BUS4026W
Services Marketing
Kathryn Wahl
Lecture 1
• Focused mainly on products
• But we have so many services around us
• Using it so much more
• Customer relationship is important
Introduction
• What services are
• Characteristics of services
• Service-Profit chain
• Ethics in Services Marketing
• Tesla’s Powerwall versus Eskom [discussion]
What are services?
• There are many service points and opportunities for the service to go wrong
• Eg: Uber delayed, Air hostess rude, check in takes long
• Thus services are unpredictable
• Different products but you need a professional
• Phones: sim provide the service, not the phone
Services vs Products
1. Intangibility
2. Inseparability
3. Heterogeneity
4. Perishability
5. Lack of Ownership
Challenges to Marketers
• Maintaining a competitive advantage
• How do you price it?
• How do you market it?
o Encouraging customer’s to pay for your service
o Showing the customer what the service is before they buy it (e.g.
logo’s)
Inseparability
• The service provider being present
• Additional cues that customers use to evaluate services
• Consistency
• Customers only need to be partially present for the service
• Eg: drop off car at service
• Customers can be mentally, not physically, present
• The involvement of other customers
• Virtual services
1
,Heterogeneity
• All the different experiences the consumer can have
• Service they provide is never the same
• Sometimes going to concerts people around you can make the experience
worse
• If people are talking in the movies
• Child kicking you in the back of the chair
Perishability
• Miss your flight need to buy another ticket
• FOMO
Lack of Ownership
• You don’t own the service
• Purchasing an airline ticket = renting a seat on the plane
Internal Service Quality
• Service providers’ attitude can influence the nature and quality of the service
provided
• Good interrelationships between staff can encourage a more service-oriented
culture
• Allows for a mutually beneficial long-term relationship with customers
• Happy Employees = Good Services = Happy Customers
2
,Employee satisfaction and loyalty
• Internal culture of the organisation must be market-driven and customer-
focused
• The quality of services that employees deliver to external customers will be
related to the treatment they receive from their employers
• Well-trained, well-paid staff working in a well-designed workplace will result in
satisfied employees and improved service quality
Employee productivity
• Satisfied staff will remain with the organisation for longer and their individual
productivity will improve as a result
• The cost of training new employees every six month
External service value
• Enhanced by:
o Increase in employee productivity
o Acceptance of a service culture
o Reflection of service culture in their behaviour towards the customer
Customer satisfaction
• Customer satisfaction should be with the organisation as a whole
• Consistent customer satisfaction can lead to customer loyalty
Customer loyalty
• Customers become loyal as they repeat their purchases
• Loyal customers are beneficial because:
o They generate word of mouth
o They are less price sensitive
o They tend to buy more from you
o Their preferences can be recorded and delivered, making them happier
Ethical Concerns in Services Marketing
• If you advertise certain services on a cruise, you should deliver on those
promises – always! (e.g. unexpected, additional charges once on board)
Lecture 2
Service Quality
3
, Understanding how to manage service quality is an important aspect of marketing
management
Quality = meets or exceeds your expectations
The degree of excellence at an acceptable price and the control of variability at an
acceptable cost (Broh, 1982)
1. Degree of excellence: How well the prototypes perform the intended
function and the benefits they offer relative to competitors’
2. Control of variability: Performance will be high, following safety and
regulation requirements, without defects
3. Acceptable cost: Quality achieved with limited resources to be
profitable and offered at an acceptable price
1 and 2 = Heterogeneity
Cannot be described adequately in a few words, but nevertheless identifies two
dimensions regarded as critical: product performance and freedom from
deficiencies (Juran, 1988)
§ Superiority or excellence
§ Objective quality (predetermined standards)
§ Comparison
§ Perceived quality (Zeithaml, 1988)
§ Perception/attitude/personal judgement
§ Evoked set = main services you like to use eg Netflix and Apple Music
§ Social media and memes can completely change your perception
Sorbet
• Business model: providing convenience
• Similar treatment or experience
• Branches are managed by different people
• “We serve differently, we serve with heart”
• “We don’t have customers. We have guests.”
• “Sorbet is not just a brand. It’s an attitude.”
