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Lecture 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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  • May 25, 2022
  • 44
  • 2019/2020
  • Lecture notes
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Services Marketing
Lecture 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.
 k
o l
 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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