Services

Marketing

“Services care activities, benefits or

satisfactions which are offered for sale or
are provided in connection
with the sale of goods.”
American Marketing Association
 What is product
• Products as anything that can be
offered to a market for attention,
acquisition, use or consumption that
might satisfy a want or need.
• Whereas service is an act or
performance offered by one party to
another.
Although the process may be tied to a
physical product, the performance is
essentially intangible and does not
normally result in ownership of any of
the factors of production.
 What is services?

• It is the part of the product or the

full product for which the customer is
willing to see value and pay for it.
 Definition
• According to Bitner-
Services as ‘deeds, process and
performances.’

Deeds- actions of the service provider.

Processes- steps in the provision of
service.
Performance- Customers
understanding of how the service has
been delivered.
“There are no such thing as
service industries. There are only
industries whose service
components are greater or less
than those of other industries.
Everybody is in service.”

-Theodore Levitt-
 Introduction
• The industrial revolution involved changes not
only in production, but also in financial
structures and in transportation and
communication networks.

• Developed countries have changed from being

goods dominated to service dominated.

• The service sector accounts for more

employment, contribution in GDP and more
consumption than manufactured goods.
 The service sector
• The services sector has been growing
at a rate of 8% per annum in recent
years
• More than half of our GDP is
accounted for from the services
sector
• This sector dominates with the best
jobs, best talent and best incomes
 Development of Indian
Economy GDP in %
Year Agricultural Industry Services
% % %

2001-2002 24.23 26.67 49.10

2003-2004 21.71 26.86 51.43

2005-2006 19.66 26.23 54.11

DNA newspaper,23 rd Feb,07

 Significant growth in service
sector
Countries % of GDP in In % of
Manufacturi Service employment
ng in service
sector
USA 21 74 80
Japan 29 58 60
UK 32 69 77
Australia 22 72 75
Canada 24 70 79
India 29 47 60
1998 Statistical year book, Dept of International Economic & Social affairs, New york
 Service Sector of Indian
Economy
• Contributes to around 55 percent of India's
GDP during 2006-07. This sector plays a
leading role in the economy of India, and
contributes to around 68.6 percent of the
overall average growth in GDP between
2002-03 and 2006-07.
• There has been a 13 percent hike in the
service sectors of trade, hotels, transport
and communication in India's economy as
compared to the 10.4 percent rise in the
previous year.
 Service Sector of Indian
Economy
• The financial services that comprise of
banks, real estate, insurance, and business
services witnessed a rise of 11.1 percent
during 2006-07 against the 10.9 percent
growth in the previous year.
• Service sectors including community, social,
and personal services experienced a growth
of 7.8 percent during 2006-07 as against 7.7
percent growth in the previous year.
 REASONS FOR GROWTH IN
SERVICE SECTOR
• Increase in population creates a new
market for different kind of services.

• The economic reforms have conducted

consumerism & middle class is
emerging as “Consumption
Community”.
• Increase in govt. interaction in the trade
sector has increased trade relationships
between nations leading to development of
tourism & hotel industry.

• Changing lifestyles due to cultural exchange

& communication networks resulted in
continued emphasis on services.

• The boom in I.T industry & computer

sciences encouraged the shift in service
industry like Travel, Banking, Education,
Financial services etc.
Difference between physical goods
and services
Physical goods Services

Tangible intangible

homogeneous heterogeneous

Production and distribution are Production, distribution and

separated from consumption consumption are simultaneous
processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-

seller interaction
Customers do not participate in the Customers participate in production
production process

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Different Service Marketing
Activities
Marketing
Activities

Analysis Strategy Tactics Management

 Marketing Activities
Analysis:
It includes analyzing the consumer
his needs, wants & desires and using
this information to design service
products.
It includes intangible features like
experience, reputation, guarantees
etc. and tangible like colour, shapes
and size etc.
It consists of-
 Analysis
• Environment Analysis: Used to identify
and analyze the forces that surround
the service firms and consumer and
scope of their influences.
• Buyers Analysis: This needs to be
analyzed to enable service firms to
know the rationale behind consumer
decisions.
• Marketing Research Analysis: This
includes collecting data on environment
and market and translating them in
information for better quality decisions.
 Strategy
• Strategy: For marketer is a plan of
action that is long term and
comprehensive, which affects the
whole organization
Target marketing consist of-
• Market segmentation
• Market targeting
• Market positioning
 Tactics
• Tactics are tools a marketers uses to
achieve his strategic goals. They are
different plan of action.
In service marketing tactical tools
are the marketing mix variables.
 Management
• After analysis, strategy and tactics the
service marketer can focus on
management, which is a process of
using inputs of resources to derive
some output of goods and services.
 Services could meet
• Personal needs –
– haircuts, tuition, massage parlours, health
care, restaurants. Etc.
• Business needs –
– courier services, office cleaning services,
delivering fresh flowers, consultation,
finance, banking. Etc.
• Trade needs –
– retailing, maintenance and repair. Etc.
• Infrastructure needs –
– communication, transportation, hospitals,
bridge, dams. Etc.
 Characteristics of services
• Intangibility: Intangible in nature, it is
difficult to experience their benefits before
they are bought. A consumer can not see,
touch, hear, smell or taste them before
purchases. E.g. Airline sells a flight tickets
from A destination to B destination.
• Perishability: services are also of perishables
commodity, unutilized or underutilized
services are an economic waste. They
cannot be stored for later sale or use e.g.
Person unemployment, credit unutilized,
empty rooms in 5 star hotels etc.
 Characteristics in service
• Inseparability: services generally are
created and supplied simultaneously.
Goods Produced Sold Consumed
Services Sold Produced Consumed
e.g. The entertainment industry, health
experts, other professional create offer
their service.
• Heterogeneity: Impossible to set a
standards for any service.
heterogeneity of service can not be
standardised.
 Characteristics in service
• Ownership: In case of sale of goods,
the goods are transferred in the name
of buyer, making him the owner of the
goods
Whereas in case of services users are
only given a access to the services and
cannot own the same.
E.g. A consumer can use personal
care services such as personal
grooming medical services, the
benefits if staying in hotel room etc.
 Characteristics in service
• Simultaneity: Service do not move through
the channels of distribution and cannot be
delivered to the potential customers.
E.g. consumers have to individually access
the benefits and services provided by
hospitality industry like hotels, taxies, train
facilities etc.

