INTRODUCTION TO SERVICES MARKETING

At the end of this module the learning outcomes are what is the concept of services ? why do we need to understand services Marketing ? What is the basic differences between Goods and Services ? What is the concept and importance of Services Marketing Triangle ?
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INTRODUCTION TO SERVICES MARKETING

Suggested Readings 1. Services Marketing by
Zeithmal & Bitner, Chapter 1

2. Services Marketing by
Christopher Lovelock, Chapter 1

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What are services Services are
Deeds Processes Performances

Predominantly Intangible
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INTRODUCTION TO SERVICES MARKETING

Example Education Interacting with students Sit in a class room Certain deeds, processes & performances Provide books, reading material which are tangible . The entire experience is predominantly intangible. Books /reading materials are tangible.
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INTRODUCTION TO SERVICES MARKETING

Car Servicing Car is a good Car manufacturers offer warranties and repair services . Even a goods manufacturer offer services

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Tangibility spectrum Products are of two types
1. Goods
Predominantly tangible

2. Services
Predominantly intangible

Intangibility is the key determinant of services. Intangibility is produced in all sectors of the economy.
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Tangibility Spectrum
Salt Soft Drinks Detergents Automobiles Cosmetics

Fast-food Outlets

Intangible Dominant Tangible Dominant

Fast-food Outlets

Advertising Agencies Airlines Investment Management Consulting

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Teaching

INTRODUCTION TO SERVICES MARKETING

Trends in Services sector Services Dominant sector of the economy USA
By 2001, services contributed 80% of the GDP.

India
It is 60% in 2006.

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Services Sectors Not all services have grown at same rate . Phenomenal growth
Information Technology Business process outsourcing Banking Telecom

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Why Services Marketing
. 1. Services based economy. 2. Service as a business imperative in manufacturing. 3. Deregulated industries and professional service needs. 4. New technologies have created need for services 5. Services Marketing is different.
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INTRODUCTION TO SERVICES MARKETING

1. Services based economy
Major contributor of GDP is services. Increasing percentage of contribution Employment oriented Employment is a key concern in many countries Six out of Ten jobs are created by the services sector. Governments have realized the importance of creating and promoting services.
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2. Service as a Business Imperative in Manufacturing
Now manufacturing sector
Automobiles manufacturers Computers Aircrafts Industrial equipment

Customers expect superior services from manufacturers. Manufacturers differentiate their offering based on the services provided.
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1. Deregulated industries & professional service needs Most Services
Regulated / controlled by government.

Recent years
Trends of privatization

Severe competition Demand for new services.

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1. New Technologies have created need for services. Rapid technological changes
Pagers Cellular mobile Internet Entertainment

Educating customers How these can be used to our advantage? Demand for service providers.
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1. . Services Marketing is Different Can you handle services in the same way as goods. No How to handle a product which is intangible
Selling car vs airlines

Need for new skills.

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Goods versus Services marketing Four Major differences .
1. 2. 3. 4. Intangibility Heterogeneity Simultaneous production and consumption Perishability

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Differences Between Goods and Services

Intangibility Heterogeneity

Simultaneous Production and Consumption

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Intangibility
Cannot be
seen felt tasted

Difficult to grasp mentally. Marketing implications. How to sell something which cannot be seen, felt or tasted Can be copied by competitors.
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Heterogenity
Delivered by human beings No two services are exactly alike Human beings are moody Causes heterogenity

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Simultaneous production and consumption Goods
First Produced Then consumed

Services Most services exhibit simultaneous production and consumption

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Simultaneous production and consumption Beauty parlor
INTRODUCTION TO SERVICES MARKETING

Services will start When customer is seated Production is instant Consumption is instant.
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Simultaneous production and consumption Marketing Implications Mass production difficult Mistakes by employees visible Employees need to be well trained Services need to be decentralized
Convenient locations
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Perishability Services cannot be
Saved Stored Resold Returned

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Perishability Examples One empty seat in airlines. One empty room in hotel. Can you return a bad haircut.

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Marketing Implications Perishability Accurate demand forecasting Strong recovery strategies When things go wrong? How to regain customer goodwill ?

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Services are Different

Goods
Tangible

Services
Intangible

Resulting Implications
Services cannot be inventoried. Services cannot be patented. Services cannot be readily displayed or communicated. Pricing is difficult.

Standardized

Heterogeneous 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. 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. It is difficult to synchronize supply and demand with services. Services cannot be returned or resold. Introduction to services 26

Production separate from consumption

Nonperishable Perishable
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Services Marketing Triangle For service marketers to succeed three types of marketing need to be carried out.
1. External Marketing 2. Internal Marketing 3. Interactive Marketing
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The Services Marketing Triangle

Company (Management)
Internal Marketing
enabling promises

External Marketing
setting promises

Employees

Interactive Marketing
keeping promises

Customers

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INTRODUCTION TO SERVICES MARKETING

External Marketing Between Company & Customers What you communicate to customers? Create customer expectations Traditional promotional techniques

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Example Public Sector Banks Cheque withdrawl norms - 10 mts Draft preparation norms 2 Hrs. Do you receive the same in the given stipulated time?

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INTRODUCTION TO SERVICES MARKETING

Internal Marketing. Enables employees to keep promises Commitments to customers How to
Train Motivate Reward the employees

Employees have to deliver the promises made in external Marketing Customer Satisfaction linked to employee satisfaction
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CitiBank
Rewards best employees Free trips abroad Motivated employees keep customers happy and satisfied.

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INTRODUCTION TO SERVICES MARKETING

Interactive Marketing Actual delivery of service Employee interact directly with customers. Promise (as made in external marketing) is delivered.

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Interactive marketing
State Bank of India Cheque withdrawl. External marketing promise to customers 10 minutes Who processes cheques - Employees Actual delivery time 15 minutes What are the reasons for failure Demotivated employees Disappointed customers

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