Chapter 9: Services Marketing

1. Marketing What isnt There

Intangibles = Services and other experience-based products that cannot be
touched.
Services = combines experience with physical goods to create an event that the
buyer consumes. (Studying at the university, football game)
All services are intangibles, but all intangibles are not services

1.1 Does Marketing work for Intangibles

Yes. It applies to for-profit and not-for-profit companies (increasingly thinking
about branding and image building competition for customers and donors is
fierce innovative marketing strategies.
Marketing actions to reach its goals:
1. Mission statement
2. SWOT analysis
3. Use info from the SWOT to develop measurable objectives
4. Develop marketing strategies ex: target market
By using the principles of effective marketing planning, just as with any
tangibles product, an organization such as a theatre can reach its goals.
Undertake research to identify which attributes of services appeal to
customers and can contribute effectively to bottom-line profits.

1.2 What is Service?

Services = Acts, efforts or performances exchanged from producer to user
without ownership rights. It satisfies needs by providing pleasure, information or
convenience. (affect your body or your possession)
- Vast majority of employments
- Consumer-oriented services: travel, dry cleaning
- Organization-oriented services: vehicle leasing, but also the same as
consumers: travel, telecommunications
1) More cost effective to outsource than to hire a workforce
2) Dont have the expertise to provide the service themselves
- Even marketing function can be outsourced

1.3 Characteristics of Services

- Intangibility
Customers cant see, touch or smell a service
Not able to inspect or handle services before buying them, consumers find
it much more difficult to evaluate.
Costumers look for reassuring signs before purchasing
Firm needs to provide physical cues to reassure the buyer (look at
facility, its furnishings,
logo, business cards, appearance of employees, advertising, websites, )
- Perishability
A service is impossible to store for later sale or consumption use it or
lose it
Marketers can try to avoid this problem by using the marketing mix to
encourage demand for the service during slack time (e.g. reduce prices)
Capacity management: organisations adjust their services to match
supply and demand
either adjusting the product or the price
- Variability
Even the same service performed by the same individual for the same
customer may vary
Difficult to standardized (due to backgrounds/interest)
Customers often appreciate the firm that customizes its service for each
individual
Solution : apply Total Quality Management management effort to
involve all employees from the assembly line onward in continuously
working towards product quality improvement.
empowering staff & provide them with the opportunity to have an input
and make decisions
if service quality fails compensation
- Inseparability
Impossible to separate the production of a service from its consumption: a
service can only take place at the time the service provider performs an
act on either the customer or its possession
Service encounter is important: the interaction between the customer
and the service provider
To prevent bad service encounter and save on labour: disintermediation
removing the middle man (e.g. self-service petrol station) most
prefer the speed and efficiency that disintermediation provides
1.4 Classifying Services
Services can be classified according to whether the customer or his possessions
are the recipient of the service and as to whether the service itself consists of
tangible or intangible elements.
- Goods/services continuum
Most products are a combination of goods and services some products are
dominated by either tangible or intangible elements.
1) Goods-dominated products: Car manufacturer
At the tangible elements end of the continuum
Companies that sell tangible products still must provide supporting
services. To achieve major competitive advantage, support services should
be better than those of competitors.
some customer wont buy your product if you dont provide service
focus on the products function and image
2) Equipment- or facility-based services: Restaurant, hospital, hotel
In the middle of the continuum: mixture of tangible and intangible
elements.
Rely on expensive equipment or facilities to deliver a product
3 factors should be considered:
1. Operational factors: Clear signs and other guidelines must
show customers how to use the service
Minimize the waiting time: ex: mirror in the lobby
2. Locational factors: A firms location often influences
consumers decision. Marketers make sure their service sites
are convenient and in places that are attractive
3. Environmental factors: An attractive environment must be
created to lure customers (more retail-like philosophy)
3) People-based services: mobile hair dresser
At the intangible end of the continuum pure people-based services
Growing importance since people have less and less time to get things
done
- Core and augmented services
When you buy a service, you may in fact be buying a set of services
Core service = A benefit that a customer gets from the service
Augmented service = additional service offerings that differentiate the firm
from its competitors
Used to attract customers, may be necessary to deliver the core service

