CHAPTER 1-Nature of Services_0688c20a4924e46fd6e3884e05b22ba9.ppt

Essentials of Services Marketing, 2nd Edition Instructor Supplements.

[Audio] Services marketing involves more than just selling products. It's about creating experiences that meet customers' needs and exceed their expectations. In this field, we focus on intangible offerings like advice, guidance, and support. These services can be delivered through various channels, such as face-to-face interactions, phone calls, emails, or even online platforms. The key is to understand what customers value most and tailor our services accordingly. By doing so, we can build strong relationships with them and drive loyalty. That's the essence of services marketing..

[Audio] Services are all around us, from the moment we wake up until we go to bed. We use them every day, often without even realizing it. Powerful forces are transforming service markets, making them more complex and competitive than ever before. As marketers, understanding these changes is crucial if we want to stay ahead of the curve. Rising consumer expectations, greater affluence, personal outsourcing, increased desire for buying experiences versus things, rising consumer ownership of high-tech equipment, easier access to more information, migration, and growing but aging population are some of the key factors driving this transformation. More companies are operating on a transnational basis, there is increased international travel, international mergers and alliances, offshoring of customer service, and foreign competitors invading domestic markets. The push to increase shareholder value, emphasis on productivity and cost savings, manufacturers adding value through service and selling services, more strategic alliances, focus on quality and customer satisfaction, growth of franchising, and marketing emphasis by nonprofits are also significant trends shaping the service economy..

4 1.1 Why study services?.

[Audio] Services dominate most economies and are growing rapidly. They account for more than 60% of GDP worldwide. Almost all economies have a substantial service sector. Most new employment is provided by services. The strongest growth area for marketing is also in services. Understanding services offers you a personal competitive advantage..

[Audio] The service sector has undergone significant changes over the past few decades due to the rise of technology, globalization, and shifting consumer preferences. These powerful forces are transforming the way services are marketed, delivered, and consumed. It is crucial for marketers to comprehend these trends and adjust their strategies accordingly..

[Audio] The powerful forces transforming the service economy are social advances in business, changes in information technology, trends in government policies, globalization, and new markets and product categories. These forces have led to an increase in demand for services, more intense competition, and innovation in service products and delivery systems. As a result, customers now have more choices and exercise greater power. To succeed in this environment, businesses must understand their customers and competitors, develop viable business models, create value for both customers and the firm, and place increased emphasis on services marketing and management..

[Audio] The service economy is being transformed by powerful forces, including advances in business, changes in information technology, trends in government policies, globalization, and new regulations. Social advancements have led to increased awareness about customer protection, employee welfare, and environmental sustainability. As a result, businesses are adapting to these changes by adopting new practices and technologies. This shift has far-reaching implications for the way we market and deliver services..

[Audio] The service economy is undergoing significant transformations, driven by powerful forces such as advances in business, changes in IT trends, government policies, globalization, social media, rising consumer expectations, greater affluence, personal outsourcing, increased desire for buying experiences over things, easier access to more information, migration, and a growing but aging population. These transformative forces are crucial to understanding how they impact our services marketing strategies..

[Audio] The powerful forces transforming service markets include social advances in business changes, IT trends, government policies, globalization, push to increase shareholder value, emphasis on productivity and cost savings, manufacturers adding value through service and selling services, more strategic alliances, focus on quality and customer satisfaction, and growth of franchising, as well as marketing emphasis by non-profits. These forces have led to significant changes in the way businesses operate and interact with customers..

[Audio] The powerful forces transforming service markets include social advancements in business, rapid growth of technology, government policies, and globalization. These forces have led to significant changes in the way businesses operate, such as increased use of IT trends, greater accessibility of the internet, and the development of faster and more powerful software. Additionally, the digitization of text, graphics, audio, and video has revolutionized the way we consume and provide services, enhancing the customer experience and making it easier for businesses to operate efficiently..

[Audio] The forces transforming the service economy are numerous and varied. Social advances have led to changes in business practices, with technology trends playing a significant role. Governments have implemented policies promoting globalization, leading to more companies operating on a transnational basis. This has resulted in increased international travel, international mergers and alliances, and even the offshoring of customer service. Furthermore, foreign competitors are now invading domestic markets. These powerful forces are reshaping the service market landscape..

