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Summary book Service Marketing
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Complete summary of the book for Service Marketing for Pre-Masters.
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Summary Services Marketing - Integrating customer focus across the firm
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CSI EXAM 1, 5, 8, 9, 10
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CSI EXAM chapters 1, 5, 8, 9, 10 (5 same as chapter 2 in the fourth edition)
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Summary of the bookServices Marketing
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Chapter 1 – Introduction to services ........................................................................................................ 2
Chapter 2 – Consumer behaviour in services ......................................................................................... 3
Chapter 3 – Customer expectations of service ....................................................................................... 4
Chapter 4 – Customer perceptions of service ......................................................................................... 5
Chapter 5 – The gaps model of service quality ....................................................................................... 6
Chapter 6 – Listening to customers ......................................................................................................... 7
Chapter 7 – Building customer relationships ........................................................................................... 9
Chapter 15 – Service recovery .............................................................................................................. 11
Chapter 8 – Service innovation and design ........................................................................................... 13
Chapter 9 – Customer-defined service standards ................................................................................. 16
Chapter 10 – The physical and virtual servicescape ............................................................................. 17
Chapter 13 – Delivering service through electronic channels and intermediaries ................................ 18
Chapter 11 – Employees’ roles in service delivery................................................................................ 19
Chapter 14 – Managing demand and capacity...................................................................................... 21
Chapter 16 – Managing external and internal communications ............................................................ 23
Chapter 17 – Pricing of services............................................................................................................ 25
Chapter 18 – Service and the bottom line ............................................................................................. 27
1
,Chapter 1 – Introduction to services
Services are deeds, processes and performances. Services include all economic activities whose output is not a
physical product or construction, is generally consumed at the time it is produced, and provides added value in
forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of
its first purchaser. It is very board, thus intangibility is the key determinant. Many services also contain tangible
components.
The service sector can be categorized into four categories, developed by Lovelock:
People as recipients Possessions as recipients
Tangible actions Directed at people’s bodies Directed at people’s tangible possessions
→ e.g. healthcare, spa → e.g. car repair, laundry cleaning
→ You must be physically present → You don’t need to be present when the service is
and enact your role. delivered, but sometimes only at the start and end.
Intangible actions Directed at people’s mind Directed at intangible possessions
→ e.g. education, entertainment → e.g. accounting, banking.
→ Physically or by internet or tv. → Little direct interaction is needed.
The service can be stored.
Vargo and Lusch argue that the value derived from physical goods is really the service provided by the good, not
the good itself. Products only have value if it can be used. Grönroos highlights that a company develops, delivers,
installs a product, and the customer creates value in use. The internet makes the system more complex and
dynamic.
1. Service industries and companies are companies that have services as their core product, e.g. hotels,
transportation or banking. This sector represent 73% of GDP of EU and is still growing.
2. Services as products represent a wide range of intangible products that customers value. Nowadays,
customers not only expect excellent, high-quality goods, but also service and solutions.
3. Services as experiences. Companies seem to involve from providing a service to creating memorable
events, especially in the hospitality and entertainment sectors.
4. Customer service is the service provided in support of a company’s core products, which is often not
charged.
The marketing for services is different than the marketing for goods. Focusing on customer satisfaction, revenue
generation and service quality are very important. Due to technology, there are new service offerings, new ways
to deliver services, and self-service technologies. Also, the internet can be seen as ‘one big service’, but it of
course also has it dark side.
The traditional view of differences between goods and services:
• Goods are tangible, services are intangible → services cannot be inventoried, easily patented, or readily
displayed or communicated, and pricing is difficult.
• Goods are standardized, services are heterogeneous → service delivery and customer satisfaction
depend on employee and customer actions, service quality depends on many uncontrollable factors, and
there is no sure knowledge that the service delivered matches what was planned and promoted.
