Services - Ch 1

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Define services

deeds, processes, and performances provided, coproduced, or cocreated by one entity or person for and/or with another entity or person.

What are the core products of service companies and products?

Service

True or false: Service sector has evolved with subtle differences

True, there has been an evolution

What are examples of service industries?

health care, professional (accounting and legal), financial, hospitality, travel, hair styling, pest control, interior design

Facts about service-based economies

1. An increase of service industries have led to an evolution of service marketing concepts
-example: 80% of employment and 81% of GDP in 2016
2. Trade in services is growing worldwide
-exports increased to 84% since 2000
205: 226B trade surplus
3. International dominance of services

Order some concepts from tangible dominant to intangible dominant

1. salt
2. soft drinks
3. cosmetics
4. (MIDDLE) Fast food outlets
5. airlines
investment management
6. Consulting
7. Teaching

Why Service Marketing?

1. Dominate US and worldwide economies
2. it's a business imperative in goods-focused businesses
3. Deregulated industries and professional service needs
4. Different
5. Leads to profits

What are some goods companies expanding into services?

Caterpillar, GE, IB, Petsmart, Procter an Gamble, Xerox

Broad definition of services

all economic activities whose ouput is not a physical product or construction, is generally consumed at the time it's produced, and provides added value in forms that are essentially intangible concerns of its first purchaser

Customer service

-critical aspect of service; provided in support of a company's core products
-can occur on-site or virtually (Internet, call text message)
-quality of customer service is essential to building customer relationships

Service as a product

-a wide range of intangible product offerings that customers value and pay for in the marketplace

Derived service

-Vargo and Lusch argue that all tangible products are values for the services they provide
-Example: razor \= barber service
-Exampple: Computer \= medical sevrice

Trends in the Service sector

-As early as 1929, 55% of population worked in service
1948: GDP was 54% services
2016: Services represented 81% GDP, and 80% employment in 2014

service as a business imperative

-Excellent products on teir own don't guarantee long-term success
1. With the commodization of products, price and margin pressures are on physical goods
-services help firms customize their offerings
2. Consumer demand of service solutions- especially in B2B- that involes multiple products and services
3. Services have higher profit margins --\> increase in firm profitability

What is a challenge in product companies transitioning into incorporating services

-Expertise is anchored in tangibles
-Need to find a new service logic and special concepts and approaches for managing and makreting services become increasingly apparent

Deregulated industries and professional service needs

-Deregulated industries have gone through rapid changes in the ways we do business, just like the services sectir.
-Specific demand for service marketing concepts comes from deregulated and professional industries/services
-In USA, service industries have been deregulated. Similar moves have been made internationally.
-Services have gone from being tightly controlled to having partial firm control

Why have providers of professional services demanded new service concepts?

Their industry has become increasingly competitive and professional standards have been modified tot allow adversing
-Now seek better ways to delivery better quality and strengthen their position

Service marketing is different

As the best marketers in the world moved into services industries like health care and banking they realized the need for new concepts and approaches for marketing and managing services businesses.

Service and technology

Technology is...
1. the foundation of many service offerings
-provides new ways to deliver service
-enables both customers and employees
-extnds the global reach of services
* the inernet is a service
* some outcomes may be negative

What were the nine service themes Leonard Berry found in firms

-values-drive leadership
commitment to investments in employee success
-trust-based relationships with customers and other partners at the foundation of organization

Argument made by the Marketing Science INstitute

Corporate strategies forcused 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

Research out of the Harvard Business School_ service-profit chain

links internal service and employee satisfaction to customer value and ultimately to profits

But 'Service Stinks' - why?

1. Customers are getting less service than they are in the past
2. Increasing use by companies of self-service and tech-based service is perceived as less service because no human interaction or personalization is provided
3. Customer expectations are higher and expect the same from all industries --\> frequently disappointed
4. Organizations have cut costs, affecting quality
5\> Competitive job market --\> less skilled workers in service
6. Many companies give lip service to customer focus and service quality

Technology-based service offerings

-tech was the basic force behind service innovations now tken for granted
-value offerings like ATms, cell phones, and automated voice mail were only possible thorugh new tech
-Internet has created an explosion of Internet-based services, like Amazon and Google/Alphabet
-Other tech provides medics to offer care remotely and perform diagnoses, treatment, and surgery guidance via technology interfaces

New ways to deliver service

-Tech provides ways to deliver existing services in a more accessible, convenient, and productive way
-Tech enables basic customer service, transactions, an learning/information seeking
-Tech offers a direct vehicle for making purchases and conducting business
-Tech (Internet esp) provides an easy way for customers to learn, do research, and collaborate with each other

Enabling both customers and employees

-Tech enables both customers and employees to be more effective in getting and providing service
-Example: online banking allows customers to access their accounts and apply for loans
-Employees: CRm and sales support aid workers in providing better ervice because of its immediate access to information

Extending the global reach for services

-Technology infusion results in the potentil for reaching out to customers around th lobe in ways not possible before
-information knows no boundaries, and can reach any customer who has access to the Internet

The Internet is a service

-All tools, strategies, and concepts in service marketing/management have direct application in an Internet or e-business world
-Despite Internet's impact into changing services, customers stil want basic service

What do customers want in basic service, including in technology?

