Lovelock Srvcmktg Ce Ppt 01

Chapter 1New Perspectives on Marketing in the Service Economy Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 1- 1 Chapter One – Learning Objectives  Define services  Recognize the importance of services  Differentiate between services marketing and goods marketing  Acquire introductory knowledge of the 8Ps of services marketing Copyright © 2008 Pearson Education Canada Services Marketing, Canadian Edition Chapter 1- 2 3 . Canadian Edition Chapter 1.What Are Services? Copyright © 2008 Pearson Education Canada Services Marketing. Defining Services  Services involve a form of rental and non-ownership  Meaning access and usage fees. not private  Systems and networks: access & usage — rent right to participate Copyright © 2008 Pearson Education Canada Services Marketing. instead of buying it outright  Services non-ownership framework  Rental-good services — right to a physical good  Defined space and place rentals — private space shared with other customers  Labour and expertise rentals — hire people  Access to shared physical environments — share use of an environment.4 . Canadian Edition Chapter 1. for a defined period of time. 5 . time and effort. labour. facilities. most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility. but they do not normally take ownership of any of the physical elements involved. and systems. networks. professional skills.Defining Services Services are economic activities offered by one party to another. Copyright © 2008 Pearson Education Canada Services Marketing. Canadian Edition Chapter 1. In exchange for their money. service customers expect to obtain values from access to goods. Defining Services  Service Product  A service product comprises all the elements of the service performance. Canadian Edition Chapter 1.6 . both tangible and intangible. that creates value for customers  Businesses sell and market the core service product  This is the marketing of services  Customer Service  Customer support of the core product after it is sold  Marketing through service Copyright © 2008 Pearson Education Canada Services Marketing. 7 .Importance of Services  Services dominate economy in most nations  Service sector is growing rapidly  Most new jobs are generated by services  Powerful forces are transforming service markets  Reshaping of demand. customers Personal competitive advantage Copyright © 2008 Pearson Education Canada Services Marketing. supply. Canadian Edition Chapter 1. competition. Why Study Services? Copyright © 2008 Pearson Education Canada Services Marketing.8 . Canadian Edition Chapter 1. Contribution of Service Industries to Canadian Gross Domestic Product.1) Copyright © 2008 Pearson Education Canada Services Marketing. 2005 (Fig 1. Canadian Edition Chapter 1.9 . Canadian Edition Chapter 1.Estimated Size of Service Sector in Selected Countries (Fig 1.10 .2) Copyright © 2008 Pearson Education Canada Services Marketing. 11 . Canadian Edition Chapter 1.Challenges Posed by Services Copyright © 2008 Pearson Education Canada Services Marketing. and reservations to smooth demand. but poor task execution could affect satisfaction  Develop user-friendly equipment.1) Difference Implications Marketing-Related Tasks  Most service products cannot be inventoried  Customers may be turned away  Use pricing. provide good support Copyright © 2008 Pearson Education Canada Services Marketing. Canadian Edition Chapter 1. and systems. Implications. promotion. train customers. and Marketing-Related Tasks (1) (Table 1. employ metaphors and vivid images in advertising  Services are often difficult to visualize and understand  Greater risk and uncertainty perceived  Educate customers on making good choices. facilities.Differences.12 . work with ops to manage capacity  Intangible elements usually dominate value creation  Harder to evaluate service and distinguish from competitors  Emphasize physical clues. offer guarantees  Customers may be involved in coproduction  Interaction between customer and provider. and Marketing-Related Tasks (2) (Table 1. train employees to   reinforce service concept Shape customer behaviour  Operational inputs and outputs tend to vary more widely  Hard to maintain quality. offer extended hours  Distribution may take place through nonphysical channels  Electronic channels or voice telecommunications  Create user-friendly. consistency. reliability  Redesign for simplicity and failure proofing Institute good service recovery procedures  Difficult to shield  Time is money. Implications.Differences. Canadian Edition Chapter 1.1) Difference Implications Marketing-Related Tasks  People may be part of service experience  Behaviour of service personnel and customers can affect satisfaction  Recruit.13 . secure websites and free access by telephone Copyright © 2008 Pearson Education Canada Services Marketing. customers from failures customers want service at convenient times  Time factor often assumes great importance  Find ways to compete on speed of delivery. Value Added by Physical. Intangible Elements Helps Distinguish Goods and Services (Fig 1.7) Copyright © 2008 Pearson Education Canada Services Marketing.14 . Canadian Edition Chapter 1. 15 .NAICS  North American Industry Classifications System  Replacing the SIC system – Standard Industrial Classification  Better understanding of service dominated economies  Some examples of new classifications:     Diet and Weight Reducing Centres Management Consulting Services Temporary Help Services Telemarketing Bureaus Copyright © 2008 Pearson Education Canada Services Marketing. Canadian Edition Chapter 1. Differentiate between services and goods   Marketing tasks in services differ from the manufacturing sector Eight common differences : 1. 2.16 Copyright © 2008 Pearson Education Canada . 5. 7. 3. 6. Service products cannot be inventoried Intangible elements dominate value creation Services difficult to visualize and understand Customers may be involved in co-production People may be part of the service experience Operational inputs and outputs tend to vary widely Time factor assumes great importance Distribution through nonphysical channels  What are marketing implications? Services Marketing. 