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BMAR211 - SU1
Transcript of BMAR211 - SU1
Overview of services marketing
Services & profitability
Study Unit 1 (Chapter 1)
Traditional marketing mix
All hard work brings a profit,
but mere talk leads only to poverty.
Lack of ownership
A service can be a deed, a process or performances...
Any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
Providers of tangible products have a service element
Many organisations do not provide a tangible product with their service offering
South African service sector = wide variety (see Table 1.1)
Major role players include:
Other components of the service sector:
Legal, educational, health, military, employment, credit, communications, transportation and information services.
Services as part of the GDP (Page 4 - 5)
Why services marketing is different?
Lack of ownership
Five characteristics that distinguishes a service from a physical product:
Products can be tasted, felt, smelled, stored or seen prior to purchasing. The same cannot be said of a service.
Difficult to patent services.
Difficult to demonstrate.
Pricing is a more complicated
Branding is challenging
Services are perceived as a riskier purchase
This can be overcome by creating a strong image and brand recognition that can reduce the level of risk perceived by potential customers.
There is a interconnectivity between the service provider delivering (producing) the service, the customer involved receiving (consuming)
Customer presence / involvement
Heterogeneity refers to the variations in consistency that may occur between different service transactions.
As a result of human involvement in service delivery
Franchises - achieving consistency
Training, recipes, manuals
Control processes etc.
Demand can also not be stored.
Services cannot be stored in a store room and used later.
Unlike buying a tangible product, services cannot be owned.
E.g. The seat on an aeroplane remains the property of the airline to be rented out to another passenger on the next flight.
from the customer's point of view...
Service value mix
Classification of services
This refers to the procedures, mechanisms, and flow of activities and operations by which the service is delivered.
The focus of Chapter 7.
The environment in which the services are delivered and where customer interaction during the service encounter takes place.
The focus of Chapter 11.
Any tangible component that facilitates performance or communication of the service.
Facility design, equipment, signage, corporate dress, annual reports, guarantees, business cards and financial statements.
It concerns all the people that play a part in the service delivery process and who can influence the customers’ perceptions.
All aspects of employee involvement in service delivery.
It includes managing interaction with customers, employee recruitment, training, motivation, rewards and teamwork.
The focus of Chapter 8.
Exploiting customer ignorance:
Complexity and fairness:
Customers paying for work that has not been done, or not done properly.
Service providers omitting hidden costs information
Transparency when costing structures are complex
Fairness is an outcome of just treatment, equity and impartiality, and customers should be treated equitably.
There are critical linkages between
internal service quality
value of services
provided to the customer and ultimately,
amount of output
amount of inputs
Productivity can be defined as:
The efficiency in the process of transforming input resources in a service or manufacturing process into customer value.
, also called cost efficiency, is how efficiently outputs can be produced using a given amount of production resources.
can be considered as how efficiently and effectively perceived quality can be produced.
Effectiveness refers to ‘doing the right thing’, while efficiency refers to ‘doing the thing right’.
Managing productivity must lead to profit efficiency or economic results (output).
Drivers of productivity:
Productivity in service organisations
The output of the service process is twofold:
quantity of output (volume)
quality of output (outcome and process).
The quantity delivered is dependent on demand of the customers:
Demand = supply = capacity efficiency is optimal.
If there is excess demand, capacity utilisation is full (may be a negative impact on the level of output).
If demand is lower than output then the capacity is underutilised.
Measuring service productivity
Costs of producing this service
Revenues from a given service
Service productivity =
There is an interrelationship between:
Customer Participation and
Automated (car washes, vending machines)
Unskilled operators (taxis, cinemas)
Skilled operators (airline pilots)
Unskilled labour (security guards)
Skilled labour (electricians, plumbers)
Professionals (accountants, medical doctors, architects)
See page 13 - 17