What is a Service?

A service is any act of performance

that one party can offer another that is
essentially intangible and does not
result in the ownership of anything; its
production may or may not be tied to a
physical product.

Service Sectors

Government

Private
nonprofit

Business

Retail
Manufacturing

Nature of Services
Characteristics

Intangibility
Inseparability
Variability
Perishability

Cannot be touched, seen,

tasted, heard, or smelled
before purchase
Lack of trial means higher
consumer risk
Consumers rely on cues to
draw quality inferences
Marketers must try to
tangibilize the intangible

Nature of Services
Characteristics

Intangibility
Inseparability
Variability
Perishability

Services are produced and

consumed at the same
time (air travel)
Service providers and
sometimes other
customers become part of
the service (restaurant)
Strong preferences for
service providers exist

Nature of Services
Characteristics

Intangibility
Inseparability
Variability
Perishability

Service providers vary with

respect to attitudes, skills,
mood, etc. Even the same
provider may give different
service on a different day.
Quality control is critical:
Hiring the right people
Standardizing service
Monitoring satisfaction

Nature of Services
Characteristics

Intangibility
Inseparability
Variability
Perishability

Services can not be

inventoried or
otherwise stored
Capacity / demand
management is critical:
Demand side strategies
Supply side strategies

Marketing strategies for service

firms

The traditional four Ps marketing approach work well for

goods, but additional elements require attention in services
businesses. Three more elements of marketing mix are
suggested which are

People
Physical evidence
Process

Marketing strategies for service

firms

People
An essential ingredient to any service provision is the use of
appropriate staff and people. Recruiting the right staff and training them
appropriately in the delivery of their service is essential if the
organization wants to obtain a form of competitive advantage.
Consumers make judgments and deliver perceptions of the service
based on the employees they interact with.

Process
Refers to the systems used to assist the organization in delivering the
service. Imagine you walk into Burger King and you order a Meal and
you get it delivered within 2 minutes. What was the process that
allowed you to obtain an efficient service delivery? Banks that send out
Credit Cards automatically when their customers old one has expired
again require an efficient process to identify expiry dates and renewal.

Marketing strategies for

service firms

Physical Evidence
Where is the service being delivered? Physical Evidence is the
element of the service mix which allows the consumer again to
make judgments on the organization. If you walk into a
restaurant your expectations are of a clean, friendly
environment. On an aircraft if you travel first class you expect
enough room to be able to lay down.

Categories of Service Mix

Pure
Pure tangible
tangible good
good

Good
Good w/
w/ accompanying
accompanying services
services
Hybrid
Hybrid
Service
Service w/
w/ accompanying
accompanying goods
goods
Pure
Pure service
service

Service Distinctions

Equipment-based or people-based
Service processes
Clients presence required or not
Personal needs or business needs
Objectives and ownership

Continuum of Evaluation for Different

Types of Products

Distinctive Characteristics
of Services
Intangibility
Inseparability
Variability
Perishability

Physical Evidence and Presentation

Place
People
Equipment
Communication material
Symbols
Price

How to Increase Quality Control

Invest in good hiring and
training procedures
Standardize the
service-performance process
Monitor customer satisfaction

Matching Demand and Supply

Demand side
Differential pricing
Nonpeak demand
Complementary
services
Reservation
systems

Supply side
Part-time
employees
Peak-time efficiency
Increased consumer
participation
Shared services
Facilities for future
expansion

Improving Service Quality

Listening
Reliability
Basic service
Service design
Recovery

Surprising
customers
Fair play
Teamwork
Employee research
Servant leadership

Root Causes
of Customer Failure

Solutions to Customer Failures

Redesign processes and redefine customer
roles to simplify service encounters
Incorporate the right technology to aid
employees and customers
Create high-performance customers by
enhancing their role clarity, motivation, and
ability
Encourage customer citizenship where
customers help customers

Three Types of Marketing in Service

Industries

Factors Leading to Customer

Switching Behavior

Pricing
Inconvenience
Core Service Failure
Service Encounter Failures
Response to Service Failure
Competition
Ethical Problems
Involuntary Switching

Gaps That Cause Unsuccessful

Service Delivery
Gap between consumer expectation and
management perception
Gap between management perception and
service-quality specifications
Gap between service-quality specifications
and service delivery
Gap between service delivery and external
communications
Gap between perceived service and
expected service

Determinants of Service Quality

Reliability
Responsiveness
Assurance
Empathy
Tangibles

Best Practices

Strategic Concept
Top-Management
Commitment
High Standards
Self-Service
Technologies
Monitoring Systems
Satisfying Customer
Complaints
Satisfying
Employees

Marketing Debate
Is service marketing different from
product marketing?
Take a position:
1. Product and service marketing are
fundamentally different.
or
2. Product and service marketing are highly
related.

Marketing Discussion
Colleges and universities can be
classified as service organizations.
How can you apply the marketing
principles developed in this chapter
to your school?
Do you have any advice as to how
it could become a better service
marketer?