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Services Marketing
Services marketing is a sub field of marketing , which can be split into the two main areas of goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables) and services marketing. Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional services. The range of approaches and expressions of a marketing idea developed with the hope that it be

effective in conveying the ideas to the diverse population of people who receive it. Services are economic activities offered by one party to another. Often time-based, performances bring about desired results to recipients, objects, or other assets for which purchasers have responsibility. In exchange for money, time, and effort, service customers expect value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved. There has been a long academic debate on what makes services different from goods. The historical perspective in the

late-eighteen and early-nineteenth centuries focused on creation and possession of wealth. Classical economists contended that goods were objects of value over which ownership rights could be established and exchanged. Ownership implied tangible possession of an object that had been acquired through purchase, barter or gift from the producer or previous owner and was legally identifiable as the property of the current owner. Adam Smiths famous book, The Wealth of Nations, published in Great Britain in 1776, distinguished between the outputs of what he termed productive and unproductive labor. The former, he stated, produced

goods that could be stored after production and subsequently exchanged for money or other items of value. But unproductive labor, however honorable,...useful, or... necessary created services that perished at the time of production and therefore didnt contribute to wealth. Building on this theme, French economist Jean-Baptiste Say argued that production and consumption were inseparable in services, coining the term immaterial products to describe them. Definition of Services: The American Marketing Association defines services as - Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.

Services -A fresh perspective : Benefits without ownership

Paying for temporary use of an object or for access to a physical facility is a way for customers to enjoy things they can not afford to buy, can not justify purchasing or prefer not to retain and store after use. Renting, therefore, is the option for customers to have access for usage on fees where such customers can get benfit of such facilities even though, they may not own such services / facilities. There are five broad categories of Non-ownership framework:

1. Rented Goods & Services: Goods of this category are those , where customers can get temporary right to use them e.g. boats, combine harvesters, fancy costumes & jewellary, taxis etc. 2. Defined space and place rentals: Herein , customers obtain use of a defined portion of a larger space of building, vehicle or other area. It can include a seat in aircraft, a dining table in a resturant, a seat in cinema hall or a chamber in a building etc. 3. Labor & Expertise Rentals: Customers hire other people to perform owrk which either they can not perform due to lack of expertise

or choose not to perform e.g. house cleaning, car repairs, Income tax return filing, management consultancy etc. 4. Access to Shared physical environment: In this category, a customer can get benefit of the facility while sharing with other

customers simultaneously , by paying a certain fee. They can be outdoor / indoor or both. Museums, Cinema Halls, Gyms, Ski Shows, Trade shows, golf Courses are some of its examples. 5. Access to and Usage of systems and networks: here the customers rent the right to participate in a specified network such as

telecommunications, information services.

utilities,

banking,

insurance

or

specialized

CHARACTERISTICS OF SERVICES The services have unique characteristics which make them different from that of goods. The most common characteristics of services are: Intangibility. Inseparability. Perish ability. Variability

Intangibility Services are activities performed by the provider, unlike physical products they cannot be seen, tasted, felt, heard or smelt before they are consumed. Since, services are not tangibles, they do not have features that appeal to the customers senses, their evaluation, unlike goods, is not possible before actual purchase and consumption. The marketer of service cannot rely on product-based clues that the buyer generally employs in alternative evaluation prior to purchase. So, as a result of this, the services are not known to the customer before they take them. The

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service provider has to follow certain things to improve the confidence of the client: The provider can try to increase the tangibility of services. For example, by displaying a plastic or a clay model showing patients an expected state after a plastic surgery. The provider can emphasize on the benefits of the service rather than just describing the features. Not all the service product has similar intangibility. Some services are highly intangible, while the others are low i.e. the goods (or the tangible

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component) in the service product may vary from low to high. For example: Teaching, Consulting, Legal advices are services which have almost nil tangible components; While restaurants, fast food centers, hotels and hospitals offer services in which their services are combined with product (tangible objective) , such as food in restaurants, or medicines in hospitals etc. Inseparability Services are typically produced and consumed simultaneously. Incase of physical goods, they are manufactured into products, distributed through multiple resellers, and consumed later. But, incase of services, it cannot

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be separated from the service provider. Thus, the service provider would become a part of a service. For example: Taxi operator drives taxi, and the passenger uses it. The presence of taxi driver is essential to provide the service. The services cannot be produced now for consumption at a later stage / time. This produces a new dimension to service marketing. The physical presence of customer is essential in services. For example: to use the services of an airline, hotel, doctor, etc a customer must be physically present. Inseparability of production and consumption increases the importance of the quality in services. Therefore, service marketers not only need to

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develop task-related, technical competence of service personnel , but also, require a great input of skilled personnel to improve their marketing and inter personal skills. Perish ability Services are deeds, performance or act whose consumption take place simultaneously; they tend to perish in the absence of consumption. Hence, services cannot be stored. The services go waste if they are not consumed simultaneously i.e. value of service exists at the point when it is required.

