Chapter 14

Services Marketing
 Objectives

• Understand nature and importance of services

• Identify characteristics of services that
differentiate them from goods
• Describe how the characteristics of services
influence development of marketing mixes for
services
• Understand importance of service quality and
explain how to deliver exceptional service
quality
• Explore nature of nonprofit marketing
Copyright © Houghton Mifflin Company. All rights reserved. 14 | 3
 The Nature and
Importance of Services
• Services as products
• Relationship to economic growth
and lifestyle
• Business services
• Theater framework

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 4

 Characteristics of Services

• Intangibility – not perceived by the senses

or physically possessed
• Inseparability – being produced and
consumed simultaneously
• Perishability – unused services can’t be
used at a future time

AUA Presentation, Hallas, 21 November 2005, p.1

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 5

 The Tangibility Continuum

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 6

 Characteristics of Services (cont’d)

• Heterogeneity – variation in quality

• Client-based Relationships – interactions
resulting in satisfied customers who use a
service repeatedly
• Customer contact – the necessary level of
interaction between provider and customer to
deliver the service

Customer Contact Association

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 7

 Developing and
Managing Mixes for Services

K. Douglas Hoffman and John E. G. Bateson, Services Marketing: Concepts, Strategies, and Cases,
3rd ed. (Cincinnati: Thomson/South-Western, 2006); Valarie A. Zeithaml, A. Parasuraman, and
Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations
(New York: Free Press, 1990); Leonard L. Berry and A. Parasuraman, Marketing Services:
Competing through Quality (New York: Free Press, 1991), p. 5.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 8

 Development Of Services

• Core Service- basic

• Supplementary Service- differentiates
from bundle of competitors’
• Customization vs. Standardization
• Dilemma
– Acceptable quality
– Efficient manner
– Satisfy customer needs
Copyright © Houghton Mifflin Company. All rights reserved. 14 | 9
 Intangibility
And Service Delivery
• Promises raise expectations
• Personnel
• Physical facility
• High-contact employees

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 10

 Distribution Of Services

• Provider’s facility
• Customer home/business
• “Arm’s length”
• Marketing channel
– Direct
– Short
• Equipment supported
Copyright © Houghton Mifflin Company. All rights reserved. 14 | 11
 Promotion Of Services

• Intangibility
• Tangible cues
• Promote
– Price
– Guarantees
– Performance documentation
– Availability
– Training/certification
• Personal selling
• Word-of-Mouth
Copyright © Houghton Mifflin Company. All rights reserved. 14 | 12
 Pricing Of Services

• Performance
• Time
• Demand-based
• Indicator of quality- paint and pricing (scroll
3/4 down page)
• Market conditions

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 13

 Service Quality

Customers’ perception of how well a service

provider meets or exceeds their expectations.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 14

 Search Qualities

Tangible attributes (of product) such as color,

style, size, feel, fit that can be evaluated prior
to purchase.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 15

 Experience Qualities

Attributes, such as taste, satisfaction, or

pleasure, which can be assessed only during
purchase and consumption of a service.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 16

 Credence Qualities

Attributes that customers may be unable

to evaluate even after purchasing and
consuming a service.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 17

 Dimensions Of Service Quality

Adapted from Leonard L. Berry and A. Parasuraman, Marketing Services: Competing through Quality (New York: Free Press, 1991 ); Valarie A. Zeithaml, A.
Parasuraman, and Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); A.
Parasuraman, Leonard L. Berry, and Valarie A. Zeithaml, “An Empirical Examination of Relationships in an Extended Service Quality Model,” Marketing
Science Institute Working Paper Series, Report no. 90–112 (Cambridge, MA: Marketing Science Institute, 1990), p. 29.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 18

 Delivering
Exceptional Service Quality
• Analysis of customer expectations
– Zone of tolerance
• Service Quality Specifications
– Goals and commitment
• Employee Performance
– Evaluation and compensation
• Management of Service Expectations
– Realistic expectation; word-of-mouth

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 19

 Service Quality Model

Adapted from A. Parasuraman, Leonard L. Berry, and Valarie A. Zeithaml, “An Empirical Examination of Relationships in an Extended Service Quality Model,”
Marketing Science Institute Working Paper Series, Report no. 90–112, 1990. Reprinted by permission of Marketing Science Institute, and the authors.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 20

 Nonprofit Marketing

Activities conducted to achieve some goal

other than ordinary business goals such as
profit, market share, or return on investment

Muscular Dystrophy Association

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 21

 How Is Nonprofit
Marketing Different?
• Not considered a business
• Greater opportunity for creativity
• Difficult to measure performance
• Sometimes controversial
• Provide body of knowledge

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 22

Nonprofit Marketing Objectives

• Change values
• Financial contribution
• Donation of services
• Shaped by nature of exchange and goals

United Way

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 23

 Developing Nonprofit
Marketing Strategies
• Target Markets
– Target
– Client
– General
• Develop Market Mix
– Product = abstract ideas/concepts
– Distribution = right media
– Promotion = multiple methods
– Pricing = fixed and variable costs
Copyright © Houghton Mifflin Company. All rights reserved. 14 | 24
 Opportunity Cost

The value of the benefit given up by

selecting one alternative over another.

Copyright © Houghton Mifflin Company. All rights reserved. 14 | 25