Services Marketing

Service Package

Supporting Facility

Explicit Services

Service
Experience
Facilitating
Information Implicit Services Goods

2-2
 A More Elaborate View:
The Service Package
• Supporting Facility: The physical resources that must be in
place before a service can be sold.
– Examples are golf course, ski lift, hospital, airplane.
• Facilitating Goods: The material consumed by the buyer or
items provided by the consumer.
– Examples are food items, legal documents, golf clubs, medical
history.
• Information: Operations data or information that is provided
by the customer to enable efficient and customized service.
– Examples are patient medical records, seats available on a flight,
customer preferences, location of customer to dispatch a taxi.
 The Service Package (cont.)
• Explicit Services: Benefits readily observable by
the senses. The essential or intrinsic features.
– Examples are quality of meal, attitude of the
waiter, on-time departure.
• Implicit Services: Psychological benefits or
extrinsic features which the consumer may sense
only vaguely.
– Examples are privacy of loan office, security of a
well lighted parking lot.
Services Marketing Mix
 The 8Ps of Services Marketing
• Product Elements
• Place and Time
• Price and Other User Outlays
• Promotion and Education
• Process
• Physical Environment
• People
• Productivity and Quality
Working in Unison: The
8Ps of Services Marketing
 (1) Product Elements
• Embrace all aspects of service performance that create
value
• Core product responds to customer’s primary need
• Array of supplementary service elements
– Help customer use core product effectively
– Add value through useful enhancements
• Planning marketing mix begins with creating a service
concept that:
– Will offer value to target customers
– Satisfy their needs better than competing alternatives
 (2) Place and Time
• Delivery decisions: Where, When, How
• Geographic locations served
• Service schedules
• Physical channels
• Electronic channels
• Customer control and convenience
• Channel partners/intermediaries
 (3) Price and Other User Outlays
• Marketers must recognize that customer outlays involve more than
price paid to seller
• Traditional pricing tasks:
– Selling price, discounts, premiums
– Margins for intermediaries (if any)
– Credit terms
• Identify and minimize other costs incurred by users:
– Additional monetary costs associated with service usage (e.g., travel to service
location, parking, phone, babysitting, etc.)
– Time expenditures, especially waiting
– Unwanted mental and physical effort
– Negative sensory experiences
 (4) Promotion and Education
• Informing, educating, persuading, reminding customers
• Marketing communication tools
– Media elements (print, broadcast, outdoor, retail, the Internet, etc.)
– Personal selling, customer service
– Sales promotion
– Publicity/PR
• Imagery and recognition
– Branding
– Corporate design
• Content
– Information, advice
– Persuasive messages
– Customer education/training
 (5) 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
• Process involves choices of method and sequence in service
creation and delivery
– Design of activity flows
– Number and sequence of actions for customers
– Nature of customer involvement
– Role of contact personnel
– Role of technology, degree of automation
• Badly designed processes waste time, create poor experiences, and
disappoint customers
 (6) 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
 (7) People
• Interactions between customers and contact personnel strongly
influence customer perceptions of service quality
• The right customer-contact employees performing tasks well
– Job design
– Recruiting
– Training
– Motivation
• The right customers for firm’s mission
– Contribute positively to experience of other customers
– Possess—or can be trained to have— needed skills (co-production)
– Can shape customer roles and manage customer behavior
 (8) Productivity and Quality
• Productivity and quality must work hand in hand
• Improving productivity key to reducing costs
• Improving and maintaining quality essential for building
customer satisfaction and loyalty
• Ideally, strategies should be sought to improve both
productivity and quality simultaneously—technology
often the key
– Technology-based innovations have potential to create high
payoffs
– But, must be user friendly and deliver valued customer benefits
Strategic Service Classification
 Classifying Services Through
Structural Positioning
• Classifications:
1. The Nature of the Service Act
2. Relationship with Customers
3. Customization and Judgment
4. Nature of Demand and Supply
5. Method of Service Delivery
 Nature of the Service Act
• The service act can be considered across two
dimensions: who or what is the direct recipient of the
service, and the tangible nature of the service. This
creates four possible classifications:
– (1) tangible actions directed to the customer, such as passenger
transportation and personal care;
– (2) tangible actions directed at the customer’s possessions,
such as laundry cleaning and janitorial services;
– (3) intangible actions directed at the customer’s intellect, such
as entertainment; and
– (4) intangible actions performed on the customer’s assets, such
as financial services.
 Nature of the Service Act
Direct Recipient of the Service
Nature of
the Service Act People Things
People’s bodies: Physical possessions:

