Services marketing
Chapter 1
In all services, there is interaction with activities, processes and performances delivered by
people, organisations and technology in order to achieve the outcomes that are desired.
Services are all economic activities whose output is not a physical product or construction, is
generally consumed at the time it is produced, and provides added value in forms that are
essentially intangible concerns of its first purchaser.
Lovelock’s classification of services classifies services into 4 broad categories from a process
perspective relating to whether the service performance was enacted on a person or their
possessions and the extent to which performance was more or less tangible.
Service is not only customer service; service can be divided into 5 distinct contexts:
• Service organisations include those industries typically classified within the service
sector whose core product is a service. (Lufthansa, Novotel, dentists, architects)
• Services as products represent a wide range of intangible product offerings that
customers value and pay for in the marketplace. Service products are sold by service
companies and by non-service companies, such as manufacturers and technology
companies.
• Services as experiences: instead of the service company charging for the activities I
performs; it charges for the feelings that customers derive from engaging in this
service. (Disneyland)
• Customer service is the service provided in support of a company’s core products.
Companies typically do not charge for their customer service. Customer service can
occur on-site (retail employee helps a customer) or over the telephone/via internet
(real time chat session). Quality customer service is essential to building customer
relationships.
• Transformative service is about developing and delivering services that create
positive changes and improvements in the well-being of individuals, communities
and ecosystems. In addition to customer satisfaction and loyalty, services can impact
on well-being outcomes, such as access, decreasing disparity and health.
, Service dominant logic is another way to look at what service means. Value is not created at
the time of the exchange between the producer and the customer but when the customer
integrates, applies and uses the resources of a particular producer. A car has limited value
unless it can provide a way of getting people to work.
Value in use is supported by warranties, advertising, branding and finance schemes as well
as the physical product itself.
Value also varies contextually in relation to time and place dimensions. This value in context
concept takes account of external influences and other stakeholders covering government-
imposed laws and restrictions (fuel prices). Produces and customers may work together to
influence these external forces in order to co-create better value for each other.
A company is producing an offering of potential value to the customer through product
development, design, manufacture and delivery. This may happen with or without direct
interaction with the customer. The customers in turn, are responsible for the value-creating
processes, where value is created or emerges as value in use.
The value generation process can be seen as comprising three spheres:
• Provider sphere that is closed to customers, where the service provider compiles
resources to be offered to customers to enable their value creation
• Joint sphere where the service provider and customers interact directly to co-create
value
• Customer sphere where the customers independently create value without the
direct involvement of the service provider
In many markets, the internet and other technologies have enabled the complexity and
dynamism of these interactions and inter-relationships to evolve further, with websites,
review sites, real-time data, mobile applications and location-based services, all adding to
the value created for the customer and producer.
Looking at the recent past, it is apparent how technology has been the basic force behind
service innovations that are now taken for granted. Internet-based companies like Amazon
and Facebook offer services previously unheard of and companies established in the pre-
digital era are also finding that internet provides a way to offer new services.
Chapter 1
In all services, there is interaction with activities, processes and performances delivered by
people, organisations and technology in order to achieve the outcomes that are desired.
Services are all economic activities whose output is not a physical product or construction, is
generally consumed at the time it is produced, and provides added value in forms that are
essentially intangible concerns of its first purchaser.
Lovelock’s classification of services classifies services into 4 broad categories from a process
perspective relating to whether the service performance was enacted on a person or their
possessions and the extent to which performance was more or less tangible.
Service is not only customer service; service can be divided into 5 distinct contexts:
• Service organisations include those industries typically classified within the service
sector whose core product is a service. (Lufthansa, Novotel, dentists, architects)
• Services as products represent a wide range of intangible product offerings that
customers value and pay for in the marketplace. Service products are sold by service
companies and by non-service companies, such as manufacturers and technology
companies.
• Services as experiences: instead of the service company charging for the activities I
performs; it charges for the feelings that customers derive from engaging in this
service. (Disneyland)
• Customer service is the service provided in support of a company’s core products.
Companies typically do not charge for their customer service. Customer service can
occur on-site (retail employee helps a customer) or over the telephone/via internet
(real time chat session). Quality customer service is essential to building customer
relationships.
• Transformative service is about developing and delivering services that create
positive changes and improvements in the well-being of individuals, communities
and ecosystems. In addition to customer satisfaction and loyalty, services can impact
on well-being outcomes, such as access, decreasing disparity and health.
, Service dominant logic is another way to look at what service means. Value is not created at
the time of the exchange between the producer and the customer but when the customer
integrates, applies and uses the resources of a particular producer. A car has limited value
unless it can provide a way of getting people to work.
Value in use is supported by warranties, advertising, branding and finance schemes as well
as the physical product itself.
Value also varies contextually in relation to time and place dimensions. This value in context
concept takes account of external influences and other stakeholders covering government-
imposed laws and restrictions (fuel prices). Produces and customers may work together to
influence these external forces in order to co-create better value for each other.
A company is producing an offering of potential value to the customer through product
development, design, manufacture and delivery. This may happen with or without direct
interaction with the customer. The customers in turn, are responsible for the value-creating
processes, where value is created or emerges as value in use.
The value generation process can be seen as comprising three spheres:
• Provider sphere that is closed to customers, where the service provider compiles
resources to be offered to customers to enable their value creation
• Joint sphere where the service provider and customers interact directly to co-create
value
• Customer sphere where the customers independently create value without the
direct involvement of the service provider
In many markets, the internet and other technologies have enabled the complexity and
dynamism of these interactions and inter-relationships to evolve further, with websites,
review sites, real-time data, mobile applications and location-based services, all adding to
the value created for the customer and producer.
Looking at the recent past, it is apparent how technology has been the basic force behind
service innovations that are now taken for granted. Internet-based companies like Amazon
and Facebook offer services previously unheard of and companies established in the pre-
digital era are also finding that internet provides a way to offer new services.