• Were able to open a Sorbet Man
Service quality
• Stress free
• Being and forgetting personal worries during the day
4
Services Marketing
Kathryn Wahl
Lecture 1
• Focused mainly on products
• But we have so many services around us
• Using it so much more
• Customer relationship is important
Introduction
• What services are
• Characteristics of services
• Service-Profit chain
• Ethics in Services Marketing
• Tesla’s Powerwall versus Eskom [discussion]
What are services?
• There are many service points and opportunities for the service to go wrong
• Eg: Uber delayed, Air hostess rude, check in takes long
• Thus services are unpredictable
• Different products but you need a professional
• Phones: sim provide the service, not the phone
Services vs Products
1. Intangibility
2. Inseparability
3. Heterogeneity
4. Perishability
5. Lack of Ownership
Challenges to Marketers
• Maintaining a competitive advantage
• How do you price it?
• How do you market it?
o Encouraging customer’s to pay for your service
o Showing the customer what the service is before they buy it (e.g.
logo’s)
Inseparability
• The service provider being present
• Additional cues that customers use to evaluate services
• Consistency
• Customers only need to be partially present for the service
• Eg: drop off car at service
• Customers can be mentally, not physically, present
• The involvement of other customers
• Virtual services
1
,Heterogeneity
• All the different experiences the consumer can have
• Service they provide is never the same
• Sometimes going to concerts people around you can make the experience
worse
• If people are talking in the movies
• Child kicking you in the back of the chair
Perishability
• Miss your flight need to buy another ticket
• FOMO
Lack of Ownership
• You don’t own the service
• Purchasing an airline ticket = renting a seat on the plane
Internal Service Quality
• Service providers’ attitude can influence the nature and quality of the service
provided
• Good interrelationships between staff can encourage a more service-oriented
culture
• Allows for a mutually beneficial long-term relationship with customers
• Happy Employees = Good Services = Happy Customers
2
,Employee satisfaction and loyalty
• Internal culture of the organisation must be market-driven and customer-
focused
• The quality of services that employees deliver to external customers will be
related to the treatment they receive from their employers
• Well-trained, well-paid staff working in a well-designed workplace will result in
satisfied employees and improved service quality
Employee productivity
• Satisfied staff will remain with the organisation for longer and their individual
productivity will improve as a result
• The cost of training new employees every six month
External service value
• Enhanced by:
o Increase in employee productivity
o Acceptance of a service culture
o Reflection of service culture in their behaviour towards the customer
Customer satisfaction
• Customer satisfaction should be with the organisation as a whole
• Consistent customer satisfaction can lead to customer loyalty
Customer loyalty
• Customers become loyal as they repeat their purchases
• Loyal customers are beneficial because:
o They generate word of mouth
o They are less price sensitive
o They tend to buy more from you
o Their preferences can be recorded and delivered, making them happier
Ethical Concerns in Services Marketing
• If you advertise certain services on a cruise, you should deliver on those
promises – always! (e.g. unexpected, additional charges once on board)
Lecture 2
Service Quality
3
, Understanding how to manage service quality is an important aspect of marketing
management
Quality = meets or exceeds your expectations
The degree of excellence at an acceptable price and the control of variability at an
acceptable cost (Broh, 1982)
1. Degree of excellence: How well the prototypes perform the intended
function and the benefits they offer relative to competitors’
2. Control of variability: Performance will be high, following safety and
regulation requirements, without defects
3. Acceptable cost: Quality achieved with limited resources to be
profitable and offered at an acceptable price
1 and 2 = Heterogeneity
Cannot be described adequately in a few words, but nevertheless identifies two
dimensions regarded as critical: product performance and freedom from
deficiencies (Juran, 1988)
§ Superiority or excellence
§ Objective quality (predetermined standards)
§ Comparison
§ Perceived quality (Zeithaml, 1988)
§ Perception/attitude/personal judgement
§ Evoked set = main services you like to use eg Netflix and Apple Music
§ Social media and memes can completely change your perception
Sorbet
• Business model: providing convenience
• Similar treatment or experience
• Branches are managed by different people
• “We serve differently, we serve with heart”
• “We don’t have customers. We have guests.”
• “Sorbet is not just a brand. It’s an attitude.”
• Were able to open a Sorbet Man
Service quality
• Stress free
• Being and forgetting personal worries during the day
4
