Understanding the

Service Experience
Interesting Quotes:…
‘Economic value like the coffee bean,
progresses from commodities to goods to
services to compelling experiences’
Pine and Gilmore, The experience economy

‘Stop trying to be perfect and start being

remarkable’
Seth Godin

©2011 South-Western/Cengage Learning. All rights reserved.

 Why Study Services?
1. The growth of the global service economy in
terms of contributions to Gross Domestic
Products (GDP)
2. The growth of the global service workforce
3. The emergence of technologically based e-
services that have transformed many service
industries
4. The importance of developing sustainable
service marketing business practices
 Worldwide GDP by Service
Sector
COUNTRY % COUNTRY %
• Hong Kong 92.3 • Belgium 74.7
• Bahamas 90.0 • Singapore 73.2
• West Bank 81.0 • Denmark 73.1
• France 78.9 • Italy 72.9
• United States 76.9 • Portugal 72.8
• Lebanon 76.2 • Greece 72.6
• Japan 75.4 • Germany 72.0
• Taiwan 75.2 • Australia 71.3
• United Kingdom 75.0 • New Zealand 69.7
• Cuba 74.8 • Canada 69.6
• Poland 67.3
 Worldwide GDP by Service
Labor Force
COUNTRY % COUNTRY %
• Hong Kong 91.6 • New Zealand 74.0
• Bahamas 90.0 • Switzerland 73.2
• Israel 82.0 • Belgium 73.0
• United Kingdom 80.4 • Denmark 72.7
• Canada 79.0 • France 71.8
• Singapore 77.4 • Ecuador 70.4
• United States 76.6 • Finland 69.9
• Argentina 76.0 • Germany 67.8
• Norway 76.0 • South Korea 67.7
• Australia 75.0 • Austria 67.0
• Greece 65.0
 Worldwide GDP by Industry
Sector
INDUSTRY SECTOR: % INDUSTRY SECTOR: %
Agriculture, forestry, 1.0 Information 4.4
fishing, and hunting
Mining 2.3 Finance, insurance, real estate, 20.0
rental, and leasing
Utilities 2.1 Professional and business 12.7
services
Construction 4.1 Educational services, health care, 8.1
and social assistance
Manufacturing 11.5 Arts, entertainment, recreation, 3.8
accommodation, & food service

Wholesale Trade 5.7 Other services 2.3

Retail Trade 6.2 Government 12.9
Transportation, 2.9
&Warehousing
 What is a Service?

• Services: deeds, efforts, or performances

• Goods: objects, devices, or things

• The distinction between goods and

services is not perfectly clear.
Scale of Market Entities
 Scale of Market Entities
• The scale that displays a range of
products along a continuum based on their
tangibility ranging from
Tangible dominant
• Goods that possess physical properties that can
be felt, tasted, and seen prior to the consumer’s
purchase decision.
Intangible dominant
• Services that lack the physical properties that can
be sensed by consumers prior to the purchase
decision
Molecular Model
 What is benefit concept?

• Benefit concept: Encapsulation of

benefits of a product in the consumer’s
mind

• Tide’s core benefit concept

• Might simply be Cleaning or
• Cleanliness
• Whiteness
• Motherhood
What is the Servuction model?

Servuction Model
A framework
for understanding
the consumer’s
experience

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 Servuction Model
Other Servicescape
Customer

Customer

Invisible Contact
Organizations Personnel/
and Systems Service
Providers

Source: Adapted from E. Langeard, J. Bateson, C. Lovelock, and P. Eiglier, Marketing of Services: New Insights from
Consumers and Managers, Report No 81-104, (Cambridge, MA: Marketing Sciences Institute, 1981).
 (1) The Servicescape
• The use of physical evidence to design
service environments
• Ambient conditions: room temperature and
music
• Inanimate objects: furnishings
• Other physical evidence: signs, symbols
 (2) Contact Personnel /
Service Producers
Contact Personnel
• Employees other than the primary service
provider who briefly interact with the
customer
Service Providers
• The primary providers of a core service
• Waiter or waitress
• Dentist
• Physician
• College instructor
 (3) Other Customers
• Customers that share the primary
customer’s service experience.
• The presence of other
customers can enhance or
detract from an individual’s
service experience.

