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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)

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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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