LECTURE 1 – FOUNDATION OF SERVICES MARKETING

TODAY’S PROGRAM

 Introduction to the subject (lecture program, learning

resources and assessment)
 Lecture 1 : Introduction to Services Marketing
 Class Discussion
INTRODUCTION TO THE SUBJECT–
PROGRAM, RESOURCES, ASSESSMENT
INTRODUCTION TO THE SUBJECT –
WHAT YOU WILL LEARN
INTRODUCTION TO THE SUBJECT
– LEARNING RESOURCES

Textbook :
Services Marketing – Integrating Customer Focus
Across the Firm. Valerie A.Zeithaml, Mary Jo Bitner
and Dwayne D Gremler. Mc Graw Hill, 7th edition.

Other learning resources :

Materials posted on FEBIOLA
INTRODUCTION TO THE SUBJECT – TEACHING TEAM

Dr Luki Pratomo Dr Ayu Ekasari Dr Evi Lanasier

Class Day/Time Class Day/Time Class Day/Time

Email Email evi@lanasier.com

INTRODUCTION TO THE SUBJECT
– ASSESSMENTS

Assessment 2 Assessment 3
Assessment 1
: Case Study : Services
: Presentation
Analysis Diary
 First, select one service from the category below :
ASSESSMENT 1 – PRESENTATION
Fitness Centre
Banking or Wellness Retail Shop
Centre
Due date Week 2 to Week 6

Group/Individual Group (2-3 members)

Education/Sch
Hospital Cinema
Length 15 minutes ool

Weighting 10%
Beauty
Restaurant/Ca
Submission email to your lecturer the day before Salon/Spa/Ma
fé
the schedule ssage

For this assessment you are required to create a Second, select one theory which you will present in
presentation with group members. The topics and the context of the service category above
theories are listed below. Week # Theory
Week 2 a. Customer Expectation, OR
b. Critical Incident
The theory is linked to the week of the presentation as Week 3 a. Importance/Performance Matrix, OR
b. Switching Behaviour
shown below. The theory provides the underpinning of the Week 4 a. Services Blueprint, OR
b. Servicescape
presentation. For example, a presentation might be about Week 5 a. Boundary Spanner, OR
b. Managing Demand
the customer expectation when selecting a savings Week 6 a. Managing Services Promises, OR
account (Banking sector). The slides will mainly show the b. Services Pricing Structure

service or experience and the notes section will contain

information about the theory.
 ASSESSMENT 2 – CASE STUDY ANALYSIS
Due date Week 4, Friday by 11.59pm
Guidelines for Case Analysis:
1. A case scenario (Rentafriend.com) is given below, that gives you the Group/Individual Individual
opportunity to identify a problem and recommend a course of action
Length 4 – 5 pages
within a business situation. Case analysis will enable you to improve their
critical thinking and analytical abilities, evaluate source information and Weighting 15%
enhance your written communication.
2. The case analysis has a page limit which will be strictly enforced. The Submission Upload into FEBIOLA
intention is to focus on analysis and consequent recommendation. A
simple reinstatement of case data and facts should be avoided.
Application of ideas with the use relevant services marketing theory and
concepts, models and frameworks will strengthen the quality of the
analysis.
3. The details of the case are more than sufficient to respond to the given
questions and the students can do further background research if require.
4. The case should include references from peer-reviewed academic
journals, textbooks, business magazines, industry whitepapers credible
and reliable websites and marketing textbooks. It is expected that a
minimum of 4 references are to be used for the analysis.
5. In constructing this case analysis, a report format is preferred to an essay
format (thus, the use of headings and sub-heading is recommended). Pls
do not write the case analysis in Q&A format.
 You are to act as a “mystery shopper” and document the

ASSESSMENT 3 – SERVICES DIARY service experience with an organisation (e.g., small business
such as hairdresser or massage services) or event (e.g., local
festival or cinema). The service experience diary is designed to
help you understand customer expectations and why
Due date Week 8 consumers are sometimes satisfied or dissatisfied with the
Group/Individual Individual service experience.

