Services Marketing

Course Outline
 Intro-features and characteristics
 Consumer Behaviour and STP
 Services Marketing Mix – 7P’s
 Service Quality and Demand
Management
 Relationship Marketing
 Aligning Service Strategy to organization
 Understanding specific service
industries.
 Why study services
marketing?
 Significantly different from goods
marketing
 Relatively new discipline with a
strong interdisciplinary base
 importance of services sector
 70% - 80% GDP in highly dev.
economies
 Service sector in India approx 50%
 Transformation of the service economy
International Government Social Business Advances in
-isation regulation changes trends technology
• ‘Hollowing • Deregulation/ • Increased • Relaxation of • Convergence
out’ effect privatisation consumer professional assn. of computers
• Increased • New trade expectations standards and
services agreements in • Increased • Marketing telecommuni-
trade services affluence and emphasis by non- cations
• Global leisure time profit
• Miniaturisation
customers • Working organisations
women • Outsourcing • Digitalisation
• Quality
• Enhanced
movement
• Franchising software

Increased demand and competition

Facilitated by information technology

Growth and focus on service marketing and management

 What is a Product?
 Anything that can be offered to a
market for attention, acquisition, use,
or consumption and that might satisfy a
want or need.

Includes: Goods, services,

events, persons, places,
organizations, ideas, or some
combination thereof.
Goods Vs Services
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 What is a Service?
“A form of product that consists of activities,
benefits, or satisfactions offered for sale that
are essentially intangible and do not result in
the ownership of anything.”
“Services are deeds, processes, and
performances”.
- Valarie Zeithaml & Mary Jo Bitner
 “ Something that can be
bought and sold but which
cannot be dropped on your
foot !”
 Examples of Service
Industries
 Health Care
 hospital, medical practice, dentistry, eye care
 Professional Services
 accounting, legal, architectural
 Financial Services
 banking, investment advising, insurance
 Hospitality
 restaurant, hotel/motel, bed & breakfast,
 ski resort, rafting
 Travel
 airlines, travel agencies, theme park
 Others:
 hair styling, pest control, plumbing, lawn
maintenance, counseling services, health club
Fed Ex Example

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 The Nature of A Service

“ The service product is essentially a

bundle of activities, consisting of the core
product - which in Federal Express’ case
consists of transporting packages
overnight and delivering them next
morning to the addressee, plus a cluster of
supplementary services.”
 The Nature of A Service

The Example of Federal Express

Advice and
Communication
Bill Statements
Order Taking
Overnight
Transportation Problem Solving
Supplies and Delivery of
Packages
Tracking
Pick-up
Documentation
Characteristics of Services
Tangibility of goods and services
Implications of Intangibility

Services cannot be inventoried

Services cannot be patented
Services cannot be readily
displayed or communicated
Pricing is difficult
Product qualities affect ease of evaluation

Easy to Difficult to
evaluate evaluate
Furniture
Clothing

Legal services
Vacation

Medical surgery
Motor vehicle

Computer repair
Lawn Fertiliser
Restaurant meals

Consultancy project
High in High in High in
search experience credence
qualities qualities qualities
Strategies for intangibility

 provide tangible evidence

 symbolic cues (i.e. uniforms,
logos)
 tangible cues (i.e. membership
cards, ticket, certificates)
 reduce risk
 emphasise reputation and
qualifications
 service guarantees
 inform and educate customers
 Heterogeneity (Variable)
 service quality varies across service
encounters
 service encounter is the interaction
between service employee and customer
 ‘moments of truth’
 service people are central to service
delivery
 service is delivered in ‘real’ time
 Implications of
Heterogeneity

 Service delivery and customer

satisfaction depend on employee
actions
 Service quality depends on many
uncontrollable factors
 There is no sure knowledge that the
service delivered matches what was
planned and promoted
 Strategies for Variability
 customer surveys and feedback
 training in interpersonal and technical
skills
 provide product knowledge
 ensure back-stage systems support
front line staff
 use standardisation strategies
 franchising, scripts
 build quality into all processes
 Inseparable
 simultaneous production and
consumption
 the service provider is the product
 the customer is involved (partial
employee)
 other customers may be present
Implications of Simultaneous
Production and Consumption
 Customers participate in and
affect the transaction
 Customers affect each other
 Employees affect the service
outcome
 Decentralization may be
essential
 Mass production is difficult
 Strategies for inseparability
 manage the service encounter
 scripts and roles
 front-line staff need both technical and
interpersonal skills (recruit & train)
 educate the customer (provider –marketer)
 manage customer interactions
 manage the physical evidence
 develop customer service policies and service
recovery procedures
 Perishable
 services cannot be stored
 need to manage supply and
demand
Implications of Perishability