-dependable outcomes
-easy access
-responsive systems
-flexibility, apologies, and compensation when things go wrong

Why did dotcommer startups and equivalent tech-based businesses fail?

They dont understand basic customer knowledge, basic service customer needs, and failure of implementation, logistics and service follow-up

The paradoxes and dark side of technology and services

-customer concerns about privacy and confidentiality raise major issues for firms particularly in the Internet
-Some customers are no ready tto use technology or are reluctant to accept technology in their work lives
-The belief technology is detrimental to the quality of life and human relationships (iPad kids, overuse of social media instead of face2face communication)
-uncertain payback in technology investments

Characteristics of services are

intangible
Heterogenous
Simultaneous production and consumption
Perishable

Intangibility implications

-services cannot be inventories
-cannot be easily patented
-cannot be readily displayed or communicated
-pricing is difficult

Implications of hetereogeneity

-Service delivery and customer satisfaction depend on employee and customer actions
-service quality depends on many uncontrollable factors
-there is no sure knowledge that the service delivered matches what was planned and promoted

Implications of simultaneous production and consumption

-customers participate in and affect the transaction
-customers affect each other (crying baby on a plane)
-employees affect the service outcome
-decentralization may be essential
-mass production is difficult

Implications of perishability

-it is difficult to synchronize supply and demand with services
-services cannot be returned or resold

Search, Experience and Credence qualities

1. Search: attributes a consumer can determine before buying - like clothes
2. Experience: discerned only through consumption - like a vacation or restaurant food
3. Credence: for the most par, impossible for users to discern even after consumption - like appendix operations and computer software updates

High search qualities

-When attributes can be almost completely determined and evaluated before purchase
-qualties: color, style, price, fit, feel, hardness, and smell
-goods/services: clothing, jewelry, furniture, houses, automobiles

High experience qualities

Attributes are not fully known or assesses until they have been purchased and consumed
-more difficult to evaluate because assessment is possible only through purchase
-restaurant meals, vacation, haircuts, childcare

High credence qualities

-Most difficult to evaluate because customers may be unaware of or lack sufficient knowledge to evaluate whether the offerings satisfy wants or needs even after usage
-Examples: television repair, legal services, root canal, auto repair, medical diagnosis

Challenges and questions for service marketers

-Improving and defining service quality
-How can new services be designed and tested effectively when service is intangible frequently cocreated
-Ensuring communication is consistent and relevant
-Accommodate fluctuating demand with fixed and perishable services
-How to set prices
-How should the firm be organized so that good strategic and tactical decisions are made
-Balancing standardization and personalization
-Protecting new service concepts from competitors
-Communicating quality and value to customers when offering is intangible and with high experience qualities
-ensuring the delivery and cocreation of consistent quality service

Expanded mix for services

-People: all human actors who play a part in service delivery and thus influence the buyer's perceptions - the personnel, customer, and other customers in environment
-Physical evidence: the environment in which the service is delivered and where the firm and customer interact, as well as any tangible components that facilitate performance or communication of the service
-Process: the procedures, mechanisms, and flow of activities by which the service is delivered, consumed, and cocreated- the service delivery and operating systems.

Customer focus

-Firm pov: all strategies are developed with an eye on the customer, and all implementations are carried out with an understanding of their impact on the customer
-Practical pov: decisions regarding new services and communiation plans will integrate the customer's point of view --\> all tools, strategies, and frameworks in the text are considerate within the customer focus

People as a P

-Influential: attitudes, behaviors, dress
-For some services, the service provider (human) is the service
-Consumers can provide timely information about themselves and firm recommendations to improve service quality; furthermore, the crying baby effect that enhances or detracts from other customer experiences

Physical evidence as a P

-Includes all the tangible representations of the service such as brochures, letterhead, business cards, reports, signage, equipment, and web pages
-Physical evidence is irrelevant in some services like telecommunications
-Physical evience provides excellent cues and opportunities for the firm to send consistent and strong messages regarding the organization's purpose, ntended market segments, and the nature of the service

Process as a P

-Includes: delivery steps, operational flow of services --\> give evidence on which to judge service as a consumer
-Singapore Airlines, for example, has a process that is highly customized to the individual, and the employees are empowered to provide nonstandard service when needed
-Highhly bureaucratic servies follow a pattern, whose step logic is not really emphasized from the consumer pov

Define services

deeds, processes, and performances provided, coproduced, or cocreated by one entity or person for and/or with another entity or person.

