SERVICE MARKETING

Chapter- 1
Introduction to
Services

BRIG GEN AKM IQBAL AZIM, ndc, psc, G+, PhD 1

 Understanding of Services
 “Service are going to move in this decade to being the front edge of
the industry”- IBM’s former CEO, Louis V Gerstner.

 Manufacturing giants shifted focus to service. IBM CEO, Sam

Palmisano, has reinforced focus on service.

 IBM is the largest service business in the world. It is the global leader
in IT service and consulting with approximately 200,000 services
professionals around the world.

 Through its global Services division, IBM offers product support

services, professional consulting services, and network computing
services.
2
 Understanding of Services…cont
 Many businesses have outsourced entire service functions to IBM. Its
services earn IBM is $48 billion, more than half company’s total revenue.

 Promises to be the engine of growth into the future known as “new

Wave of Services” .

 Switching from a manufacturing to a service and customer focus is

indeed a big challenge.

 It requires changes in management mind set, changes in culture,

changes in the ways people work and are rewarded and new ways of
implementing customer solutions.
3
 Understanding of Services…cont

 Definite switch that the company has made from hardware to service
and the strategic focus on customers. Hundreds of researchers currently
focusing on service science and service innovation.

 Services are not limited to service industries, services can be very

profitable and services are challenging to manage and market. It
represent a huge and growing percentage of the world economy.

4
FIGURE 1.1 Contributions of Service Industries to U.S. Gross Domestic Product, 2016 5
 Understanding of Services…cont
 We will learn tools, strategies and approaches for developing and
delivering profitable services that can provide competitive advantage to
firms.”

 At the base of services we will find strong customer focus that extends
across all functions of the firm.

 Service: Services are deeds, processes and performances provided or

coproduced by one entity or person for another entity or person.

 Services are not tangible that can be touched, seen, and felt, but
intangible deeds and performances provided for customer.

 IBM or Dell offers repair and maintenance service for its equipment,
consulting services for IT and e-commerce applications, training services,
web design and hosting etc.
6
 Understanding of Services
 The entire services is represented to the client through problem
analysis activities, meeting with the client, follow up calls, and reporting a
series of deeds, processes and performances.

 Similarly, the core offerings of hospitals, hotels, banks and utilities are
primarily deeds and actions performed for customers or coproduced with
them.

 Services to include “all economic activities whose output is not a

physical product or construction, is generally consumed at the time it is
produced, and provides added value in forms (such as convenience,
amusement, timeliness, comfort or health) that are essentially intangible
concerns of its first purchaser,”
7
 Services Industries, Services as Products,
Customer Service, And Derived Service

 Service Industries and Companies include those industries and

companies typically classified within the service sector whose core
product is a service. Example of pure service companies:
Sonargaon/Sheraton Hotel (lodging), BD Airlines (transportation),
Square (health care) etc.

 Service as products represent a wide range of intangible product

offerings that customers value and pay for in the marketplace. For
example, IBM offer information technology consulting services to
the marketplace.

 Customer Service is the service provided in support of a

company’s core products to building customer relationships. It
can occur on site or it can occur over the phone or via the Internet.
8
 Services Industries, Services as Products,
Customer Service, And Derived Service

 Derived service is another way to look at what service means. In an

award winning article in the Journal of Marketing, Steve Vargo and Bob
Lusch argue for a new dominant logic for marketing that suggests that all
products and physical goods are valued for the services they provide.

 For example, a pharmaceutical provides medical services, a razor

provides barbering services, and computers provide information and data
manipulation services.

 Definition. Marketing is defined by the American Marketing

Association as "the activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large".

