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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 2002 - 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 2002 - 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 2002 - Dwayne D. Gremler

  4. What are services? 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.” ã 2002 - Dwayne D. Gremler

  5. What are services? ã 2002 - Dwayne D. Gremler

  6. Why study services marketing? • service-based economy • source of competitive advantage for manufacturing firms • deregulation in some service industries • new technologies have created new service opportunities ã 2002 - Dwayne D. Gremler

  7. Percent of U.S. Labor Force by Industry 80 70 60 Percent of GDP 50 40 30 20 10 0 • Services • Manufacturing • Mining & Agriculture 1929 1948 1969 1977 1984 1996 Year Figure 1-2 Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39. ã 2002 - Dwayne D. Gremler

  8. Percent of U.S. Gross Domestic Product by Industry 80 70 60 Percent of GDP 50 40 30 20 10 0 1948 1959 1967 1977 1987 1996 • Services • Manufacturing • Mining & Agriculture Year Figure 1-3 Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39. ã 2002 - Dwayne D. Gremler

  9. Goods Production separate from consumption Standardized Tangible Nonperishable Services S H I P Goods vs. Services ã 2002 - Dwayne D. Gremler

  10. Services are Different 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 2002 - Dwayne D. Gremler

  11. Product Definition • Product • it is everything that the customer receives in making an exchange ã 2002 - Dwayne D. Gremler

  12. 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 1-1 Consulting Teaching

  13. 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 2002 - Dwayne D. Gremler

  14. Services Marketing Mix • traditional marketing mix: • Product • Place • Promotion • Price • expanded mix for services: • P • P • P ã 2002 - Dwayne D. Gremler

  15. 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 2002 - Dwayne D. Gremler

  16. Process • the actual procedures, mechanisms, and flow of activities by which the service is delivered • includes: ã 2002 - Dwayne D. Gremler

  17. Physical Evidence includes: (1) • background characteristics (furnishings, noise, color) • spatial layout • signs (2) tangible cues/facilitating goods that facilitate performance or communication of the service • examples: ã 2002 - Dwayne D. Gremler

  18. Expanded Marketing Mix for Services Table 1-3 ã 2002 - Dwayne D. Gremler

  19. Expanded Marketing Mix for Services Table 1-3 (Continued) ã 2002 - Dwayne D. Gremler

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