What are the core products of service companies and products?

Service

True or false: Service sector has evolved with subtle differences

True, there has been an evolution

What are examples of service industries?

health care, professional (accounting and legal), financial, hospitality, travel, hair styling, pest control, interior design

Facts about service-based economies

1. An increase of service industries have led to an evolution of service marketing concepts
-example: 80% of employment and 81% of GDP in 2016
2. Trade in services is growing worldwide
-exports increased to 84% since 2000
205: 226B trade surplus
3. International dominance of services

Order some concepts from tangible dominant to intangible dominant

1. salt
2. soft drinks
3. cosmetics
4. (MIDDLE) Fast food outlets
5. airlines
investment management
6. Consulting
7. Teaching

Why Service Marketing?

1. Dominate US and worldwide economies
2. it's a business imperative in goods-focused businesses
3. Deregulated industries and professional service needs
4. Different
5. Leads to profits

What are some goods companies expanding into services?

Caterpillar, GE, IB, Petsmart, Procter an Gamble, Xerox

Broad definition of services

all economic activities whose ouput is not a physical product or construction, is generally consumed at the time it's produced, and provides added value in forms that are essentially intangible concerns of its first purchaser

Customer service

-critical aspect of service; provided in support of a company's core products
-can occur on-site or virtually (Internet, call text message)
-quality of customer service is essential to building customer relationships

Service as a product

-a wide range of intangible product offerings that customers value and pay for in the marketplace

Derived service

-Vargo and Lusch argue that all tangible products are values for the services they provide
-Example: razor \= barber service
-Exampple: Computer \= medical sevrice

Trends in the Service sector

-As early as 1929, 55% of population worked in service
1948: GDP was 54% services
2016: Services represented 81% GDP, and 80% employment in 2014

service as a business imperative

-Excellent products on teir own don't guarantee long-term success
1. With the commodization of products, price and margin pressures are on physical goods
-services help firms customize their offerings
2. Consumer demand of service solutions- especially in B2B- that involes multiple products and services
3. Services have higher profit margins --\> increase in firm profitability

What is a challenge in product companies transitioning into incorporating services

-Expertise is anchored in tangibles
-Need to find a new service logic and special concepts and approaches for managing and makreting services become increasingly apparent

Deregulated industries and professional service needs

-Deregulated industries have gone through rapid changes in the ways we do business, just like the services sectir.
-Specific demand for service marketing concepts comes from deregulated and professional industries/services
-In USA, service industries have been deregulated. Similar moves have been made internationally.
-Services have gone from being tightly controlled to having partial firm control

Why have providers of professional services demanded new service concepts?

Their industry has become increasingly competitive and professional standards have been modified tot allow adversing
-Now seek better ways to delivery better quality and strengthen their position

Service marketing is different

As the best marketers in the world moved into services industries like health care and banking they realized the need for new concepts and approaches for marketing and managing services businesses.

Service and technology

Technology is...
1. the foundation of many service offerings
-provides new ways to deliver service
-enables both customers and employees
-extnds the global reach of services
* the inernet is a service
* some outcomes may be negative

What were the nine service themes Leonard Berry found in firms

-values-drive leadership
commitment to investments in employee success
-trust-based relationships with customers and other partners at the foundation of organization

Argument made by the Marketing Science INstitute

Corporate strategies forcused 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

Research out of the Harvard Business School_ service-profit chain

links internal service and employee satisfaction to customer value and ultimately to profits

But 'Service Stinks' - why?

1. Customers are getting less service than they are in the past
2. Increasing use by companies of self-service and tech-based service is perceived as less service because no human interaction or personalization is provided
3. Customer expectations are higher and expect the same from all industries --\> frequently disappointed
4. Organizations have cut costs, affecting quality
5\> Competitive job market --\> less skilled workers in service
6. Many companies give lip service to customer focus and service quality

Technology-based service offerings

-tech was the basic force behind service innovations now tken for granted
-value offerings like ATms, cell phones, and automated voice mail were only possible thorugh new tech
-Internet has created an explosion of Internet-based services, like Amazon and Google/Alphabet
-Other tech provides medics to offer care remotely and perform diagnoses, treatment, and surgery guidance via technology interfaces

New ways to deliver service

-Tech provides ways to deliver existing services in a more accessible, convenient, and productive way
-Tech enables basic customer service, transactions, an learning/information seeking
-Tech offers a direct vehicle for making purchases and conducting business
-Tech (Internet esp) provides an easy way for customers to learn, do research, and collaborate with each other

Enabling both customers and employees

-Tech enables both customers and employees to be more effective in getting and providing service
-Example: online banking allows customers to access their accounts and apply for loans
-Employees: CRm and sales support aid workers in providing better ervice because of its immediate access to information

Extending the global reach for services

-Technology infusion results in the potentil for reaching out to customers around th lobe in ways not possible before
-information knows no boundaries, and can reach any customer who has access to the Internet

The Internet is a service

-All tools, strategies, and concepts in service marketing/management have direct application in an Internet or e-business world
-Despite Internet's impact into changing services, customers stil want basic service

What do customers want in basic service, including in technology?