13 1.3 What are services?.

[Audio] Services involve a form of rental, where we offer benefits to customers without transferring ownership. This can include renting out goods, such as cars or apartments. When it comes to marketing these types of services, there are some key differences compared to selling physical products. We will explore these differences further in this presentation..

[Audio] Services can be categorized into four broad categories within the non-ownership framework. These categories are people processing, intangible products, rental services, and access to and usage of systems and shared physical environments. Two or more of these categories may be combined to provide a service. For example, a hotel room is a combination of people processing and rental services. Similarly, a consulting firm provides people processing, while a software company offers access to and usage of systems and shared physical environments through its network..

[Audio] Services are economic activities offered by one party to another, where one party provides time-based performances to bring about desired results. In return, customers provide money, time, and effort, expecting to gain value from access to various resources such as goods, labor, facilities, environments, professional skills, networks, and systems. Customers typically do not own the physical elements involved in these transactions..

[Audio] Services can be categorized into four broad groups. Goods-based services are closely tied to the production and sale of physical products. Maintenance and repair services provided by manufacturers to their customers are examples of this type of service. People-based services involve direct interaction between the service provider and the customer. Healthcare services, education, and consulting are all examples of this type of service. Task-based services focus on completing specific tasks or projects for the customer. Accounting, law, and architecture are all examples of this type of service. Information-based services provide access to knowledge, data, or entertainment. News, music, and software downloads are all examples of this type of service..

[Audio] Services can be categorized into four broad groups based on the nature of the service act and the direct recipient of the service. These categories include people processing, possession processing, mental stimulus processing, and information processing..

[Audio] Services can be categorized into four broad groups. Goods-based services are closely tied to the production and sale of physical products. Consulting services provided by companies that manufacture machinery or equipment are examples of this type of service. People-based services involve interactions between individuals, including education, healthcare, and financial planning. Task-based services focus on completing specific tasks, such as travel agency services or home maintenance services. Information-based services provide access to knowledge, data, or entertainment, including online news sources or streaming music platforms..

[Audio] Customers must physically enter the service factory and cooperate actively with the service operation. Managers should consider the process and output from the customer's perspective, identifying the benefits created and non-financial costs such as time, mental, and physical effort..

[Audio] Customers who receive possession-based services are typically less involved than those who receive processing-based services. In fact, their involvement may be limited to simply dropping off the possession, such as when you take your car to a repair shop and hand over the keys. The production and consumption of these services are also separate, meaning that the service provider produces the service independently of the customer's presence. For instance, a hotel room is prepared regardless of whether the guest is present or not..

[Audio] Services marketing involves four broad categories of services, one of which is mental stimulus processing. This type of service requires ethical standards from suppliers because customers who rely on these services may be vulnerable to manipulation. Since physical presence is not necessary, core content is based on information. This means that services can be inventoried, making it easier to understand and analyze them..

[Audio] Services can be categorized into four broad types. One of these categories is Information Processing. In this type of service, information is the most intangible form of service output. This output may be transformed into enduring forms of service output. Furthermore, the line between information processing and mental stimulus processing may be blurred..

[Audio] Services can be intangible, meaning they cannot be seen, touched, or tasted. They are often experienced through interactions with people, technology, or processes. This characteristic sets them apart from physical products, which can be held and examined. For instance, when you visit a doctor's office, you may not see any tangible product being produced, but you receive a service - medical care. Similarly, when you use a bank's online platform, you interact with digital interfaces, but no physical product is exchanged. The intangibility of services necessitates unique marketing strategies that focus on creating emotional connections with customers and building trust through experiences..

[Audio] Services marketing is a unique field that requires a deep understanding of the customer's needs and preferences. The key challenge in services marketing is to create value for the customer through the delivery of high-quality services. This can be achieved by identifying the customer's needs and preferences, designing services that meet those needs, and delivering those services in a way that exceeds the customer's expectations. The importance of understanding the customer's needs and preferences cannot be overstated. By doing so, service providers can tailor their services to meet the specific needs of each customer, increasing the likelihood of satisfaction and loyalty. Furthermore, understanding the customer's needs and preferences allows service providers to identify opportunities to innovate and improve their services, leading to increased competitiveness and profitability..