9
 Services Industries, Services as Products,
Customer Service, And Derived Service

Banglade Bhuta India* Maldiv Nepal** Pakistan Sri

sh** n (2009) es** (2006) (2006) Lanka*
(2006) (2005) (2006) *
(2006)

Agricult 19.9 24.7 21.8 16 38 22 17.3

ure

Industry 20.6 37.2 25.1 7 20 26 27.3

Service 59.5 38.1 53.1 77 42 52 55.4

FIGURE : Percentage of SAARC Countries Gross Domestic Product by Industry

10
 Services Industries, Services as Products,
Customer Service, And Derived Service

Bangladesh Bhuta India Maldives Nepal** Pakistan Sri

** (2006) n (2009) ** (1995) (2004) (2004) Lanka**
(2004) #* (2006)

Agricultu 63 63 52* 22 76 42 34.3

re
Industry 11 6 14 18 6 20 25.3

Service 26 31 34 60 18 38 40.4

FIGURE : Percentage of SAARC Countries labor force by Industry

11
 Tangibility Spectrum
 Tangibility Spectrum. The board definition of services implies that
intangibility is a key determinant of weather an offering is a service. Very
few products are purely intangible or totally tangible. Instead services
tend to be more intangible than manufactured products.

 For example, the fast food industry, while classified as a service, also
has many tangible components such as the food, packaging and so on.
Automobiles while classified within the manufacturing sector, also
supply many intangibles, such as transportation and navigation services

 Assuming the board definition of services - few “pure services” or “pure

goods”.
12
 Tangibility Spectrum & Trends in the Service Sector

FIGURE 1.2 Tangibility Spectrum

13
FIGURE 1.5 Continuum of Evaluation for Different Types of Products 15
 Trends in the Service Sector

 Trends in the Service Sector. Many modern economics are dominated

by services. United States and other countries did not become service
economics overnight. In US in 1929, 55 percent of the working population
was employed in the service sector, and approximately 54 percent of the
gross national product were generated by services on 1948.

 Figures 1.3 and 1.4 show (later slide) that the trend toward services has
continued, until in 2006 services represented 80 percent of the gross
domestic product (GDP) and 82 percent of employment. The number of
employees and value of the services they produce would be classified as
manufacturing sector data

16
 Tangibility Spectrum & Trends in the Service Sector
9

7
Parcentage of U.S Labor Force

0
1929 1948 1969 1977 1984 1999 2006

Year
Services Manufacturing Mining, Agreeculture and construction

FIGURE 1.3 Percentage of U.S Labor Force by Industry

17
 Tangibility Spectrum & Trends in the Service Sector
9
Percentage of GDP

0
1948 1959 1967 1977 1987 1999 2006

Year
Service Manufacturing Mining, agreecalture and construction

FIGURE 1.4 Percentage of U.S Gross Domestic Product by Industry

18
Why Services Marketing & Service Based Economics
 Important to learn about services marketing, service quality and
service management.

 Many forces have led to the growth of services marketing, and many
industries, companies, and individuals have defined the scope of the
concept, frameworks, and strategies of this field.

 Service Based Economics. First services marketing concepts and

strategies have developed in response to the tremendous growth of
service industries, resulting in their increased importance to the U.S and
world economics. Almost all the absolute growth in numbers of jobs and
in job formation are in service industries, particularly healthcare and IT.

19
Why Services Marketing & Service Based Economics
Country Percent of GDP Attributed of Services
Hong Kong 91
United States 79
France 77
Netherlands 74
United Kingdom 73
Japan 73
Sweden 71
Germany 70
Australia 70
Canada 69
New Zealand 69
Spain 68
Finland 67
Singapore 66
India 61
Brazil 54
Thailand 45
China 40
20
 Why Services Marketing & Service Based Economics

 Trade in services is growing worldwide. In fact, while the U.S balance of

trade in goods remains low, in 2006 $19 billion trade surplus in services.

 World-class providers of services such as American Express,

McDonald's, and Marriott Hotels, together with many small service
companies, are exporting information, knowledge, creativity and
technology that the world badly needs.

 There is a growing market for services and increasing dominance of

services in economics worldwide. This growth is clear in established
economics, as well as emerging economics such as China, where the
central government has placed a priority of service sector growth. The
growth of the service sector has drown increasing attention to the
challenges of service sector industries worldwide.
21
 QU ANS
an WER
EST Sessi
ION d on

42
THANK YOU VERY MUCH

43