SERVICES MARKETING

Integrating Customer Focus Across

The Firm

Valarie A Zeithaml; Mary Jo Bitner; Dwayne

D Gremler and Ajay Pandit
6th Edition

1
SERVICES MARKETING

Introduction to Services

Chapter # 1

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What are Services???
Services are a combination of deeds,
processes, and performances which may
or may not produce final tangible
outcome and do not result to any
transfer of ownership.

3
 Introduction to Services???
Services are deeds, processes and performance

Intangible, but may have a tangible component

Generally produced and consumed at the same time

4
 Challenges to Services
Defining and improving quality
Communicating and testing new services
Communicating and maintaining a consistent image
Motivating and sustaining employee commitment
Coordinating marketing, operations and human
resource efforts
Setting prices
Standardization versus personalization

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 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
airlines, travel agencies, theme park
Others:
hair styling, pest control, plumbing, lawn
maintenance, counseling services, health club
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Tangibility Spectrum
All tangible goods have some intangible
services, while all services include some
tangible goods.
Hence some products are tangible
dominant, while some are intangible
dominant and there are some products
which fall in the middle.

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 Tangibility Spectrum
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics Fast-food
Outlets
Intangible
Dominant

Tangible

Dominant Fast-food
Outlets
Advertising
Agencies

Airlines
Investment
Management
Consulting
Teaching
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 Percent of U.S. Labor Force by
Industry
80
70
60
Percent of GDP
50
40
30
20
10
0 Services
1929 1948 1969 1977 1984 1996 Manufacturing
Mining & Agriculture
Year
Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and
July 1992, Table 6.4C; Eli Ginzberg and George J. Vojta, The Service Sector of the U.S.
Economy, Scientific American, 244,3 (1981): 31-39. 9
 Percent of U.S. Labor Force by
Industry
80
Percent of GDP

70
60
50
40
30
20
10
0
Services
1948 1959 1967 1977 1987 1996
Manufacturing
Year Mining & Agriculture

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Industries in Bangladesh

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 Sector wise
Contribution to GDP
(%)
Primary Secondary Tertiary
Year Sector Sector Sector

Bangladesh
1990 38% 18% 44%

Bangladesh
2002 23% 26% 51%

Bangladesh
2010 20% 18% 62%
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 Sector wise Contribution to GDP (%)
70%

60%

50%

40%
Bangladesh 1990
Bangladesh 2002
30% Bangladesh 2010

20%

10%

0%
Primary Sector Secondary Sector Tertiary Sector

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Sector wise Contribution to GDP (%)
Primary Sector

40%

35%

30%

25%
Primary Sector
20%

15%

10%

5%

0%
Bangladesh 1990 Bangladesh 2002 Bangladesh 2010

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 Sector wise Contribution to GDP (%)
Secondary Sector

30%

25%

20%

Secondary Sector
15%

10%

5%

0%
Bangladesh 1990 Bangladesh 2002 Bangladesh 2010

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Sector wise Contribution to GDP (%)
Tertiary Sector

70%

60%

50%

40% Tertiary Sector

30%

20%

10%

0%
Bangladesh 1990 Bangladesh 2002 Bangladesh 2010

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Why Services Marketing???
The growth of the services industries across
the world.
Services marketing is different.
Because of the nature of the services, it
requires special focus.
Shift in the paradigm of marketing studies
is required due to the very nature of the
services concerns.

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 Differences in Goods &
Services
Intangibility: Because services are performances,
or actions rather than objects, they cannot be seen, felt,
tasted or touched in the same manner that we can
sense tangible goods.
Resulting marketing implications: Intangibility presents several
marketing challenges:

a) Services cannot be inventoried therefore difficult to manage

fluctuation of demand,
b) Services cannot be easily patented and new service concepts
can easily be copied
c) Services cannot be easily displayed or communicated to the
customers, therefore the quality of the services is difficult to
demonstrate.
d) Pricing is difficult.
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 Differences in Goods &
Services
Heterogeneity: Because services are
performances, frequently produced by humans, no two
services will be precisely alike. Again, no two customers
are precisely alike.
Service delivery and customer satisfaction depend
on employee actions
Service quality depends on many uncontrollable
factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted

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 Differences in Goods &
Services
Simultaneous Production and Consumption:
whereas most goods are produced first and then sold and
consumed, most services are sold first and then produced
and consumed simultaneously. Because of the
simultaneous production and consumption service
producers find themselves playing a role of the product
itself and as an essential ingredient in the service
experience for the consumers.
Customers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
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 Differences in Goods &
Services
Perishability: Refers to the fact that services
cannot be saved, stored, resold, or returned.

It is difficult to synchronize supply and demand with

services
Services cannot be returned or resold

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The Services Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing
enabling the promise setting the promise

Employees Interactive Marketing Customers

delivering the promise

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler 22
 Services Marketing Mix:
7 Ps of Marketing
Traditional Marketing Mix
Expanded Mix for Services: 7 Ps
Building Customer Relationships Through
People, Processes, and Physical Evidence
Ways to Use the 7 Ps

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Expanded Mix for Services --
the 7 Ps
Product
Price
Place
Promotion
People
Process
Physical Evidence
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Expanded Marketing Mix for Services

People: All human actors who play a part in service delivery

and thus influence the buyers perceptions: namely the firms
personnel, the customers and other customers in the service
environment.
Process: The actual procedures, mechanisms, and flow of
activities by which the service is delivered the service delivery
and operating systems.
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.
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Expanded Marketing Mix for Services
PRODUCT PLACE PROMOTION PRICE
Physical good Channel type Promotion Flexibility
features blend

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms
Packaging Outlet location Sales Differentiation
promotion
Warranties Transportation Publicity Allowances
Product lines Storage
Branding

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Expanded Marketing Mix for Services
PEOPLE PHYSICAL PROCESS
EVIDENCE
Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicating Signage Level of customer

culture and values involvement

Employee research Employee dress

Other tangibles

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Expanded Marketing Mix for Services

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 Ways to use the 7Ps
Overall Strategic
Assessment
How effective is a firms
services marketing mix?
Is the mix well-aligned with
overall vision and strategy?
What are the strengths and
weaknesses in terms of the
7 Ps?
Specific Service
Implementation
Who is the customer?
What is the service?
How effectively does the
services marketing mix for a
service communicate its
benefits and quality?
What changes/
improvements are needed?
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The Beginning of the Chapters

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