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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
Introduction to Services(Chapter 1)
  • What are services?
  • Why study services marketing?
  • Goods vs. Services
  • Characteristics of Services
  • Services Marketing Mix

ã 2005 - Dwayne D. Gremler

marketing definition
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 2005 - Dwayne D. Gremler

examples of service industries
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 2005 - Dwayne D. Gremler

goods and services
“Goods” and “Services”
  • In General:
    • Goods are…
    • Services are…

ã 2005 - Dwayne D. Gremler

what are services
What are services?
  • Long Definition:

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.”

  • Short Definitions:

ã 2005 - Dwayne D. Gremler

why study services marketing
Why study services marketing?
  • service-based
  • source of for manufacturing firms
  • in some service industries
  • have created new service opportunities

ã 2005 - Dwayne D. Gremler

percent of u s labor force by industry
Percent of U.S. Labor Force by Industry

Figure 1.3

ã 2005 - Dwayne D. Gremler

percent of u s gross domestic product by industry
Percent of U.S. Gross Domestic Product by Industry

Figure 1.4

ã 2005 - Dwayne D. Gremler

contributions of service industries to u s gross domestic product in 2003
Contributions of Service Industries toU.S. Gross Domestic Product (in 2003)

Figure 1.1

Source: Inside Sam’s $100 Billion Growth Machine, by David Kirkpatrick, Fortune, June 14, 2004, p 86.

ã 2005 - Dwayne D. Gremler

goods vs services
Goods

Production separate from consumption

Standardized

Tangible

Nonperishable

Services

S

V

I

P

Goods vs. Services

ã 2005 - Dwayne D. Gremler

goods vs services1
Goods vs. Services

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 2005 - Dwayne D. Gremler

what customers buy
What Customers Buy…
  • “Customers do not buy goods or services: they buy offerings which render services which create value.”
  • “The traditional division between goods and services is long outdated. It is not a matter of redefining services and seeing them from a customer perspective; activities render services, things render services.”
  • “The shift in focus to services is a shift from the means and the producer perspective to the utilization and the customer perspective.”
          • Gummesson (1993, p. 250)

ã 2005 - Dwayne D. Gremler

product definition
Product Definition
  • Product
    • it is everything that the customer receives in making an exchange

ã 2005 - Dwayne D. Gremler

tangibility spectrum
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 1.2

Consulting

Teaching

challenges for services
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 2005 - Dwayne D. Gremler

services marketing mix
Services Marketing Mix
  • traditional marketing mix:
    • Product
    • Place
    • Promotion
    • Price
  • expanded mix for services:
    • P
    • P
    • P

ã 2005 - Dwayne D. Gremler

people
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 2005 - Dwayne D. Gremler

process
Process
  • the actual procedures, mechanisms, and flow of activities by which the service is delivered
  • includes:
    • Examples:

ã 2005 - Dwayne D. Gremler

physical evidence
Physical Evidence
  • includes:

(1)

    • background characteristics (furnishings, noise, color)
    • signs

(2) tangible cues/facilitating goods that facilitate performance or communication of the service

    • examples:
      • bank statements, travel brochures, business cards

ã 2005 - Dwayne D. Gremler

expanded marketing mix for services
Expanded Marketing Mix for Services

Table 1.3

ã 2005 - Dwayne D. Gremler

expanded marketing mix for services1
Expanded Marketing Mix for Services

Table 1.3 (Continued)

ã 2005 - Dwayne D. Gremler

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