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Defining the Essence of a Service

 An act or performance offered by one party to another  An economic activity that does not result in ownership  A process that creates benefits by facilitating a desired change
in:
 customers themselves  physical possessions  intangible assets

Slide ©2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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Some Impacts of Technological Change

 Radically alter ways in which service firms do business:
 with customers (new services, more convenience)  behind the scenes (reengineering, new value chains)

 Create relational databases about customer needs and
behavior, mine databanks for insights

 Leverage employee capabilities and enhance mobility  Centralize customer service—faster and more responsive  Develop national/global delivery systems  Create new, Internet-based business models
Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

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Distinguishing Characteristics of Services (Table 1.1)  Customers do not obtain ownership of services  Service products are ephemeral and cannot be inventoried  Intangible elements dominate value creation  Greater involvement of customers in production process  Other people may form part of product experience  Greater variability in operational inputs and outputs  Many services are difficult for customers to evaluate  Time factor is more important--speed may be key  Delivery systems include electronic and physical channels Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1.3 .

4) Hi Salt Soft drinks CD Player Golf clubs New car Tailored clothing Furniture rental Fast food restaurant Plumbing repair Office cleaning Health club Airline flight Retail banking Insurance Weather forecast Intangible Elements Services Marketing 5/E Tangible Elements Lo Hi 1.Value Added by Tangible vs Intangible Elements in Goods and Services (Fig. 1.4 Slide ©2004 by Christopher Lovelock and Jochen Wirtz .

Important Differences Exist among Services Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1.5 .

recycling INTANGIBLE ACTS Mental Stimulus Processing e. haircutting. insurance. accounting. hospitals. retailing.Four Categories of Services Employing Different Underlying Processes (Fig.5) What is the Nature of the Service Act? TANGIBLE ACTS Who or What is the Direct Recipient of the Service? DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS People Processing e.g. research Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1.g. cleaning.g. 1.. psychotherapy Information Processing (directed at intangible assets) e. fitness centers Possession Processing e. consulting. airlines..g. legal. broadcasting.. education. restaurants hotels. banking. freight. landscaping.. repair.6 .

7 . especially hurt service quality  Faster  Simpler  More conveniently replacing people by machines. may cause dissatisfaction  New processes that improve efficiency by cutting costs may  Best new processes deliver benefits desired by customers  Customers may need to be educated about new procedures and how to use them Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1.Implications of Service Processes (1) Seeking Efficiency May Lower Satisfaction Processes determine how services are created/delivered— process change may affect customer satisfaction  Imposing new processes on customers.

avoid unwanted noises. toilets. parking. etc.” so:  Think of facility as a “stage” for service performance  Design process around customer  Choose convenient location  Create pleasing appearance.8 . Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1. smells  Consider customer needs--info.Implications of Service Processes: (2) Designing the Service Factory People-processing services require customers to visit the “service factory. food.

mental-stimulus processing. Business is conducted at arm’s length through . email.g. or information processing services. Service employees visit customer’s home or workplace 4. phone.Implications of Service Processes: (3) Evaluating Alternative Delivery Channels For possession-processing. Web site) Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1.g. alternatives include: 1. fax.physical channels (e. mail.9 . Customers come to a retail office 3. courier service) ..electronic channels (e. Customers come to the service factory 2..

productive capacity is wasted Potential solutions: . problems arise because service output can’t be stored: 1.Manage capacity Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 . If demand is high and exceeds supply.Manage demand .Implications of Service Processes: (4) Balancing Demand and Capacity When capacity to serve is limited and demand varies widely. If demand is low. business may be lost 2.10 .

and internet (e.Implications of Service Processes: (5) Applying Information Technology All services can benefit from IT. email. information.. but mental-stimulus processing and information-processing services have the most to gain:  Remote delivery of informationbased services “anywhere.g. anytime”  New service features through websites. reservations)  More opportunities for self-service  New types of services Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .11 .

technical skills or detract from service experience--need to manage customer behavior  Other customers may enhance Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .Implications of Service Processes: (6) Including People as Part of the Product Involvement in service delivery often entails contact with other people  Managers should be concerned about employees’ appearance. social skills.12 .

The Services Marketing Mix Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .13 .

Elements of The Services Marketing Mix: “7Ps” vs. the Traditional “4Ps” Rethinking the original 4Ps  Product elements  Place and time  Promotion and education  Price and other user outlays Adding Three New Elements  Physical environment  Process  People Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .14 .

15 . they buy a good night’s sleep)  Guarantees Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .The 7Ps: (1) Product Elements All Aspects of Service Performance that Create Value  Core product features—both tangible and intangible elements  Bundle of supplementary service elements  Performance levels relative to competition  Benefits delivered to customers (customers don’t buy a hotel room.

and How  Geographic locations served  Service schedules  Physical channels  Electronic channels  Customer control and convenience  Channel partners/intermediaries Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 . When.The 7Ps: (2) Place and Time Delivery Decisions: Where.16 .

advice  persuasive messages  customer education/training Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 . retail. customer service  sales promotion  publicity/PR  Imagery and recognition  branding  corporate design  Content  information. etc.17 . and Reminding Customers  Marketing communication tools  media elements (print. Persuading. outdoor. broadcast. Educating.)  personal selling. Internet.The 7Ps: (3) Promotion and Education Informing.

The 7Ps: (4) Price and Other User Outlays Marketers Must Recognize that Customer Outlays Involve More than the Price Paid to Seller Traditional Pricing Tasks  Selling price.g.)  Time expenditures. babysitting.etc. parking. premiums  Margins for intermediaries (if any)  Credit terms Identify and Minimize Other Costs Incurred by Users  Additional monetary costs associated with service usage (e. discounts..18 . phone. travel to service location. especially waiting  Unwanted mental and physical effort  Negative sensory experiences Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .

The 7Ps: (5) Physical Environment Designing the Servicescape and providing tangible evidence of service performances  Create and maintaining physical appearances  buildings/landscaping  interior design/furnishings  vehicles/equipment  staff grooming/clothing  sounds and smells  other tangibles  Select tangible metaphors for use in marketing communications 1 .19 Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E .

degree of automation Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .20 .7Ps: (6) Process Method and Sequence in Service Creation and Delivery  Design of activity flows  Number and sequence of actions for customers  Providers of value chain components  Nature of customer involvement  Role of contact personnel  Role of technology.

21 .The 7Ps: (7) People Managing the Human Side of the Enterprise  The right customer-contact employees performing tasks well  job design  recruiting/selection  training  motivation  evaluation/rewards  empowerment/teamwork  The right customers for the firm’s mission  fit well with product/processes/corporate goals  appreciate benefits and value offered  possess (or can be educated to have) needed skills (co-production)  firm is able to manage customer behavior Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 .

and HR Functions (Fig.Managing the 7Ps Requires Collaboration between Marketing.7) Operations Management Customers Marketing Management Human Resources Management Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 1 . 1.22 . Operations.

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