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Introduction to Services (Chapter 1)

Introduction to Services (Chapter 1). What are services? Why study services marketing? Goods vs. Services Characteristics of Services Services Marketing Mix. Marketing Definition.

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Introduction to Services (Chapter 1)

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  1. Introduction to Services(Chapter 1) • What are services? • Why study services marketing? • Goods vs. Services • Characteristics of Services • Services Marketing Mix ã 2005 - Dwayne D. Gremler

  2. Marketing Definition Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. --American Marketing Association ã 2005 - Dwayne D. Gremler

  3. 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 airlines, travel agencies, theme park Others: hair styling, pest control, plumbing, lawn maintenance, counseling services, health club Examples of Service Industries ã 2005 - Dwayne D. Gremler

  4. “Goods” and “Services” • In General: • Goods are… • Services are… ã 2005 - Dwayne D. Gremler

  5. What are services? • Long Definition: Services “include all economic activities whose output is not a physical product or production, 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.” • Short Definitions: ã 2005 - Dwayne D. Gremler

  6. Why study services marketing? • service-based • source of for manufacturing firms • in some service industries • have created new service opportunities ã 2005 - Dwayne D. Gremler

  7. Percent of U.S. Labor Force by Industry Figure 1.3 ã 2005 - Dwayne D. Gremler

  8. Percent of U.S. Gross Domestic Product by Industry Figure 1.4 ã 2005 - Dwayne D. Gremler

  9. Contributions of Service Industries toU.S. Gross Domestic Product (in 2003) Figure 1.1 Source: Inside Sam’s $100 Billion Growth Machine, by David Kirkpatrick, Fortune, June 14, 2004, p 86. ã 2005 - Dwayne D. Gremler

  10. Goods Production separate from consumption Standardized Tangible Nonperishable Services S V I P Goods vs. Services ã 2005 - Dwayne D. Gremler

  11. Goods vs. Services Table 1.2 Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,” Journal of Marketing 49 (Spring 1985): 33-46. ã 2005 - Dwayne D. Gremler

  12. What Customers Buy… • “Customers do not buy goods or services: they buy offerings which render services which create value.” • “The traditional division between goods and services is long outdated. It is not a matter of redefining services and seeing them from a customer perspective; activities render services, things render services.” • “The shift in focus to services is a shift from the means and the producer perspective to the utilization and the customer perspective.” • Gummesson (1993, p. 250) ã 2005 - Dwayne D. Gremler

  13. Product Definition • Product • it is everything that the customer receives in making an exchange ã 2005 - Dwayne D. Gremler

  14. Tangibility Spectrum Salt l Soft Drinks l Detergents l Automobiles l Cosmetics l Fast-food Outlets l Intangible Dominant Tangible Dominant l l Fast-food Outlets l Advertising Agencies l Airlines l Investment Management l Figure 1.2 Consulting Teaching

  15. Challenges for Services • Defining and improving quality • Communicating and testing new services • Communicating and maintaining a consistent image • Motivating and sustaining employee commitment • Coordinating marketing, operations and human resource efforts • Setting prices • Standardization versus personalization ã 2005 - Dwayne D. Gremler

  16. Services Marketing Mix • traditional marketing mix: • Product • Place • Promotion • Price • expanded mix for services: • P • P • P ã 2005 - Dwayne D. Gremler

  17. People • are the firm in the customer’s eye • are a critical part of the product • may be involved in production • can facilitate or inhibit service performance • can impact service encounters via their attitude, behavior, or degree of involvement ã 2005 - Dwayne D. Gremler

  18. Process • the actual procedures, mechanisms, and flow of activities by which the service is delivered • includes: • Examples: ã 2005 - Dwayne D. Gremler

  19. Physical Evidence • includes: (1) • background characteristics (furnishings, noise, color) • signs (2) tangible cues/facilitating goods that facilitate performance or communication of the service • examples: • bank statements, travel brochures, business cards ã 2005 - Dwayne D. Gremler

  20. Expanded Marketing Mix for Services Table 1.3 ã 2005 - Dwayne D. Gremler

  21. Expanded Marketing Mix for Services Table 1.3 (Continued) ã 2005 - Dwayne D. Gremler

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