SERVICES MARKETING

Kapil R. Tuli
Associate Professor of Marketing
Lee Kong Chian School of Business
Singapore Management University

Some Rules

Go Beyond the Book and create a MESS

(Mental Engagement Stimulation & Simulation)

Participate and enjoy this class

(More than a century of cumulative experience)

Listen & Respect your peers

In Class on Time

Be prepared, read the materials

Avoid cell phones and laptops

Service Industries

Health Care

Professional Services

restaurant, hotel/motel, bed & breakfast

ski resort, rafting

Travel

banking, investment advising, insurance

Hospitality

accounting, legal, architectural

Financial Services

hospital, medical practice, dentistry, eye care

airline, travel agency, theme park

Others

hair styling, pest control, plumbing, lawn maintenance, counseling services, health
club, interior design
1-3

Services are an Increasing Important Sector

Source: Park and Shin (2012), ADB Working Paper Series No. 322

Copyright: Dr. Kapil R. 1-4

Tuli

Do you see a Trend?

5

Source: Park and Shin (2012), ADB Working Paper Series No. 322

Copyright: Dr. Kapil R. Tuli

Do you see a Trend?

6

Source: Park and Shin (2012), ADB Working Paper Series No. 322

Copyright: Dr. Kapil R. Tuli

What About the Singapore Economy?

GDP AT 2010 MARKET PRICES

Goods Producing Industries
Manufacturing
Construction
Utilities
1
Other Goods Industries
Services Producing Industries
Wholesale & Retail Trade
Transportation & Storage
Accommodation & Food Services
Information & Communications
Finance & Insurance
Business Services
Other Services Industries
Ownership of Dwellings
Gross Value Added At Basic Prices
Add: Taxes on Products
Contribution of Services

2010

2011

2012
2013
Million Dollars

322,361
84,230
65,040
14,221
4,851
118
208,683
58,449
25,423
5,921
11,073
33,154
42,119
32,544
11,514
304,428
17,933
65%

341,886
90,109
70,118
14,923
4,944
123
222,564
62,619
26,773
6,561
11,935
36,184
44,424
34,069
11,649
324,322
17,565
65%

350,446
91,712
70,342
16,201
5,044
124
228,717
62,545
28,157
6,713
12,655
36,837
46,847
34,963
11,958
332,386
18,060
65%

363,942
93,983
71,512
17,194
5,155
122
240,929
66,355
29,059
7,015
13,200
40,802
48,867
35,632
12,237
347,149
16,793
66%

2014
I

2014
II

91,696
23,750
18,081
4,378
1,258
32
60,661
16,331
7,222
1,779
3,328
10,617
12,320
9,064
3,145
87,556
4,140
66%

93,690
24,226
18,542
4,322
1,332
30
62,060
16,956
7,437
1,756
3,424
10,912
12,452
9,123
3,147
89,432
4,258
66%

Source: http://www.singstat.gov.sg/statistics/browse_by_theme/national_accounts.html

Manufacturers are Entering Into Services

8

Boeing

A Priori, How Do We Evaluate Goods/ Services?

1-9

Offering Services: Challenges & Opportunities

10

Challenges

Implications

Opportunities

Intangibility

Display, Communication, Pricing, and

Inventory.

Differentiate on tangibles.
(A380, Toast Box, Kopitiam)

Heterogeneity

Employees are service, Uncontrollable

factors play a big role

Strive to deliver a uniform

experience.
(McDonalds, Starbucks, Ya
Kun Kaya Toast)

Simultaneity

Customers participate in production,

Affect each other, Mass production is
difficult

Leverage customer
participation.
(Salad Stop, Marche,
Hibachi Grill)

Perishability

Supply & demand synchronization

difficult

Leverage perishability as a
business model
(Scoot, Tiger Air, Priceline)

Marketing Mix for Services

1-11

Dual Lenses View

12

Product

Intangibility
An Experience

Processes

Perishability
Short to
No Inventory

Service
Challenges

Price

Heterogeneity
Taste &
People

Product
Service
Excellence
Excellence
Physical

Place

Simultaneity
Buy & Consume

People

Promotion

How do we overcome the challenges by utilizing the critical assets?

Copyright: Dr. Kapil R. Tuli

Course Structure
Global, Macro-Economic, & Competitive Forces
Gap 1

WITHIN FIRM CONTROL

Customer Expectations

Gap 2
Listen to Customers

Gap 3
Design & Standardize

Customer Perceptions

Gap 4
Deliver/Perform

Customer Satisfaction
Financial Performance

Gap 5
Communicate