2 MODULE-01 Duration-3 Lectures. INTRODUCTION TO SERVICES MARKETINGDefinitions.Characteristics & classification of servicesServices economyNature and scope ofservice market potential
3 g o o d sands e r v i c e sGoods - things you can touch - “tangible”Services - things you can’t touch - but you can see their effect “intangible” “… services are not physical, they are intangible…”
4 ServiceA Service is a type of a product. “… a deed performed by one party for another…”Services have special characteristics that make them different than products.
5 Service Defination A product without physical characteristics; a bundle of performance and symbolic attributes designed to produce consumer want satisfaction.
6 Definition of Service-2 A service is an act for performance of an essentially intangible nature that does not result in the ownership of tangible product or commodity but serves to create value and benefits for customer.
7 “There are no such thing as service industries “There are no such thing as service industries.There are only industries whose service components are greater or less than those of other industries. Everybody is in service.”-Theodore Levitt-
8 Tangible / Intangible Attributes touchseetastesmellIntangiblecan’t seecan’t touchcan’t smellcan’t tasteGOODSSERVICESNot in the text
9 What is a service Services are deeds, processes and performances. Service industries and companies – industries and companies typically classified within the service sector whose core product is a service.Services as products – a wide range of intangible product offerings that customers value and pay for in the marketplace.Customer service – the service provided in support of a company's core product.Derived service – the value derived from physical goods is really the service provided by the good, not the good itself.
10 Definitions James Schorr At Procter & Gamble:“ A product is something a consumer purchases and takes away with him or consumes or otherwise uses. If it is not physical, not something that they can take away or consume, then we call it a service”At Holiday Inns:“…people are buying a hotel experience. I’m selling the room, the way they treat you at the front desk, the way the bellman treats you, the way the waitress treats you – it’s all mixed together in a consumer’s mind when he makes a hotel decision”
11 Services (examples) Medical Centers Industrial Design Services Investment BankingManagement Consulting ServicesSatellite TelecommunicationsInternet Search Engine providerCasino / HotelsContinuing Care Retirement CommunitiesDiet and Weight Reducing CentersEnvironmental ConsultingGolf Courses and Country ClubsHazardous Waste Collection
12 Goods and Services: Scale of Elemental DominanceNot in the text
13 4 Characteristics of Services 1. Intangibility - “u can’t touch this”2. Production (or performing the service) and Consumption (using the service) - happens at the same time3. Heterogeneity - services are not always delivered the same way4. Perishability - cannot be put in inventory or stored for later useie. You can’t buy 2 haircuts
14 Characteristics of Services 1. Intangibility - “u can’t touch this”Services cannot be storedServices cannot be protected through patents- therefore a really great travel package and service can be copieda really great physical object can be patented, and NOT allowed to be copied
15 Characteristics of Services 1. Intangibility - “u can’t touch this”Hard to explain and display Services if you can’t see themPrices are difficult to set - depends on customers expectationsNot in the text
16 Characteristics of Services 2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same timemass production of services is hard to doNot in the text
17 Characteristics of Services 2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same timeMarketing StrategiesEmphasize how much you train your people - so their ability to give you good service will be highHave many locations so customers can get to youie. Insurance sales come to your homeNot in the text
18 Characteristics of Services 3. Heterogeneity - services are not always delivered the same wayIt is very difficult to standardize serviceseg. A machine can make ice cream cones a standard size 100% of the timeA person filling an ice cream cone with a scoop cannot do it the same amount each time, unless you use a machine to dispense the ice creamNot in the text
19 Characteristics of Services 3. Heterogeneity - services are not always delivered the same wayIt is very difficult to standardize serviceseg. A Taxi driver cannot drive you to the office in exactly the same time each day because the traffic patterns changeeg. A travel agent can sell you a vacation package - but cannot guarantee you will like the trip exactly the same way another tourist did.Not in the text
20 Characteristics of Services 4. Perishability - cannot be put in inventory or stored for later useie. You can’t buy 2 haircutsDemand fluctuates and changes, sometimes depending on the season, or weathereg. Taxi in the rain, vacation in summerNot in the text
21 Characteristics of services IntangibleVariableServiceCharacteristicsInseparablePerishableTemporaryownership
22 So what’s it all about? No ownership Not inventoried Intangible dominatedCustomer involvement in productionOther customers may form part of the productMore variability than productsMore difficult to evaluateTime = important
23 Key factors behind the growth of services Consumer BusinessDemographicsSocial norms and working2 income familiesIncrease in quality of lifeGreater life complexityInternational travel and mobilityIncreasing aspirationsGlobalisationE- businessIT linked to competitive advantageGlobalisationGrowth in government servicesMergers and acquisitionsToo expensive to retain service expertiseOutsourcing ofservices
24 Results in…In the US 80% of employment and 77% of GDP is attributable to the service sector.In the UK 63% of employment and 76% of GDP is attributable to the service sector.Across Europe, services account for most growth in new jobsBusiness services are growing even where manufacturing is in declineService sector accounts for >50% of GNP and employs >50% of work force in many Latin American countriesNow growing rapidly in developing nations(World Bank)
25 Services dominate the Economy: GDP by Industry, 2001 Agriculture, Forestry,Mining, Construction 8%Finance, Insurance,Real Estate20%Manufacturing 14%Government(mostly services)13%Wholesale andRetail Trade16%Other Services 11%Transport, Utilities,Communications8%SERVICESBusinessServices5%Health6%Source: Bureau of Economic Analysis, November 2002
26 In China (2004)share of the economyServices sector contributed $265 billion of its economic growthservice46%Small factory13%primary41%industries
27 Assignment Prepare a PPT of. 5 organizations providing services in different categories .How these companies tangibalise their intangible services.TOTAL OF 8 SLIDES.Presentation Time- 5 minutes.Give one page write up on services industry relevance in today’s economy with facts and figures- Mention along the sources.Date of presentation-