Services

Marketing
20.10.2021
Prof Dr Emine Çobanoğlu
 Transformation of the Service Economy
Social Business Advances in
Changes Trends IT

Government
Globalization
Policies
▪ New markets and product categories
▪ Increase in demand for services
▪ More intense competition

Innovation in service products & delivery systems, stimulated by better technology

Customers have more choices and exercise more power

Success hinges on:

▪ Understanding customers and competitors
▪ Viable business models
▪ Creation of value for customers and firm
 Factors Stimulating Transformation of
the Service Economy (1)
Social Business Advances in
Changes Trends IT

Government
Globalization
Policies

▪ Changes in regulations

▪ Privatization

▪ New rules to protect customers,

employees, and the environment

▪ New agreement on trade in services

 Factors Stimulating Transformation of
the Service Economy (2)
Social Business Advances in
Changes Trends IT

Government
Globalization
Policies
▪ Rising consumer expectations
▪ More affluence
▪ More people short of time
▪ Increased desire for buying experiences
versus things
▪ Rising consumer ownership of high tech
equipment
▪ Easier access to information
▪ Immigration
▪ Growing but aging population
 Factors Stimulating Transformation of
the Service Economy (3)
Social Business Advances in
Changes Trends IT

Government
Globalization
Policies

▪ Push to increase shareholder value

▪ Emphasis on productivity and cost savings

▪ Manufacturers add value through service and

sell services

▪ More strategic alliances and outsourcing

▪ Focus on quality and customer satisfaction

▪ Growth of franchising

▪ Marketing emphasis by nonprofits

DIFFERENCES BETWEEN SERVICES AND GOODS
 There are more variables in the marketing mix for services than
for goods
 Customer interface is more important for services than for
goods
 There is no stock or inventories of services, depends on mental
shelf space of the firm’s sales personnel
 Pricing is the most critical in the marketing of services versus
goods
 Promotional price cuts erode images of the services
 TANGIBILITY SPECTRUM
Physical
Elements
High
Salt
Detergents
CD Player
Wine
Golf Clubs
New Car
Tailored clothing
Plumbing Repair
Fast-Food Restaurant
Health Club
Airline Flight
Landscape Maintenance
Consulting
Life Insurance
Internet Banking

Low Intangible Elements High

Source; Adapted from Lynn Shostack
TRENDS IN THE SERVICE SECTOR
 Domination of the services industry in economy
 Improvement of services (especially with technology and
automation)
 Services seen as points of differentiation and competitive
advantage
 Consumers perception of declining quality of service
CHALLENGES TO SERVICES
 Many customers are in fact getting less service than they have in past even
though the number of services increased
 Customer expectations are higher
 Self-service and technology-based service is perceived as less service
 Technology-based services are hard to implement with many failures and
poorly designed systems in place
 Organizations have cut costs to the extent that they are too lean and too
understaffed to give services
 Many companies fail to provide the training, compensation, and support
needed to actually deliver service quality