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
Tutorial preparation materials
Recommended articles (in Reading List content area)
Lecture and tutorial programme
Brief for each tutorial
Bring it to every session
2,500-word assignment based on a case study
Online submission: Wednesday March 13th 2019
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
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
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)
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:
the film –
|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), based on Lovelock (1983)
|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
|Information||How to obtain and use a service|
|Order-taking||Secure a commitment to service delivery|
|Billing||Clear and accurate|
|Payment||Simple and convenient transactions|
|Consultation||Advice tailored to individual customer needs|
|Safekeeping||Firm will look after personal possessions|
|Exceptions||Flexible 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: https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/how-shared-mobility-will-change-the-automotive-industry
ONS (2018) Economy. Available from: https://www.ons.gov.uk/economy
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: http://www.economist.com/search/google?cx=013751040265774567329%3Apqjb-wvrj-q&cof=FORID%3A11&query=index%20terms&op=Search
UNCTAD (2012) Statistics. Available from: http://unctad.org/en/Pages/Statistics.aspx.
Wilson, A., Zeithaml, V., Bitner M.J., and Gremler, D. (2012) Services Marketing. 2nd ed. Maidenhead: McGraw Hill.