SERVICES MARKETING

Kapil R. Tuli

Associate Professor of Marketing

Lee Kong Chian School of Business

Singapore Management University

Some Rules

Go Beyond the Book and create a MESS

(Mental Engagement Stimulation & Simulation)

Participate and enjoy this class

(More than a century of cumulative experience)

Listen & Respect your peers

In Class on Time

Be prepared, read the materials

Avoid cell phones and laptops

Service Industries

Health Care

hospital, medical practice, dentistry, eye care

Professional Services

accounting, legal, architectural

Financial Services

banking, investment advising, insurance

Hospitality

restaurant, hotel/motel, bed & breakfast

ski resort, rafting

Travel

airline, travel agency, theme park

Others

hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design

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Services are an Increasing Important Sector

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Source: Park and Shin (2012), ADB Working Paper Series No. 322 Copyright: Dr. Kapil R. Tuli

Do you see a Trend?

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Source: Park and Shin (2012), ADB Working Paper Series No. 322 Copyright: Dr. Kapil R. Tuli

Do you see a Trend?

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Source: Park and Shin (2012), ADB Working Paper Series No. 322 Copyright: Dr. Kapil R. Tuli

What About the Singapore Economy?

Source: http://www.singstat.gov.sg/statistics/browse_by_theme/national_accounts.html

2014 2014

2010 2011 2012 2013 I II

GDP AT 2010 MARKET PRICES 322,361 341,886 350,446 363,942 91,696 93,690

Goods Producing Industries 84,230 90,109 91,712 93,983 23,750 24,226

Manufacturing 65,040 70,118 70,342 71,512 18,081 18,542

Construction 14,221 14,923 16,201 17,194 4,378 4,322

Utilities 4,851 4,944 5,044 5,155 1,258 1,332

Other Goods Industries1

118 123 124 122 32 30

Services Producing Industries 208,683 222,564 228,717 240,929 60,661 62,060

Wholesale & Retail Trade 58,449 62,619 62,545 66,355 16,331 16,956

Transportation & Storage 25,423 26,773 28,157 29,059 7,222 7,437

Accommodation & Food Services 5,921 6,561 6,713 7,015 1,779 1,756

Information & Communications 11,073 11,935 12,655 13,200 3,328 3,424

Finance & Insurance 33,154 36,184 36,837 40,802 10,617 10,912

Business Services 42,119 44,424 46,847 48,867 12,320 12,452

Other Services Industries 32,544 34,069 34,963 35,632 9,064 9,123

Ownership of Dwellings 11,514 11,649 11,958 12,237 3,145 3,147

Gross Value Added At Basic Prices 304,428 324,322 332,386 347,149 87,556 89,432

Add: Taxes on Products 17,933 17,565 18,060 16,793 4,140 4,258

Contribution of Services 65% 65% 65% 66% 66% 66%

Million Dollars

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Manufacturers are Entering Into Services

Boeing

A Priori, How Do We Evaluate Goods/ Services?

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Offering Services: Challenges & Opportunities

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Challenges Implications Opportunities

Intangibility Display, Communication, Pricing, and

Inventory.

Differentiate on tangibles.

(A380, Toast Box, Kopitiam)

Heterogeneity Employees are service, Uncontrollable

factors play a big role

Strive to deliver a uniform

experience.

(McDonalds, Starbucks, Ya

Kun Kaya Toast)

Simultaneity Customers participate in production,

Affect each other, Mass production is

difficult

Leverage customer

participation.

(Salad Stop, Marche,

Hibachi Grill)

Perishability Supply & demand synchronization

difficult

Leverage perishability as a

business model

(Scoot, Tiger Air, Priceline)

Marketing Mix for Services

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Dual Lenses View

12

Service Challenges

Intangibility

Heterogeneity

Simultaneity

Perishability

Service

Excellence

Product

Price

Place

Promotion People

Physical

Processes

How do we overcome the challenges by utilizing the critical assets?

An Experience

Taste &

People

Buy & Consume

Short to

No Inventory

Product

Excellence

Copyright: Dr. Kapil R. Tuli

Course Structure

Gap 2

Listen to Customers

Gap 3

Design & Standardize

Gap 4

Deliver/Perform

Gap 5

Communicate

WIT

HIN

FIR

M C

ON

TR

OL

Gap 1

Financial Performance

Customer Satisfaction

Customer Perceptions Customer Expectations

Global, Macro-Economic, & Competitive Forces