Health care Freight transportation

Passenger transportation Repair and maintenance
Tangible actions Beauty salons Veterinary care
Exercise clinics Janitorial services
Restaurants Laundry and dry cleaning

People’s minds: Intangible assets:

Education Banking
Intangible actions Broadcasting Legal services
Information services Accounting
Theaters Securities
Museums Insurance
 Relationship with Customers
Type of Relationship between Service Organization and Its Customers
Nature of
Service Delivery “Membership” relationship No formal relationship

Insurance Radio station

Telephone subscription Police protection
Continuous delivery Electric Utility Lighthouse
of service Banking Public Highway

Long-distance phone calls Restaurant

Theater series tickets Pay phone
Discrete transactions Transit pass Toll highway
Sam’s Wholesale Club Movie theater
Airline frequent flyer Public transportation
 Customization and Judgment
Extent to Which Service Characteristics Are Customized
Extent to Which Personnel
Exercise Judgment in Meeting
Customer Needs High Low

Surgery Preventive health programs

High Taxi services Education (large classes)
Gourmet restaurant Family restaurant

Telephone service Public transportation

Hotel services Spectator sports
Low Retail banking Movie theater
Cafeteria Institutional food service
 Nature of Demand and Supply
Extent of Demand Fluctuation over Time
Extent to which Supply
Is Constrained Wide Narrow

Electricity Insurance
Peak demand can Telephone Legal services
usually be met Police emergency Banking
without a major delay Hospital maternity unit Laundry and dry cleaning

Tax preparation Fast food restaurant

Peak demand regularly Passenger transportation Movie theater
exceeds capacity Hotels and motels Gas station
 Method of Service Delivery
Availability of Service Outlets
Nature of Interaction
between Customer and
Service Organization Single site Multiple site

Customer travels to Theater Bus service

service organization Barbershop Fast-food chain

Service provider Taxi Mail delivery

travels to customer Pest control service AAA emergency repairs
Taxi

Transaction is at Credit card company Broadcast network

arm’s length Local TV station Telephone company
 Qualities of services
• Search qualities
• Experience qualities
• Credence qualities
 Consumer Evaluation Processes for Services
 Search Qualities
 attributes a consumer can determine prior to
purchase of a product
 Experience Qualities
 attributes a consumer can determine after purchase
(or during consumption) of a product
 Credence Qualities
 characteristics that may be impossible to evaluate
even after purchase and consumption
 Continuum of Evaluation for
Different Types of Products

Most Most
Goods Services

Easy to evaluate Difficult to evaluate

Clothing

Jewelry

Furniture

Houses

Automobiles

Restaurant meals

Vacations

Haircuts

Child care

Television repair

Legal services

Root canals

Auto repair

Medical diagnosis
{
{
{
High in search High in experience High in credence
qualities qualities qualities
Xpresso Lube Facility
Xpresso Lube’s Service Package
• Supporting Facility

• Facilitating Goods

• Information

• Explicit Services

• Implicit Services
 Xpresso Lube’s Distinctive
Service Characteristics
• Intangibility

• Perishability

• Heterogeneity

• Simultaneity

• Customer Participation in the Service Process

 Xpresso Lube’s Service
Classification
• Nature of the service act

• Relationship with customers

• Customization and judgement

• Nature of demand and supply

• Method of service delivery

 Beyond Xpresso Lube

• What elements of Xpresso Lube’s location

contribute to its success?

• Given the example of Xpresso Lube, what

other services could be combined to “add
value” for the customer?