Length 8 – 10 pages You are required to visit or experience a service organisation or

event in the last 12 months. For example, going to a cinema,
Weighting 25% exercise at fitness centre, dine out in the restaurant, getting
hair cut at the beauty salon OR receiving a service at University
Submission Upload into FEBIOLA
such as using the library.
Structure of the Diary : The report will be easier to do if you select a service that is
• Brief relevant background about you and the
heavily intangible dominant. Refer to the figure from the lecture
situational influences of the purchase
slides for intangibility spectrum.
• Describe the pre-purchase stage
• Describe the actual visit/experiences
• State the satisfaction rating/value for money
• Analysis of the experiences by using services theory
(gap 1 to gap 4) Type of organisation Services obtained
Accommodation Overnight stay in the hotel, services apartment or Airbnb
Travel Local public transport (bus, taxi, grab)
Inter city buses
Domestic/International flight
Cinema Movie
Personal Services Hairdressing, Spa and Massage
Medical Services Doctor’s office, hospital or dentist office
Professional Services Accounting services, legal services
Educational Services Training, workshops, library, lectures
LECTURE 1 – INTRODUCTION TO MARKETING
WHAT IS SERVICES ?
 Any act, performance or experience that one party can offer to another

 Essentially intangible and does not result in the ownership of anything

 Processes (economic activities) that provide time, place, form, problem solving or
experiential value to the receiver

 Something that may be bought or sold but cannot be dropped on your foot
 TANGIBILITY SPECTURM
Salt
⚫ Soft Drinks
⚫ Detergents
⚫ Automobiles
⚫ CosmeticsFast-food
⚫ Outlets
⚫ Intangible
Dominant

Tangible
⚫
Dominant Fast-food
Outlets ⚫
Advertising
Agencies
⚫
Airlines ⚫
Investment
Management ⚫
Consulting⚫
Teaching
 WHY SERVICES ?
 Service (experience) sector is the engine of economic growth in developed and most
developing countries today

 Services are becoming the mainstream focus of marketing

 Every day you use a vast array of services; rentals (furniture, garden plants), IT
services, health, finance, recreation, hospitality, tourism, etc.
EXAMPLES OF SERVICES INDUSTRIES
Consumer services Business services
• Airline • Accountancy
• Banking and finance • Architecture
• Insurance • Engineering
• Medical • Legal services
• Telecommunications • Management consulting
• Hotel • Printing
• Restaurant • Insurance
• Opera/theatre • Telecommunications
• Football match • IT consulting
• House cleaning • Logistics consulting
• Transportation • Marketing research
 WHY STUDY SERVICES MARKETING

• Service-based economies
• Service as a business imperative in manufacturing and IT
• Deregulated industries and professional service needs
• Services marketing is different
• Service equals profits
 CONTRIBUTIONS OF
SERVICES INDUSTRIES TO
GDP
 GOODS VERSUS SERVICES

Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of
Marketing 49 (Fall 1985), pp. 41–50.
 CHARACTERISTICS OF SERVICES
Heterogeinity
Intangibility
- Services delivery and customer
- Services cannot be inventoried
satisfaction depend on employee and
- Services cannot be easily
customer actions
patented
- Service quality depends on many
- Services cannot be readily
uncontrollable factors
displayed or communicated
- There is no sure knowledge that the
- Pricing is difficult
service delivered matches what was
planned and promoted
Intangibility Heterogeinity

Simultaneous
production and Perishability
consumption
Simultaneous production & consumption Perishability
- Customers participate in and affect the - It is difficult to synchronise supply and
transaction demand with services
- Customers affect each other - Services cannot be returned or sold
- Employees affect the service outcome
- Decentralisation may be essential
- Mass production is difficult
AN EXPANDED MARKETING MIX FOR SERVICES (THE 7PS)
 GAPS MODEL OF SERVICE QUALITY
Customer Gap → Difference between
customer expectation and perceptions

