• Deregulated industries and professional service
  needs
• Services marketing is different
• Service equals profits

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Characteristics of Services Compared to Goods
Intangibility
Heterogeneity
Simultaneous Production and Consumption
Perishability
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Implications of Intangibility

• Services cannot be inventoried
• Services cannot be easily patented
• Services cannot be readily displayed or
  communicated
• Pricing is difficult

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Implications of Heterogeneity

• Service delivery and customer satisfaction depend
  on employee and customer actions
• Service quality depends on many uncontrollable
  factors
• There is no sure knowledge that the service
  delivered matches what was planned and promoted

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Implications of Simultaneous Production and
Consumption

• Customers participate in and affect the
  transaction
• Customers affect each other
• Employees affect the service outcome
• Decentralization may be essential
• Mass production is difficult

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Implications of Perishability

• It is difficult to synchronize supply and demand
  with services
• Services cannot be returned or resold

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Challenges for Services

• Defining and improving quality
• Designing and testing new services
• Communicating and maintaining a consistent image
• Accommodating fluctuating demand
• Motivating and sustaining employee commitment

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Challenges for Services (contd.)

• Coordinating marketing, operations, and human
  resource efforts
• Setting prices
• Finding a balance between standardization versus
  personalization
• Ensuring the delivery of consistent quality

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Traditional Marketing Mix

• All elements within the control of the firm that
  communicate the firms capabilities and image to
  customers or that influence customer satisfaction
  with the firms product and services
• Product
• Price
• Place
• Promotion

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Expanded Mix for Services --The 7 Ps

• Product
• Price
• Place
• Promotion
• People
• All human actors who play a part in service
  delivery and thus influence the buyers
  perceptions namely, the firms personnel, the
  customer, and other customers in the service
  environment.
• Physical Evidence
• The environment in which the service is delivered
  and where the firm and customer interact, and any
  tangible components that facilitate performance
  or communication of the service.
• Process
• The actual procedures, mechanisms, and flow of
  activities by which the service is deliveredthe
  service delivery and operating systems

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Table 1.3Expanded Marketing Mix for Services
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Ways to Use the 7 Ps

• Overall Strategic Assessment
• How effective is a firms services marketing mix?
• Is the mix well-aligned with overall vision and
  strategy?
• What are the strengths and weaknesses in terms of
  the 7 Ps?

• Specific Service Implementation
• Who is the customer?
• What is the service?
• How effectively does the services marketing mix
  for a service communicate its benefits and
  quality?
• What changes/ improvements are needed?

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What makes them special
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Characteristics of Services (Wolak, et al.,
1998)

• Intangibility
• Inseparability
• Heterogeneity
• Perishability

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Methods of classifying services

• Degree of intangibility
• Degree of customer contact required
• Degree of simultaneity
• Degree of heterogeneity
• Degree of perishability
• Degree of service customization

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Classifying a service
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Levitt (1980)

• Marketing success through differentiation--of
  anything
• Does this apply to services?
• What is a product?
• What is the role of management?
• Levitt, Theodore (1980) "Marketing success
  through differentiation--of anything" Harvard
  Business Review 58(1) 83 (9).

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Services cannot be

• Inventoried
• Patented
• Readily displayed or communicated
• Easily priced

Do you agree? When?
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Service

• Delivery and customer satisfaction depends on
  employee actions
• Quality depends on many uncontrollable factors
• Delivery cannot be matched against planned and
  promoted promise
• Demand and supply are difficult to synchronize
• Cannot be returned

Do you agree? When?
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Customers

• Participate in and affect the transaction
• Affect each other
• Are affected by employees
• May forced decentralized delivery
• Demand individual offerings making mass
  production difficult

Do you agree? When?
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For next week

• Can manufacturing companies afford not to offer
  ANY services? Can service companies afford not
  to offer any products?

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• Questions ??