Wednesday, August 12, 2015

SM: Session 2: Evolution of Services

The early mentions of services were found in Adam Smith's book, "Wealth of Nations", published in 1776. There it was termed as "unproductive labour", i.e. "honourable...useful, or....necessary", referring to something that perished at the time of production and therefore, didn't contribute to wealth.

Do you think all services are perishable?

The Multiplier Theory

If we look at the scenario today, services have proved to be contributing towards the wealth of wealthy (developed) nations. Over the years, there has been a complete transformation of the service sector. Important contributors to this transformation are; changes in government policies, social changes, changes in business trends, advances in information technology and globalization. Due to all these advances and developments, there were more products and product categories offered to customers, which resulted in more competition. As competition increased, companies, in search for the distinctiveness took the road of innovation, which further resulted in more choice for the consumers. 

Evolution of Services

Fisk, Brown and Bitner identify 4 distinct stages in the evolution of services marketing and management. 

The ‘Crawling Out’ Stage (Before 1980) 

During this time specific areas of marketing theory were examined. It was realised that the services marketing is different from goods marketing as problems and constraints of insufficient or inappropriate in handling service sector surfaced. Important contribution came from Theodore Levitt in the form of Molecular Theory. During this while the distinctive characteristics of services were examined.

The ‘Scurrying About’ Stage (Between 1980 and 1986)

Now the attention was focused heavily on the critical issue of managing quality in service operations. Significant contributions came from Zeithaml, Berry and Parasuraman in form of development of ‘Gaps model’ of service operations. Also, Booms and Bitner added 3 more P’s to the original marketing mix to make it suitable to services – People, Process and Physical Evidence. The text books on Services Marketing were published, establishing it more firmly as a legitimate field of academic study. 

The ‘Walking Erect’ Stage (After 1986) 

During this phase there was increased focus on specific marketing problems of services. Specific topics like service encounters, service design, perceived service quality and customer satisfaction, internal marketing and relationship marketing were researched.

The ‘Galloping’ Stage (After 2000)

After 2000 there has been a tremendous increase in service jobs. World has seen increasing contribution of Services to GDP.

Prezi Presentation


Reference: Services Marketing: People, Technology, Strategy - Lovelock, Wirtz & Chatterjee

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