School of Hospitality Management

Chapter 1
Introduction to Services

Fall 2022
Fall 2016
Hospitality Marketing
Hospitality Marketing
 HM 442: Hospitality Marketing

Today’s Topics
● What are services?

● Why services marketing?

● Comparing services and goods

● Services marketing mix

 HM 442: Hospitality Marketing

Questions
● What are services?
 What are services?

Give Me Some Examples of Services

 What are services?

Examples of Service Industries

● Health Care ● Hospitality
 hospitals, medical practice, dentists,  restaurants, hotels/motels, bed
eye care & breakfast,
● Professional Services
 ski resorts, rafting, theme parks

 accounting, legal, architectural

● Travel
 airlines, travel agencies, OTAs
● Financial Services
 banking, investment advising,
insurance
● Others
 hair styling, pest control, plumbing,
lawn maintenance, counseling
services, health clubs
 What are services?

Tangibility Spectrum

Source: Shostack (1977)

 What are services?

Four definitions of “service”

1. Services industries and companies:

Core product is service.

2. Services are products:

Intangible product offerings that customers value.

3. Customer service:
Service provided in support of company’s core products.

4. Derived service:
Value derived from physical goods is really the services
provided by the goods, not the good itself.
 Why Services Marketing?

Why services marketing?

• Services dominate
Service
the U.S. and global economy
Industries
Companies
• The service-driven economy accounts for a large number of
jobs in the United States Services are growing dramatically
 Why Services Marketing?

Why services marketing? (Cont’d)

Service
Industries
Companies
• Services can provide higher profit margins and growth
potential than products

• Services can be used as a differentiation strategy in

competitive markets

Ferrari theme park

 Why Services Marketing?

Services marketing is challenging!

You will want to make sure that you deliver customer satisfaction
at a profit…
[DISCUSSION]

Challenges for Services Marketing

● List as many challenges as you can!

● Share and discuss!

[DISCUSSION]

Challenges for Services Marketing

o Accommodating fluctuating demand
o Motivating and sustaining employee commitment
o Coordinating marketing, operations, and human resource efforts
o Setting prices
o Finding a balance between standardization versus customization
o Defining and improving quality
o Ensuring the delivery of consistent quality
o Designing and testing new services
o Communicating and maintaining a consistent image
 Question:
 How is services marketing different from traditional marketing?
 Services vs. Goods

• Service delivery depend

• Cannot be inventoried;
on employee and
• Cannot be easily patented;
customer;
• Cannot be readily
• Many uncontrollable
displayed or
factors;
communicated;
• No sure knowledge if
• Pricing is difficult.
service matches promises.
Tangible vs. Standardized vs.
Intangible Heterogeneous

Separate vs. Non-perishable vs.

Simultaneous Perishable
• Customers co-produce;
• Services cannot be
• Customers influence each
returned or resold;
other;
• Difficult to synchronize
• EE affect service outcome;
supply and demand.
• Decentralization;
• Mass production is
difficult.
 Services Marketing Mix

Traditional Marketing-mix: 4Ps

• All elements within the control of the firm that communicate the
firm’s capabilities and image to customers or that influence customer
satisfaction with the firm’s product and services.
 Comparing services and goods

What’s missing?
 Services Marketing Mix

Expanding Mix for Services

Place
The 7Ps • Channel Type
• Exposure
Product • Transportation
•… Promotion
• Quality Level • Promotion blend
• Branding • Sales
•… • Advertising
•…

Target Price
Market • Price level

People • Differentiation
• Allowance
• …

Physical
Process
Evidence
 Services Marketing Mix

Expanding Mix for Services: The 7Ps

• People
 All human actors who play a part in service delivery and thus
influence customer perceptions
 e.g., the firm’s personnel, the customer, and other customers in
the service environment
 Services Marketing Mix

Expanding Mix for Services: The 7Ps

• Physical evidence
 The environment in which the service is delivered, and
 Any tangible components that facilitate performance or
communication of the service.
 Logo, signage, equipment, web pages, employee uniforms, etc.
[EXAMPLE]
 Services Marketing Mix

Expanding Mix for Services: The 7Ps

• Process
 The actual procedures, mechanisms, and flow of activities
by which the service is delivered.
 Service and Technology

The Sharing Economy (P2P)

 Service and Technology

New ways to deliver service

https://www.youtube.com/watch?v=O3_4zR7
 Service and Technology

New ways to deliver service

● Robot server ● Fitness Mirror

 Service and Technology

Service and Technology

● Potential for new service offerings

● New ways to deliver service

● Enabling both customers and employees

● Extending the global reach of services

● The internet is a service

1997 2003 2004 2006 2010 2011 2011

 HM 442: Hospitality Marketing

Next Class
● Chapter 2: The Gaps Model of Service Quality

● Group Project Overview