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

 - Dwayne D. Gremler


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

 - Dwayne D. Gremler

bed & breakfast. counseling services.  ski resort. insurance  Hospitality  restaurant. travel agencies. health club  Financial Services  banking. investment advising.3 Examples of Service Industries  Health Care  hospital.Dwayne D. rafting  . Gremler . lawn maintenance. architectural  Others:  hair styling. medical practice. theme park  Professional Services  accounting. legal. dentistry. pest control. plumbing. eye care  Travel  airlines. hotel/motel.

Gremler .Dwayne D.4 “Goods” and “Services”  In General:  Goods are…   Services are…   .

is generally consumed at the time it is produced. Gremler . amusement. or health) that are essentially intangible concerns of its first purchaser.5 What are services?  Long Definition: Services “include all economic activities whose output is not a physical product or production. timeliness. and provides added value in forms (such as convenience.”  Short Definitions:    . comfort.Dwayne D.

Gremler .Dwayne D.6 Why study services marketing?  service-based  source of manufacturing firms   opportunities for in some service industries have created new service  .

Labor Force by Industry Figure 1.Dwayne D. Gremler .3  .7 Percent of U.S.

Gremler .Dwayne D.S.8 Percent of U.4  . Gross Domestic Product by Industry Figure 1.

1  . 2004. by David Kirkpatrick.9 Contributions of Service Industries to U. Fortune. p 86. .S.Dwayne D. Gremler Source: Inside Sam’s $100 Billion Growth Machine. Gross Domestic Product (in 2003) Figure 1. June 14.

Gremler . Services  Goods  Production separate from consumption  Services  S  V  I  Standardized  Tangible  Nonperishable  P  .10 Goods vs.Dwayne D.

Service delivery and customer satisfaction depend on employee actions. and Leonard L. Mass production is difficult. There is no sure knowledge that the service delivered matches what was planned and promoted. Berry. Services cannot be readily displayed or communicated. Zeithaml. Employees affect the service outcome. A. Customers affect each other.2 Goods Tangible Services Intangible Resulting Implications Services cannot be inventoried. Service quality depends on many uncontrollable factors. It is difficult to synchronize supply and demand with services. Gremler . Services cannot be patented. Decentralization may be essential. Services cannot be returned or resold.  . Pricing is difficult.” Journal of Marketing 49 (Spring 1985): 33-46.11 Goods vs. Standardized Variable Production separate from consumption Simultaneous production and consumption Nonperishable Perishable Source: Adapted from Valarie A. Parasuraman. Services Table 1. Customers participate in and affect the transaction. “Problems and Strategies in Services Marketing.Dwayne D.

p.Dwayne D.” – Gummesson (1993. Gremler . 250)  . It is not a matter of redefining services and seeing them from a customer perspective. things render services. activities render services.12 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.”  “The shift in focus to services is a shift from the means and the producer perspective to the utilization and the customer perspective.

Dwayne D. Gremler .13 Product Definition  Product  it is everything that the customer receives in making an exchange     .

2 Fast-food Outlets Advertising Agencies Airlines Investment Management Consulting Teaching l l l l l .Tangibility Spectrum Salt l Soft Drinks l Detergents l Automobiles l Cosmetics l Fast-food Outlets l l Intangible Dominant Tangible Dominant Figure 1.

15 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  . Gremler .Dwayne D.

Dwayne D. Gremler .16 Services Marketing Mix  traditional marketing mix:     Product Place Promotion Price  expanded mix for services:  P  P  P  .

Gremler . or degree of involvement  .Dwayne D. behavior.17 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.

mechanisms. and flow of activities by which the service is delivered  includes:   Examples:  .Dwayne D.18 Process  the actual procedures. Gremler .

travel brochures. noise.Dwayne D. business cards    . color)   signs (2) tangible cues/facilitating goods that facilitate performance or communication of the service  examples:   bank statements.19 Physical Evidence  includes: (1)   background characteristics (furnishings. Gremler .

3 PRODUCT Physical good features Quality level Accessories Packaging Warranties Product lines Branding PLACE Channel type PROMOTION PRICE Promotion blend Salespeople Advertising Flexibility Exposure Intermediaries Price level Terms Differentiation Allowances Outlet location Sales promotion Transportation Publicity Storage  .Dwayne D.20 Expanded Marketing Mix for Services Table 1. Gremler .

21 Expanded Marketing Mix for Services Table 1.Dwayne D. Gremler .3 (Continued) PEOPLE Employees Customers Communicating culture and values Employee research PHYSICAL EVIDENCE Facility design Equipment Signage Employee dress Other tangibles PROCESS Flow of activities Number of steps Level of customer involvement  .

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