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Service Industries 1 summary
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Week 1 Introduction to the service industryDriving forces: The importance of the service industry is growing. The forces the lead to an increase
in demand for services:
Increasing consumer incomes.
Increasing demographic and sociological changes.
Increasing professionalism in companies and technological developments.
Industry division in sectors:
1. Primary sector: Farming, forestry, and fishing.
2. Secondary sector: Industrial sector: gas, mining, manufacturing, electricity, water,
construction.
3. Tertiary sector: Service sector.
Categories of services:
Distributive: Transportation, communication, and trade.
Producer: Investment banking, insurance engineering, accounting, bookkeeping, and legal
services.
Social: Health care, education, non-profit organizations, and government agencies.
Personal services: Services that are personalized. Tourism, recreation, domestic services. For
example: Netflix. My Netflix is different than your Netflix.
A couple of definitions of service:
Service: A service is an activity, benefit, or satisfaction offered for sale that is essentially intangible
and does not result in the ownership of anything.
Service: Services are economic activities performed by one party to another. Often time-based, these
performances bring about desired results to recipients, objects, or other assets. In exchange for
money, time, effort, service customers expect value from access to labor, skills, expertise, goods,
facilities, networks, and systems.
Service: All those economic activities that are intangible and imply an interaction to be realized
between the service provider and consumer.
1. Core product: What are the benefits that our product is giving to our customers. Which
needs are fulfilled by the product? For example A phone gives you communication. A car
gives you transport.
2. Actual product: The physical good or delivered service that you actually get. What is the
actual product? Features, design, packaging, quality level, brand name.
3. Augmented product: Extra services and benefits beyond the core and actual product.
Warranty, delivery.
,Characteristics of services:
Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before purchase.
Services may or may not be attached to a physical product.
Heterogeneity/ variability: The
quality of the service depends on who provides it and when, where, and how. Service
provider, the customer, the surroundings.
Simultaneity/ inseparability: The services cannot be separated from their providers. The
service is consumed at the same time it is provided.
Perishability: Services cannot be stored for later sale or use.
Differences between physical goods and services:
Consuming a physical
product means making use of the products itself.
Consuming a service means undergoing the process and the final result. That’s the
inseparability factor.
A service can be added to a physical product (augmented).
Wrap up:
A service is an intangible product offered by organizations to serve needs or to satisfy wants,
characterized by simultaneous production and consumption.
Resulting in:
Simultaneity: demand and supply must meet.
Heterogeneity: quality of performance is not constant.
Perishability: stocking is impossible.’
, No ownership
Week 2 Service marketing mix 3 additional P’s
Service marketing mix:
Price
Product (service)
Place
Promotion
Process
Physical evidence
People
Process: The systems used to deliver the service.
Variability in the process: The service provider, (behavior of the) customer, and the surroundings
impact the quality of the service.
Customers variability in the process:
Arrival variability: Customers arrive at the place where the service is when they desire the
service. In some cases, this can be controlled (hotel reservation system). In but some cases it
can’t (emergency medical system). The arrival time can influence the quality of the service.
For example, in rush hours it is way busier than at other times. This influences the quality of
the service.
Request variability: Customer demand and expect different service outcomes. What you
request from the provider. For example what kind of vacation you want, what kind of meal.
One person wants vegan food and the other wants a meat plate. The provider limits its
offerings to reduce request variability.
Capability variability: Customers differ in their capabilities to perform tasks in the service
process. For example: booking appointments online. What customers are capable of. For
example, not everyone can use iPhone. Not everyone can speak a certain language.
Effort variability: Customers can differ in the amount of effort they want to apply to these
tasks. For example: Pelikaan and Basic-Fit. How much do you want to pay for a sports
abonnement?
Subjective preference variability: People have different values and expectations. They like
different things. Customers vary in their opinion about what it means to be served well. For
example, some students like to listen to the teacher explaining the book, and others like to
study for their self’s.
Physical evidence (environment): Services are intangible. Customers often use the tangible aspects
of the service to guide their evaluation of their meaning about the service, how they perceive the
quality of the service. For example the beds in a hotel room. A comfortable big bed provided more
quality to the service than a small uncomfortable bed.
People: Services are inseparable/ simultaneity. That means that the service cannot be separated
from the provider. Services are provided by people. Those people influence the services. The
difference between services can be limited by standardization.
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