Marketing services and customer experience
Michelle_Michy
Lecture1_Definitionsclassificationsandtrends.pptxDefinitions, classifications, and trends Marketing Services and the Customer Experience Study unit 1
Size of the service sector
66% of world GDP
74% of GDP in developed countries
51% of GDP in developing countries
(World Bank, 2017)
Share of economic output in UK
(Office for National Statistics, 2018)
1948
2016
Services Manufacturing Construction Agriculture 46 42 6 6
% of GDP
79%
Services Manufacturing Construction Agriculture 79 14 6 1
Examples of service industries
Supply (retail, energy, transport)
Entertainment
Government and non-profit
Personal and maintenance
Tourism, Hospitality, Recreation
Healthcare
Communication and Information
Education and knowledge
Financial and insurance
What are services?
The production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need
(Palmer, 2014)
What are services?
Services are deeds, processes, and performances…
economic activities whose output is not a physical product, is generally consumed at the time it is produced, and provides added value in forms (such as amusement, comfort, convenience) that are essentially intangible
(Wilson et al., 2016)
What are services?
Products of economic activity that you can’t drop on your foot, ranging from hairdressing to websites
(The Economist, 2013)
Product-service continuum
Tangible
Intangible
Tangible dominant
(service as add-on)
Intangible dominant
(product as add-on)
(Oliva and Kallenberg, 2003)
Distinction between the marketing of a service where service is the core product and where service is an add-on to a physical product
Servitization
With increasingly similar products, service becomes the differentiating factor and source of competitive advantage
Competing through service provision requires culture change
Physical product
Process-oriented service
Standardized services
Customized services
Transactional services
Relational services
(Kowalkowski et al., 2015)
New business models
Shift in lifestyle: car ownership forecast to decrease in developed economies (McKinsey, 2017)
Automotive manufacturers introducing service element to replace reduced revenues from manufacturing
Mercedes (and others) investing in shared mobility services
Open service innovation
Exchanging information and ideas with competitors and/or customers (i.e. external knowledge) to develop new services
(Myhren et al., 2018)
Ocado selling its automated warehouse technology, which uses robots and AI to fulfil online grocery orders, to supermarkets
Artificial Intelligence
AI increasingly used in services: robots and virtual bots in, for example, hospitality, healthcare, and call centres for mechanical and analytical tasks
Mechanical intelligence
Analytical
intelligence
Intuitive (creative)
intelligence
Empathetic
intelligence
Send scripted response after service failure
Analyse nature of failures
Understand contexts
Empathise and calm the customer
(Huang and Rust, 2018)
S-Commerce
Bricks and mortar commerce
Electronic
commerce
Social
Commerce
Social media used to promote online transactions
(Yusuf et al., 2018)
Molecular model
Many offerings are a combination of tangible and intangible:
cinema
visit
food and
drink
atmosphere
ticket purchase
and seat
reservation
method
of
delivery
building and
seating
the film –
entertainment
Screen size,
sound clarity
Classifying services
| People as recipients | Possessions as recipients | |
| Tangible actions | High-involvement personal services | Goods maintenance services |
| Intangible actions | Services for the mind | Intangible asset maintenance services |
(Palmer, 2014)
Classification criteria
| Low or high customization |
| Low or high customer participation |
| Low or high level of service provider judgement |
| One-time episodes or long-term relationship/contract |
| Utilitarian or hedonic service |
| Wide or narrow demand fluctuations |
| Capacity constrained or flexible |
| Customer to organization or organization to customer or remote interaction |
Based on Lovelock (1983)
Supplementary services
Core Service
Payment
Consultation
Hospitality
Safekeeping
Billing
Order-taking
Information
Exceptions
Facilitating
Enhancing
Lovelock (1995)
Empirically validated by Frow et al. (2014). Their revised model amalgamates billing with payment, and introduces a new supplementary service: sustainability and social responsibility.
References
Frow, P., Ngo, L., and Payne, A. (2014) Diagnosing the supplementary services model. Journal of Marketing Management. 30 (1-2) 138-171.
Huang, M. and Rust, R. (2018) Artificial intelligence in service. Journal of Service Research. 2 (2) 155-172.
Kowalkowski, C., Windahl, C., Kinstrom, D., and Gebauer, H. (2015) What service transition? Industrial Marketing Management. 45 (February) 59-69.
Lovelock, C. (1983) Classifying services to gain strategic marketing insights. Journal of Marketing. 47 (summer), pp. 9-20.
Lovelock, C. (1995) Competing on service: Technology and teamwork in supplementary services. Strategy and Leadership. 32 (4) 32-47.
McKinsey (2017) Shared mobility. Available from: https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/how-shared-mobility-will-change-the-automotive-industry
Myhren, P., Witell, L., Gustafsson, A. and Gebauer, H. (2018) Incremental and radical service innovation. Journal of Services Marketing. 32 (2) 101-112.
Oliva, O. and Kallenberg, R. (2003) Managing the transition from products to services. International Journal of Service Industry Management. 14 (2) 160-172.
ONS (2018) Economy. Available from: https://www.ons.gov.uk/economy
Palmer, A. (2014) Principles of Services Marketing. 7th edition. Maidenhead: McGraw-Hill.
The Economist (2013) Economics A to Z. London: The Economist.
Wilson, A., Zeithaml, V., Bitner M.J., and Gremler, D. (2016) Services Marketing. 3rd ed. Maidenhead: McGraw Hill.
World Bank (2017) World Development Indicators. Available from: http://wdi.worldbank.org/table/4.2.
Yusuf, A., Hussin, A. and Busalim, A. (2018) Consumer purchase intentions in social commerce. Journal of Services Marketing. 32 (4) 493-504.