• Quality measurements: It requires a potential

tool for quality measurements. It is very
difficult to rate or quantify total purchase.
E.g. It is possible for customers to
quantify food served in a hotel but the way a
waiter serves the customers or other
behavior can not be ignored.
 Characteristics in service
• Nature of demand: Services are
generally considered to be fluctuating in
nature and particularly in an abnormal
increase in the demand for services.
E.g. Tourism service industry.
 Marketing Strategies for
Service Firms
The service profit chain:

• In a service business, the customer and front- line

service employee interact to create the service.

• Successful service companies focus their attention

on both their customers and their employees.

• They understand the service profit chain, which

links service firm profits with employees and
customer satisfaction.

This chain consists of five links…

 Marketing Strategies for
Service Firms
• Internal service quality: superior employee
selection and training, a quality work
environment, and strong support for those
dealing with customer. Which results..

• Satisfied and productive service

employees: more satisfied, loyal and
hardworking employees, which results..

• Greater service value: more effective and

efficient customer value creation and
service delivery, which results..
 Marketing Strategies for
Service Firms
• Satisfied and loyal customers: satisfied
customers who remain loyal. Repeat
purchase, and refer other customers,
which results..

• Healthy service profits and growth:

superior service firms performance.

Thus, service marketing requires more than

just traditional external marketing
Types of service marketing

Company

Internal External
Marketing Marketing
‘Enabling the ‘Setting the
Promise’ Promise’

Employees Customers

Interactive Marketing
‘Delivering the promise’ * * Philip Kotler
Marketing Management
 Types of service marketing
• Internal marketing: Service firms must orient
its customer-contact employees and
supporting service people to work as a team
to provide customer satisfaction. The firms
must carried out to train, motivate, and
reward its employees.
• Interactive marketing: Service quality
depends on buyers and sellers interaction
during the service encounter. Training
service employees in the fine art of
interacting with customers to satisfy their
needs.
 Types of service marketing
• External Marketing: The firm engaged in
to set up its customer’s expectations and
make promised to customers regarding
what is to be delivered. Anything that
communicates to the customer before
service delivery.

