Services Marketing
Chapter 1: Introduction to Services
Service can be divided into four distinct categories:
- Service industries and companies
- Services as products
- Services as experiences
- Customer service
Service dominant logic value derived from physical goods is actually the service provided by the
good, not the good itself. (So, products and physical goods are valued for the service they provide.)
Technology provides opportunities for (1) new service offerings and for (2) delivering existing
services in more accessible, convenient, productive ways. Self-service technologies customers can
serve themselves more effectively. Technology also makes employees more effective and efficient in
delivering service. Technology also results in the potential for reaching out to customers around the
globe in ways not possible before.
Characteristics of services:
- Intangibility makes it hard to patent a service and new service concepts can therefore
easily be copied by competitors. Quality may be difficult for consumers to assess, since
services cannot be readily displayed or easily communicated. Promotional activities are
challenging, so is pricing hard to determine costs of a ‘unit of service’.
- Heterogeneity result of human interaction services are produced by humans, so no two
services will be precisely alike. Also no two customers are precisely alike; each will have
unique demands or experiences. Ensuring consistent service quality is challenging.
- Inseparability production and consumption are simultaneously, so mass production is
difficult also not possible to gain significant economies of scale through centralization
(except for technology-delivered services). The customer is involved in the production
process and thus may affect the outcome of the service transaction.
- Perishability services cannot be saved, stored, resold or returned, so it is not possible to
hold stock demand forecasting and planning for capacity utilization are important
challenges.
Service triangle shows three interlinked groups that work together to develop, promote and
deliver service promises (1) the company, (2) the customers and (3) the employees/technology.
Three types of marketing must be successfully carried out for a service to succeed:
- External marketing (between the company and the customers making the promise
- Interactive marketing (between the customers and the employees) delivering the promise
- Internal marketing (between the employees and the company) enabling the promise
The expanded marketing mix for services includes the traditional four P’s (price, product, place and
promotion) and also people, physical evidence and process.
Chapter 2: Consumer Behavior in Services
Service providers need to understand how consumers choose, experience and evaluate their service
offerings. Because services are intangible and non-standardized, and partly because consumption is
closely intertwined with production, the consumer evaluation processes for goods and services differ
in all stages of the buying and consumption process.
Economists distinguish between three categories of properties of consumer products:
, - Search qualities attributes that a consumer
can determine before purchasing a product
- Experience qualities attributes that can be
discerned only after purchasing a products
- Credence qualities characteristics that the
consumer may find impossible to evaluate even
after purchase and consumption.
Goods fall to the left of the continuum, whereas
most services fall to the right because of the
distinguishing characteristics of services make it
hard to evaluate.
Three broad stages of consumer behavior:
- Consumer choice includes how consumers choose and make decisions and the steps that
lead to the purchase of a particular service customers follow a logical sequence:
o Need recognition Maslow’s hierarchy:
Physiological needs biological needs such as food, water and sleep
Safety and security needs shelter, protection and security
Social needs affection, friendship and acceptance (particularly in the East)
Ego needs for prestige, success, accomplishment and self-esteem
Self-actualization involves self-fulfillment and enriching experiences
o Information search to reduce risk; helping consumers feel more confident about
their choices. Consumers use both:
Customer opinion sources
Promotional sources
Consumers rely to a greater extent on personal sources when purchasing services,
because promotional sources can communicate far less about experience qualities
and because promotional sources of information are not as readily available for
services.
o Evaluation of alternatives evoked set is smaller for services, because consumers
are unlikely to find more than one or two businesses providing the same services in a
given geographic area and because it is difficult to obtain adequate pre-purchase
information about services.
o Purchase often ‘free’ initial trials to reduce risk in the final purchase decision
- Consumer experience metaphor of service as theatre useful framework for describing
and analyzing service performance managing actors and physical setting of their behavior
the importance of service actors increases in three conditions:
o When the degree of direct personal contact is high
o When the services involve repeat contact
o When they have discretion in determining the nature of the service and how it is
delivered
The physical setting of the service increases in importance when the environment
distinguishes the service.
Service roles combinations of social cues that guide and direct behavior in a given setting.
Service scripts the logical sequence of events expected by the customer, involving him or
her a either a participant or an observer.
The presence, behavior and similarity of other customers receiving services has a strong
impact on the satisfaction and dissatisfaction of any given customer. Moods and emotions
are critical factors that shape the perceived effectiveness of service encounters:
o Positive moods can make customers more obliging and willing to participate in
behaviors that help service encounters succeed. Customers in a negative mood may
be less likely to engage in behaviors essential to the effectiveness of the service
Chapter 1: Introduction to Services
Service can be divided into four distinct categories:
- Service industries and companies
- Services as products
- Services as experiences
- Customer service
Service dominant logic value derived from physical goods is actually the service provided by the
good, not the good itself. (So, products and physical goods are valued for the service they provide.)
