Gilbert A. Churchill, Jr. J. Paul Peter

1. Marketing Chapter 11 Marketing Services Gilbert A. Churchill, Jr. J. Paul Peter Products, such as bank loans or home security, that are intangible or substantially so.

2. Slide 11-1 Services Receipts 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 Services Receipts (in billions) 900 800 700 600 500 400 300 200 100 1967 1972 1977 1982 1987 1991 1994 Year Source: Statistical Abstract of the United States (1996), p. 783.

3. Slide 11-2 The Economic Importance of Services Jobs in Germany Jobs in Japan Jobs in Great Britain 43% 27% 38% 73% 62% 57% Jobs in U.S. in 1992 Jobs in U.S. in 2005 21% 18% Service Producing Goods Producing 82% 79% Source: Arlington Star Telegram, September 2, 1996, p. B9.

4. Characteristics that Distinguish Services from Goods Slide 11-3a Table 11.1 Characteristic Services Goods Clientrelationship Services often involve an ongoing personal relationship. Especially when dealing with a doctor, lawyer, etc. Goods often involve an impersonal, short-term relationship, although relationship strength and duration are increasing. Perishability Goods can be placed in inventory for use at another time. Services can be used only at the time they are offered. Intangibility The customer owns only memories or outcomes, such as greater knowledge or styled hair. The customer owns objects that can be used, resold, or given to others.

5. Characteristics that Distinguish Services from Goods Slide 11-3b Table 11.1 Characteristic Services Goods Inseparability Services often cannot be separated from the person providing them. Goods typically are produced and sold by different people. Customereffort Customer’s involvement may be limited to buying completed product and using it. Customer can be more involved in production of services. Uniformity Because of inseparability and high involvement, each service may be unique, with the quality likely to vary. Variations in quality and variance from standards can be corrected before customers purchase products.

6. Goods/Service Continuum Slide 11-4 MostlyTangible Goods Lumber Computer withService Contract RestaurantDinner Oil Change Maid Service Mostly IntangibleServices

7. Categorizing Services by Means of Delivery Slide 11-5 EquipmentBased PeopleBased Automated Unskilled Operators Skilled Operators Unskilled Labor Skilled Labor Professionals America Online KellyServices

8. The Marketing Environment for Services Slide 11-6 EconomicEnvironment Political and Legal Environment CompetitiveEnvironment P P TM P P TechnologicalEnvironment SocialEnvironment NaturalEnvironment The same dimensions of the marketing environment that affects goods also affects marketers of services

9. The Marketing Mix for Services: Product Slide 11-7 StandardizedGoods CustomizedServices Camping Equipment Camping Trips Identical for each Customer Varies by Customer

10. The Marketing Mix for Services: Pricing Slide 11-8 Tools – Massachusetts Highway Department Road Use Fees – Yellowstone Park Entrance Rent – Kroger Center Office Space Fare – Taxi Ride Rate – Marriott Hotel Room Tuition – Harvard Degree

11. The Marketing Mix for Services: Placement Slide 11-9 Table 11.3 TYPE DESCRIPTION EXAMPLE Nature of Interaction between Customer and Service Organization Availability of Service Outlets Product Single Site Multiple Sites Theater Barbershop Customer goes to service organization Bus serviceFast-food chain Service organization comes to customer Lawn care servicePest Control serviceTaxi service Mail DeliveryEmergency repair service Customer and service organization transact at arm’s length (by mail or electronic communications Credit card company Local TV station Broadcast TV networkTelephone company Sources: Reprinted from Christopher H. Lovelock, Services Marketing, 2nd ed. (Englewood Cliffs, N.J.: Prentice Hall, 1991), p. 33. An earlier version of this figure appeared in Christopher H. Lovelock, “Classifying Services to Gain Strategic Marketing Insights,” Journal of Marketing (Summer 1983), p. 18.

12. The Marketing Mix for Services: Promotion Slide 11-10 Table 11.3 Promotion Advertising Personal Selling Intangibles require promotion to explain what theservice is and how it will benefit the buyer.

13. Types of Nonprofit Organizations Slide 11-11 Public - local, state, federal governments, post office Cultural - museums, symphonies, libraries, and operas Education - school, colleges, universities Religious - churches, temples, mosques Philanthropic - foundations, charities, Social causes - environmental, consumerism

14. Characteristics that Distinguish Services from Goods Slide 11-12 Difficulties Decisions Product Can not adjust product to increase marketability Market complex ideas - with no direct benefit to donor (e.g.,MADD) Range of involvement can be low (don’t litter) to high (stop smoking) Price Indirect payment through taxes - public parks and libraries Break even pricing (Post office) or below cost pricing (university) Place Need to provide better time and place utility (e.g., salvation army; museums go on tour, universities provide better schedules) Promotion Many can not do it all all (because its illegal or lack of resources) Public Service Advertisement (PSA) - an announcement that promotes the message (“a public service message from the ad council”)