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Getting Started on Services Marketing
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Services Dominate the Modern Economy
Around the world, the service sector is experiencing near revolutionary change. Innovators constantly launch new ways to satisfy existing needs and to meet needs that we did not even know we had.
HSBC Holdings, one of the world’s largest banking groups, is turning to its own backyard, Asia, in search of profit and growth after two decades of expansion in the US and Europe.
This policy shift is sharply focused on expanding the personal or retail business of HSBC (bank) in major Asia markets because sustained high growth in many Asian economies has increased the demand for banking services.
NBC Asia, a subsidiary of the National Broadcasting Company, has launched CNBC Asia, a 24-hour business and financial news network offering news coverage from three continents. Its service includes round-the-clock information for the world’s leading stock markets comprising a constant stream of news, trading updates, market indications, etc.
Contribution to GDP
agriculture: 12.3%industry: 32.6%services: 55.1% (2010 est.)
agriculture: 3.9%industry: 25.5%services: 70.6% (2010 est.)
agriculture: 1.2%industry: 22.2%services: 76.6% (2010 est.)
agriculture: 1.3%industry: 27.2%services: 71.5% (2010 est.)
agriculture: 10.2%industry: 46.9%services: 43% (2010 est.)
agriculture: 0.9%industry: 55.5%services: 43.6% (2010 est.)
Most New Jobs are Generated by Services
Employment is predicted to continue shrinking in manufacturing, mining, and agriculture in many different countries.
Some of the fastest growth is expected in knowledge-based industries such as professional and business services, education, and health services.
Powerful Forces are Transforming Service Markets
Service markets are shaped by government policies, social changes, business trends, advances in information technology, and internationalization. Collectively, these forces are reshaping demand, supply, the competitive landscape, and even customers’ styles and decision making.
Government
Policies
Business
Trends
Social
Changes
Advances in
IT
Globalization
Innovation in service products & delivery systems, stimulated by better technology
Customers have more choices and exercise more power
Success hinges on:● Understanding customers and competitors
● Viable business models
● Creation of value for customers and firm
● New markets and product categories
● Increase in demand for services
● More intense competition
Transforming the Service Economy
Customer needs and behavior are evolving, in response to changing demographics and lifestyles. Thus, managers of service organizations need to focus more sharply on marketing strategy if they hope to meet – or even anticipate – these needs with services that customers see as offering value.
Customers are a vital source of ideas, not only for new products but also for improvements to existing ones.
By working with R&D experts, and with operations and HR managers, marketers may be able to create new service features that customers will value.
What is Service?
A type of economic activity that is intangible, is not stored and does not result in ownership. A service is consumed at the point of sale. Services are one of the two key components of economics, the other being goods. http://www.investorwords.com/6664/service.html
A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not usually result in ownership of any of the factors of production. (Lovelock)
How Services Differ from Goods
Customers do to obtain ownership of services Service products are intangible performances Greater involvement of customers in the production
process Other people may form part of the product More variability in operational inputs and outputs Many services are difficult for customers to evaluate Absence of inventories after production Time factor is relatively more important Delivery systems may involve both electronic and
physical channels
Services Pose Distinctive Marketing Challenges
Difference Implications Marketing-Related Tasks
Most service products cannot be inventoried
Customers may be turned away or have to wait
Smooth demand through promotions, dynamic pricing, and reservations
Work with operations to adjust capacity
Intangible elements usually dominate value creation
Customers can’t taste, smell, or touch these elements and may not be able to see or hear them
Harder to evaluate service and distinguish from competitors
Make services tangible through emphasis on physical clues
Employ concrete metaphors and vivid images in advertising, branding
Services are often difficult to visualize and understand
Customers perceive greater risk and uncertainty
Educate customers to make good choices, explain what to look for, document performance, offer guarantees
Services Pose Distinctive Marketing Challenges
Difference Implications Marketing-Related Tasks
Customers may be involved in co-production
Customers interact with provider’s equipment, facilities, and systems
Poor task execution by customers may hurt productivity, spoil service experience, curtail benefits
Develop user-friendly equipment, facilities, and systems
Train customers to perform effectively; provide customer support
People may be part of the service experience
Appearance, attitude, and behavior of service personnel and other customers can shape the experience and affect satisfaction
Recruit, train, and reward employees to reinforce the planned service concept
Target the right customers at the right times, shape their behavior
Services Pose Distinctive Marketing Challenges
Difference Implications Marketing-Related Tasks
Operational inputs and outputs ten to vary more widely
Harder to maintain consistency, reliability, and service quality or to lower costs through higher productivity
Difficult to shield customers from results of service failures
Set quality standards based on customer expectations; redesign product elements for simplicity and failure-proofing
Institute good service recovery procedures
Automate customer-provider interactions; perform work while customers are absent
The time factor often assumes great importance
Customers see time as a scarce resource to be spent wisely; dislike wasting time waiting, want service at times that are convenient
Find ways to compete on speed of delivery, minimize burden of waiting, offer extended service hours
Services Pose Distinctive Marketing Challenges
Difference Implications Marketing-Related Tasks
Distribution may take place through nonphysical channels
Information-based services can be delivered through electronic channels such as the internet or voice telecommunications, but core products involving physical activities or products cannot
Seek to create user-friendly, secure websites and free access by telephone
Ensure that all information-based service elements can be downloaded from site
A Framework For Developing Effective Service Marketing Strategies
Understanding Customer Needs, Decision Making, and Behavior in Service Encounters
Building the Service Business Model
Managing the Customer Interface
Implementing Profitable Service Strategies
Framework
Building The Service Model
Develop service concept: core & supplementary elements
Select physical & electronic channels for service delivery
Set prices with reference to costs, competition & value
Value Exchange
The Value Proposition
The Business Model
Educate customers & promote the value proposition
Position the value proposition against competing alternatives
Design and manage service processes
Balance demand against productivity capacity
Plan the service environment
Manage service employees for competitive advantage
Framework
Managing the Customer Interface
Framework
Implementing Profitable Service Strategies
Create customer relationship and build loyalty
Plan for service recovery and create customer feedback systems
Continuously improve service quality and productivity
Organize for change management and service leadership
8P’s of Service Marketing
Product Elements
Promotion and Education
Physical Environment
Productivity and Quality
People
Process
Price and Other User
Outlays
Place and Time