Defining and classifying services

Marketing Services 1

Teaching and learning

Lecture: introduction to, and understanding of, key ideas in services marketing, with practical examples of theory in the ‘real world’

Tutorial: application of theory to practice, with an opportunity to discuss and debate. Requires preparation and participation

Assessment: opportunity to analyse, evaluate, to make recommendations, and to apply theory to practice

Independent Study: reading to enhance understanding of key ideas

Core text book

Palmer, A. (2014) Principles of Services Marketing,

7th edition, Maidenhead: McGraw-Hill


Module handbook

Lecture slides


Tutorial preparation materials

Recommended articles (in Reading List content area)

Coursework brief

Module handbook


Lecture and tutorial programme

Recommended reading

Brief for each tutorial

Bring it to every session


Coursework 50%

2,500-word assignment based on a case study

Online submission: Wednesday March 13th 2019

Examination 50%

Two-hour examination in April/May. Essay-style questions. Answer two questions from a choice of four. Each of the four questions will focus on one topic, drawn from study units 6 to 11.

Size of the service sector

66% of world GDP

74% of developed countries’ GDP

51% of developing countries’ GDP

(UNCTAD, 2012)

Share of economic output in UK

(Office for National Statistics, 2018)


2016% of GDP

Services Manufacturing Construction Agriculture 46 42 6 6

% of GDP


Services Manufacturing Construction Agriculture 79 14 6 1

Examples of service industries

Supply (retail, energy, transport)


Government and non-profit

Personal and maintenance

Tourism, Hospitality, Recreation


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., 2012)

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 dominant

e.g. coffee

Intangible dominant

e.g. consultancy

Restaurant meal

(Shostack, 1977)

Trends in services

Many manufacturers of products now add supplementary service elements that augment the tangible good

Servitization: Manufacturing firms competing through service provision. Requires culture change

With increasingly similar products, service becomes the differentiating factor and source of competitive advantage

Distinction between the marketing of a service where the service is the core product, and where service is an add-on to a physical good and adds value to the good.

Customer service is the service provided in support of a company’s core product. You do not ‘buy’ customer service; you buy the product or service that a company offers.

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

Molecular model (Shostack, 1977)

Many ‘products’ are a combination of tangible and intangible:



food and



ticket purchase

and seat





building and


the film –


Screen size,

sound clarity

Classifying services

People as recipientsPossessions as recipients
Tangible actionsHigh-involvement personal servicesGoods maintenance services
Intangible actionsServices for the mindIntangible asset maintenance services

Palmer (2014), based on Lovelock (1983)

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)

The Flower of Service

Core Service











Lovelock (1995)

Supplementary services

InformationHow to obtain and use a service
Order-takingSecure a commitment to service delivery
BillingClear and accurate
PaymentSimple and convenient transactions
ConsultationAdvice tailored to individual customer needs
HospitalityMade welcome
SafekeepingFirm will look after personal possessions
ExceptionsFlexible and responsive to special requests


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:

ONS (2018) Economy. Available from:

Palmer, A. (2014) Principles of Services Marketing. 7th edition. Maidenhead: McGraw-Hill.

Shostack, G.L. (1977) Breaking free from product marketing. Journal of Marketing. 41 (2), pp. 73-80.

The Economist (2013) Economics A to Z. Available from:

UNCTAD (2012) Statistics. Available from:

Wilson, A., Zeithaml, V., Bitner M.J., and Gremler, D. (2012) Services Marketing. 2nd ed. Maidenhead: McGraw Hill.