The Services Marketing Mix

Lecture  10:  Services  Marketing  

Services  

activities,  performances  of  benefits  that  are  offered  for  sale  of  which  involve  neither   an  exchange  of  tangible  goods  nor  a  transfer  of  title    

Service  

act  of  delivering  a  product  involving  human,  intellectual  or  mechanical  activity  that   adds  value  to  the  product  

Consumer  Services  

 

• Purchased  by  individual  consumer  or  households  for  own  private  consumption  

• During  periods  of  economic  growth  demand  for  services  increase  and  vice  versa  

• Technological  change  =  opportunity  for  service  providers  (e.g.  eBay)   Examples  include:  airline  travel,  banking  finance,  hairdressing,  and  restaurants  

Business-­‐to-­‐Business  Services  

 

• Purchased  by  individuals  and  organizations  for  use  in  production  of  other  products  or  in   daily  business  operations  

The  Services  Marketing  Mix   Intangibility  

 

Services  cannot  be  easily  perceived  by  five  physical  senses,  increasing  customer  feelings  of   uncertainty  and  risk  

Reducing  such  anxiety:  

• Use  of  tangible  cue  e.g.  logos,  uniforms  

• Use  of  guarantees,  testimonials  and  word-­‐of-­‐mouth  

Inseparability  

(simultaneity)    

Characteristic  of  being  produced  and  consumed  simultaneously  –  buyers  and  sellers  of  services   usually  ‘co-­‐producers’  of  service  

• Technical  skill  and  customer  service  delivery  concerns  –  promote  via  personal  selling  

• Delivering  services  face-­‐to  face  promotes  trust  

Heterogeneity  

 

Inevitable,  but  avoidable,  variation  in  quality  in  delivery  of  service  product   Key  Strategies  to  overcome  heterogeneity:  

• Develop  service  delivery  systems  

• Manage  customer  expectations  

• Invest  heavily  in  staff  training    

Perishability  

   

The  inability  to  store  service  for  use  at  a  later  date  –  in  circumstances  where  demand  fluctuates   over  time,  flexible  pricing  can  be  used    

Supply  and  demand  can  be  balanced  by:  

• Stimulating  demand  e.g.  cheaper  Tuesdays  

• Restricting  demand  

• Increasing  or  decreasing  supply  capacity      

   

The  Extended  Services  Marketing  Mix  

1.

Product  

2.

Place  

3.

Price  

4.

Promotion  

5.

Process  

6.

Physical  Evidence  

7.

People  

People

 

Creating  and  delivering  service  and  affecting  value  for  customer  as  they  are  directly  involved  in   the  service  experience.  

Staff  –  most  controllable  factor  in  service  delivery  and  must  be:  

• Technically  competent  

• Able  to  deliver  high  standard    

• Able  to  promote  products  through  personal  selling  

Process

 

All  systems  and  procedures  used  to  create  communicate,  deliver  and  exchange  offering.  Process   should  result  in  performance  that  exceeds  customer  expectation.  

Functional  Expectations:  Expectations  of  the  technical  delivery  of  the  service  transaction   Customer  Service  Expectations:  Relate  to  service  experience    

Physical  Evidence

 

Tangible  cues  that  can  be  used  as  means  to  evaluate  service  quality  prior  to  purchase  –  physical   environment  includes  architectural  design,  floor  layout,  furniture,  décor,  shop  or  office  fittings,   colours,  background  music  and  smell  

   

Services  Marketing  Challenges  

Key  issues  in  marketing  of  services:  

1. Achieving  sustainable  differential  advantage  in  marketing  services   2. Managing  profitable  customer  relationships  

3. Delivering  consistently  high  levels  of  customer  service  

Managing  Differentiation

 services  cannot  be  protected  by  legal  patents  and  can  be  more   readily  mimicked  by  competitors  –  competitors  will  immediately  replicate  innovations  

• Developing  and  maintaining  profitable  customer  relationships  is  key  to  long  term   survival  

• Professional  service  providers  typically  provide  standardized  service  offering    

Churn  

rate  of  customer  turnover  –  many  customers  will  never  be  profitable  and  contracts   reduce  customer  churn  by  locking  them  in  

Search  qualities  

can  be  evaluated  prior  to  purchase,  such  as  colour,  size  and  smell  

Experience  qualities

 are  evaluated  during  and  after  service  delivery    

Delivering  consistent  customer  service  quality  requires:  

1. Understanding  customers;  expectations   2. Establishing  service  quality  standards  

3. Managing  customers’  service  quality  standards   4. Managing  customers’  service  expectations   5. Measuring  employee  performance  

Checklist  of  service  quality   Dimension  of  

Service  Quality   Explanation   Evaluation  Criteria  

1.  Reliability  

Consistency  and  

dependability   • Began  on  time  

• Finished  on  time  

• Billed  correctly  

2.  Tangibles  

Physical  Evidence   • Condition  of  premises  

• Presentation  of  service  provider  

• Condition  of  equipment  

3.  Responsiveness  

Willing  and  able  to  provide  

service   • Enquiries  responded  to  

• Service  provided  promptly  

• Accommodated  urgent  needs  

4.  Assurance  

Trust  and  confidence  in  

service  provider   • Demonstrated  knowledge  and  skills  

• Reputation  

• Personal  manner  of  service  provider  

5.  Empathy  

Care  and  attentiveness   • Listened  to  needs  

• Cared  about  customer’  interests  

• Provided  personalized  service  

 

Not  for  Profit  Marketing  

Marketing  activities  of  individuals  and  organizations  designed  to   achieve  objectives  other  than  generating  profits  

Two  broad  categories:  

1. Activities  of  not-­‐for-­‐profit  organizations  such  as  The  Smith  Family  

‘Social  Marketing’  such  as  anti  smoking  campaigns