Chapter 1 : What is Services?

Factors Stimulating Transformation of the Service Economy

Government Policies
Social Changes
Business Trends
Advances in IT
Globalization

Five broad categories within non-ownership framework:

1. Rented goods services

2. Defined space and place rentals

3. Labor and expertise rentals

4. Access to shared physical environments

5. Systems and networks: access and usage

Implications of renting versus owning

 Markets exist for renting durable goods rather than selling them

 Renting portions of larger physical entity (e.g., office space, apartment) can form basis for service

 Customers more closely engaged with service suppliers

 Time plays central role in most services

 Customer choice criteria may differ between rentals and outright purchases

 Services offer opportunities for resource sharing

Services

Are economic activities offered by one party to another

 Most commonly employ time-based performances to bring about desired results in:

― recipients themselves

― objects or other assets for which purchasers have responsibility

Services Pose Distinctive Marketing Challenges, The eight common differences are:

1. Most service products cannot be inventoried

2. Intangible elements usually dominate value creation

3. Services are often difficult to visualize and understand

4. Customers may be involved in co-production

5. People may be part of the service experience

6. Operational inputs and outputs tend to vary more widely

7. The time factor often assumes great importance

8. Distribution may take place through nonphysical channels

Marketing can be viewed as:

 A strategic and competitive thrust pursued by top management

 A set of functional activities performed by line managers

 A customer-driven orientation for the entire organization

The 8Ps of Services Marketing

 Product Elements

 Place and Time

 Price and Other User Outlays

 Promotion and Education

 Process

 Physical Environment

 People

 Productivity and Quality

People-processing

 Tangible Actions (services directed at people's bodies):

• Barbers

• Health

Customers must:

 Physically enter the service factory

 Co-operate actively with the service operation

 Managers should think about process and output from customer’s perspective

 To identify benefits created and non-financial costs:― Time, mental, physical effort

Possession- Processing

Tangible Actions (services directed at physical possessions)

• Refueling

• Disposal. Recycling

 Customers are less physically involved compared to people processing services

 Involvement is limited

 Production and consumption are separable

Mental stimulus processing

Intangible Actions (services directed at people’s mind):

• Education

• Advertising/PR 

Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers

 Physical presence of recipients not required

 Core content of services is information-based

 Can be “inventoried

Information processing

Intangible Actions - (services directed at intangible assets)

• Accounting

• Banking 

Information Processing

 Information is the most intangible form of service output

 But may be transformed into enduring forms of service output

 Line between information processing and mental stimulus processing may be blurred.

Co-production

In services means that the customer actively participates in creating or delivering the service, together with the service provider.