• For example unruly

customers in a restaurant or
a night club, children crying
during a church service, or
theatergoers carrying on a
conversation during a play
(4) Organizations and
Systems
• Invisible organization
and systems
• That part of a firm that
reflects the rules,
regulations, and
processes upon which
the organization is
based
 What are E-Services?
• E-services: an electronic service available
via the net that completes tasks, solve
problems, or conducts transactions.
• E-services have become more commonly
known as self-service technologies.
• Auto rental chains, banks, insurance
companies, hotels, movie rental chains and
theaters, and a variety of other retail
operations
 Traditional Service
Supersectors and
Ethical Considerations
Opening Vignette: Vail Resorts

 Vail Resorts has

recognized its
responsibility to its
guests and aggressively
promotes skier safety.
 Developed “Your
Responsibility Code”:
hopes its guests follow
the code and share the
responsibility of safety

20
What is the Service Economy?

Education and
Health Services
Other Services
Financial
Activities
Wholesale and
Retail trade Service Government
Economy
Transportation
And Utilities Information

Professional and Leisure and

Business services Hospitality

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Education and Health Services

• Education subsector Health Care and Social

Assistance subsector
– Second largest Health services is the
employment industry largest employment
– 13.3 million jobs in industry in private
• Schools
14 million jobs in
• Colleges
• Universities and Hospitals
training centers. Nursing care
facilities

22
 Financial Activities

Banking and Insurance Securities, Commodities,

e.g. Commercial banking
Savings institutions,
Credit Unions, and
Insurance Carriers
and other investments
manage the issuance,
purchase, and sale of
financial instruments.

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 The Government

• Publicly-owned
establishments of
federal, state, and
local agencies that
administer, oversee,
and manage public
1. Not-for-profit sector programs
• Advocacy
• Grantmaking
Civic Organizations
2.
•

Federal Government
• Includes public
3. State and local government schools and public
hospitals
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 Information Subsector
• Consist of establishments that produce and
distribute information and cultural products,
provide the means to distribute or transmit these
products, and/or process data.
• Publishing industries
• Motion picture and sound recording industries
• Broadcasting industries
• Telecommunication industries
• Internet service providers and web search portals
• Data procession industries and information services
industries.
• Represents 2.6% of all employment

25
 Leisure and Hospitality

• Arts, Hotels and other

entertainment, accommodation
and recreation and food services
subsector subsector
– More than 40% of 22% of employees are
the workforce has between the ages of
no formal 16 to 19
education beyond 2 out of 5 employees
high school work part time
Jobs are plentiful
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 Professional and Business
 Includes a multitude of activities
• Advertising and PR services
• Legal advice and representation
• Accounting and bookkeeping
• Engineering and research services
• Office administration and clerical services
• Security and surveillance services
• Cleaning and waste disposal services

27
 Transportation &
Warehousing and Utilities

Transportation and
Warehousing Utilities
e.g. Transportation of e.g. electricity, natural gas,
passengers and cargo, steam, water, and
warehousing and storage, sewage removal
sightseeing transportation

28
 Wholesale and Retail Trade

• Wholesale Trade Retail Trade

subsector subsector
– Establishments Establishments that
that wholesale retail merchandise
merchandise and and provide services
provide services related to the sell of
related to the sell merchandise
of merchandise 84% consist of sales
– 2/3 work in the and administrative
office and support positions
administrative
support roles
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 Other Services

• “Catch-all”
• A myriad of establishments that are in
engaged in a variety of activities including
• Equipment and machinery repair
• Promoting or administering religious activities
• Grantmaking
• Advocacy
• Drycleaning and laundry service
• Personal care, death care, pet care
• Photofinishing, temporary parking services, and
dating services

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 Service Sector Concerns

• Materialismo Snobbery
– Belief that without manufacturing there
will be less for people to service and so
more people available to do less work

• Dichotomization of Wealth
– The rich get richer and the poor get
poor

• Wages associated with service

employment
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 Ethical Considerations
for Services Marketers
1. Consumer vulnerability in services
marketing
2. Issues that create ethical conflict
3. Factors influencing ethical decision
making
4. The effects of ethical misconduct
5. Strategies for controlling ethical
behavior
32
 What are Ethics?

• A branch of philosophy dealing with what

is good and bad and with moral duty and
obligation.

• The principles of moral conduct that guide

behavior in the business world.

33
The Opportunity for Ethical
Misconduct in Services
• Intangibility complicates the consumer’s
ability to objectively evaluate the quality
of service provided
• Heterogeneity reflects the difficulty in
standardization and quality control
• Inseparability reflects the human
element involved in the service delivery
process

34
Factors Contributing to Consumer
Vulnerability

 Few search attributes

 Technical and specialized services
 Time lapse between performance
and evaluation
 Sold without guarantees and
warranties
35
Factors Contributing to Consumer
Vulnerability
• Performed by
boundary-spanning
personnel
• Accepted variability in
performance
• Outcome-based
reward systems
• Consumer
participation in
production

36
Issues that Create Ethical Conflict

• Conflict of Interest
• Organizational Relationships
• Honesty
• Fairness
• Communication

37
The Effects of Ethical Misconduct

• Personal Effects  Organizational Effects

• Job-related tension  Customer

• Frustration dissatisfaction
• Anxiety  Unfavorable word-of-

• Ineffective mouth publicity

performance  Negative image for

• Turnover intentions firm and industry

• Lower job
satisfaction

38
Controlling Ethical Decision
Making

• Employee socialization
• Standards of conduct
• Corrective control
• Leadership training
• Service/product knowledge
• Monitoring employee
performance
• Stress long-term customer
relationships 39