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The perishable character of services adds to the service marketers problems. The inability of service sector to regulate supply with the changes in demand; poses many quality management problems. Hence, service quality level deteriorates during peak hours in restaurants, banks, transportation etc. This is a challenge for a service marketer. Therefore, a marketer should effectively utilize the capacity without deteriorating the quality to meet the demand. Variability Services are highly variable, as they depend on the service provider, and where and when they are provided. Service marketers face a problem in

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standardizing their service, as it varies with experienced hand, customer, time and firm. Service buyers are aware of this variability. So, the service firms should make an effort to deliver high and consistent quality in their service; and this is attained by selecting good and qualified personnel for rendering the service. Difference between Goods and Services:
Goods A physical commodity Tangible Homogenous Services A process or activity Intangible Heterogeneous

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Production and distribution are separation from their consumption Can be stored Transfer of ownership is possible

Production, distribution and consumption are simultaneous processes Cannot be stored Transfer of ownership is not possible

Salt

Soft Drinks Detergents Automobiles Cosmetics Fast food Outlets

INTANGIBLE DOMINANT

TANGIBLE DOMINANT Fast food Outlets Advt. Agencies Airlines

Investment Mgt. Consulting Teaching

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Types of Services 1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the services of lawyer or teacher. 2. Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value Categories of Services (As per GATS): 1. Business services. 2. Communication services. 3. Construction and related engineering services.

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4. Distribution services. 5. Educational services. 6. Environmental services. 7. Financial services. 8. Health-related and social services. 9. Tourism and travel-related services. 10. Recreational, cultural, and sporting services. 11. Transport services. 12. Other services not included elsewhere.

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Industries Classified within Service Sector :

Transportation & Public Utilities
Transportation Railroad Trucking & Interurban passenger Water Transportation Air Transport Pipeline except natural gas Health Services Communication Telephone & Telegraph Radio & Television Electricity, Gas & Sanitary services Wholesale Trade Private Household Services Hotels & Other Lodging Places Personal Services Business Services Misc. Repair Services Motion Pictures Amusement & recretional Services Legal Services Educational Services Social Services Membership Organisations Misc. Services

Other Services

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Retail Trade Finance, Insurane & Real Estate Depository Institutions Non- Depository Institutions Security & Commodity Brokers Insurance agents, brokers & services Holding and other investment companies

Forces that transform and impact the Service Economy:

Govt. Policies Changes in Regulations Examples Ban on Smoking in public Place Privatization of Airlines, Elec. Departments, Road Transportation, Telecom Sector Regulations on Insurance Impact on Service Economy Improved Customer Comfort , attaracting more people to dine out. Increased competition, leading to better efficiency and improved services. Increased cost but better

Privatization Govt. Regulations on

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service sectors Social Changes Increasing Income Outsourcing of domestic servicings

and banking sector Examples Higher Spendings Wedding / Birthday Functions, Home Cleaning Services, Baby and Child care General desire to look fitter and better (Obesity / Aging etc.) Internet

security and services. Impact on Service Economy Development of new services New players in these sectors, expanding the business

Health Consciousness Easier access to more information Business Trends Increase Shareholder Values Emphasis on productivity and cost cutting Mergers & Acquisitions

Health Clubs, Spas, Gymnasium Better Consumer awareness

Examples Pressure on company mgt. to deliver better returns on investments Move to self service technologies Airlines, Health & General

Impact on Service Economy Cost minimisation on services renderes by company. Finding out new revenue sources. Replace old technologies with improved ones to reduce costs. Cost cuttings and aggresive

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Insurance Growth of Franchising Advances in IT Growth in Internet Greater Bandwidth Fast Food Chain Examples Information at fingertip. Customers becoming more knowledgeable.

marketing stratigies Challenges of maintaining consistent quality, facilities with enhanced earnings. Impact on Service Economy Creation of new services to gather information from various sources.

Services as Process: It is a well established fact services do not involve transfer of ownership, services are categorised based what is being processed. In services, people, physical objects and data can be processed. The process can be tangible or intangible.

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Tangible actions are performed on peoples bodies or to their physical possessions where intangible actions are performed on peoples minds or their intangible assets. Based on the above, services can be categoried in to four broad categories i.e. people procsessing, possession processing, mental stimulus

processing and information processing. Who or What is the direct receipient of the service? People Possessions
People Processing Possession Processing (Services directed at peoples (Services directed at physical bodies) possessions)

Nature of the Service Act

Tangible Action

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Passenger Transportation, Lodging Health Care, Beauty Saloons, Resturants

Freight Transportation, Repairs and maintenance, Courier Services Laundry and Dry cleaning, Lawn maintenance Information Processing (Services directed at intangible assets) Accounting Banking Legal Services Securities, Insurance

Intangible Action

Mental Stimulus Processing ( services directed at peoples mind) Education, Broadcasting, Advertisement /PR Psychotherapy Theatres, Museaums

