1. The ‘Services’ Sector

2. What Are Services? Services are deeds, processes, and performances.
Nature of product.
Greater involvement of customers in the production process.
People as part of the product.
Greater difficulties in maintaining quality control standards.

3. A Different Context for Services Marketing
Narrow definition of marketing by other managers.
Limited appreciation for marketing skills.
Different organizational structure.
A relative lack of competitive data.
Problems determining costs.
Constraints and opportunities facing marketers of public and nonprofits.

4. Examples of Service Industries
Health Care
hospital, medical practice, dentistry, eye care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Hospitality
restaurant, hotel/motel, bed & breakfast,
ski resort, rafting
Travel
airlines, travel agencies, theme park
Others:
hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

5. Gross Domestic Product by Industry
Percent of U.S.
Gross Domestic Product by Industry 80 70 60
Percent of GDP 50 40 30 20 10
Services
Manufacturing
Mining & Agriculture
1948
1959
1967
1977
1987
1996
Year
Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981):

18. Importance of Service Sector
$3.52 trillion of U.S. GDP
53.2% of U.S. GDP
71% of total employment
91% of new jobs from 1992 to 2005
Fast growing services for the next decade
Health services
Business services
Finance, insurance, real estate
Residential care
Computer & data processing
Child day-care
Social services
Transportation services

19. Factors Contributing to Growth
Movement to information age
Shift to knowledge-based economy
Aging population
Longer life expectancies
Increase leisure time
High per capita income
Changing social and cultural values
Advances in technology

20. Challenges for Services
Defining and improving quality
Communicating and testing new services
Communicating and maintaining a consistent image
Motivating and sustaining employee commitment
Coordinating marketing, operations and human resource efforts
Setting prices
Standardization versus personalization

21. Differences Between Goods and Services
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability

22. Figure 1-1 Tangibility Spectrum
Salt 
Soft Drinks 
Detergents 
Automobiles 
Cosmetics 
Fast-food
Outlets 
Intangible
Dominant
Tangible
Dominant  
Fast-food
Outlets 
Advertising
Agencies 
Airlines 
Investment
Management 
Consulting
Teaching

23. Table 1-2 Services are Different
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”
Journal of Marketing 49 (Spring 1985):

24. Figure 1-5 The Services Marketing Triangle
Company
(Management)
External Marketing
Internal Marketing
“setting the
promise”
“enabling the
promise”
Employees
Customers
Interactive Marketing
“delivering the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

25. Services Marketing Triangle Applications Exercise
Focus on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle?
How is each type of marketing being carried out currently?
Are the three sides of the triangle well aligned?
Are there specific challenges or barriers in any of the three areas?

26. Ways to Use the Services Marketing Triangle
Specific Service Implementation
What is being promoted and by whom?
How will it be delivered and by whom?
Are the supporting systems in place to deliver the promised service?
Overall Strategic Assessment
How is the service organization doing on all three sides of the triangle?
Where are the weaknesses?
What are the strengths?

27. The Services Triangle and Technology
Company
Technology
Customers
Providers
Source: Adapted from A. Parasuraman