Chapter 1 Introduction to Services Chapter Objectives Understand

Chapter 1 Introduction to Services

Chapter Objectives • Understand the basic difference between goods and services. • Develop an appreciation for how service can be used as a competitive advantage for both intangible and tangible products. • Appreciate the factors that create the customer’s service experience and why it is important to manage the overall experience. • Comprehend the driving forces behind the importance of the study of services marketing. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Opening Vignette: The Burj al Arab Hotel • The world’s only 7 -star hotel offers guests a remarkable service experience: – – – Magnificent views Large rooms Rain showers and Jacuzzis are standard in every suite A fleet of chauffeur-driven Rolls Royce automobiles Personnel offer the finest in personal service • The concepts that follow provide the keys for delivering a truly remarkable service experience © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Introduction • The new “global services era” is characterized by: – Economies and labor force that are dominated by the service sector – More customer involvement in strategic business decisions – Products that are increasingly market-focused and much more responsive to the changing needs of the marketplace – The development of technologies that assist customers and employees in the provision of services – Employees who have been provided with more discretionary freedom to develop customized solutions to special customer requests and solve customer complaints on the spot with minimal convenience – The emergence of new service industries and the “service imperative, ” where the intangible aspects of the product are becoming more and more the key features that differentiate products in the marketplace © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

What Is a Service? • The distinction between goods and services is not always perfectly clear • Goods: objects, devices, or things • Services: deeds, efforts, or performances © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 1: Scale of Market Entities © 2017 Cengage Learning®. May not be

The Scale of Market Entities • The scale that displays a range of products along a continuum based on their tangibility, ranging from tangible dominant to intangible dominant – Tangible dominant: goods that possess physical properties that can be felt, tasted, and seen prior to the consumer’s purchase decision – Intangible dominant: services that lack the physical properties that can be sensed by consumers prior to the purchase decision © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 2: The Progression of Value © 2017 Cengage Learning®. May not be

Figure 1. 3: The Molecular Model © 2017 Cengage Learning®. May not be scanned,

Creating the Service Experience • Benefit concept: the encapsulation of the benefits of a product in the consumer’s mind • Example: an orange from the grocery store – Unseen services encapsulated in the orange include: • Planting of the orange tree • Caring for the orange tree • Harvesting by grove workers • Directing of workers by management staff • Packing/transporting/distributing to the grocery store © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Servuction Model A framework for understanding the consumer’s experience © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 4: The Servuction Model © 2017 Cengage Learning®. May not be scanned,

The Servicescape • Servicescape: the use of physical evidence to design service environments – Ambient conditions such as room temperature and music – Inanimate objects such as furnishings and equipment – Other physical evidence such as signs, symbols, and personal artifacts such as family pictures and personal collections © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Contact Personnel/Service Providers • Contact personnel: employees other than the primary service provider who briefly interact with the customer • Service providers: the primary providers of a core service – – Waiter or waitress Dentist Physician College instructor © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Other Customers • Other customers: customers who share the primary customer’s service experience – The presence of other customers can enhance or detract from an individual’s service experience • Example: unruly customers in a restaurant or a nightclub, children crying during a church service, or theatergoers talking and texting during a movie © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Invisible Organizations and Systems • Invisible organization and systems: that part of a firm that reflects the rules, regulations, and processes upon which the organization is based © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Why Study Services? 1. The growth of the global service economy in terms of contributions to gross domestic product (GDP) 2. The growth of the global service work force 3. The emergence of technologically based eservices that have transformed many service industries 4. The importance of developing sustainable services marketing business practices © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 5: U. S. Gross Domestic Product: Composition by Industry Sector © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 6: Worldwide Gross Domestic Product: Composition by Service Sector © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 7: Worldwide Gross Domestic Product: Composition by Service Labor Force © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in wholeor in part.

What Are E-Services? • E-service: an electronic service available via the Net that completes tasks, solve problems, or conducts transactions • Many e-services have become more commonly known as self-service technologies – Auto rental chains, banks, insurance companies, hotels, movie rental chains and theaters, and a variety of other retail operations © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 1. 8: Worldwide Internet Users by World Regions © 2017 Cengage Learning®. May

Serving It Up Green: Sustainability Comes to Services • Sustainability: the ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environmental, and social challenges • Pursuing sustainable business practices allows companies to find areas of improvement and competitive advantages in four areas: 1. Eco-efficiency 2. Environmental cost leadership 3. Beyond compliance leadership 4. Eco-branding strategies © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.