UM20MB504-Principles of Marketing Management

Unit 5: Shaping the market offerings

Lecture Notes: Services Marketing

“Activities, benefits and satisfactions, which are offered for sale or are provided in
connection with the sale of goods” (American Marketing Association, Committee of
Definitions 1960, p. 21). “Services include all economic activities whose output is not a
physical product or construction, 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”
(Quinn, Baruch and Paquette, 1987).

The Special Characteristics of Services

 Intangibility
 Inseparability of production and consumption
 Heterogeneity
 Perishability

The Expanded Marketing Mix for Services: 3 More Ps

(I) People ‹ All humans who play a role in service delivery and who influence the
perceptions of customers (Zeithaml and Bitner, 1996) Service delivery
employees (front-line staff) The general staff of the service company The
customer The other customers that are present in the servuction and delivery
process „
(II) Physical Evidence ‹ The setting where the service is delivered (Zeithaml and
Bitner, 1996) Where the service company and the customer interact Any
tangible components that facilitate performance or communication of the service.
(III) Process ‹ The actual procedure, mechanisms and flow of activities through which
a service is delivered (Zeithaml and Bitner, 1986) ‹ The dimensions of a process’s
efficiency and effectiveness: Length: the number of steps that participants have
to follow in order to effect service delivery Duration: the time that elapses from
the first to the last activity of the service delivery process Logistical
effectiveness: the degree of smoothness in the flow of the steps of the service
delivery process

Examples of Service Industry

Transportation services
Communication services
 Wholesale and trade
Retailing
Financial services (banking, insurance, real estate etc.)
Tourism services
Health services
Auto repair services
Business services
Legal services
Government service
Education

Source: http://www2.aueb.gr/users/esaopa/courses/part2.pdf accessed 19th June,

2020

Basic Differences Between Goods and Services

Every product – a term that we use in this book to describe the core output of any type of industry –
delivers benefits to the customers who purchase and use them.

Goods can be described as physical objects or devices, while services are actions or performances.13
Early research into services sought to differentiate them from goods, focusing particularly on four
generic differences, referred to as intangibility, heterogeneity (or variability), perishability of output
and simultaneity of production and consumption.

Although these characteristics are still cited, researchers such as Grönroos qualify these descriptions
and admit that they do not apply in all circumstances.

More practical insights are provided in Table 1, which lists nine basic differences that can help us to
distinguish the tasks associated with marketing and managing services from those involved with
physical goods. It’s important to note that in identifying these differences we’re still dealing with
generalisations that do not apply equally to all services.
Analysing Services on a Tangible versus Intangible spectrum

Source: Services Marketing, Lovelock et al, 2011, Edinburgh Business School.

What are E-Services?

What exactly are e-services? According to Hewlett-Packard, “an e-service is an electronic service
available via the net that completes tasks, solves problems, or conducts transactions. E-services can
be used by people, businesses, and other e-services and can be accessed via a wide range of
information appliances.”

E-services that are available today include your local bank’s online account services, ATMs, UPS
package tracking service, Schwab’s stock trading services, Travelocity’s online purchasing options, a
grocery store’s self-check-out option, and the list could go on and on. Today, e-services have
become more commonly known as self-service technologies (SSTs).
Proponents of self-service technologies (SSTs) frequently boast that “the best service is self-
service!” Consequently, companies should operate under the philosophy “help thy customer, help
thyself.” Ideally, SSTs are purposely created to automate routine interactions between customers
and providers with the goal of providing convenience and efficiency to both parties.

When these are developed and implemented successfully, consumers love self-service technologies.
With respect to airlines, customers can easily compare prices of alternative providers, book their
own tickets, select their own seats, and preprint boarding passes to bypass check-in procedures.
Ultimately, consumers often enjoy the convenience, speed, and ease of using self-service
technologies as compared to traditional assisted services. Service industries that employ self-service
technologies include: auto rental chains, banks, insurance companies, hotels, movie rental chains
and theatres, and a variety of other retail operations.

Service Blueprinting

Developing a new service based on the subjective ideas contained in the service concept can lead to
costly trial-and-error efforts to translate the concept into reality. When a building is developed, the
design is captured on architectural drawings called blueprints, because the reproduction is printed
on special paper, creating blue lines. These blueprints show what the product should look like and all
the specifications needed for its manufacture.

G. Lynn Shostack has proposed that a service delivery system also can be captured in a visual
diagram (i.e., a service blueprint) and used in a similar manner for the design of services.

First and foremost the service blueprint is a map or flowchart of all the transactions constituting the
service delivery process. It suggests questions such as:

What signage is necessary to facilitate customer actions?

Are there transactions that can be eliminated or made self-serve (e.g., express checkout)?

Which transactions are potential fail-points (i.e., activities where mistakes could occur)?

For example, the activity “take food order” might require provisions such as numbering menu items
to avoid errors. At the top we find the “physical evidence” that customers will see (e.g., hotel
exterior, uniform worn by bellperson, and room decor) and experience (e.g., waiting for check-in,
taking a bath, watching television, and eating a meal). Management might ask, is the evidence
consistent with the customer’s expectation and hotel’s image?

Activities in the first row above the “line of interaction” are customer-initiated steps, choices, and
interactions the customer performs in the process of purchasing, consuming, and evaluating the
service. Any vertical flow line crossing the “line of interaction” depicts a direct contact between the
customer and the organization (i.e., a service encounter).

We can ask questions such as, should the customer interact with the same person or be handed off
(e.g., handling a customer’s bags)?

Are different interpersonal skills required of the bellperson, check-in clerk, bag handler, and food
deliverer?
 Paralleling the customer actions are two areas of contact-employee actions. Above the “line of
visibility” are actions in full view of the customer and thus “onstage” (e.g., checking in and taking
delivery of one’s bags). Below the line of visibility are activities that are “backstage” and not seen by
the customer, such as taking food orders over the telephone. Questions in this area concern
appropriate backstage staffing to avoid unnecessary delays onstage.

Below the “line of internal interaction” we find the support processes that generate questions
concerning the capacity requirements of these back-office systems, such as a reservation
information system and kitchen. Finally, the position of the “line of visibility” in a service blueprint
can immediately signal the level of involvement of the customer in the service delivery process. For
example, the line of visibility is relatively high for a gourmet restaurant compared to that for a fast-
food restaurant.

Source: Service Management, Operations, Strategy and Technology, Fitzzimmons and Fitzzimmons,
2010