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 A Note on the
PowerPoint Slides...
 These PowerPoint slides contain selected exhibits,
figures, and tables from the chapters as well as objectives
for the chapters. For some chapters, we include extra
lecture slides and in-class exercises that we have
compiled and used in our classes. The lecture slides are
not intended to provide full outlines or complete lectures
for the chapters, but rather may be used selectively to
enhance class sessions.

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 Part 1

FOUNDATIONS
FOR SERVICES
MARKETING

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 Chapter
Introduction to Services 1

 What are services?

 Why services marketing?
 Service and Technology
 Characteristics of Services Compared to
Goods
 Services Marketing Mix
 Staying Focused on the Customer

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 Objectives for Chapter 1:
Introduction to Services
 Explain what services are and identify important trends in
services.

 Explain the need for special services marketing concepts and

practices and why the need has developed and is accelerating.

 Explore the profound impact of technology on service.

 Outline the basic differences between goods and services and

the resulting challenges and opportunities for service
businesses.

 Introduce the expanded marketing mix for services and the

philosophy of customer focus, as powerful frameworks and
themes that are fundamental to the rest of the text.

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 Examples of 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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 Figure 1.1

Contributions of Service Industries to

U.S. Gross Domestic Product

McGraw-Hill/Irwin Source: Inside Sam’s $100 Billion Growth Machine, by David Kirkpatrick,
© 2006Fortune, June 14, 2004,Companies,
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 Figure 1.2

Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets
 Intangible
Dominant

Tangible

Dominant Fast-food
Outlets 
Advertising
Agencies

Airlines 
Investment
Management 
Consulting 
Teaching
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 Figure 1.3

Percent of U.S. Labor Force by Industry

80
Percent of U.S. Labor Force
70
60
50
40
30
20
10
0  Services
1929 1948 1969 1977 1984 1999  Manufacturing
Year  Mining & Agriculture

Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli
Ginzberg and George J. Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.

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 Figure 1.4

Percent of U.S. Gross Domestic

Product by Industry
80
70
60
Percent of GDP

50
40
30
20
10
0  Services
1948 1959 1967 1977 1987 1999  Manufacturing
Year  Mining & Agriculture

Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and George J.
Vojta, “The Service Sector of the U.S. Economy,” Scientific American, 244,3 (1981): 31-39.

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 Table 1.1

Eight Central Paradoxes of Technological

Products

Source: D. G. Mick and S. Fournier, “Paradoxes of Technology: Consumer Cognizance, Emotions, and Coping Strategies,” Journal of Consumer
Research 25 (September 1998), pp. 123–47.

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 Table 1.2

Goods versus Services

Source: A. Parasuraman, V.A. Zeithaml, and L. L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of
Marketing 49 (Fall 1985), pp. 41–50.

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 Why study Services Marketing?
 Service-based economies

 Service as a business imperative in manufacturing and IT

 Deregulated industries and professional service needs

 Services marketing is different

 Service equals profits

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 Characteristics of Services
Compared to Goods

Intangibility Heterogeneity

Simultaneous
Production
and Perishability
Consumption

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 Implications of Intangibility
 Services cannot be inventoried

 Services cannot be easily patented

 Services cannot be readily displayed or communicated

 Pricing is difficult

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 Implications of Heterogeneity
 Service delivery and customer satisfaction depend on
employee and customer actions

 Service quality depends on many uncontrollable factors

 There is no sure knowledge that the service delivered

matches what was planned and promoted

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Implications of Simultaneous Production
and Consumption
 Customers participate in and affect the transaction

 Customers affect each other

 Employees affect the service outcome

 Decentralization may be essential

 Mass production is difficult

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 Implications of Perishability
 It is difficult to synchronize supply and demand with
services

 Services cannot be returned or resold

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 Challenges for Services
 Defining and improving quality
 Designing and testing new services
 Communicating and maintaining a consistent image
 Accommodating fluctuating demand
 Motivating and sustaining employee commitment
 Coordinating marketing, operations, and human resource
efforts
 Setting prices
 Finding a balance between standardization versus
personalization
 Ensuring the delivery of consistent quality

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 Traditional Marketing Mix
 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:
 Product
 Price
 Place
 Promotion

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 Expanded Mix for Services --
The 7 Ps
 Product
 Price
 Place
 Promotion
 People
 All human actors who play a part in service delivery and thus influence the
buyer’s perceptions: namely, the firm’s personnel, the customer, and other
customers in the service environment.
 Physical Evidence
 The environment in which the service is delivered and where the firm and
customer interact, and any tangible components that facilitate performance
or communication of the service.
 Process
 The actual procedures, mechanisms, and flow of activities by which the
service is delivered—the service delivery and operating systems.

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 Table 1.3

Expanded Marketing Mix for Services

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 Ways to Use the 7 Ps
Overall Strategic Assessment
 How effective is a firm’s
services marketing mix?
 Is the mix well-aligned with
overall vision and strategy?
 What are the strengths and
weaknesses in terms of the
7 Ps?
McGraw-Hill/Irwin
Specific Service Implementation
 Who is the customer?
 What is the service?
 How effectively does the
services marketing mix for a
service communicate its
benefits and quality?
 What changes/
improvements are needed?
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