MBAD 871- MARKETING MANAGEMENT

TOPIC 9: MARKETING OF SERVICES

Presentation by Ileen Chesire, CM11/40100/20

What is a service?
According to Phillip Kotler a service is any act or performance one party can offer to another
that is intangible and doesn’t result to ownership of anything.
Characteristics of services
1. Intangibility
Unlike a product, a service cannot be seen, touched or held
2. Inseparability
Services cannot be separated from the giver of the service. E.g. you cannot separate a
barber from the haircut.
3. Perishability
Services exist only at the time of production. They cannot be stored for future, for
example, shaving of hair is a service that gets finished when haircut is done.
4. Variability
Services differ according to the person giving it. Organizations however try to
standardize their services by: highlighting the steps towards performing a certain service,
monitor customer satisfaction and invest in good hiring and training procedures.
Also the same service given by one person changes every day. No two services will be
completely identical, they are variable. For example, returning to the same garage time
and time again for a service on your car might see different levels of customer
satisfaction or speediness of the work.

How to overcome the challenges presented by the service characteristics?

1. Intangibility
Customer testimonials. You can take written testimonials from your existing customers
and put these, along with each customer’s photo, on your business website, in your shop
and in your brochures.
Customer reviews on established websites such as Yelp, Google and TripAdvisor also
work well. Also enable social media ratings on networks that attract followers who are
your potential customers.
2. Perishability
You cannot store a service for future use,
Let’s take the example of an airline. If a flight is going half empty, you cannot store the
half empty seats for future use that automatically brings a loss. So airlines use different
strategies to fill their airplanes. E.g. early bookings and reservations.

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 There are a couple of marketing strategies to counter periods where there is less demand:
Aggressive promotion, including online and offline advertising.
Discounts and sales during low-demand periods.
Loyalty programs with points.
Savvy marketers can create a sense of false urgency and false demand, causing people to
rush out to buy services. They do this by offering discounted pricing for a limited period.
This will reduce the service going at loss
3. Variability
This challenge can be overcome through standard processes and frequent audits. By
training yourself and your employees to adhere to the same process every time, you can
achieve a higher overall level of service.
4. Inseparability
You can overcome this challenge of inseparability by having systems and processes. For
example, big hotels, record customers’ preferences in a master database that is accessible
to any hotel in the chain. So when you make a reservation, they already know you, and
set your room up accordingly! And their customers love that.
By using a customer relationship management system, you can keep track of the
preferences of each customer. This will allow you to deliver highly customized service
every time
Categories of services mix
 Pure tangible good
Offering of tangible good, no services accompanies it
 Tangible good with accompanying services
Offering tangible goods accompanied with a service. E.g. selling a computer and offering
support service or installation
 Hybrid
Offer consists of equal parts of goods and service.
E.g. in a hotel, the food and serving of food
 Major Service with accompanying minor goods.
Offer consists of a major service along with an additional services or supporting goods.
E.g. in airline, you get snacks, drinks but what you buy is transportation.
Service strategies to produce a better match for demand and supply in service business.
Demand for a service can fluctuate according to seasons or time. Sometimes there can be too
many people chasing a specific service. E.g. in Transportation-there can be the rush hours.
What marketer’s advice in case the demand outweighs supply of service and vice versa.

What to do to curb the increased demand. (Supply side)

