SERVICES MARKETING

MKT 406

Golam Mohammad Forkan

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 1
 Why study services?
Services Dominate the Economy

Services, 68% Agriculture, Forestry, Mining,

Fishing, 2.3%

Manufacturing and
Construction,
17.3%

Government, 12.4%
(mostly Services)

INSIGHTS
 Private sector service industries account for over two-thirds of GDP
 Adding government services, total is almost four-fifths of GDP
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 2
 Why study services?
Service Industries

 Advertising  Tourism
 Financial services  Hotels
 Insurance
 Education
 Telecom
 Diet and Weight Reducing
 Airlines
Centers
 Entertainment
 Management Consulting Services
 Healthcare
 Security services  Environmental Consulting
 Telemarketing

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 3
 Why study services?
Transformation of the Service Economy

Social Business Advances in

Changes Trends IT

Government
Globalization
Policies
 Product life cycles are getting shorter
 Strategy life cycles are getting shorter
 More intense competition

The only way of long term survival is innovation!!!

But innovation is not easy!!!!

Success hinges on:

 Understanding customers and competitors
 Creation of value for customers and firm
 Viable business model innovation
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 4
 Defining Services

 Services
 Are economic activities offered by one party to another
 Most commonly employ time-based performances to bring about
desired results in:
― recipients themselves
― objects or other assets for which purchasers have responsibility

 In exchange for their money, time, and effort, service

customers expect to obtain value from
 Access to goods, labor, facilities, environments, professional skills,
networks, and systems
 But they do not normally take ownership of any of the physical
elements involved

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 5
 What Are Services?

 The historical view

 Goes back over 200 years to Adam Smith and Jean-Baptiste Say
 Different from goods because they are perishable (Smith 1776)
 Consumption cannot be separated from production, services are
intangible (Say 1803)

 A fresh perspective: Services involve a form of rental,

offering benefits without transfer of ownership
 Include rental of goods
 Marketing tasks for services differ from those involved in selling
goods and transferring ownership

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 6
 Services Pose Distinctive
Marketing Challenges
 Marketing management tasks in the service sector
differ from those in the manufacturing sector

 The eight common differences are:

1. Most service products cannot be inventoried
2. Intangible elements usually dominate value creation
3. Services are often difficult to visualize and understand
4. Customers may be involved in co-production
5. People may be part of the service experience
6. Operational inputs and outputs tend to vary more widely
7. The time factor often assumes great importance
8. Distribution may take place through nonphysical channels

 What are the marketing challenges for services?

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 7
 The 4Ps

Product Place

The target market

Price Promotion

Walker, O.C., Mullins, J. W., Boyd, H. W., & Larreche, J.C. (2006). Marketing Strategy, 5 th Ed. New York. McGraw-Hill, pp. 153-169.
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 8
 The 8Ps of Services Marketing

 Product Elements
 Service innovation
 Promotion and Education
 Promoting the value proposition
 Positioning services
 Place and Time
 Service value chain
 Process
 Designing and managing services process
 Productivity and Quality
 Servqual
 Balancing demand and productivity
 Managing relationship
 Price and Other User Outlays
 Physical Environment
 People The 8Ps of Services
 Managing people for service advantage Marketing
 Organizing for change management

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 1 - 9