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Understanding Services Marketing: Key Concepts and Challenges in the Service Sector

This chapter introduces Services Marketing, highlighting its significance in modern economies where services dominate job creation and economic growth. It explores the unique characteristics of services that differentiate them from goods, such as intangibility, variability, and co-production. The content covers the importance of the 7 Ps of marketing—Product, Place, Price, Promotion, Process, Physical Environment, and People—in effectively delivering service experiences. Understanding these concepts helps firms navigate the distinctive marketing challenges they face in the service sector.

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Understanding Services Marketing: Key Concepts and Challenges in the Service Sector

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Presentation Transcript

  1. CHAPTER 1Introduction toServicesMarketing

  2. Why Study Services? • Services Dominate Economy in Most Nations • Most New Jobs are Generated by Services • Fastest Growth Expected in Knowledge-Based Industries • Many traditional manufacturing firms are fast becomingservice firms

  3. Contribution of Services Industries to Global GDP

  4. Contributions of Service Industries toU.S. Gross Domestic Product

  5. Estimated Size of Service Sector in Selected Countries

  6. What are Services? • Five broad categories within non-ownership framework: • Rented goods services • Defined space and place rentals • Labor and expertise rentals • Access to shared physical environments • Systems and networks: access and usage

  7. What is Service? The New View • Service includes every interaction between any customer and anyone representing the company, including: Customer

  8. Four Categories Of Services

  9. Physical vs. Intangible Elements

  10. Services Pose Distinctive Marketing Challenges • Marketing management tasks in the service sector differ from those in the manufacturing sector. • The eight common differences are: • Most service products cannot be inventoried • Intangible elements usually dominate value creation • Services are often difficult to visualize and understand • Customers may be involved in co-production • People may be part of the service experience • Operational inputs and outputs tend to vary more widely • The time factor often assumes great importance • Distribution may take place through nonphysical channels

  11. The 7 Ps of Services Marketing • Product elements • Place and time • Price and other user outlays • Promotion and education • Process • Physical environment • People

  12. Process • Process • How firm does things may be as important as what it does • Customers often actively involved in processes, especially when acting as co-producers of service • Operational inputs and outputs vary more widely • Quality and content varies among employees, between employees • Variations can be with different customers • Variations from time of the day • Variability can be reduced by: • Standardized procedures • Implementing rigorous management of service quality • Training employees more carefully • Automating tasks • Train employees in service recovery procedures • Manage process design and “flow of customers

  13. Physical Environment • Physical environment • Design servicescape and provide tangible evidence of service performances • Create and maintain physical appearances • Buildings/landscaping • Interior design/furnishings • Vehicles/equipment • Staff grooming/clothing • Sounds and smells • Other tangibles • Manage physical cues carefully— can have profound impact on customer impressions

  14. People • People • Interactions between customers and contact personnel strongly influence customer perceptions of service quality • Well-managed firms devote special care to selecting, training and motivating service employees • Other customers can also affect one’s satisfaction with a service

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