奧蘇菲亞

Sofia Rizki Aulia

RA6117284

Course Note 1: Understanding Services

1. Define Service and Explain what services are and identify important trends in services.
Service has a range of meanings. In simple terms, services are deeds, processes, and
performances provided, coproduced, or created by one entity or person for and /or with
another entity or person. Compatible with the simple terms, in broad, service is 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 that are
essentially intangible concerns of its first purchaser, such as convenience, amusement,
timeliness, comfort, or health).
Trends in Service Sector:

Fig. 1 Percentage of U.S. Labor Force by Fig. 2 Percentage of U.S. Gross Domestic
Industry Product by Industry

Figure 1 shows the trend of percentage of US Labor Force by industry. In early 1929,
55% of the working population was employed in the service sector and has continued
until 2014 reached 80% of employment. Figure 2 shows the trend of percentage of US
Gross Domestic Product (GDP) by industry. In 1948, approximately 54% of the GDP was
generated by services. The trend toward services has continued, until in 2016 services has
reached 81% of GDP.

2. Explain the need for special service marketing concepts and practices and why the need
has developed and is accelerating.
a. Service has increased importance to the US and worldwide economies. There is a
growing market for services and increasing dominance of services in economies
worldwide.
b. Service as a business imperative in goods – focused business. Now, companies across
industries have discovered the value of service innovation and service growth
strategies.
c. Deregulated industries and professional service needs. Deregulation created
companies to accelerate the need for more sophisticated, customer – based, and
 competition-sensitive marketing. Providers of professional services have also
demanded new concepts and approaches for their business as these industries have
been modified to allow advertising.
d. Service marketing is different. Business people realized that marketing and managing
services presented different issues and challenges in different companies. Therefore,
they realize the need for new concepts and approaches for marketing and managing
service businesses.
e. Service leads to profits. Researchers have found that service strategies that
implemented appropriately can be very profitable. Harvard Business School built a
case for the “service-profit chain”, linking internal service and employee satisfaction
to customer value and ultimately to profits.

3. Explore the profound impact of technology on service.

a. Technology is the foundation of many service offerings. Many new technology
services are on the evolving and they will continue to explode on the scene at an
increasingly rapid rate.
b. Technology provides new ways to deliver service. The approaches for delivering
existing services are more accessible, convenient, and in productive ways.
c. Technology enables both customers and employees to be more effective in getting and
providing services. Through self-service technologies, customers can serve
themselves more effectively. For employees, technology can provide tremendous
support in making them more effective and efficient in delivering services.
d. Technology extends the global reach of services. The internet itself have no
boundaries, and therefore information, customer service, and transactions can move
across countries and across continents, reaching any customer who has access to the
internet.
e. The internet is a service. All business and organizations that operate on the internet
are essentially providing services, whether they are giving information, performing
basic customer service functions, facilitating transactions, or promoting social
interactions among individuals.
f. Some outcomes may be negative. Customer are concern about their privacy and
confidentiality. It can also affect loss of human contact. Lastly, the payback in
technology investments is often uncertain.

4. Outline the basic differences between goods and services and the resulting challenges and
opportunities for service businesses.

Goods Services Resulting Implications

Tangible Intangible - Services cannot be inventoried.
- Services cannot be easily patented.
- Services cannot be readily displayed or
communicated.
- Pricing is difficult.
Standardized Heterogenous - Service delivery and customer
satisfaction depend on employee and
customer actions.
- Service quality depends on many
uncontrollable factors.
- There is no sure knowledge that the
service delivered matches what was

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 planned and promoted.
Production Simultaneous - Customers participate in and affect the
separate from production and transaction.
consumption consumption - Customers affect each other.
- Employees affect the service outcome.
- Decentralization may be essential.
- Mass production is difficult.
Nonperishable Perishable - It is difficult to synchronize supply and
demand with services.
- Services cannot be returned or resold.
- Services for any given time-period
cannot be sold or delivered at a later
date.

5. Introduce the expanded marketing mix for services and the philosophy of customer focus
as powerful frameworks and themes that are fundamental to the rest of the text.
Expanded Marketing Mix
Due to services that are usually produced and consumed simultaneously and services are
intangible, service marketers adopt the concept of expanded marketing mix for services.
This type of service marketing includes aspects from the traditional marketing mix (4Ps)
with addition of three aspects, they are :
a. Product : the good or service being marketed to the target audience
b. Place : where you sell your product and the distribution channels you use to get it to
your customer
c. Promotion : how you advertise your product or service
d. Price : the cost of a product or service
e. People : all human actors who play part in service delivery
f. Physical evidence : the environment in which the service is delivered and where the
firm and customer interact, as well as any tangible components
g. Process : the procedures, mechanism, and flow of activities by which the service is
delivered, consumed, and cocreated
The Philosophy of Customer Focus
From the firm’s perspective, customer focus has a meaning of all strategies are developed
with an eye on the customer and all implementations are carried out with an
understanding of their impact on the customer. Meanwhile, from practical’s perspective,
decisions regarding new services and communication plans will integrate the customer’s
point of view, operations and human resource decisions will be considered in terms of
their impact on customers. As a whole, this philosophy view customers as assets to be
valued, developed, retained and focuses on customer relationship building.

CRITICAL THINKING AND DISCUSSION QUESTIONS

1. Discuss the meaning of the statement, “all businesses are service businesses.” Can you
think of any exceptions? If so, justify your position.
“All businesses are service business” is a quote by Philip Kotler who is known as the
father of marketing. This statement refers to a meaning that all kind of economic
activities regardless if the outputs are either services or products, it is included as service
business. I personally agree with this statement. In whatever type of company, there is
always a service aspect that is counted as one of the important factors that influence the
company. A proper business should satisfy the customer’s expectations efficiently and

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 effectively which can be judged through the services they provide. For product
companies, although the output is mainly a product, but the service could be embedded in
the product themselves.
2. What are some ways in which consumer product companies such as Apple and Samsung
are also service providers?
Apple and Samsung are product companies, their products are electronic devices such as
smartphone, laptop, computer, and so on. Even though they are product companies, they
still provide services. The services are embedded in the products themselves which
provide essential services and solutions to our daily lives. As an example, applications
that is on your smartphone could provide you information, entertainment, purchasing
opportunities, or any other unique solutions. Apple itself has been recognized as a service
business and even rank third for service among all companies by 24/7. It provides
innovative services and solutions the customers have come to expect and depend on.

3. What are some other industries that are likely to experience the rise of disruptive
collaborative service such as those exemplified by Uber and Airbnb? Why?
Nowadays, technology, collaboration and the sharing economy are giving rise to many
new services. This impacts on the emerge of disruptive collaborative service as a new
business model. This model is based on activity of acquiring, providing, or sharing access
to goods and services that is often facilitated by a community-based online platform.
Besides Uber and Airbnb, here are some other companies with the same business model :
a. Fiverr. It is an online marketplace for freelancers to share professional services such
as copywriting, design, SEO assistance, and so on. What the platform provide is
included as the disruptive collaborative service.
b. JustPark. It is an online platform that matches drivers with a parking space through
website and mobile app. In this platform, the physical assets are shared as services
which made it included as a disruptive collaborative service.
c. Spotahome. It is an online platform that employs a team of home checkers, which are
ordinary people who are paid by the company to view a house or flat on behalf of
someone who wants to rent it but are unable to visit in person. This function is part of
the disruptive collaborative service.