chapter 7 service products

1. part three: the marketing mix chapter 7 service products

2. an opening challenge You are the marketing manager for a company that makes office furniture. Despite being one of the best recognised brands in your home, business-to-business market, you have recently lost a couple of big orders to a foreign rival whose prices are much lower. To make matters worse, their furniture is just as well designed and as good quality as yours. Their brand name is as well recognised too. The production manager has shown that there is no way your company can match their low prices. You need a way to make customers value your products more highly. What are the possibilities?

3. agenda • the services sector • the nature of services • the 7Ps • service quality • branding services • service recovery

4. definitions ‘A service is an activity which benefits recipients even though they own nothing extra as a result.’ (Masterson and Pickton, 2010: 241) ‘[A service is] The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need.’ (Palmer, 2005: 2–3)

5. some service product examples • personal • hairdressing • nail bars • medical • dentistry • physiotherapy • business • consultancy • maintenance • financial • banking • insurance • electronic • shopping • gaming • social networking • leisure • leisure centres • sports facilities • hospitality • hotels • restaurants • cleaning • car servicing

6. service sector growth • more employment in knowledge-based industries • consumers have more leisure time and so demand more leisure services • popularity of outsourcing services • redundant workers setting up their own small businesses, often consultancy, training and coaching • complex modern products requiring support services • the service element is often the key way to differentiate goods

7. the intangibility of servicesAQ – re-set figure type

8. total service product modelAQ – re-set figure type

9. services • are intangible • have benefits • are time and place dependent • cannot be stored or transported • are often inconsistent • especially personal services, e.g. hairdressing • cannot be owned • the service provider is part of the service • the consumer is part of the service

10. service convenience • decision convenience • access convenience • transaction convenience • benefit convenience • post-benefit convenience (Berry et al., 2002)

11. services marketing mix the 7Ps • product • promotion • place • price • people • process • physical evidence 7Ps

12. people • the face of a service business • skills are often what you are selling • a key determinant of success • skills, attitudes, efficiency • relationship marketing • in overseas markets, use expatriates or locals?

13. physical evidence • most services have a tangible element • peripheral products • house style and livery • facilities • ambience

14. process • how service is provided • e.g. self-service or table service • customer journey • e.g. through webpages • bookings and order processing • customer enquiries • integration • problems of outsourcing • quality control standards

15. servicescapes ‘The environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service.’ (Bitner and Booms, 1981: 56)

16. luxury servicescape: the Orient Express (photo courtesy of Dave Pickton)

17. online servicescapes • the website • the situation in which they are used • home or office or internet cafe? • hardware • operating system (http://online.sagepub.com/)

18. service quality • know that service intangibility increases perceived risk • cannot usually return a service • reassure customers in advance of service delivery • build trust

19. SERVQUAL • quality of tangibles • physical evidence • service reliability • how dependable is the service? • service provider responsiveness • speed of response and helpfulness • customer assurance • confidence in the service offering • staff empathy • good customer understanding (Parasuraman et al., 1988)

20. branding services • emphasise the tangible • add value • harder to be consistent • largely dependent on people • can’t be sure of quality in advance

21. service recovery • things go wrong more frequently with services • bad service encounters can lead to • customer complaints • expensive corrections • loss of business • bad word of mouth • a complaint is an opportunity to provide great service • recover well, and customers are even happier

22. summary • there are 7Ps in services marketing • customers perceive services as risky • inconsistent • unpredictable • and therefore harder to brand • some services are more product-reliant • e.g. restaurants, retail • some services are more skill-reliant • e.g. photography, car cleaning • good service recovery is essential

23. references • Berry, L.L., Seiders, K. and Grewal, D. (2002) ‘Understanding service convenience’, Journal of Marketing, 66 (3): 1–17. • Booms, B.H. and Bitner, M.J. (1981) ‘Marketing strategies and organization structures for service firms’, in J.H. Donnelly and W.R. George (eds) Marketing of Services. Chicago: American Marketing Association, pp. 51–67. • Masterson, R. and Pickton, D. (2010) Marketing: An Introduction, 2nd edn. London: SAGE. • Palmer, A. (2005) Principles of Services Marketing, 4th edn. Maidenhead: McGraw-Hill. • Parasuraman, A., Zeitham, V.A. and Berry, L.B. (1988) ‘SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality’, Journal of Retailing, 64 (1): 12–40.