• The production of goods is separate from consumption, services have simultaneous production and
consumption → customers participate in and affect the transaction and each other, employees affect the
service outcome, decentralization may be essential and mass product is difficult.
• Goods are non-perishable, services are perishable → difficult to synchronize supply and demand and
services cannot be returned or resold.
Service marketing is about made and kept promises. The
service marketing triangle has three interlinked groups:
the company, the employees/technology and the
customer. The company makes a promise (external
marketing), this promise is kept or broken
(interactive/real-time marketing), and the company has to
make sure it can enable the promise (internal marketing).
2
, The original marketing mix contains product, price, place and promotion, but for service marketing, three extra p’s
are added:
• People: all human actors who play a part in service delivery and thus influence the buyer’s perceptions.
• Physical evidence: the environment in which the service is delivered and where the firm and customer
interact, and any tangible components that facilitate performance or communication of the service.
• Process: the actual procedures, mechanisms, and flow of activities by which the service is delivered
The servuction system model breaks the service delivery process that the customer receives into the visible
and invisible part. The visible part is again broken into inanimate environment (physical elements) and the service
providers. Lastly, consumers influence each other.
Chapter 2 – Consumer behaviour in services
Services marketers have the same objective as all marketers: develop and provide offerings that satisfy consumer
needs and expectations, thereby ensuring their own economic survival. But, services are not chosen, experienced
and evaluated the same way as goods?
• Search qualities are attributes that a consumer can determine before purchasing a product, e.g. colour,
price or feel for cars and jewellery. This are often goods and easy to evaluate.
• Experience qualities are attributes that can be discerned only after purchase or during consumption, e.g.
taste or wearability for vacations and restaurant meals. This are often services and harder to evaluate.
• Credence qualities includes characteristics that the consumer may find impossible to evaluate even after
purchase and consumption. For example insurance. This are often services and most difficult to evaluate
Consumer choice
1. Recognition of needs and wants. One way to characterize needs is the Maslow’s hierarchy: physiological
needs → safety and security → social needs → ego needs → self-actualization.
2. Searching for information. This can be formal if the service or good is important or a major investment, but
often it happens quick and relatively automatic. Customers can use costumer opinion sources (friends,
reviews) (especially if purchasing a service) and promotional sources (advertising, website). Services have a
higher perceived risk (because intangible, non-standardized, no guarantees), but seeking information,
guarantees, free trial period, etc., can reduce this risk.
3. Evaluation of alternatives. Services have less alternatives than goods, but this is changing due to the
internet and comparison websites. You can also do self-service, e.g. cleaning your own home.
4. Purchase. Goods are produced, often seen and tried, and then purchased. Services are often produced and
purchased at the same time. This results in a higher perceived risk, which can be reduced by trails or tours.
5. Consumer experience. An experience is often a process, which includes several steps, sometimes by a
different network of firms. A service can be compared to an theatre; a desirable impression must be
maintained and the actors (sincere or cynical) and physical setting are important. Services actors are more
important if the direct personal contact is high, if there is repeated contact, and if the contact determines the
nature of the service and how it is delivered. Service roles are combinations of social cues that guide and
direct behaviour and the service script is the logical sequence of events expected by the customer. The
presence, behaviour and similarity of other customers receiving the service has a strong impact on the
(dis)satisfaction of any given customer. The customer plays a co-production role because it actively
participates in the service. Lastly, emotions and moods influence the experience.
6. Post-experience evaluation. The post-experience evaluations will influence the word-of-mouth
communication (which is very important for services) and possible brand loyalty. The post-experience
evaluations can be influenced by the attribution of dissatisfaction (yourself or the service) and negative
biases (focus more on negative)
Culture can influence values and attitudes, manners and customs, material culture (own and use products), and
aesthetics (beauty, taste). In group purchasing decisions, the needs and goals of the various members must be
balanced so that the service delivers optimal satisfaction for as many members as possible. Organizations often
have employees who are specialized in purchasing.
3
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