Introduction to Services (Chapter 1) 

What are services? Why study services marketing? Goods vs. Services Characteristics of Services Services Marketing Mix

¥ - Dwayne D. Gremler


Marketing Definition

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
--American Marketing Association

¥ - Dwayne D. Gremler

counseling services.Dwayne D. legal. travel agencies.3 Examples of Service Industries  Health Care hospital. architectural  Others: hair styling. eye care  Travel airlines. plumbing. rafting ¥ . investment advising. health club  Financial Services banking. Gremler . insurance  Hospitality restaurant. theme park  Professional Services accounting. medical practice. pest control. bed & breakfast. lawn maintenance. hotel/motel. dentistry. ski resort.

Gremler .Dwayne D.4 ³Goods´ and ³Services´  In General: Goods are« Services are« ¥ .

and provides added value in forms (such as convenience.Dwayne D. timeliness. Gremler .´  Short Definitions: ¥ . is generally consumed at the time it is produced.5 What are services?  Long Definition: Services ³include all economic activities whose output is not a physical product or production. or health) that are essentially intangible concerns of its first purchaser. comfort. amusement.

Gremler .Dwayne D.6 Why study services marketing?  service-based  source of manufacturing firms   for in some service industries have created new service opportunities ¥ .

Labor Force by Industry Figure 1.7 Percent of U. Gremler .3 ¥ .Dwayne D.S.

Gross Domestic Product by Industry Figure 1. Gremler .8 Percent of U.S.4 ¥ .Dwayne D.

Dwayne D. Gross Domestic Product (in 2003) Figure 1. June 14. p 86. Gremler . by David Kirkpatrick. 2004.S. ¥ .1 Source: Inside Sam¶s $100 Billion Growth Machine. Fortune.9 Contributions of Service Industries to U.

Services  Goods Production separate from consumption  Services S Standardized Tangible Nonperishable V I P ¥ .10 Goods vs. Gremler .Dwayne D.

A. Parasuraman. Decentralization may be essential.11 Goods vs. Services Table 1. Services cannot be patented. Mass production is difficult. Employees affect the service outcome. ³Problems and Strategies in Services Marketing.2 Goods Tangible Services ntangible Res l i lica io s Services cannot be inventoried. Customers participate in and affect the transaction. Services cannot be readily displayed or communicated. There is no sure knowledge that the service delivered matches what was planned and promoted. and Leonard L. Zeithaml. Pricing is difficult. Service delivery and customer satisfaction depend on employee actions.Dwayne D. Gremler . Services cannot be returned or resold. ¥ . Berry. Customers affect each other. Standardized Variable Production separate from consumption Simultaneous production and consumption Nonperishable Perishable Source: Adapted from Valarie A.´ Journal of Marketing 49 (Spring 1985): 33-46. Service quality depends on many uncontrollable factors. t is difficult to synchronize supply and demand with services.

things render services.´  ³The traditional division between goods and services is long outdated.´ ± Gummesson (1993.´  ³The shift in focus to services is a shift from the means and the producer perspective to the utilization and the customer perspective. It is not a matter of redefining services and seeing them from a customer perspective. activities render services.12 What Customers Buy«  ³Customers do not buy goods or services: they buy offerings which render services which create value. p. 250) ¥ .Dwayne D. Gremler .

13 Product Definition  Product it is everything that the customer receives in making an exchange ¥ .Dwayne D. Gremler .

2 Fast-food Outlets Advertising Agencies Airlines Investment Management Consulting Teaching      .Tangibility Spectrum Salt  Soft Drinks  Detergents  Automobiles  Cosmetics  Fast-food Outlets   Intangible Dominant Tangible Dominant Figure 1.

Dwayne D. operations and human resource efforts  Setting prices  Standardization versus personalization      ¥ . Gremler .15 Challenges for Services Defining and improving quality Communicating and testing new services Communicating and maintaining a consistent image Motivating and sustaining employee commitment Coordinating marketing.

16 Services Marketing Mix  traditional marketing mix: Product Place Promotion Price  expanded mix for services: P P P ¥ . Gremler .Dwayne D.

or degree of involvement ¥ . behavior.17 People  are the firm in the customer¶s eye are a critical part of the product  may be involved in production can facilitate or inhibit service performance  can impact service encounters via their attitude.Dwayne D. Gremler .

mechanisms. and flow of activities by which the service is delivered  includes: Examples: ¥ . Gremler .18 Process  the actual procedures.Dwayne D.

travel brochures. noise. Gremler . business cards ¥ .Dwayne D.19 Physical Evidence  includes: (1) background characteristics (furnishings. color) signs (2) tangible cues/facilitating goods that facilitate performance or communication of the service examples: bank statements.

Gremler .Dwayne D.3 P T P E annel t pe P M O TIO N P I E lexi ilit P sical good feat res Q alit level Pro otion lend Salespeople dvertising Expos re Inter ediaries Price level Ter s ccessories Packaging W arranties Product lines randing O utlet location Sales pro otion Transportation Publicit Storage ifferentiation llow ances ¥ .20 Expanded Marketing Mix for Services Table 1.

Dwayne D.3 (Continued) PEOP E m p lo ees E P H Y S IC EVI ENCE a c ilit d e s ig n P OCESS lo w o f a c tiv itie s N u m b e r o f s te p s e v e l o f c u s to m e r in v o lv e m e n t C u s to m e rs C o m m u n ic a t in g c u ltu r e a n d v a lu e s E m p lo e e re s e a rc E q u ip m e n t S ig n a g e E m p lo Ot e e d re s s e r t a n g ib le s ¥ . Gremler .21 Expanded Marketing Mix for Services Table 1.

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