Chapter 1

An Introduction to Services

What is a Service?
Services: deeds, efforts, or performances Goods: objects, devices, or things The distinction between goods and services is not perfectly clear.

Figure 1.1: 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 consumers purchase decision.

Intangible dominant
Services that lack the physical properties that can be sensed by consumers prior to the purchase decision

Figure 1.2: Molecular Model

What is benefit concept?

Benefit concept: Encapsulation of benefits of a product in the consumers mind Tides core benefit concept
Might simply be Cleaning or

Cleanliness Whiteness Motherhood

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What is the Servuction model?

Servuction Model A framework for understanding the consumers experience

Figure 1.3: Servuction Model

Other Customer
Servicescape

Customer

Invisible Organizations and Systems

Contact Personnel/ Service Providers 8

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

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(3) Other Customers

Customers that share the primary customers service experience.

The presence of other customers can enhance or detract from an individuals 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

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(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

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Why Study Services?

1. 2. 3. 4. The growth of the global service economy in terms of contributions to Gross Domestic Products (GDP) The growth of the global service workforce The emergence of technologically based e-services that have transformed many service industries The importance of developing sustainable service marketing business practices

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Figure 1.4: Worldwide GDP by Service Sector

COUNTRY 1. Hong Kong 2. Bahamas 3. West Bank 4. France 5. United States 6. Lebanon 7. Japan 8. Taiwan 9. United Kingdom 10. Cuba % 92.3 90.0 81.0 78.9 76.9 76.2 75.4 75.2 75.0 74.8 COUNTRY 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Belgium Singapore Denmark Italy Portugal Germany Australia New Zealand Canada Poland % 74.7 73.2 73.1 72.9 72.8 72.0 71.3 69.7 69.6 67.3

Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bf.html 14

Figure 1.5: Worldwide GDP by Service Labor Force

COUNTRY 1. Hong Kong 2. Bahamas 3. Israel 4. United Kingdom 5. Canada 6. Singapore 7. United States 8. Argentina 9. Norway 10. Australia % 91.6 90.0 82.0 80.4 79.0 77.4 76.6 76.0 76.0 75.0 COUNTRY 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. New Zealand Switzerland Belgium Denmark France Ecuador Finland Germany South Korea Austria % 74.0 73.2 73.0 72.7 71.8 70.4 69.9 67.8 67.7 67.0

Source: https://www.cia.gov/library/publications/the-world-factbook/geos/bf.html 15

Figure 1.6: Worldwide GDP by Industry Sector

INDUSTRY SECTOR:

% 1.0

INDUSTRY SECTOR: Information

% 4.4

Agriculture, forestry, fishing, and hunting

Mining
Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation, &Warehousing

2.3
2.1 4.1 11.5 5.7 6.2 2.9

Finance, insurance, real estate, rental, and leasing

Professional and business services Educational services, health care, and social assistance Arts, entertainment, recreation, accommodation, & food service Other services Government

20.0
12.7 8.1 3.8 2.3 12.9 16

Source: https://www.bea.gov/industry

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

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