CH 13

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc.
c. All rights reserved.

Growth of Business Services
1. E-Business. Beyond creating new business, the

Internet is creating new business models and driving
organizations to do business in fundamentally different
ways.
2. Outsourcing. The trend is to outsource functions and
services that are not the company’s core expertise.
3. Innovations. New services, never considered ten years
ago, are stimulating increasing services demand.
4. Manufacturing growth. Manufacturing output is still
growing despite the decline in the number of
manufacturing employees.
Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Services in the
Business-to-Business Market
Two distinct groups:
1. Products supported by services
• The wide range of service elements that
accompany the physical product are frequently as
important as the technical solutions offered by the
product itself.
2. Pure services
• Those that are marketed in their own right without
necessarily being associated with a physical
product.
Professional Service Firms
Marketing Programs
1. Pre-establish a relationship with a client.
2. Advance its reputation as a leader in the field.
3. Strengthen its relationships with existing clients.
Services are Different
 Deeds
 Processes
 Performances
 Services are intangibility
Provides a useful tool for understanding the product-service
definitional problem. The continuum suggest that there are
very few pure products or pure services.
Business Product-Service Classification Based on Tangibility
Business services are those market offerings that are intangible-dominant. Few
services are totally intangible--they often contain elements with tangible
properties.
Unique Service Characteristics
The Dimensions of Service Quality
• Customers focus on five dimensions in evaluating service

quality.
• Among these dimensions, reliability--delivery on promises--
is the most important to customers.
Customer Satisfaction and Loyalty
Customer-Linking Processes
1. The basic elements of the product or service that

customers expect all competitors to provide.
2. Basic support services, such as technical assistance or
training.
3. A recovery process for quickly fixing product or service
problems.
4. Extraordinary services that so excel in solving
customers’ unique problems or in meeting their needs
that they make the product or service seem
customized.
Service Recovery
1. Encompasses the procedures, policies, and processes that a

firm uses to resolve customer service problems promptly and
effectively.
2. Service providers who satisfactorily resolve service failures
often see that their customer’s level of perceived service
quality rises.
Key Elements of the
Service Marketing Mix
Target Development Pricing Promotion Distribution
segments of service
must be packages
selected,
and then a
marketing
mix must be
tailored
Segmentation
First, service segments are often narrower.

Second, service segmentation focuses on what
they business buyers expect as opposed to what
they need.
Third, segmenting service markets helps the firm
to adjust service capacity more effectively.
Conceptualizing the Service Product
• The service package
can be thought of as
the product dimension
of service.
• The service package
must consider some
factors that are
unique to services--
the personnel, the
physical product, and
the process of
providing the service.
• A major stumbling block to creating and launching a new service is
the difficulty in “tangibilizing” the service concept.
• Traditional approaches, such as product prototyping, do not work
effectively with services because it is hard to prototype services that
are often customized for individual buyers.
Steps for
Enhancing the
New Service
Development
Process
New Service Projects That Succeed
• The Customized, Expert Service: These new services

are relatively straightforward and inexpensive but are
customized to fit the needs and operating systems of
client firms.
• The Planned, Pioneering Venture: These are first-to-
market services that are unique, complex, and
expensive.
• The Improved Service Experience: Represented here
are equipment-based improvements made to a current
service offering that increase the speed and reliability of
the service process.
New Service Projects That Fail
• The Peripheral, Low Market Potential Service:

These new services tend to be peripheral to the firm’s
core offerings, fail to provide added value to the
customer, and enter a market with very limited
potential.
• The Poorly Planned “Industrialized” Clone: These
are complex new services that rely on “hard”
technology for their production and delivery.

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Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc.

c. All rights reserved.

1. E-Business. Beyond creating new business, the

1. Pre-establish a relationship with a client.

2. Advance its reputation as a leader in the field.

3. Strengthen its relationships with existing clients.

Business Product-Service Classification Based on Tangibility

Unique Service Characteristics

• Customers focus on five dimensions in evaluating service

1. The basic elements of the product or service that

1. Encompasses the procedures, policies, and processes that a

First, service segments are often narrower.

• The Customized, Expert Service: These new services

• The Peripheral, Low Market Potential Service:

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