SERVICES MARKETING
INTEGRATING CUSTOMER FOCUS ACROSS THE FIRM
Wilson, Zeithaml, Bitner & Gremler | 3rd edition
,1 INTRODUCTION TO SERVICES
1.1 WHAT ARE SERVICES?
Services are deeds, processes and performances. Services are not tangible things that can be touched,
seen and felt, but are rather intangible deeds and performances. Even a product-based organization
offers clients a range of service offerings.
Another definition of services is 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.
The best-known classification of the service sector was developed by Lovelock in 1983:
People Possessions
Services directed at Services directed at
Tangible people’s bodies people’s tangible
actions possessions
Intangible Services directed at Services directed at
actions people’s minds intangible
assets/possessions
Services directed at people’s bodies
Services in this category require the recipient to be physically present within the service system. The
customer is a key part of the delivery of the service as they have to be present at the correct time and
enact their role in the service experience. Examples are passenger transportation, the dentist, the hair
dresser, etc. Managers need to think through the information that the customer requires in order to
carry out the correct actions and behavior. The premises or transportation vehicles in which the
service is performed have to be inviting and attractive to potential customers and generally need to be
located in a place that is convenient.
Services directed at people’s tangible possessions
Services in this category do not require the customer to be present when the service is being
delivered, although they may need to be present at the start and end of the service. The emphasis is
on operational issues. Examples are car repair and dry cleaning services.
Services directed at people’s minds
Services directed at people’s minds include services such as education, the arts, professional advice,
news and information. The service can be delivered at a distance without the customer being present
in the place where the service is produced, with technology such as TV and the Internet. The service
can be produced, then stored for delayed use through the digital recording of the performance. This
means the service provider and the customer don’t necessarily need to be active at the same time.
Services directed at people’s intangible possessions
Services such as banking, insurance, and accountancy can be delivered with very little direct
interaction between the customer and the organization. It is mostly automatic. The customer sees
,very little that is tangible, so it is often difficult to differentiate such services and to communicate their
true value.
TANGIBILITY SPECTRUM
Very few products are purely intangible or totally tangible.
Services tend to be more intangible than manufactured
products, and manufactured products tend to be more
tangible than services. The tangibility spectrum captures
this idea.
1.2 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 services they provide. The value derived from physical goods is really the service
provided by the good, not the good itself. Their argument is that companies provide service solutions
for customers and should therefore offer the best combinations of service and products to create that
solution. The over-arching concept is that it is the knowledge and competencies of the providers and
the customers that represent the essential source of value creation rather than the products on their
own.
The thinking behind service dominant logic is that value is not something that is simply created and
delivered to the customer; the value is co-created in a process that requires the active participation of
the producer, its customers and possibly other stakeholders.
Value is created when the customer integrates, applies and uses the resources of a particular
producer. This is termed ‘value in use’ and is supported by warranties, advertising, branding, finance
schemes as well as the physical product itself. It is co-created by the customer, as the customer is
expected to perform in certain ways in order to ensure their optimum achievement of the ‘value in
use’. The value also varies contextually in relation to time and place dimensions. This ‘value-in-context’
concept takes account of external influences and other stakeholders covering government-imposed
laws and restrictions.
It is also important to consider that a service involves interaction between a service
provider and a customer. A company is producing an offering of potential value to the
customer through product development, design, manufacture and delivery. The
customers, in turn, are responsible for the value-creating processes, where value is
created or emerges as value in use.
In many markets, the Internet and other technologies have enabled the complexity and
dynamism of these interactions and inter-relationships to evolve further with websites,
online forums, mobile application, etc. all adding to the value created for the customer and the
producer.
, SERVICES INDUSTRIES, SERVICES AS PRODUCTS, SERVICES AS EXPERIENCES AND CUSTOMER
SERVICE
Service can be divided into four distinct categories:
1. Service industries and companies
This includes industries and companies whose core product is a service.
There is a growing market for services and increasing dominance of services in economies worldwide,
which has drawn increasing attention to the issues and challenges of service sector industries
worldwide and a need for specific new services marketing concepts and approaches.
2. Services as products
This category represents a wide range of intangible product offerings that customers value and pay for
in the marketplace. Service products are sold by service companies and by non-service companies
such as manufacturers and technology companies. The need for effective services management and
marketing strategies continues.
Companies are recognizing the opportunity to grow and profit through services, because the quick
pace of developing technologies and increasing competition make it difficult to gain strategic
competitive advantage through physical products alone. Moreover, customers are more demanding.
Not only do they expect excellent, high-quality goods and technology, they also expect high levels of
customer service and total service solutions along with them.
3. Services as experiences
Service companies evolve from simply providing a service, to creating memorable events for their
customers, with the memory of the experience becoming the product. Rather than the service
company charging for the activities it performs, it would be charging for the feelings that customers
derive from engaging in the service.
4. Customer service
Customer service is the service provided in support of a company’s core products. Companies typically
do not charge for customer service. Quality customer service is essential to building customer
relationships.
1.3 WHY SERVICES MARKETING?
SERVICES MARKETING IS DIFFERENT
Marketing and managing services presents issues and challenges not faced in the marketing of
products, therefore there is a need for new concepts and approaches for marketing and managing
service businesses. Frameworks, concepts and strategies have been developed to address the fact that
‘services marketing is different’.
In the final decades of the twentieth century, many firms jumped on the service bandwagon, investing
in service initiatives and promoting service quality as ways to differentiate themselves and create
competitive advantage. A dedication to quality service has been the foundation for success for many
firms, across industries. Successful businesses share devotion to nine common service themes, among
these are values-driven leadership, commitment to investment in employee success, and trust-based
relationships with customers and other partners at the foundation of the organization.
Work suggests that corporate strategies focused on customer satisfaction, revenue generation, and
service quality may actually be more profitable than strategies focused on cost-cutting or strategies
that attempt to do both simultaneously.