- Services on the web

Anything that can be delivered can be sold on the web (banking, software,
travel, career-related sites)
Marketers need to think seriously about developing online presence.
Effective websites: 1. Allow customers access to the online service
2. provide information on how to contact the firm, for
customers who want
personal contact
3. are fast, simple, continuously updated & easy to navigate

- Expansion of the traditional marketing mix

In an addition to the traditional 4 ps (Price, product, place and promotion) 3
additional ones:
People in delivering the service. Management and motivation of people
crucial in services marketing help influence customer satisfaction and
repeat custom
Process relates to the procedures, mechanisms and routines put into place
to deliver value to the customer: customers are influenced by how they are
treated in their entire service experience Ex: Disneyland (companys
ethos and employee training)
Physical evidence: environment where the service is delivered and can
also include any tangible cues relating to the service people gauge the
service by the attire (personnel, logo, website, )

1.5 The Service Encounter

Occurs when the customer comes into contact with the organisation
Several dimension: 1. Social contact dimension: one-person interaction
with another person
2. Physical dimension: customers pay close attention to the
environment
where the service is delivered
3. Interactive contact: the moment of truth employee
can determine whether the costumer will come away with a
good or bad impression of the service
Social elements of the service encounter: employees and
customers
- The quality of a service is only as good as its poorest employee (action, words,
physical appearance professionalism)
- The customer also plays a part in ensuring that a quality experience will
result: the customer must provide accurate information to receive good
service
Physical elements of the service encounter: servicescapes and
other tangibles
- Servicescape = the environment in which the service is delivered and where
the firm and customer interact. (exterior design, interior elements, close
attention to the design of tangibles elements that facilitate the performance
of the service or provide communications)
- Marketers know that carefully designed servicescapes can have a positive
influence on customers purchase decisions, their evaluations and ultimate
satisfaction
useful way for seeking a competitive advantage
- Nowadays, for many consumers the first tangible evidence of a business is its
website.
Websites need to be attractive and functional
Save company money by reducing the # of telephone enquiries

2. Providing Quality Service

Disservice = a negative service experience
Satisfaction is relative the recipient compares the current experience to some
prior set of expectations can have been spoiled in the past so will be
disappointed by the current service in comparison to the past one
Marketers must identify customer expectations and work hard to exceed
them not easy
Providing customers with logical explanations for service failures and
compensating them can substantially reduce dissatisfaction (disservice)

2.1 Service Quality Attributes

Difficult to estimate how good a service is until to buy it no free trial
Service marketers have to develop search qualities, build on experience
qualities and utilise credence qualities to illustrate their services benefits.

Search qualities = attributes the consumer can examine prior to purchase

(colour, price, fit, smell, ). Not easy for intangible goods build on tangibles
good by paying attention to details Service Experience Blueprint
Experience qualities = attributes that customers can determine during or after
consumption. Customers cant determine the quality beforehand, thus marketers
need to reassure them before (good presentation + experience form previous
customers)
Credence qualities = attributes customers find difficult to evaluate even after
they experienced the service (ex: doctors diagnosis). must trust the provider
(ex: doctor) Tangible cues of professionalism (ex: diplomas, organized office)
count toward purchase satisfaction if evaluation is difficult.

