Summary of the book Services Marketing: Integrating Customer Focus Across the Firm, complemented with topics/theories discussed during the lectures. Written in English.
Course: Services Marketing
Lecturer: Hans Haans
Tilburg University
Summary Services Marketing - Integrating customer focus across the firm
CSI EXAM 1, 5, 8, 9, 10
CSI EXAM chapters 1, 5, 8, 9, 10 (5 same as chapter 2 in the fourth edition)
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Tilburg University (UVT)
Marketing Management
Services Marketing
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Summary
Services Marketing: Integrating
Customer Focus Across the Firm
Alan Wilson – Valarie A. Zeithaml – Mary Jo Bitner –Dwayne D. Gremler
Third European Edition
CHAPTER 1 — INTRODUCTION TO SERVICES 1
CHAPTER 2 - CONSUMER BEHAVIOUR IN SERVICES 9
CHAPTER 3 - CUSTOMER EXPECTATIONS OF SERVICE 14
CHAPTER 4 - CUSTOMER PERCEPTIONS OF SERVICE 18
CHAPTER 5 - THE GAPS MODEL OF SERVICE QUALITY 24
CHAPTER 6 - LISTENING TO CUSTOMERS 27
CHAPTER 7 - BUILDING CUSTOMER RELATIONSHIP 31
CHAPTER 8 - SERVICE INNOVATION AND DESIGN 36
CHAPTER 9 - CUSTOMER-DEFINED SERVICE STANDARDS 44
CHAPTER 10 - THE PHYSICAL AND VIRTUAL SERVICESCAPE 48
CHAPTER 11 - EMPLOYEES’ ROLES IN SERVICE DELIVERY 53
CHAPTER 13 - DELIVERING SERVICE THROUGH ELECTRONIC CHANNELS AND INTERMEDIARIES 57
CHAPTER 14 - MANAGING DEMAND AND CAPACITY 60
CHAPTER 15 - SERVICE RECOVERY 66
CHAPTER 16 - MANAGING EXTERNAL AND INTERNAL COMMUNICATIONS 69
CHAPTER 17 - PRICING OF SERVICES 73
CHAPTER 18 - THE FINANCIAL IMPACT OF SERVICE QUALITY 75
,Chapter 1 — Introduction to Services
What are Services?
Put in a very broad context, services are deeds, processes and performances. A more specific definition
of a service is, “a change in the condition of a person or of a good belonging to the same economic unit
which is brought about as a result of the activity of some other economic unit, with the prior
agreement of the former person or economic unit” (Hill, 1977). It is important to note that a service is
generally consumed at the time it is produced. In Europe, the service sector accounts for 72% of all
European employment and 73% of European GDP. Lovelock has developed a classification model which
categorises different types of services into four distinct categories:
People as Recipients Possessions as Recipients
People Processing Possessions Processing
Services Directed at People’s Bodies Services Directed at People’s Tangible Possessions
Tangible Actions
● Passenger Transportation ● Courier Services
● Healthcare ● Car Repair
● Spa Treatments ● Laundry and Dry Cleaning
Mental Stimulus Processing Information Processing
Services Directed at People’s Minds Services Directed at Intangible Assets/Possessions
Intangible Actions
● Education ● Accounting
● Entertainment ● Banking
● Psychotherapy ● Legal Services
Lovelock’s Classifications of Services
People Processing: Services Directed At People’s Bodies
For services within this category, the recipient needs to be physically present (e.g. dentist, train,
massage). Mostly, you have to go to the service provider, however in some cases they can also come to
you (e.g. haircut). The recipient therefore plays a key role in the delivery. Therefore, it is vital that the
service provider gives the customer the required information they need to carry out the right actions and
behaviour. For instance, an airline cannot provide their service properly if the customer does not check in
on time. Also, the premises/transportation vehicles where the service is performed need to be inviting
and attractive, and should be conveniently located.
Possession Processing: Services Directed At People’s Tangible Possessions
The customer does not need to be present when services within this category are being performed,
though they might have to be for at the beginning and the end of the service - e.g. when dropping off and
collecting their car from a car repair centre. The attractiveness and location is less of an issue given that
emphasis is put more on operational matters.