 It is difficult to synchronize
supply and demand with
services
 Services cannot be returned or
resold
 How can demand be
managed?
 accurate demand forecasting
 develop off-peak and on-peak strategies
 use reservation systems and differential
pricing
 employ part-time staff
 extend hours of operation
 Provide self-service options (i.e. ATMs,
internet banking)
Goods versus Services
 Classification of Services
Based on Degree Of Cust. Involvement
( Lovelock)
1. People Processing
2. Possession Processing
3. Mental Stimulus Processing
4. Information Processing
 Four Categories of Services
Based on the Process Used
 People Processing
 Tangible Acts Directed
Toward People
 e.g. airlines, hospitals,
hair stylists, fitness
centers
 Possession Processing
 Tangible Acts Directed
Toward Possessions
 e.g. repair services,
landscaping, house
cleaning services
 Mental Stimulus Processing
 Intangible Acts Directed
Toward People
 e.g. consulting,
education,
psychotherapy,
broadcasting
 Information Processing
 Intangible Acts Directed
Toward Intangible Assets
 e.g. accounting,
banking, financial
services
 Levels of Customer Contact with
Service Organizations

Emphasizes encounters
High with service personnel

N u r s in g H o m e
H a ir C u t
4 - S ta r H o te l
M a n a g e m e n t C o n s u ltin g
G o o d R e s ta u r a n t
Te le p h o n e B a n k in g
A ir lin e T r a v e l (E c o n .)

R e ta il B a n k in g C a r R e p a ir

M o te l In su r a n ce
D r y C le a n in g
Fa st F o o d
M o v ie T h e a te r s

C a b le T V
P u b lic Tr a n s it
H o m e
B a n k in g

M a il B a se d R e p a ir s

I n te r n e t- b a s e d
S e r v ice s

Emphasizes encounters Low

with equipment
 Other Classification of
Services
 Degree of Tangibility
e.g
 Based on Skills and Expertise Required-e.g.
Professional & non professional
 Business Orientation of service
provider
 Type of end user
Services Marketing Mix
Traditional Marketing Mix

All elements within the control of the firm that

communicate the firm’s capabilities and image
to customers or that influence customer
satisfaction with the firm’s product and
services:
 Product
 Price
 Place
 Promotion
An expanded marketing mix for services

Product
People (service)
Process
Place,
Place &
cyber- Customers Price
Time
space Customers
Customers Price
& time

Promotion

Physical evidence
People
 All human actors who play a part in
service delivery and thus influence
the buyer’s perceptions: namely, the
firm’s personnel, the customer, and
other customers in the service
environment.

customer
service employees
other customers
Physical Evidence
 The environment in which the service
is delivered and where the firm and
customer interact, and any tangible
components that facilitate
performance or communication of the
service.

•atmosphere
décor, music etc.
•equipment
•facilities
•uniforms
Process
 The actual procedures, mechanisms,
and flow of activities by which the
service is delivered—the service
delivery and operating systems.

service delivery systems

•back stage
•front stage
procedures
policies
Expanded Marketing Mix for
Services
 Expanded Marketing
Mix for Services
PEOPLE PHYSICAL PROCESS
EVIDENCE
Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicating Signage Level of customer

culture and values involvement

Employee research Employee dress

Other tangibles
 The Services Marketing
Triangle
Company
(Management)

Internal External
Marketing Marketing
“enabling the “setting the
promise” promise”

Employees Interactive Marketing Customers

“delivering the promise”
 Ways to Use the
Services Marketing Triangle
Specific Service
Overall Strategic Implementation
Assessment
• What is being promoted and
• How is the service by whom?
organization doing on • How will it be delivered and
all three sides of the by whom?
triangle?
• Are the supporting systems
• Where are the in place to deliver the
promised service?
weaknesses?
• What are the
strengths?
 Marketing Analysis Framework

33 C’s
C’s
Customers Competitors Company
Market Intelligence

S T P
(Segment) (Target) (Position)

Product Promotion
44 P’s
P’s
Price Place
 Challenges for Services
 Defining and improving quality
 Communicating and testing new services
 Communicating and maintaining a consistent
image
 Motivating and sustaining employee
commitment
 Coordinating marketing, operations and
human resource efforts
 Setting prices
 Standardization versus personalization