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Marketing of Services


Marketing of Services Chapter 12 MR2100 Why are Services Different? Services are different than other products because they are Intangible. – PowerPoint PPT presentation

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Title: Marketing of Services

Marketing of Services
  • Chapter 12
  • MR2100

Why are Services Different?
  • Services are different than other products
    because they are Intangible.
  • Intangibility means that these services have no
    physical presence and therefore cannot be touched.

Why are Services so important?
  • The provision of Services makes up about 70 of
    all products purchased in the Canadian economy.
    In Newfoundland, the service sector is even more
    important with about 75 of all production coming
    from the service sector.
  • Not only do services make up a large proportion
    of the economy but they also are becoming
    increasingly important in this information age.

The Four Is of Service (1)
  • The text identifies 4 unique elements of all
  • 1) Intagibility - Services cannot be touched or
    seen (therefore evaluated) before the purchase
  • 2) Inconsistency - because services are
    intangible and are provided by a wide diversity
    of people, it is hard to maintain consistency in
    the level of service that is being provided.
    Service orgnaizations try to get around this
    problem by training employees, standardizing
    procedures and mechanizing where possible.

The Four Is of Service (2)
  • The text identifies 4 unique elements of all
  • 3) Inseparability - Services cannot be broken
    down into subparts. The service cannot be
    separated from the deliverer or delivery
  • 2) Inventory -You strictly cannot store services.
    They must be provided in conjunction with the
    demand. Sometimes you may have excess delivery
    capacity for the demand resulting in idle
    production capacity, other times the demand may
    outstrip the delivery capability.

Is it a service or a good being provided?
  • The provision of services is often mixed with the
    provision of a good - such as in going to
    McDonalds, There is the intangible service but
    there is also the tangible meal.
  • This reality is reflected in Figure 24-3 which
    demonstrated the reality their there are in fact
    very few pure services or pure goods. This is
    known as the Service Continuum.

Is it a service or a good being provided?
The Service Continuum
How Can Service Deliverers be Classified?
  • Service deliverers fall into 1 (or more) of the
    following categories.
  • 1) Those provided by people or by equipment
  • 2) Those provided by for profit or by
    not-for-profit organizations
  • 3) Those provided by government
    (quasi-government) agencies or private

How do Consumers attempt to Evaluate intangible
  • Without being able to evaluate services using the
    traditional methods used for goods, consumers are
    forced to evaluate services based on the
  • Experience Qualities - Only really determined
    after trying the service. Based on the initial
    experience a consumer decides on whether or not
    to purchase the service again.
  • Credence Qualities - Credence is reputation. If
    a Doctor has a good reputation, for example,
    people who have never seen her before may be more
    willing to go see her.

You have purchased the Service, so how do you
feel now?
  • In order to measure peoples satisfaction with the
    service that was provided a form of post-purchase
    evaluation known a Gap Analysis is used.
  • Gap Analysis measures the difference between
    peoples expectations before receiving the
    service and their level of satisfaction after
    receiving the service. -- the larger the gap the
    less satisfaction.

Customer Contact Audit
  • The Customer Contact Audit is a flow chart that
    outlines the process involved in buying a service
    and identifies the key contact points between the
    consumer and the service provider.
  • See Figure 12-4 for an Audit.
  • The Contact points represent the places that the
    service provider must focus their training and
    standardization efforts.

Managing in the Service Environment The Eight Ps
  • Product (Service) Concerns
  • Unlike a product, you cannot legally protect a
    service with a patent. So, a service company has
    to come up with something different that makes
    its service identifiably different (and better)
    than its competitors. This concept is referred to
    as Exclusivity.
  • Like a product, Brand names help to convey a
    positive image for the service. This is known as
  • In order to balance the demand for and supply of
    the service being offered some organizations
    offer incentives or disincentives to buying the
    service at specific times. This is known as
    Capacity Management.

Managing in the Service Environment The Eight Ps
  • Price Concerns
  • Prices can be set in such a way as to control
    volume and allow supply to match demand.

Managing in the Service Environment The Eight Ps
  • Place Concerns
  • Services, or the tools to provide the services,
    must be close to the customer.
  • Intermediaries are usually not involved in the
    delivery of services.
  • Technology is affecting how and where services
    are delivered.

Managing in the Service Environment The Eight Ps
  • Promotional Concerns
  • Public Relations is usually the tool of choice
    for promoting services.
  • People Concerns
  • With most services, People are critical to the
    customer experience.
  • Internal marketing promotes the concept of taking
    care of employees so that employees will take
    care of customers

Managing in the Service Environment The Eight Ps
  • Physical Evidence
  • The appearance of the environment in which the
    service is provided.
  • Impression management
  • Process
  • The procedures and mechanisms and flow of
    activities by which the service is created and
  • Productivity
  • How capacity is managed to enhance the service
  • Capacity Management, Off Peak Pricing, Time