In service firms there are many factors

that communicate to customers such as
advertising, sales promotions, sales and
public relations etc.
Marketing Strategies for Service
Firms
Service companies face three major
marketing task: They want to increase their
service differentiation, service quality and
service productivity.
• Service differentiation: To develop a
differentiated offer, delivery, and image. The
offer can include innovative features that set
one company's offer apart from competitors
offers.
E.g. Hotels can offer car rental, banking,
and business centre services in their lobbies
and free high speed internet connections in
their rooms.
 Marketing Strategies for
Service Firms
• Managing service quality: A service
firms can differentiate itself by
delivering consistently higher quality
than its competitors do. Most of have
joined the customer-driven quality
movement. However, good service
recovery can turn angry customers
into loyal ones.
 Marketing Strategies for
Service Firms
• Managing Service productivity:
Service firms under great pressure to
increase service productivity. They
can train current employees better or
hire new ones who will work harder
or more skillfully. Or they can
increase the quantity of their service
by giving up some quality. The
provider can industrialize the service
by adding equipment and
standardizing production.
 The three additional ‘P’s of
Service Marketing
• The services are usually produced and
consumed simultaneously, and it
concludes that they can use additional
variables to communicate with and
satisfy their customers.
E.g. In hotel industry the design and
décor of the hotel as well as the
appearance and attitude of its
employees will influence customer
perceptions and experiences.
 People
• All human actors who play a part in service
delivery influence the buyers perceptions
namely firms personnel, customers in the
service environment. Personal appearance,
and their attitudes and behaviors all
influence the customers perceptions of the
service.
In some service industry service provider
or contact person can be very important such
as consulting, counseling, teaching, and
other professional relationship based
services.
 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.
The physical evidence of service
includes all of the tangibles
representation of the service such as
brochures, letterhead, business cards,
report formats, equipments which
includes the where the service is
offered.
 Process
• The actual procedures, mechanisms,
and flow of activities by which the
service is delivered- the service
delivery and operating systems.
The actual delivery steps the
customer experiences, or operational
flow of the service, will also provide
customers with evidence on which to
judge the service.
 Determinants of service quality
• Reliability – perform promised service
dependably and accurately. Delivering
the services as promised. E.g. The
concern of reliability get reflected in
statement like:
– ‘This bank promises to clear outstation
cheques in two days. Will it really?’
– ‘This courier company promises delivery of
packets next morning before 10 o’clock.
But will they deliver my letter tomorrow?’
• Responsiveness – willing and ready to
provide service promptly. E.g. avoid
keeping customers waiting for no apparent
reason. ‘If I develop some problems up in
the air, will the employees of this airline
help me?’
‘I have applied for a loan in this bank. Will
the staff help me in documentation?’
• Assurance – ability to convey trust and
confidence. E.g. being polite and showing
respect for customer.
 Determinants of service quality
• Empathy- ability to be approachable.
Deliver “caring, individualized
attention” will pay attention, listen,
adopt and be flexible in dealing what
individual customers need. E.g. being a
good listener.
• Tangibles – physical facilities and
facilitating goods or individualizing
customers. E.g. cleanliness, Queeing
machine provided by banks.
• Credibility: Concerned with service
provider’s trustworthiness, honesty
and believability.
E.g. The insurance company has
made a claim that in case of
accident, they would settle the claim
without any delay and paper work.
Can I believe them without any
doubt?’
• Understanding Customer: concern whether
service providers will make genuine efforts
to understand customers needs.
• E.g. ‘Will this hair stylist try to learn my
specific preferences or give me an
ordinary cut?’
• Access: Refers to expectations
surrounding the issue of ease with which
the staff or service can be approached.
• E.g. ‘In this college, it is difficult to contact
the principal to register any complaints’.
 Managing service Quality
• Gap 1: Between management
perceptions and consumer expectations.
Not knowing what customers except
• Gap 2:Between management
perceptions and service quality
specifications. Not selecting the right
service designs and standards.
• Gap 3: Between service quality
specifications and service delivery. Not
delivering to service standards
 Managing service Quality

• Gap 4: Between service delivery and

external communication. Not
matching performance to promises.

• Gap 5: Between expected service and

perceived service.
 Importance Performance
Analysis
I high imp/low High imp/high
M performance performance
P Keep up the
Concentrate
O
Here good
R
T Work
A Low imp/ low Low imp/high
N
performance performance
C
E Low Possible over skill
priority

PERFORMANCE
Service quality is directly
proportional to employee
satisfaction
 How customers contribute to
quality and value

For each scenario, ask “Which

customer A or B) will be most satisfied
and receive the greatest quality an
value, and why?
 Scenario 1:
A major international hotel. Guest A called
the desk right after check-in to report that his
TV was not working and that the light over
the bed was burned out; both problems were
fixed immediately. The hotel staff exchanged
his TV for one that worked and fixed the light
bulb. Later they brought him a fruit plate to
make up for the inconvenience. Whereas
GUEST B did not communicate to
management until checkout time that his TV
did not work and he could not read in his
bed. His complaints were overheard by
guests checking in who wondered whether
they had chosen the right place to stay.
 SCENARIO 2
• Office of a professional tax preparer.

• Client A has organized into categories

the information necessary to do her
taxes and has provided all documents
requested by the accountant.
• Client B has a box full of papers and
receipts, many of which are not
relevant to her taxes but which she
brought along “Just in case”.
 SCENARIO 3
An airline flight from London to New York.
Passenger A arrives for the flight with a
portable tape player and reading material
and wearing warm clothes; passenger A also
called ahead to order a special meal.

Passenger B, who arrives empty-handed,

becomes annoyed (angry) when the crew
(group) runs out of blankets, complains
about magazines selection and the meal,
and starts fidgeting after the movie.
 First Impressions From a
Restaurant in England - case
This story comes from my good friend,
Graham Agass.
For several years Graham has had a
favorite Indian restaurant in our home
town. The food has always been very
good and the service has been
excellent. Graham was a real fan. On
his most recent visit, Graham used the
toilet.
Graham washed his hands before
returning to the restaurant.
The waiter didn’t!
Graham doesn’t use that restaurant
anymore.
As always, I think it is important to tell
stories of bad service but not so that
we can share the business concerned.
What I want you to do is to take this as
a case study. Use it with your own
team.
What are the little things that really
make a difference for your
customers?
And sometimes your customers might
feel that procedures need to be taken
more seriously.
I’m reminded of a quotation by Jan
Carlzon from Scandinavian Airlines. He
said," Coffee stains on the flip trays tell
the customer that we don’t service our
engines properly.”
• Thank You