Summary of the textbook: Services Marketing
Chapter 1: Introduction to services
Definition of services: “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 (such as convenience, amusement, timeliness,
comfort or health) that are essentially intangible concerns of its first purchaser”.
The Lovelock’s classification of services has 4 broad categories from a process
perspective relating to whether the service performance was enacted
(vastgesteld) on a person or their possessions and the extent to which
performance was more or less tangible:
Services directed at people’s bodies
This category requires the recipient to be physically present withing the
service system (e.g., dentist, train).
Services directed at people’s tangible possessions
Services in this category do not require the customer to be present when
the service is being delivered, although they may need to be present at the
start and end of the service (e.g., car repair).
Services directed at people’s minds
Services directed at people’s minds include services such as education, the
arts, and professional advice. Although customers may go to the physical
premises such as universities and theatres, these premises may not be
needed as technology such as the internet and other broadcasting
technologies can deliver the service at distance (at any time).
Services directed at people’s intangible possessions
Services such as banking, insurance and accountancy can be delivered with
very little direct interaction between the customer and the organization. As
the customer sees very little that is tangible, it is often difficult to
differentiate such services and to communicate their true value.
Tangibility spectrum
Intangibility is a key determinant of whether an offering is a service. The tangible
spectrum shows the difference between subjects from very tangible to very
intangible. Some tangible products have also intangible services.
Specific demand for services marketing concepts has come from the deregulated
industries and professional services as both these groups have gone through
rapid changes in the ways they do business. Many industries are deregulated and
as a result, marketing decisions that used to be tightly controlled by the
government are not partially, and in some cases totally, within the control of
individual firms. Deregulation initially created turmoil in the electricity generation
and supply industry, accelerating the need for more sophisticated, customer-
based and competition-sensitive marketing. Providers of professional services
have also demanded new concepts and approaches for their businesses as these
industries have become increasingly competitive.
, In the development field of services marketing and management, most of the
impetus came from service industries such as banking and retailing. These
traditional service industries evolve and become more competitive. The need for
effective services management and marketing strategies continuous.
Companies, such as Apple are recognising the opportunity to grow and profit
through services, because the developing technologies and increasing
competition make it difficult to gain strategic competitive advantage through
physical products alone. Consumers also are more demanding. They expect high
levels of customer service and total service solutions along with them.
Pine and Gilmore argued about the term ‘experience economy’ that service
companies would evolve from simply providing service to creating memorable
events for their customers. Many organizations are creating the experience in the
service (Disneyland Paris).
Service dominant logic is yet another way to look at what service means. A
new dominant logic for marketing that suggests that all products and physical
goods are valued for the services they provide. Their argument is that companies
provide service solutions for customers and should therefore offer the best
combinations of service and products to create that solution.
Why services marketing
Among organizations with a high quality of services are values-driven leadership,
commitment to investment in employee success and trust-based relationships
with customers and other partners at the foundation of the organization.
Work sponsored by the Marketing Science Institute suggests that corporate
strategies focused on customer satisfaction, revenue generation and service
quality may actually be more profitable than strategies focused on cost-cutting or
strategies that attempt to do both simultaneously.
An important key to these successes is that the right strategies are chosen and
that these strategies are implemented appropriately and well.
Service and technology
Technology, specifically information technology, is currently shaping the field and
profoundly influencing the practice of services marketing. Through innovation of
services it’s now normally basic that we have automated voicemail, mobile
phones, etc.
Another innovation is the Internet. Many organizations (e.g., Financial
Times) offer an interactive edition that allows customers to organise the
newspaper’s content to suit their individual preferences and needs. Still many
technology services (e.g., connected car) are on the horizon. There are many new
ways to deliver service.
Companies have moved from face-to-face service to telephone-based service to
widespread use of interactive voice response systems to internet-based customer
service and now to mobile services. Finally, technology, specifically the Internet,
Chapter 1: Introduction to services
Definition of services: “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 (such as convenience, amusement, timeliness,
comfort or health) that are essentially intangible concerns of its first purchaser”.
The Lovelock’s classification of services has 4 broad categories from a process
perspective relating to whether the service performance was enacted
(vastgesteld) on a person or their possessions and the extent to which
performance was more or less tangible:
Services directed at people’s bodies
This category requires the recipient to be physically present withing the
service system (e.g., dentist, train).
Services directed at people’s tangible possessions
Services in this category do not require the customer to be present when
the service is being delivered, although they may need to be present at the
start and end of the service (e.g., car repair).
Services directed at people’s minds
Services directed at people’s minds include services such as education, the
arts, and professional advice. Although customers may go to the physical
premises such as universities and theatres, these premises may not be
needed as technology such as the internet and other broadcasting
technologies can deliver the service at distance (at any time).
Services directed at people’s intangible possessions
Services such as banking, insurance and accountancy can be delivered with
very little direct interaction between the customer and the organization. As
the customer sees very little that is tangible, it is often difficult to
differentiate such services and to communicate their true value.
Tangibility spectrum
Intangibility is a key determinant of whether an offering is a service. The tangible
spectrum shows the difference between subjects from very tangible to very
intangible. Some tangible products have also intangible services.
Specific demand for services marketing concepts has come from the deregulated
industries and professional services as both these groups have gone through
rapid changes in the ways they do business. Many industries are deregulated and
as a result, marketing decisions that used to be tightly controlled by the
government are not partially, and in some cases totally, within the control of
individual firms. Deregulation initially created turmoil in the electricity generation
and supply industry, accelerating the need for more sophisticated, customer-
based and competition-sensitive marketing. Providers of professional services
have also demanded new concepts and approaches for their businesses as these
industries have become increasingly competitive.
, In the development field of services marketing and management, most of the
impetus came from service industries such as banking and retailing. These
traditional service industries evolve and become more competitive. The need for
effective services management and marketing strategies continuous.
Companies, such as Apple are recognising the opportunity to grow and profit
through services, because the developing technologies and increasing
competition make it difficult to gain strategic competitive advantage through
physical products alone. Consumers also are more demanding. They expect high
levels of customer service and total service solutions along with them.
Pine and Gilmore argued about the term ‘experience economy’ that service
companies would evolve from simply providing service to creating memorable
events for their customers. Many organizations are creating the experience in the
service (Disneyland Paris).
Service dominant logic is yet another way to look at what service means. A
new dominant logic for marketing that suggests that all products and physical
goods are valued for the services they provide. Their argument is that companies
provide service solutions for customers and should therefore offer the best
combinations of service and products to create that solution.
Why services marketing
Among organizations with a high quality of services are values-driven leadership,
commitment to investment in employee success and trust-based relationships
with customers and other partners at the foundation of the organization.
Work sponsored by the Marketing Science Institute suggests that corporate
strategies focused on customer satisfaction, revenue generation and service
quality may actually be more profitable than strategies focused on cost-cutting or
strategies that attempt to do both simultaneously.
An important key to these successes is that the right strategies are chosen and
that these strategies are implemented appropriately and well.
Service and technology
Technology, specifically information technology, is currently shaping the field and
profoundly influencing the practice of services marketing. Through innovation of
services it’s now normally basic that we have automated voicemail, mobile
phones, etc.
Another innovation is the Internet. Many organizations (e.g., Financial
Times) offer an interactive edition that allows customers to organise the
newspaper’s content to suit their individual preferences and needs. Still many
technology services (e.g., connected car) are on the horizon. There are many new
ways to deliver service.
Companies have moved from face-to-face service to telephone-based service to
widespread use of interactive voice response systems to internet-based customer
service and now to mobile services. Finally, technology, specifically the Internet,