Provider Gap 1 (The Listening Gap)

→ Not knowing what customers expect

Provider Gap 2 (The Service Design &

Standard Gap)
→ Not having the right services design and
standards

Provider Gap 3 (The Services Performance

Gap)
→ Not delivering to services standards

Provider Gap 5 (The Communication Gap)

→ Not matching performance to promises
 Customer
Expectations

CUSTOMER ⚫ Provider Gap 1: Not knowing what customers expect

GAP ⚫ Provider Gap 2: Not selecting the right service designs and standards

⚫ Provider Gap 3: Not delivering to service standards

⚫ Provider Gap 4: Not matching performance to promises

Customer
Perceptions
 Customer Expectations

GAP 1 – THE LISTENING ▪ Inadequate marketing research orientation

GAP Insufficient marketing research
Research not focused on service quality
Inadequate use of market research
▪ Lack of upward communication
Lack of interaction between management and customers
Insufficient communication between contact employees and managers
Too many layers between contact personnel and top management
▪ Insufficient relationship focus
Lack of market segmentation
Focus on transactions rather than relationships
Focus on new customers rather than relationship customers
▪ Inadequate service recovery
Lack of encouragement to listen to customer complaints
Failure to make amends when things go wrong
No appropriate recovery mechanisms in place for service failures

Customer Perceptions
 Customer Expectations

GAP 2 – THE SERVICES ▪ Poor service design

DESIGN & STANDARD Unsystematic new service development process
Vague, undefined service designs
Failure to connect service design to service positioning
▪ Absence of customer-driven standards
Lack of customer-driven service standards
Absence of process management to focus on customer
requirements
Absence of formal process for setting service quality goals
▪ Inappropriate physical evidence and servicescape
Failure to develop tangibles in line with customer expectations
Servicescape design that does not meet customer and
employee needs
Inadequate maintenance and updating of the servicescape

Customer Perceptions
 Customer Expectations

GAP 3 – SERVICES ▪ Deficiencies in human resource policies

PERFORMANCE GAP Ineffective recruitment
Role ambiguity and role conflict
Poor employee-technology job fit
Inappropriate evaluation and compensation systems
Lack of empowerment, perceived control, and teamwork
▪ Customers who do not fulfill roles
Customers who lack knowledge of their roles and responsibilities
Customers who negatively impact each other
▪ Problems with service intermediaries
Channel conflict over objectives and performance
Difficulty controlling quality and consistency
Tension between empowerment and control
▪ Failure to match supply and demand
Failure to smooth peaks and valleys of demand
Inappropriate customer mix
Overreliance on price to smooth demand

Customer Perceptions
 Customer Expectations

GAP 4 ▪ Lack of integrated services marketing communications

THE COMMUNICATION GAP Tendency to view each external communication as independent
Not including interactive marketing in communications plan
Absence of strong internal marketing program
▪ Ineffective management of customer expectations
Absence of customer expectation management through all forms of
communication
Lack of adequate education for customers
▪ Overpromising
Overpromising in advertising
Overpromising in personal selling
Overpromising through physical evidence cues
▪ Inadequate horizontal communications
Insufficient communication between sales and operations
Insufficient communication between advertising and operations
Differences in policies and procedures across branches or units

Customer Perceptions
CLASS DISCUSSION– BREAKOUT ROOM DISCUSSION
Activity 1
Roughly estimate your spending for an average month. What percentage of your
spending goes for services versus goods? Do the services you purchase have
value? In what sense? If you had to cut back on your expenses, what would you
cut out? - discuss on compare with your team members

Activity 2
Try a service you have never tried before on the Internet or on your smart phone.
Analyze the benefits of this service. Was enough information provided to make
the service easy to use? How would you compare this service to other methods
of obtaining the same benefits? – choose one service which every team
members agree

Activity 3
Use the Internet to locate the website of Disney, Marriott, Ritz-Carlton, or any
other well-known, high-quality service organization. Which provider gaps has the
company closed? How can you tell? – discuss with your team members