Mental Stimulus Processing: Services Directed At People’s Minds
These services include education, the arts, professional advice, news and information. Customers can go
to physical premises - e.g. universities and theatres - modern technology (Internet, broadcasting
technologies) can deliver these services at a distance. Therefore, the customer does not need to physically
present in the place where the service is produced. In the case of distant learning, for instance, the
service can even be produced, then stored for delayed use through digital recording.
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,Information Processing: Services Directed At People’s Intangible Possessions
Services like banking, insurance, and accountancy require very little interaction between customers and
the organisation. The customer sees very
little of these kinds of services that is
tangible, making it difficult to
differentiate and communicate their true
value.
Tangibility Spectrum
Intangibility is a key determinant of
services; however, some services tend to
be more intangible than manufactured
products, and manufactured products are
generally more tangible than services. A
good example for this is the fast-food
industry: while classified as a service,
there are many tangible parts such as the
food, packaging, etc.
Service Dominant Logic
Service Dominant Logic looks at a service from a broader perspective. It suggests that all products and
physical goods are valued for the service they provide. For instance, a pharmaceutical product provides
medical services and computers provide
information and data manipulation
services. The thinking behind this theory is
that value is not simply created and
delivered to a customer, the value is co-
created in a process which requires the
active participation of the producer, its
customers, and other stakeholders (of
both the producer and the customer). That
value is not created at the time of the
exchange, but when the customer
integrates, applies and uses the product.
The role of interaction is important when it
comes to value creating; while the
company (merely) produces an offering of
potential value to the customer, the
customers, in turn, are responsible for the value-creating process.
Services Industries, Services as Products, Services as Experiences and
Customer Service
Sometimes when people think of service, they think only of customer service, but service can be divided
into four distinct categories.
2
, 1. Service Industries and Companies
Industries and companies typically classified in this sector have a service as their core product. These
include: Accor (hotels), Lufthansa (airline), and HSBC (banking). The market for services is growing
worldwide, and with it the specific demand for services marketing concepts. What is more, many large
service industries (e.g. airlines, banking, telecommunications, and energy supply) which used to be
controlled by the government are now partially, or in some cases even totally, within the control of
individual companies.
2. Services as Products
This category represents the range of intangible products that consumers value and pay for. These
services can either be sold by service- or non-service companies (e.g. IBM and HP offer IT consulting
services; retailers like Tesco sell insurance and photograph processing). When services marketing first
started developing, the key driving forces came from industries such as banking, transportation, and
retailing. In this day and age, however, the need for effective services marketing and marketing strategies
becomes more and more important given the growing competition in the marketplace. Customers no
longer expect companies to only deliver high-quality products; they also expect high levels of customer
service and total service solutions along with them.
3. Services as Experiences
Service companies evolve from merely providing a service to creating a memorable event where the
memory of the experience actually becomes the product. While many hospitality organisations (boutique
hotel) and the entertainment sector (Disneyland Paris) have been focussing on activities for many years,
other service providers like retailers (Nike Stores) and Airlines doing the same.
4. Customer Service
This is also a critical aspect of service. In fact, it is the service provided in support of a company’s core
product, which can occur on-site (e.g. retail employee helps a customer find a desired item) or over the
telephone/via the Internet (e.g. Dell provide a real-time chat session to help customers with their
hardware problems). High-quality customer service is essential to building good relationships. This,
however, should not be confused with the services provided for sale by the company.
Why Services Marketing?
Services marketing is different. Skills acquired in, for instance, the packaged good industries are not
directly transferable to, say, the airline industry. Hence, services marketing is very different from product
marketing.
Service and Technology
Information technology is shaping the field of services marketing. It is, in fact, together with globalisation
the most profound influencer.
Potential for New Service Offerings
The fast development of technology in recent years has made many innovations possible. Especially the
Internet makes it possible for companies like Amazon or Facebook to offer services previously unheard of.
Also established companies, e.g. the Financial Times, find that the Internet is a door-opener to an
extension of their existing offerings; they now offer an interactive edition which allows for customers to
organise the newspaper’s content according to individual preferences and needs.
3
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