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PEOPLE PROCESSING : Since ancient times, people have sought services directed at themselvesbeing fed, lodged, transported, restored health or made more beautiful. To obtain such services, the consumer has to enter into respective service zones i.e. Service factory as he himself is an integral part of the process . For example, to get a haircut, you have to go to saloon and sit there for the service to be processed by barber. Similarly, for restoring your health, not only you need to go to a doctor but even have to abide by his advice and medication.The amount of time required in People processing

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services can be very little like in boarding a city bus to very long , such as undergoing medical treatment for a disease. The output from these services can vary from minutes to months , depending upon processing time of the service rendered e.g. a customer will take few minutes to get maximum output of the service in a hair saloon but the same may go on for weeks in case of a medical treatment. Managers., therefore, need to thinks about process and output from the standpoint of what happens to the customer . Analysing benefits accrued to him at every stage of process is

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very crucial and also the non-financial costs incurred by him in terms of time, mental and physical efforts. POSSESSION PROCESSING : In possession processing , a customer seeks services from an organization to provide tangible treatment to his physcial possession - Pest Service, repair of gadgets, delivery of package by courier, laundering clothes etc. In this type of processing, production and consumption are not necessarily simultaenous. Installation, removal and disposal of equipments, whole sales / retail distribution, cleaning, maintaining and

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storing or repairing physical objects are such processes where the production and consumption are at different time . In possession processing, the involvement of customers is lower than people processing . In this type of process, all customer is to do to drop/ offer its physical objects for service at service factory and then collect it once, it is repaired / restored. MENTAL STIMULUS PROCESSING : Unlike People Processing or Possession Processing , where a customer has to physically contact the service factory, in case of Mental Stimulus Processing, there is no need for physical contact of the customer with the

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service factory. Services directed at peoples minds include education, news , information, professional advice, entertainment and certain religious activities are services, which come under the category of Mental Stimulus processing. Obtaining full benefit of such service requires an investment of time and mental effort by the customer, though, he may not be required to be physically present at service factory. To get its benefit, a customer has to make mentally alert in case of Mental Stimulant Processing e.g. one can not get output in classroom teaching, if he is sleeping. On the other hand People Processing doesnot require mental efforts for a customer.

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For example, one can reach his destination by travelling by train, even though, he may sleep during the journey. It is worthwhile to understand that core content of this type of service is Information( music, visual or voice), which now can be digitised and sold as CDs, DVDs , after proper packaging and marketing like any other phsical product.Accordingly, services of Mental Stimulus type can be inventoried for consumtion at a later date. INFORMATION PROCESSING : This is quite close to mental stimulus processing as information possessing also requires information for processing. An audit firm, a

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legal advisor or an investment manager , all provide thier services based on information. While in case of Mental stimulus Processing, a customer requires to make mental efforts to gain benefit of the service, that may not be always the case in case of Information processing.Information processing can be conveted into physical objects like CD ROMs or DVDs or letters or Reports. In view of the very close nature of Mental Stimulus and Information processing, togather , they are also known as Information based services.

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Managerial Services:

Implications

of

Eight

common

Features

of

Difference

Implications

Most service products can not be inventoried.

Customers may be declined service or asked to wait. Customers can neither taste, smell or touch neither can see or hear them. Harder to evaluate service and distinguish from

Marketing Related Topics Smooth demand through promotions, dynamic pricing . Work with Operations to adjust capacity. To make services tangible through emphasis on physical clues. Employ concrete metaphors and vivid images in advertising,

Intangible elements usually dominate value creation

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competitors. Customers percieve greater risks.

branding Educate customers to make good choices, explainwhat to look for, document performances, offer guarantee. Develop User-friendly equipment, facilities and systems. Train customers to perform effectively. Provide customer support.

Services are often difficult to visualize and understand.

Customers may be involved in coproduction

People may be part of the service experience.

Customers interact with providers equipments, facilities and systems Poor task execution by customers may hurt productivity , spoil service experience or even curtail benefits. Apperance, attitude and behaviour of

Recruit, train and reward employees to reinforce

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service personnel and other customers can shape the experience and affect satisfaction Harder to maintain consistency, reliability and service quality or to lower costs through higher productivity. Difficult to shield customers from impact of service failures.

Operational inputs and outputs tend to vary more widely.

The time factor often

For customers, time

the planned service concept. Target the right customer at the right time., shaping their behaviour. Set quality standards based on customer expectations, redesign product elements for simplicity and failure proofing. Institute good service recovery procedures. Automate customer provide interactions, perform work while customers are absent. New ways to be found to

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assumes great importance

Distribution may take place through non physical channels.

is a scarce resource, which they donot want to waste and therefore, hate to waste . They want service as per their convenience. Information based services can be delivered through electronic channels like internet but core products involving physical activities and products, can not be delivered physically.

cut on waiting time, speeding up deliveries and offering extended service time.

Need to create userfriendly secure websites and free access by telephone. Ensure that all information based services can be downloaded from site.