[Audio] Services have five key characteristics that distinguish them from tangible goods. These characteristics include intangibility, inseparability, variability, perishability, and heterogeneity. We can analyze the nature of a service by examining these characteristics. For instance, education, consulting, and legal services are intangible because they cannot be physically possessed. Similarly, services such as haircuts, live performances, and medical check-ups are inseparable because they are produced and consumed simultaneously. These characteristics enable us to comprehend the unique aspects of services and how they diverge from products..

[Audio] Services are highly variable because they depend on who provides them, when, where, and how. Standardization is challenging due to human involvement. For example, the quality of customer service at a restaurant may vary depending on the waiter. Services cannot be stored for future use. If a service is not consumed at the moment it is offered, it is lost. An airline seat left empty on a flight or an unfilled hotel room represents a loss of potential revenue..

[Audio] When customers consume services, they do not own them afterwards. Instead, they experience or benefit from them. For instance, when renting a car, subscribing to Netflix, or attending a training program, customers do not retain ownership once the service has been consumed. They simply enjoy the benefits or results of the service. Another key aspect of services marketing is high customer involvement. Customers play an active role in the service process, and their perception of quality hinges on their own expectations and experiences. Businesses must carefully manage these expectations to ensure a positive outcome. For example, in a gym setting, the overall experience depends on both the facilities provided by the business and the customer's own efforts and dedication. By understanding these fundamental aspects of services marketing, businesses can better tailor their offerings to meet the unique needs and preferences of their customers..

[Audio] Service marketing focuses on building long-term customer relationships by emphasizing customer satisfaction, loyalty programs, and personalized services. For instance, banks, airlines, and hotels use loyalty programs to retain customers. Additionally, word-of-mouth and reputation-driven service marketing relies heavily on customer reviews, testimonials, and social proof. People often choose hospitals, hotels, and restaurants based on online reviews and ratings..

[Audio] Services marketing involves more than just selling products. It is about creating memorable experiences for customers. To achieve this, we need to consider seven key elements, often referred to as the 7 Ps of services marketing. These are: Product - what we offer to our customers; Process - how we deliver our product or service; People - who provides the service; Physical Evidence - the environment where the service takes place; Price - the cost of the service; Promotion - how we communicate with our customers; and Place - where the service is delivered. By considering these seven Ps, we can create a comprehensive strategy for delivering exceptional customer experiences. This is essential for building loyalty and driving business growth..

[Audio] The 7 Ps of services marketing refer to the seven key elements that marketers use to create a unique service offering. Product, place, price, promotion, process, physical environment, and people each play a crucial role in shaping the customer's experience and perception of the service. By understanding how each of these elements interacts with one another, marketers can develop a comprehensive strategy for delivering a high-quality service that meets the needs and expectations of their customers..

[Audio] Services marketing requires understanding how customers perceive and evaluate services, which can differ significantly from evaluating products. Unlike tangible products, services are often intangible and may necessitate more interaction with the provider. For instance, when selecting a restaurant, customers consider factors like food quality, service speed, and ambiance, whereas when purchasing a product, they typically focus on features, price, and brand reputation. Recognizing these distinctions is vital for crafting effective marketing strategies for services..

[Audio] Services marketing requires a framework to develop effective strategies. The framework consists of three key components: understanding the customer, creating value, and delivering the service. Understanding the customer involves gathering information about their needs, wants, and preferences. Creating value means identifying opportunities to differentiate the service from competitors and providing unique benefits to customers. Delivering the service refers to the actual provision of the service, including the people, processes, and technology involved. By considering these three components, marketers can develop a comprehensive strategy that meets the needs of both the organization and the customer..

[Audio] Services marketing requires a framework to guide the development of effective strategies. This framework consists of three key components: understanding the customer, creating value, and delivering value. Understanding the customer involves identifying their needs, wants, and expectations. Creating value means developing unique benefits that meet those needs, wants, and expectations. Delivering value ensures that these benefits are delivered consistently and reliably. By integrating these three components, organizations can develop effective services marketing strategies that drive business results..

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