2.2 Measuring Service Quality

Measuring positive and negative service Holy Grail
ex: - Mystery shoppers to check then give feedbacks
- SERVQUAL scale which identifies 5 dimension
Tangibles the physical facilities, equipment and the professional
appearance of personnel
Reliability ability to provide dependably and accurately what was
promised
Responsiveness willingness to help customers and provide prompt
service
Assurance knowledge and courtesy of employees, ability to convey trust
and confidence
Empathy the degree of caring and individual attention provided to
customers
Through written, online or telephone questionnaire
Over time to see improvement
Can be in gap analysis approach
2 ways to measure service quality: 1) Gap analysis & 2) Critical incident
technique
1) Gap analysis = measurement approach that gauges the difference between
costumers expectations of quality vs what actually occurs identify specific
places that need improvements
Major gaps:
1. Gap between consumer expectations and management perceptions
Firms managers dont understand what its customers expectations
are (ex: bank closing early)
2. Gap between managements perception and quality standards the firm
sets
Management needs to focus on appropriate quality standards that
will be valued among consumers (ex: responsiveness)
3. Gap between established quality standards and service delivery
Biggest threat = poor employee performance
Teamwork is crucial & companies should clearly specify what they
expect from them
4. Gap between service quality standards and consumer expectations
A service firm should communicate exactly what the customer can
expect and what will happen if it does not deliver its promises no
exaggeration
5. Gap between expected service and perceived service
Company should verify that all forms of communication dont mislead
customers

2) Critical incident technique = The company collects and closely analyses

very specific customer complaints to identify critical incidents (specific
contacts between consumers and service providers that are likely to result in
dissatisfaction)
Happen when the org cant meet the customers expectations
Need to address the problem or explain the raison to the customer

2.3 Strategies for Developing and Managing Services

Sometimes, service quality fails. To effectively recover: research suggests that
consumers are more likely to keep buying from the firm when complaints are
resolved quickly the key is speed
Managers should first understand the service and the potential places
where failures are most likely to occur and then make plans ahead of time
to recover
Employees should be trained to listen and empowered to take appropriate
actions

New dominant logic for marketing: redefines service as the core deliverable
and the actual physical products purveyed as somewhat incidental to the
business proposition

Important trends that provide opportunities and challenges for marketers of

services
1. Changing demographics population ages, service industries that
meet the needs of older consumers will see dramatic growth
2. Globalisation increases the need for logistics and distribution services
to move products around the world, and for accounting and legal services
that facilitate these global exchanges. Also, global deregulation affects the
delivery of services of services by financial service industries because of
greater competition
3. Technological advances will provide opportunities for growth and
innovation in global service industries. They will also provide opportunities
for services that we havent even thought of yet, which will change and
improve the lives of customers
 4. Shift to flow of information we have become an information society
Critical to the success Will provide opportunities for services that
facilitate the storage and transfer of knowledge

3. Marketing People, Place, Ideas

Services are not the only intangibles: people, places & ideas are as well
they need to be sold by someone and bought by someone else.

3.1 Marketing People

Sizeable # of people hire personal image consultants to devise a marketing
strategy for them and others undergo plastic surgery, physical conditioning or
cosmetic makeovers to improve their market position or sell themselves to
potential employers, friends, lovers. Ex: Politicians (agent)
3 strategies marketers use to sell a person
1. Pure selling approach = an agent presents a clients qualifications to
potential buyers until he finds one who is willing to act as an intermediary
Agent presents client to film studios, advertising agencies
2. Product improvement approach = an agent works with a client to
modify certain characteristics that will increase market value
Client is modified: new name/image, dancing lessons, plastic surgery,
3. Market fulfilment approach = an agent scans the market to identify
unmet needs and then finds a person or a group that meets a set of
minimum qualifications and develops a new product
Agent develop a new product
More than one approach Agent has to determine the best approach to take
for each product

3.2 Marketing Places

Place marketing strategies regard a location as a brand, and attempts to
position it so that customers select this over competing destinations (fierce)

3.3 Marketing Ideas

Costumers often dont perceive the value they receive from recycling their
household waste or reducing global warming to be worth the cost.
Governments and other organisations use marketing strategies, often with
limited success, to sell ideas that will save the lives of millions of unwilling
customers or will help save our planet