Slide 01

Services Marketing
Lecture 2_3

Why study services?

We live in a service-driven economy!

• Services Dominate the Global Economy

• Most New Jobs Are Generated by Services
Fig: Changing structure of employment as an
• Understanding Services Offers Personal economy develops

Competitive Advantage

Fig: Contribution of services industries to GDP globally.

Why study services?
Services sector domination in
Bangladesh!
The service economy
Service economy includes
the “soft parts” of the
economy consisting of
industry supersectors
• Education and health services
• Financial activities
• Government
• Information
• Leisure and hospitality
• professional and business services
• Transportation and utilities
• Wholesale and retail trade, and
• Other services
 Forces transforming the service economy

Forces
transforming the
service economy
The big question – What are services?

Any act or performance that one party

can offer to another that is essentially
intangible and does not result in the
ownership of anything
Services involve a form of ‘rental’
through which customers can
Services can be defined as deeds, obtain benefits.
efforts or performances

The big question – What are services?

Non-ownership: A key defining principle!

Five broader categories:

• Labor, skills, and expertise rentals

Non-ownership framework: • Rented goods services
• Defined space and facility rentals
• Access to shared facilities
• Access and use of networks and systems
The big question – What are services?

Services are economic activities performed by one party

to another. Often time-based, these performances bring
about desired results to recipients, objects, or other
assets.

In exchange for money, time, and effort, service

customers expect value from access to labor, skills,
expertise, goods, facilities, networks, and systems.
However, they do not normally take ownership of the
physical elements involved.

Characteristics of services

• Intangibility
• Inseparability
Four unique characteristics
• Heterogeneity, and
• Perishability
Characteristics of services
Intangibility
A distinguishing characteristic of
services that makes them unable
to be touched or sensed in the
same manner as physical goods.
Marketing Challenges Created
by Intangibility:
• Services cannot be inventoried
• Services lack patent protection
and can be easily copied
• Services are difficult to display
and/or explain to customers
• The pricing of services is difficult

Characteristics of services
Intangibility

POSSIBLE SOLUTIONS :
• The use of tangible clues to help
“tangibilize” the service
• Use personal sources of information
to market services
• Create a strong organizational image
• Utilize an activity-based costing
approach
Characteristics of services
Intangibility

Coffee conversation

Give examples of how internet telecommunications - Share your thoughts

technologies (e.g. e-commerce, mobile apps) have - Draw examples from
changed some of the services you use. different industries
Characteristics of services
Inseparability

A distinguishing characteristic of services that

reflects the interconnections among the service
provider, the customer involved in receiving the
service, and other customers sharing the
service experience.

Critical incident A specific interaction between

a customer and a service provider.

Characteristics of services
Inseparability

Marketing Challenges Created by

Inseparability:

• The service provider is physically

connected to the service.
• The customer is involved in the
production process.
• “Other customers” are involved in the
production process.
• The mass production of services is
especially challenging.
Characteristics of services
Inseparability

Possible Solutions to Challenges

Created by Inseparability:

• Strategic selection and training of

public contact personnel
• Effectively managing consumers
• The use of multisite locations

Characteristics of services
Heterogeneity

A distinguishing characteristic of services that

reflects the variation in consistency from one
service transaction to the next.

Makes it impossible for a service operation to

achieve 100 percent perfect quality on an
ongoing basis.
Characteristics of services
Heterogeneity

Marketing Challenges Created Possible Solutions:

by Heterogeneity:
• Pursue a customization strategy
• Service standardization and
quality control are difficult to • Pursue a standardization strategy
achieve. (How?)

Characteristics of services
Perishability

A distinguishing characteristic of services in that

they cannot be saved, their unused capacity
cannot be reserved, and they cannot be
inventoried.
Characteristics of services
Perishability

Marketing Challenges Created by

Perishability:

• Demand Exceeds Supply of Service

Available.
• Lower Demand than Optimal Supply
Levels.

Characteristics of services
Perishability

Possible Solutions to Challenges

Created by Perishability :
Coffee conversation

Identify the pros and cons of having the - Share your thoughts
customer involved in the production process. - Draw examples from
different industries

Thank you