CHAPTER 21

THE MARKETING OF SERVICES

CHAPTER OBJECTIVES
1. To explain why service marketing has become a centre of attention in
recent years.
2. To identify the characteristics of services that are important from the
marketing point of view.
3. To discuss the service marketing process
4. To discuss the service quality model.
5. To consider some of the managerial challenges of service marketing.
CHAPTER SUMMARY
The chapter begins by looking at the background and focus of service
marketing. It then explores the characteristics of services and service
marketing processes. The perceived service quality model is then
explained. The augmented service offering and the gap analysis model
are discussed in the context of interactive marketing planning and this is
followed by an investigation of the customer relationship life cycle. The
chapter concludes by looking at the role of internal marketing and a
discussion of where service marketing is going.
ANNOTATED LECTURE OUTLINE
Point 1 - Introduction.
The subject area of service marketing was not really dealt with until the
1970s either in Europe or the USA. Since that time it has grown
considerably and has received much attention from various authors.
According to the Nordic School, service marketing is the recognition that
contacts between service providers and their customers is the basis of a
process of building relationships, and the term service management is
used in order to recognise the management of this relationship process.

Service marketing is not only relevant to the service sector but to all
organizations that offer a service element to their customers.
Point 2 - Characteristics of services: process, consumption, and the lack
of a pre-produced product.
The consumption of services cannot be separated from the process by
which the service emerges as a solution to customers problems
(Rathmell 1974). Services are normally neither produced nor delivered in
the same way that physical products are. The nature of service
consumption is different from the type of consumption traditional
product-orientated models are built on. In the case of the physical
product, consumption follows production with a time gap filled by
marketing. In the case of a service, the process and consumption are
parallel and cannot be separated.
Point 3 - Service marketing processes.
A triangle can be used to show the scope of both service and product
marketing enabling a comparison between the two. The idea is that
marketing deliver promises but a closer look at the two figures shows that
most of the elements are different between the two diagrams.
Point 4 - Understanding the object of marketing: the perceived service
quality model.
As there are no pre-produced and pre-packed bundle of benefits on which
to base their marketing, service providers must manage the object of
marketing differently. In product marketing the appropriateness of a
solution to customers problems is often analysed as quality. How this
quality is perceived by service consumers can be shown in the perceived
service quality model and links to the service marketing triangle.

Point 5 - Planning interactive marketing: the augmented service offering.

The augmented service offering model takes into account both the
technical and functional quality aspects of the process and is divided into
three phases: a service concept; a basic service package; and,
augmentation of the offering.
Point 6 - Planning interactive marketing: the gap analysis model.
The gap analysis model can be used for analysing sources of quality
problems and for helping managers understand how service quality can
be improved and thus help to develop a better interactive marketing
impact.
Point 7 - Service marketing in a time perspective: the customer
relationship life cycle.
In a service context, as with product marketing, getting and keeping
customers is of utmost importance. With service, in particular, someone
within the organization will interact with customers, hence they should be
viewed as customer relationships not just customers or clients. Customer
relationships have to be built and a useful way of viewing this
developments as a life cycle which is split into three phases: initial stage,
purchasing process, and consumption process. The marketing objective
will change as the customer proceeds through the cycle.
Point 8 - Internal marketing.
Employees who provide the service element in an organization, although
not part of the marketing department, have a profound effect on the
interactive marketing process. It is important that they are prepared for
re-sales and/or cross-sale opportunities. In service marketing this is
known as internal marketing because these personnel form a first, internal
market for the service.

Point 9 - Conclusion.

Understanding service marketing is becoming increasingly important for

all organizations as more firms seek to differentiate their product through
their service offering. Interaction and customer relationship concepts,
two key areas of service marketing are set to be of even greater
importance to all firms in the future.
Answers to discussion questions:1. The essence of this discussion lies around the fact that with services
no tangible product is produced, what is consumed is a process in
which the consumer may also take part. Accepted methods of
measuring productivity are difficult to apply.
2. Certain tangible features that are seen to be of value to customers
could be appropriate here as well as intangible features such as
quality.
3. Students should be encouraged to look for a number of definitions of a
service in marketing literature and then test them against the services
given.
4. To some extent this is true, if cost advantages and technical
advantages cannot be maintained, then service may be the only
opportunity for competitive advantage. The implications revolve
around the nature of the service provision and the role of the part time
marketer and their increasing importance as well as the shift in focus
of marketing activities.
5. The application of the perceived service quality model (Section 4)
should help with this discussion. Students should be encouraged to
look at the experience and expectations of customers.
Suggested activities:
1. Think of two recent situations where you received good service and
another two where you received bad service. Describe briefly what
happened and what was the outcome. In the case of the bad service
could you make any recommendations concerning how the
organization could have improved the outcome.
2. Taking the customer relationship life cycle model in Figure 21.7, for
each stage give, in detail, the marketing objectives, and then identify
how you would achieve these objectives.

MINI CASE
BRIDSON AND GREAVES SOLICITORS
Discussion questions:
1. The size of the market and the needs of the potential customers need
to be fully researched as does the competitive offering in this area.
For example, do the software houses and research institutes have their
own legal teams. Would Leslie be able to handle this new business on
his own without affecting the quality standards already established in
Bridson and Greaves. How long has Leslie been operating in this
work and does he have the necessary experience? What are the
implications of a diversification strategy for this firm?
2. Students need to give a considered opinion and justify their decision.