Chapter 24, Service Marketing

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A service is an intangible product involving a deed, performance, or an effort that cannot be physically possessed. Dominant component is intangible.

Includes rental of goods, alteration and repair of goods owned by customers, and personal services. Major differences between goods and services are:

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The use of marketing by service firms

Has been limited to: Use of marketing is likely to increase rapidly in the near future....due to competition etc.

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Special Considerations for Service Marketing

Must consider how the intangible/inventory/inseparable/inconsistency component effect the service.


Prior to purchase, much service promotion must rely on performance attributes which can only be measured after a purchase experience (tangible goods have search qualities). Also professional services have credence qualities. Need to use promotion to help customers perceive a service as highly tangibility. Intangibility also presents pricing problems. How should an auto mechanic charge for his/her services?
Visibility of the service may be a problem. Although a problem may have been fixed, you don't understand why (CAR). Need to explain the time needed for repair, and functions that were performed if you want the repair to be more tangible.
Psychological role of price is magnified since customers must rely on price as the sole indicator of service quality when other quality indicators are absent.
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Services cannot be stockpiled. Need to avoid excess unsatisfied demand and excess capacity leading to unproductive use of resources.

Handout...Bikers Give Ski Resort Summer Lift

Discusses the seasonal demand patterns of ski resorts, and what ski resorts are doing to develop demand for their service in the summer months. To resolve inventory issues: Return to Content List


Lawn care service cannot mow a lawn precisely the same way each time, but need to make the service as efficient and consistent as possible.

Remedy--use technology to help make the service provider more consistent...or replace workers with technology :)

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Leads to direct (short) channels of distribution. In some cases it is possible to use intermediaries, travel agents, ATMs etc.

Close provider-customer relationship--employee interpersonal skills very important. "relationship managers", quality of relationships determines the probability of continued interchange with those parties in the future.

Customers may become loyal to a particular employee as opposed to the company, prevalent in the advertising industry. Therefore must make sure that multiple employees are capable of performing the same tasks.

CAA...Michael Ovitz...Coke?

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The extent of services in the economy

US is the worlds first service economy. More than 75% of the workforce in the private sector is employed in the service industry.
Accounts for more than $3bn in output and contribute 60% of GNP.
60% of services are consumed by the final consumer.

The increase in the service sector is a result of LT growth in the US economy deriving demand for additional services

Dual income families need for convenience.
Increase in health awareness.
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Illustration of Service Marketing

Marriot Hotels: (discussed when reviewing market segmentation)
Offer different services for different segments of their target market.
Great attention paid to product positioning.
Rely on research, publicity, TV advertising, use of well conceived slogans and greater personal attention to consumers.
Quick resolution to customer problems--overbooking, long customer lines, unresponsiveness, discourteous staff.
Hotels now offer alternative accommodations for over booking, computerized check out systems, express check outs, serving free drinks, provide baggage handling etc.

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Non Profit Marketing

Conducted by organizations and individuals that operate in the public interest or that foster a cause and do not seek financial profits.

Involve organizations-Charitable groups, Unions, Universities etc.
Involve people-political candidates etc.
Involve places-resorts, convention centers
Involve ideas-stop smoking
as well as goods and services

Perform exchanges but not necessarily monetary (votes).
Price is not necessarily a reflection of the costs or values.
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Non Profit vs. Profit Oriented Marketing

Similar in many respects. Some basic differences include: Examples:

Handout...Buy a Brand New Pumper Truck

Ideas to generate revenue in order to afford a new truck....need to be very innovative since there are many non-profit organizations competing for donors' contributions.

Handout...These Cards List Stats

Marketing to the improve image of the police in the local community by offering baseball type police cards.

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