Gilbert A. Churchill, Jr. J. Paul Peter Chapter 11 Marketing Services Marketing Products, such as bank loans or home security, that are intangible or substantially so.

Services Receipts Source: Statistical Abstract of the United States (1996), p Services Receipts (in billions) 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, , Year Slide 11-1

The Economic Importance of Services Jobs in Great Britain Jobs in Germany Jobs in Japan Goods Producing Service Producing 27% 73% 43% 57% 38% 62% 21% 79% Jobs in U.S. in 1992Jobs in U.S. in % 82% Source: Arlington Star Telegram, September 2, 1996, p. B9. Slide 11-2

Characteristic Client relationship Perishability Services Services often involve an ongoing personal relationship. Especially when dealing with a doctor, lawyer, etc. Intangibility Characteristics that Distinguish Services from Goods Slide 11-3a Table 11.1 Goods Goods often involve an impersonal, short-term relationship, although relationship strength and duration are increasing. Goods can be placed in inventory for use at another time. Services can be used only at the time they are offered. The customer owns only memories or outcomes, such as greater knowledge or styled hair. The customer owns objects that can be used, resold, or given to others.

Characteristic Inseparability Customer effort Services Services often cannot be separated from the person providing them. Uniformity Slide 11-3b Table 11.1 Goods Goods typically are produced and sold by different people. Customer’s involvement may be limited to buying completed product and using it. Customer can be more involved in production of services. Because of inseparability and high involvement, each service may be unique, with the quality likely to vary. Variations in quality and variance from standards can be corrected before customers purchase products. Characteristics that Distinguish Services from Goods

Goods/Service Continuum Slide 11-4 Lumber Computer with Service Contract Restaurant Dinner Oil Change Maid Service Mostly Intangible Services Mostly Tangible Goods

Categorizing Services by Means of Delivery Slide 11-5 Unskilled OperatorsSkilled OperatorsUnskilled LaborSkilled LaborProfessionals America Online Kelly Services Equipment Based People Based Automated

The Marketing Environment for Services The same dimensions of the marketing environment that affects goods also affects marketers of services Economic Environment Political and Legal Environment Social Environment Natural Environment Technological Environment Competitive Environment TM PP PP Slide 11-6

The Marketing Mix for Services: Product Slide 11-7 Camping Equipment Camping Trips Identical for each Customer Varies by Customer Standardized Goods Customized Services

Slide 11-8 Tools–Massachusetts Highway Department Road Use Fees–Yellowstone Park Entrance Rent–Kroger Center Office Space Fare–Taxi Ride Rate–Marriott Hotel Room Tuition–Harvard Degree The Marketing Mix for Services: Pricing

Slide 11-9 Table 11.3 The Marketing Mix for Services: Placement TYPEDESCRIPTIONEXAMPLE Product Nature of Interaction between Customer and Service Organization Single Site Multiple Sites Theater Barbershop Customer goes to service organization Service organization comes to customer Customer and service organization transact at arm’s length (by mail or electronic communications Lawn care service Pest Control service Taxi service Credit card company Local TV station Broadcast TV network Telephone company Mail Delivery Emergency repair service Bus service Fast-food chain Availability of Service Outlets Sources: Reprinted from Christopher H. Lovelock, Services Marketing, 2nd ed. (Englewood Cliffs, N.J.: Prentice Hall, 1991), p. 33. An earlier version of this figure appeared in Christopher H. Lovelock, “Classifying Services to Gain Strategic Marketing Insights,” Journal of Marketing (Summer 1983), p. 18.

Slide Table 11.3 The Marketing Mix for Services: Promotion Advertising Personal Selling Intangibles require promotion to explain what the service is and how it will benefit the buyer. Promotion

Slide Types of Nonprofit Organizations Public - local, state, federal governments, post office Cultural - museums, symphonies, libraries, and operas Education - school, colleges, universities Religious - churches, temples, mosques Philanthropic - foundations, charities, Social causes - environmental, consumerism

Decisions Product Price Can not adjust product to increase marketability Market complex ideas - with no direct benefit to donor (e.g.,MADD) Range of involvement can be low (don’t litter) to high (stop smoking) Place Slide Difficulties Need to provide better time and place utility (e.g., salvation army; museums go on tour, universities provide better schedules) Many can not do it all all (because its illegal or lack of resources) Public Service Advertisement (PSA) - an announcement that promotes the message (“a public service message from the ad council”) Characteristics that Distinguish Services from Goods Promotion Indirect payment through taxes - public parks and libraries Break even pricing (Post office) or below cost pricing (university)