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What is service marketing?


Graeme Lindsay

on 13 March 2013

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Transcript of What is service marketing?

What is Service Marketing? a. Understanding the term services
b. Appreciate distinguishing characteristics of services
c. Differences between marketing of goods and services
d. Issues and problem of producing a service ‘live’
e. The nature of the producer-consumer encounter
f. Service failure and methods by which service firms seek to recover from
failure The production of an essentially
intangible benefit, either in its own
right or as a significant element of a
tangible product, which through
some form of exchange, satisfies
an identified need The Growth of Service Based economies Eurostat Data Estonia
55% employed in services
Services accounted for 60% of ‘value added'.
Growth of Sector 1995-2005
32% of value added
12% of employment Close correlation between economic development
and strength of service sector.
UK 75% France 76%, Estonia 71%, Romania 50%
Lowest levels
Mexico 62 % Bangladesh 54% Ethiopia 10%, Uganda 50% Cause and Effect
Do services create growth or are they a product of growth?
Agriculture relies on services such as distribution, retailing
Services such as holidays, communication, and entertainment
are products of economic wealth. Measuring Services Production
Methods Distinguishing Features of a Service

•Non ownership. Intangibility Intangibility
A service is an abstraction.

Problem assessing the ‘quality ‘ of service can
only take place after it has been delivered. Level of Tangibility
Three principle sources
•Tangible goods included in the offer (food)
•Physical environment (the restaurant)
•Tangible evidence of service (the cooks) Implications Customer
•Lack of physical evidence increases perceived risk
•Difficulty in evaluating competing services
•Customers place greater emphasis on personal information sources
•Us pricing to assess quality Implications Management
•Reduce service complexity
•Stressing tangible cues
•Facilitating word of mouth
•Focussing on service ‘quality’ Inseparability Production and consumption of goods are two separate activities
Services production and consumption have to meet in some way. Implications for Customers
•Being co-producers of services
•Often being co-producers with other consumers
•Often having to travel to point of service production Implications for Management
•Attempts to separate production and consumption
•Management of consumer-producer interaction
•Improvement in service delivery systems. Variability The extent to which production performance varies unintentionally from a norm in terms of both outcomes and production processes.
The extent to which a service can be deliberately customised to meet the specific needs of individual customers. •Services are produced live
•Often no chance to correct mistakes before consumption
•Often reliant on fallible human inputs
•May be difficult to blueprint service process Leads to
•High levels of perceived risk for buyers
•Difficulty in presenting an image of consistent quality
•Difficulty in developing strong brand Perishability •Inability to store services
•Fluctuating patterns of demand
•Short-term supply inelasticity Leads to

•Problems where demand pattern is difficult to predict
•Requirement for JIT production of services
•Poor management can create congestion at peak periods and unused capacity at off-peak periods Ownership Relates to intangibility and perishability

No transfer of ownership

Right to access service Status of the Service in the total product offer.

•Pure Service
•Added Value
•Facilitate Availability Extent of Customer Involvement

•High involvement creates higher levels of risk Pattern of service delivery

•Continuous – Internet
•Discrete series of events
•On-going People-based vs Equipment-based services
•Different Management techniques Process vs Outcome-based services
•Beauty treatment vs Car repair service High-knowledge vs low-knowledge
•Accountants, Medical, Legal advisers vs Customer service Significance to purchaser

•High value vs low value Analysis of service offer

•Core Product
•Tangible Product
•Augmented Product Pure Goods: Pure Services

Main distinction between

•A service delivered directly
•Indirectly via the purchase of a good.
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