1. Introduction to Services
Chapter 1
Introduction to Services

2. Chapter Objectives
Understand the basic difference between goods and services.
Develop an appreciation for how service can be used as a competitive advantage for both intangible and tangible products.
Appreciate the factors that create the customer’s service experience and why it is important to manage the overall experience.
Comprehend the driving forces behind the importance of the study of services marketing.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3. Opening Vignette: The Burj al Arab Hotel
The world’s only 7-star hotel offers guests a remarkable service experience:
Magnificent views
Large rooms
Rain showers and Jacuzzis are standard in every suite
A fleet of chauffeur-driven Rolls Royce automobiles
Personnel offer the finest in personal service
The concepts that follow provide the keys for delivering a truly remarkable service experience
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

4. Introduction The new “global services era” is characterized by:
Economies and labor force that are dominated by the service sector
More customer involvement in strategic business decisions
Products that are increasingly market-focused and much more responsive to the changing needs of the marketplace
The development of technologies that assist customers and employees in the provision of services
Employees who have been provided with more discretionary freedom to develop customized solutions to special customer requests and solve customer complaints on the spot with minimal convenience
The emergence of new service industries and the “service imperative,” where the intangible aspects of the product are becoming more and more the key features that differentiate products in the marketplace
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5. What Is a Service?
The distinction between goods and services is not always perfectly clear
Goods: objects, devices, or things
Services: deeds, efforts, or performances
Products: either a good or a service
Intangibility: a product that lacks physical substance
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

6. Figure 1.1: Scale of Market Entities
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7. The Scale of Market Entities
The scale that displays a range of products along a continuum based on their tangibility, ranging from tangible dominant to intangible dominant
Tangible dominant: goods that possess physical properties that can be felt, tasted, and seen prior to the consumer’s purchase decision
Intangible dominant: services that lack the physical properties that can be sensed by consumers prior to the purchase decision
Service marketing myopia: condition of firms that product tangible products and overlook the service aspects of their products
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8. Figure 1.2: The Progression of Value
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9. Figure 1.3: The Molecular Model
Molecular model: conceptual model of the relationship between the tangible and intangible components of a firm’s operation
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

10. Creating the Service Experience
Benefit concept: the encapsulation of the benefits of a product in the consumer’s mind
Example: an orange from the grocery store
Unseen services encapsulated in the orange include:
Planting of the orange tree
Caring for the orange tree
Harvesting by grove workers
Directing of workers by management staff
Packing/transporting/distributing to the grocery store
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

11. A framework for understanding the consumer’s experience
The Servuction Model
Servuction Model
A framework for understanding the consumer’s experience
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12. Figure 1.4: The Servuction Model
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

13. The Servicescape
Servicescape: the use of physical evidence to design service environments
Ambient conditions such as room temperature and music
Inanimate objects such as furnishings and equipment
Other physical evidence such as signs, symbols, and personal artifacts such as family pictures and personal collections
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

14. Contact Personnel/Service Providers
Contact personnel: employees other than the primary service provider who briefly interact with the customer
Service providers: the primary providers of a core service
Waiter or waitress
Dentist
Physician
College instructor
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15. Other Customers
Other customers: customers who share the primary customer’s service experience
The presence of other customers can enhance or detract from an individual’s service experience
Example: unruly customers in a restaurant or a nightclub, children crying during a church service, or theatergoers talking and texting during a movie
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

16. Invisible Organizations and Systems
Invisible organization and systems: that part of a firm that reflects the rules, regulations, and processes upon which the organization is based
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17. The Servuction Model
The servuction model demonstrates that consumers are an integral part of the service process
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18. Why Study Services?
The growth of the global service economy in terms of contributions to gross domestic product (GDP)
The growth of the global service work force
The emergence of technologically based e- services that have transformed many service industries
The importance of developing sustainable services marketing business practices
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19. Figure 1.5: U.S. Gross Domestic Product: Composition by Industry Sector
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20. Figure 1.6: Worldwide Gross Domestic Product: Composition by Service Sector
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21. Figure 1.7: Worldwide Gross Domestic Product: Composition by Service Labor Force
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

22. What Are E-Services?
E-service: an electronic service available via the Net that completes tasks, solve problems, or conducts transactions
Many e-services have become more commonly known as self-service technologies— technologically based services that help consumers help themselves
Auto rental chains, banks, insurance companies, hotels, movie rental chains and theaters, and a variety of other retail operations
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

23. Figure 1.8: Worldwide Internet Users by World Regions
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24. Serving It Up Green: Sustainability Comes to Services
Sustainability: the ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environmental, and social challenges
Pursuing sustainable business practices allows companies to find areas of improvement and competitive advantages in four areas:
Eco-efficiency
Environmental cost leadership
Beyond compliance leadership
Eco-branding strategies
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.