4. Canadian Edition Chapter 1. 8. price and other user outlays. processes. Canadian Edition Chapter 1. productivity and quality Copyright © 2008 Pearson Education Canada Services Marketing. all other functions are cost centres  The “8Ps” of services marketing are needed to create strategies for meeting customer needs profitably in a competitive marketplace  Traditional – product elements. people. place and time.17 . promotion and educations  Extended by service delivery – physical environment.The 8 Ps of Services Marketing  Marketing is the only function to bring operating revenues into a business. Canadian Edition Chapter 1.18 .Expanded Marketing Mix for Services Copyright © 2008 Pearson Education Canada Services Marketing. The 8 Ps of Services Marketing  Product Elements (Chapter 3)  Place and Time (Chapter 4)  Price and Other User Outlays (Chapter 5)  Promotion and Education (Chapter 6)  Process (Chapter 8)  Physical Environment (Chapter 10)  People (Chapter 11)  Productivity and Quality (Chapter 14) Copyright © 2008 Pearson Education Canada Services Marketing. Canadian Edition Chapter 1.19 . 20 . Canadian Edition Chapter 1.The 8Ps of Services Marketing: (1) Product Elements  Embrace all aspects of service performance that create value  Core product responds to customer’s primary need  Help customers use core product through array of supplementary service elements  Creates a service concept that offers value to customers and satisfies better than competitors Copyright © 2008 Pearson Education Canada Services Marketing. When. Canadian Edition Chapter 1. How  Geographic locations served  Service schedules  Physical channels  Electronic channels  Customer control and convenience  Channel partners/intermediaries Copyright © 2008 Pearson Education Canada Services Marketing.21 .The 8Ps of Services Marketing: (2) Place and Time  Delivery decisions: Where. .)  Time expenditures.The 8Ps of Services Marketing: (3) Price and Other User Outlays  Traditional pricing tasks:  Selling price. travel to service location. parking.22 . premiums  Margins for intermediaries (if any)  Credit terms  Service marketers must recognize that customer outlays involve more than price paid to seller  Identify and minimize other costs incurred by users:  Costs associated with service usage (e. especially waiting  Unwanted mental and physical effort  Negative sensory experiences Copyright © 2008 Pearson Education Canada Services Marketing. phone. Canadian Edition Chapter 1. babysitting.g. etc. discounts. persuading.The 8Ps of Services Marketing: (4) Promotion and Education  Informing. reminding customers  Marketing communication tools  Media elements (print. etc. the Internet. broadcast. customer service  Sales promotion  Publicity/PR  Imagery and recognition  Branding  Corporate design  Content  Information. Canadian Edition Chapter 1.23 . outdoor. advice  Persuasive messages  Customer education/training Copyright © 2008 Pearson Education Canada Services Marketing.)  Personal selling. retail. educating. Canadian Edition Chapter 1. especially when acting as co-producers of service  Process involves choices of method and sequence in service creation and delivery      Design of activity flows Number and sequence of actions for customers Nature of customer involvement Role of contact personnel Role of technology. create poor experiences. degree of automation  Badly designed processes waste time.24 . and disappoint customers Copyright © 2008 Pearson Education Canada Services Marketing.The 8Ps of Services Marketing: (5) Process  How firm does things may be as important as what it does  Customers often involved in processes. The 8Ps of Services Marketing: (6) Physical Environment  Design servicescape and provide tangible evidence of service performances  Create and maintain physical appearances       Buildings/landscaping Interior design/furnishings Vehicles/equipment Staff grooming/clothing Sounds and smells Other tangibles  Manage physical cues carefully— can have profound impact on customer impressions Copyright © 2008 Pearson Education Canada Services Marketing.25 . Canadian Edition Chapter 1. performing tasks well     Job design Recruiting Training Motivation  Need the right customers for firm’s mission  Contribute positively to experience of other customers  Possess—or can be trained to have— needed skills (coproduction)  Can shape customer roles and manage customer behaviour Copyright © 2008 Pearson Education Canada Services Marketing. Canadian Edition Chapter 1.The 8Ps of Services Marketing: (7) People  Interactions between customers and employees influence perceptions of service quality  Need the right customer-contact employees.26 . strategies should be sought to improve both productivity and quality simultaneously—technology often the key  Technology-based innovations have potential to create high payoffs  But.The 8Ps of Services Marketing: (8) Productivity and Quality  Productivity and quality must work hand in hand  Improving productivity key to reducing costs  Improving and maintaining quality essential for building customer satisfaction and loyalty  Ideally. must be user friendly and deliver valued customer benefits Copyright © 2008 Pearson Education Canada Services Marketing.27 . Canadian Edition Chapter 1. Place and Time 3. Productivity and Quality Copyright © 2008 Pearson Education Canada Services Marketing. time and effort  Services are transforming markets and experiencing rapid growth  The differences between services and goods marketing focus on intangibility. Canadian Edition Chapter 1. Process 6. People 8. Physical Environment 7.Summary – Chapter 1  Services Defined  Rental and non-ownership of goods  Time based exchange of economic activity performed in exchange for money. Price and Other User Outlays 4.28 . Product Elements 2. people and time  8Ps of services marketing 1. Promotion and Education 5.