Chapter 1

Copyright © 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.
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1-1
Valarie A Zeithaml | Mary Jo Bitner
6E
Dwayne D. Gremler | Ajay Pandit
Integrating Customer Focus Across the Firm
SERVICES MARKETING
INTRODUCTION TO SERVICES
11
 What are Services?
 Why Service Marketing?
 Service and Technology
 Characteristics of Services
 Service Marketing Mix
 Staying Focused on the Customer
1-4
Objectives for Chapter 1:
Introduction to Services
 Explain what services are and identify important trends
in services.
 Explain the need for special service marketing concepts
and practices and why the need has developed and is
accelerating.
 Explore the profound impact of technology on service.
 Outline the basic differences between goods and
services and the resulting challenges and opportunities
for service businesses.
 Introduce the expanded marketing mix for services and
the philosophy of customer focus as powerful
frameworks and themes that are fundamental to the rest
of the text.
1-5
Examples of Service Industries
 Health Care
 hospital, medical practice, dentistry, eye care
 Professional Services
 accounting, legal, architectural
 Financial Services
 banking, investment advising, insurance
 Hospitality
 restaurant, hotel/motel, bed & breakfast
 ski resort, rafting
 Travel
 airline, travel agency, theme park
 Others
 hair styling, pest control, plumbing, lawn maintenance,
counseling services, health club, interior design 1-6
1-7
Contributions of Service Industries to
U.S. Gross Domestic Product
1-8
Tangibility Spectrum
Why Service Marketing?
 Services dominate U.S. and worldwide

economies
 Service as a business imperative in
goods-focused businesses
 Deregulated industries and professional
service needs
 Service marketing is different
 Service leads to profits
1-9
1-10
Percent of U.S. Labor Force by Industry
1-11
Percent of U.S. Gross Domestic
Product by Industry
1-12
Examples of Goods Companies that are
Expanding into Services
Boeing
1-13
Eight Central Paradoxes of
Technological Products
Characteristics of Services
Compared to Goods
Intangibility Heterogeneity
Simultaneous
Production
and Perishability
Consumption
1-14
1-15
Comparing Goods and Services
Implications of Intangibility
 Services cannot be inventoried
 Services cannot be easily patented
 Services cannot be readily displayed or

communicated
 Pricing is difficult
1-16
Implications of Heterogeneity
 Service delivery and customer

satisfaction depend on employee and
customer actions
 Service quality depends on many
uncontrollable factors
 There is no sure knowledge that the
service delivered matches what was
planned and promoted
1-17
Implications of Simultaneous
Production and Consumption
 Customers participate in and affect the

transaction
 Customers affect each other
 Employees affect the service outcome
 Decentralization may be essential
 Mass production is difficult
1-18
Implications of Perishability
 It is difficult to synchronize supply and

demand with services
 Services cannot be returned or resold
1-19
1-20
Search, Experience, and Credence
Qualities
Challenges and Questions for Service
Marketers
 Defining and improving quality
 Designing and testing new services
 Communicating and maintaining a consistent image
 Accommodating fluctuating demand
 Motivating and sustaining employee commitment
 Setting prices
 Organizing to facilitate strategic and tactical decision-
making
 Finding a balance between standardization and
personalization
 Protecting new service concepts from competitors
 Communicating quality and value to customers
 Ensuring the delivery of consistent quality service
1-21
Traditional Marketing Mix
Elements an organization controls that can

be used to satisfy or communicate with
customers:
 Product
 Price
 Place
 Promotion
1-22
Expanded Mix for Services – The 7 Ps
 Product
 Price
 Place
 Promotion
 People
All human actors who play a part in service delivery and thus
influence the buyer’s perceptions: namely, the firm’s personnel, the
customer, and other customers in the service environment.
 Physical Evidence
The environment in which the service is delivered and where the
firm and customer interact, and any tangible components that
facilitate performance or communication of the service.
 Process
The actual procedures, mechanisms, and flow of activities by which
the service is delivered—the service delivery and operating systems.
1-23
1-24
Expanded Marketing Mix for Services
Ways to Use the 7 Ps
Overall Strategic Specific Service

Assessment Implementation
 How effective is a  Who is the customer?

firm’s service  What is the service?
marketing mix?
 How effectively does
 Is the mix well-
the service marketing
aligned with overall
vision and strategy? mix for a service
 What are the communicate its
strengths and benefits and quality?
weaknesses in terms  What changes/
of the 7 Ps? improvements are
needed? 1-25

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Copyright © 2013 by McGraw Hill Education (India) Private Limited. All rights reserved.

Integrating Customer Focus Across the Firm

 Services dominate U.S. and worldwide

 Services cannot be inventoried

 Services cannot be easily patented

 Services cannot be readily displayed or

 Service delivery and customer

 Customers participate in and affect the

 It is difficult to synchronize supply and

Elements an organization controls that can

Overall Strategic Specific Service

 How effective is a  Who is the customer?

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