06. Service Marketing

A growing proportion of economic activity focuses on the provision of services. The current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades. The European economy, as a mature economy, consists of a 70–30 services-to- product GDP ratio. Services are everywhere.

Services include airlines, hotels, car hire, hairdressers and beauticians, maintenance and repair, accountants, bankers, solicitors, engineers, doctors, software programmers and management consultants to name but a few.

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Many market offerings consist of a variable mix of products and services. At a fast-food restaurant, for example, the customer consumes both a product and a service.

According to the World Trade Organisation (WTO), the services sector accounts globally for €1 trillion of world trade. Over two-thirds of the workforce in Europe are employed in services and between 60 and 70 per cent of the gross value-added figure achieved by European states can be attributed to services. Within Europe, an ageing population will have a future need for nurses, home health care, physical therapists and social workers.

Double-income families need childcare, education, house cleaning and gardening services. There will also be an increased demand for business-to-business services that already account for over 55 per cent of total employment in Europe, equating to over 55 million people.

Current marketing thought argues that all companies are in fact service companies and that we need to use a services perspective for marketing as the main or dominant focus.15, 16 This text takes a service-dominant logic perspective as an underlying concept. That means that the 7 Ps of the marketing mix – product/service, price, promotion, place; and the three extra service mix elements – process, physical evidence and people – are used for both products and services.

In other words all businesses are considered service businesses using all 7Ps of the marketing mix. The 7Ps are used throughout this text as the default for both products and services. The service-dominant
logic will be explored in greater detail throughout the text.

This perspective acknowledges the importance of the customer experience of exchange, whether with a product or service. It also acknowledges that the company alone does not offer value to a consumer; value is in fact created when the company and the customer work together; often called co-creation.

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