-dependable outcomes
-easy access
-responsive systems
-flexibility, apologies, and compensation when things go wrong

Why did dotcommer startups and equivalent tech-based businesses fail?

They dont understand basic customer knowledge, basic service customer needs, and failure of implementation, logistics and service follow-up

The paradoxes and dark side of technology and services

-customer concerns about privacy and confidentiality raise major issues for firms particularly in the Internet
-Some customers are no ready tto use technology or are reluctant to accept technology in their work lives
-The belief technology is detrimental to the quality of life and human relationships (iPad kids, overuse of social media instead of face2face communication)
-uncertain payback in technology investments

Characteristics of services are

intangible
Heterogenous
Simultaneous production and consumption
Perishable

Intangibility implications

-services cannot be inventories
-cannot be easily patented
-cannot be readily displayed or communicated
-pricing is difficult

Implications of hetereogeneity

-Service delivery and customer satisfaction depend on employee and customer actions
-service quality depends on many uncontrollable factors
-there is no sure knowledge that the service delivered matches what was planned and promoted

Implications of simultaneous production and consumption

-customers participate in and affect the transaction
-customers affect each other (crying baby on a plane)
-employees affect the service outcome
-decentralization may be essential
-mass production is difficult

Implications of perishability

-it is difficult to synchronize supply and demand with services
-services cannot be returned or resold

Search, Experience and Credence qualities

1. Search: attributes a consumer can determine before buying - like clothes
2. Experience: discerned only through consumption - like a vacation or restaurant food
3. Credence: for the most par, impossible for users to discern even after consumption - like appendix operations and computer software updates

High search qualities

-When attributes can be almost completely determined and evaluated before purchase
-qualties: color, style, price, fit, feel, hardness, and smell
-goods/services: clothing, jewelry, furniture, houses, automobiles

High experience qualities

Attributes are not fully known or assesses until they have been purchased and consumed
-more difficult to evaluate because assessment is possible only through purchase
-restaurant meals, vacation, haircuts, childcare

High credence qualities

-Most difficult to evaluate because customers may be unaware of or lack sufficient knowledge to evaluate whether the offerings satisfy wants or needs even after usage
-Examples: television repair, legal services, root canal, auto repair, medical diagnosis

Challenges and questions for service marketers

-Improving and defining service quality
-How can new services be designed and tested effectively when service is intangible frequently cocreated
-Ensuring communication is consistent and relevant
-Accommodate fluctuating demand with fixed and perishable services
-How to set prices
-How should the firm be organized so that good strategic and tactical decisions are made
-Balancing standardization and personalization
-Protecting new service concepts from competitors
-Communicating quality and value to customers when offering is intangible and with high experience qualities
-ensuring the delivery and cocreation of consistent quality service

Expanded mix for services

-People: all human actors who play a part in service delivery and thus influence the buyer's perceptions - the personnel, customer, and other customers in environment
-Physical evidence: the environment in which the service is delivered and where the firm and customer interact, as well as any tangible components that facilitate performance or communication of the service
-Process: the procedures, mechanisms, and flow of activities by which the service is delivered, consumed, and cocreated- the service delivery and operating systems.

Customer focus

-Firm pov: all strategies are developed with an eye on the customer, and all implementations are carried out with an understanding of their impact on the customer
-Practical pov: decisions regarding new services and communiation plans will integrate the customer's point of view --\> all tools, strategies, and frameworks in the text are considerate within the customer focus

People as a P

-Influential: attitudes, behaviors, dress
-For some services, the service provider (human) is the service
-Consumers can provide timely information about themselves and firm recommendations to improve service quality; furthermore, the crying baby effect that enhances or detracts from other customer experiences

Physical evidence as a P

-Includes all the tangible representations of the service such as brochures, letterhead, business cards, reports, signage, equipment, and web pages
-Physical evidence is irrelevant in some services like telecommunications
-Physical evience provides excellent cues and opportunities for the firm to send consistent and strong messages regarding the organization's purpose, ntended market segments, and the nature of the service

Process as a P

-Includes: delivery steps, operational flow of services --\> give evidence on which to judge service as a consumer
-Singapore Airlines, for example, has a process that is highly customized to the individual, and the employees are empowered to provide nonstandard service when needed
-Highhly bureaucratic servies follow a pattern, whose step logic is not really emphasized from the consumer pov