Class notes
Services Marketing Notes
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Detailed lecture notes for Marketing students who are taking a module in Services Marketing
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Services MarketingLecture 1
Introduction
Overall Module Aims
o … the overall aim of this module is to provide students with an understanding and
awareness of the service sector, understand services from both the service user and
provider perspectives, how marketing theory differ for this sector, the unique
challenges faced by services marketers (full-time and part time) and managers, as
well as the application of relevant service theory in practice
Module Learning Outcomes 1(2)
o At the end of this module, students should be able to:
1. Identify the differences between manufacturing and service organisations,
and describe the unique challenges involved in marketing and managing
services
2. Apply concepts form services marketing theory/frameworks in a practical
sense in order to 1) understand the importance of the customer’s role in the
service encounter and 2) develop and manage effective customer service
programmes with service firms to achieve a SCA
3. Develop and understanding towards management of service quality through
a thorough understanding of the antecedents of the five gaps of the Gaps
model
4. Contribute to further development of graduate skills in the following areas:
analysis, critical evaluation and thinking, effective communication and
problem solving. To develop these skills, it is expected that students engage
with the module and its content, and take responsibility for their own
learning and development.
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Core textbook and other resources
o Core textbook
Wilson et al. (2016). Services Marketing: Integrating customer focus across
the firm. 3rd Eds, McGraw-Hill
E-book available as well
o Weekly readings are listed, along with relevant chapter in the textbook, at the end
of each week’s lecture notes
o Journal articles and additional information are available on several databases
EBSCO, Emerald, ProQuest, etc.
o Refer to the Reading List for the module on BB for additional resources
Assessment
o 100% examination during the Winter exam period
Essay type questions
Section 1 – compulsory question (50% weighting)
Section 2 – select 1 out of 2 questions (50% weighting)
Feedback
o Students are given feedback in many ways during the term, examples include:
Q&A sessions in lectures and seminars
, 1-2-1 or group appointments during office hours
o Pre-examination
o Post-examination
Refer to ABS Undergraduate Programme Policy on examination feedback for
futher information
o
Expectations & behaviour
o As always, lecture attendance is expected
Refer to university policy
o Individual preparation and participation in lectures is expected
Have read up to the chapter and set journal articles
Lectures provides the ‘bare bones’ of the content, preparatory
reading is needed to get the most from lectures and exercises in
class
Student engagement and co-creation of knowledge is important for
individual student satisfaction
o All material covered in the module is assessable
Unique characteristics of services impacting on marketing activities
How to differentiate products and services
o Different characteristics can be used to differentiate products and services
o Distinguishing features of services
Intangibility
Inseparability
Variability
Ownership
Perishability
o These characteristics
Act as test to see whether goods belong to product sector or service sector
Underline all aspects of services
Intangibility
o Services are all, or mostly, intangible
Intangibility= incapable of being perceived by the senses
o The level of tangability present in the services offer comes from 3 main sources:
1. The tangible goods that are included in the offer and consumed by the user
i.e. the food in a restaurant
2. The physical environment that the service production/consumption process
takes place
i.e. the interior of the restaurant and the building it is in
3. The tangible evidence of service performance
i.e. seeing the chefs at work in the kitchen
Holidays are very intangible
o On what basis do consumers evaluate the alternative ‘dreams ‘available to them?
Value added by tangible versus intangible elements in goods and services
Some implications of service intangibility (diagrams on ppt)
Inseparability
o Inseparability occurs when the producer is human or a machine
Producer and consumer must interact to for the benefit of the service to be
realized
Services used to be mainly face-to-face, but technology now means
there is a more flexible and impersonal basis for interaction
, o Production of a service cannot be separated from its consumption
Surgeons cannot operate without the patient being present
Consumers are co-producers of a service
Insurance broker, may work on your behalf to find you the most
suitable policy, BUT they need to know your circumstances and
needs before they can match you with a policy
o Makes quality control more difficult
o Has implications for accessibility to services
Inseparability can be overcome
o New opportunities for separating service production and consumption
E.g. BT call centres in India
Some implications of services inseparability (diagram ppt)
Variability
o 2 aspects of variability that are relevant to services, i.e. the extent to which:
Production performance varies unintentionally from a norm, in terms of
both outcomes and production processes
A service can be deliberately varied to meet the specific needs of individual
customers
o Each producer-consumer encounter may be unique
o May be little opportunity for quality control to maintain consistency
o It is often easy to adapt services to the specific needs of individual consumers
Causes and consequences of service variability (diagram ppt)
Perishability
o Services cannot be stored or inventoried for when demand is high
Hospitals cannot store spare beds on a ward for a later date
Hairdressers cannot store appointment slots from one day to the next
o If capacity is not used, the opportunity to sell it is lost forever
o The management of supply and demand must be carefully management
Mismatch between supply and demand can impact directly on consumers
Peak/off-peak travel and other daily/weekly variability in demand
patterns, as well as seasonal, cyclical and unpredictable demand
Causes and consequences of service perishability (diagram ppt)
Ownership of services
o Services cannot be “owned”
o Buyers are buying a process rather than a tangible outcome
o Inability to own a service has implication for design of channels of distribution
Z
From the marketing mix to the services marketing mix
The Services Marketing Mix
o This is an extension of the 4Ps to the 7Ps (Booms and Bitner, 1982):
Product
Price
Place
Promotion +
People
Physical Evidence
Processes
o N.B., some important issues in services are not covered in the Services Marketing
Mix
Service quality and customer satisfaction
, Service R&D (i.e. service innovations)
Merchandizing (builds on the promotions mix element)
Product/Service Product
o Product
… a complexity of tangible and intangible attributes, including functional,
social and psychological utilities or benefits. A product can be either an idea,
a service, a good or any combination of the three. Dibb et al. (2000)
o Service Products
are made up of all the intangible and tangible elements of the service
performance that create value for customers, Lovelock and Wirtz (2011, p.
106)
o Kotler (1997) recognised that there are significant differences between different
product offerings
Designing the service concept
o Requires an understanding of the service offer
o The service offer
People tend to buy the benefits that a product offers, rather than the
product itself
That is, solutions to problems
Consequently, the most important part of a company’s marketing mix is the
“offer” or “service offer”
It is imperative to understand what a service offer is from both the buyer
AND seller perspectives
Analysis of the service offer
o The elements within the service offer needs to be identified
Fundamental to the nature of the product
Redefine or differentiate it
o Service offer tends to be analysed in terms of 2 levels of service purchase
Core service
Core product
Secondary service
Tangible product
Augmented product
The core service
o Refers to the essential function of a service
The substantive service (Sasser et al. 1978)
o Little difference between goods and services at this level
o All customer needs and wants are intangible
Essential to understand what they are for organisational success
Market research required to measure customer
Perceptions and expectations of the service
Attitudes
Beliefs
Price
o From the firm’s perspective, pricing generates income and creates profits
o From the customer’s perspective, pricing is key part of costs to obtained wanted
benefits
o Marketers must recognize that customer costs involve more than the price paid to
seller
o Identify and minimize non-monetary costs incurred by users:
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