Technology provides opportunities for (1) new service offerings and for (2) delivering existing
services in more accessible, convenient, productive ways. Self-service technologies customers can
serve themselves more effectively. Technology also makes employees more effective and efficient in
delivering service. Technology also results in the potential for reaching out to customers around the
globe in ways not possible before.
Characteristics of services:
- Intangibility makes it hard to patent a service and new service concepts can therefore
easily be copied by competitors. Quality may be difficult for consumers to assess, since
services cannot be readily displayed or easily communicated. Promotional activities are
challenging, so is pricing hard to determine costs of a ‘unit of service’.
- Heterogeneity result of human interaction services are produced by humans, so no two
services will be precisely alike. Also no two customers are precisely alike; each will have
unique demands or experiences. Ensuring consistent service quality is challenging.
- Inseparability production and consumption are simultaneously, so mass production is
difficult also not possible to gain significant economies of scale through centralization
(except for technology-delivered services). The customer is involved in the production
process and thus may affect the outcome of the service transaction.
- Perishability services cannot be saved, stored, resold or returned, so it is not possible to
hold stock demand forecasting and planning for capacity utilization are important
challenges.
Service triangle shows three interlinked groups that work together to develop, promote and
deliver service promises (1) the company, (2) the customers and (3) the employees/technology.
Three types of marketing must be successfully carried out for a service to succeed:
- External marketing (between the company and the customers making the promise
- Interactive marketing (between the customers and the employees) delivering the promise
- Internal marketing (between the employees and the company) enabling the promise
The expanded marketing mix for services includes the traditional four P’s (price, product, place and
promotion) and also people, physical evidence and process.
Chapter 2: Consumer Behavior in Services
Service providers need to understand how consumers choose, experience and evaluate their service
offerings. Because services are intangible and non-standardized, and partly because consumption is
closely intertwined with production, the consumer evaluation processes for goods and services differ
in all stages of the buying and consumption process.
Economists distinguish between three categories of properties of consumer products:
, - Search qualities attributes that a consumer
can determine before purchasing a product
- Experience qualities attributes that can be
discerned only after purchasing a products
- Credence qualities characteristics that the
consumer may find impossible to evaluate even
after purchase and consumption.
Goods fall to the left of the continuum, whereas
most services fall to the right because of the
distinguishing characteristics of services make it
hard to evaluate.
Three broad stages of consumer behavior:
- Consumer choice includes how consumers choose and make decisions and the steps that
lead to the purchase of a particular service customers follow a logical sequence:
o Need recognition Maslow’s hierarchy:
Physiological needs biological needs such as food, water and sleep
Safety and security needs shelter, protection and security
Social needs affection, friendship and acceptance (particularly in the East)
Ego needs for prestige, success, accomplishment and self-esteem
Self-actualization involves self-fulfillment and enriching experiences
o Information search to reduce risk; helping consumers feel more confident about
their choices. Consumers use both:
Customer opinion sources
Promotional sources
Consumers rely to a greater extent on personal sources when purchasing services,
because promotional sources can communicate far less about experience qualities
and because promotional sources of information are not as readily available for
services.
o Evaluation of alternatives evoked set is smaller for services, because consumers
are unlikely to find more than one or two businesses providing the same services in a
given geographic area and because it is difficult to obtain adequate pre-purchase
information about services.
o Purchase often ‘free’ initial trials to reduce risk in the final purchase decision
- Consumer experience metaphor of service as theatre useful framework for describing
and analyzing service performance managing actors and physical setting of their behavior
the importance of service actors increases in three conditions:
o When the degree of direct personal contact is high
o When the services involve repeat contact
o When they have discretion in determining the nature of the service and how it is
delivered
The physical setting of the service increases in importance when the environment
distinguishes the service.
Service roles combinations of social cues that guide and direct behavior in a given setting.
Service scripts the logical sequence of events expected by the customer, involving him or
her a either a participant or an observer.
The presence, behavior and similarity of other customers receiving services has a strong
impact on the satisfaction and dissatisfaction of any given customer. Moods and emotions
are critical factors that shape the perceived effectiveness of service encounters:
o Positive moods can make customers more obliging and willing to participate in
behaviors that help service encounters succeed. Customers in a negative mood may
be less likely to engage in behaviors essential to the effectiveness of the service