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 1. Part time employees-During peak time organizations can hire part time employees. Like
in colleges part time lectures are hired when enrollment goes up
2. Peak time efficiency
During peak times, employees can be asked to do only essential tasks and avoid lateness
or time wastage.
3. Increase consumer participation
Enlightening customers on some of the procedure so that they can participate in helping
themselves.
1. Perishability
What to do to decongest demand (Demand side)
1) Differential pricing
Shifting prices according to demand shift. e.g. charging high during peak hours and low
during off peak hours. This will encourage more consumers to want to utilize the price
cuts and offset congestion of the peak hours.
2) Non peak demand special offers
During off peak seasons hotels can push for after sell services like breakfast after paying
accommodation.
3) Reservation systems. Encouraging people to book in advance. E.g. in Long distance
travelling bus or aero planes.
4) Self service
Offering other services for waiting customers. Like ATMS in banks
MARKETING STRATEGIES FOR SERVICE FIRMS
 Managing service quality-The service of a firm is always tested at each service
encounter. It is important to manage it well to retain and attract customers. Customers
always have expectations
 Differentiated services
Marketers can differentiate their services through processes that add value
E.g. in hotels industry
They can provide bed and breakfast.
 Establishing image dimensions
Create an image that associates with your service. E.g. chuka university has created an of
being a prophetic university. So anybody who comes across it, first impression will
perceive it as a very religious institution that is honest in their dealings.
 Customer empowerment
Providing the right tools and information needed by customers. Like putting information
on company websites, brochures and providing customers with suggestion boxes to
speak about their dissatisfaction or giving ways on how to reach an operator at any point
in their call.
 Coproduction
Involving citizens or people in the creation of a service or public policies. This is so as to
minimize customer complaints as they will be aware of the processes.

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 This can be done through the following ways
 Incorporating the right technology to aid employees and customers
 A company can keep a record of purchase; this is in case a customer loses receipts
 To encourage participation -Companies that offer health services to employers can
give 20% reduction in insurance premiums
 Encourage customer’s citizenship
This is where customers help other customers and encourage others. E.g. in a golf club

Determinants of service quality

Marketers must ensure they are marketing quality services so as to get a space in the market
share.
A quality of service is determined by the following
 Reliability
The ability to perform the promised service
 Responsiveness
The ability to provide prompt service when needed
 Assurance
Employees instill confidence in customers
 Empathy (caring approach)
Providing caring and attention to customers
 Tangibles
The appearance of the physical facility: equipment’s as to where the service is coming
from. (Appealing materials associated with the service)
BEST PRACTICES OF SERVICE QUALITY MANAGEMENT
Well managed service companies share the following practices:
(What companies do to ensure service is quality)
 Strategic concept-
These companies know their target customers and their needs. They have developed a
strategy on how to achieve thee needs-
 Commitment by top management-
The management not only look at the financial performance but also service performance
on a monthly basis
 Commitment to quality and high standards
They set very high standards by having faster deliver systems
E.g. answering of customer calls within 10 seconds
 Self-service technologies- having technologies that customers can serve themselves to
save time. E.g. ATMS
 Systems of monitoring service performance and customer complaints-

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 There’s internal audits to monitor processes and performances and suggestion/complains
box
 Employee satisfaction-
Positive employee attitudes promote stronger customer loyalty. Ensuring employees are
well taken care off financially, physically and emotionally will provide an ample
atmosphere for good service delivery

Customer expectation
Customers form expectations from many sources such as past experience, word of mouth,
advertising.
If perceived service falls below the expected service customers are disappointed.
Delighting customers is matter of exceeding expectations. Companies need to add benefits to
their offers by providing very quality services according to customer needs.
What causes unsuccessful delivery:
These are the gaps that lead to consumer’s expectations not being met
 Gap between consumer expectation and management expectation
Management may think customers wants this, but in reality customers wants the other.
e.g.
In hospital management may think patients want good beds and medicines but in reality
they want care and attention from the medics
 Gap between management perception and service quality specification
Management may perceive a customer wants but not set a standard to meet the
specification
 Gap between service quality specifications and service delivery
The service maybe well but the delivery and presentation might be poor. E.g. in Schools
good lectures might be given but the delivery can be poor and out of context
 Gap between service delivery and external communications
Customers are affected by what they see on adverts/brochures. E.g. they see a very big
clean room in hospitals. Only to find an untidy room when they visit.
 Gap between perceived service and expected service
This is when the customer misperceives the quality.

MANAGING PRODUCT SUPPORT SERVICES

Manufacturers of equipment’s: office machines, tractors, aero planes must provide product
support service.
Support service is a service offered by a seller to a buyer after buying of a specific product. This
is a marketing tool to increase buyers’ confidence in a product

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Best product service support provides a better competitive advantage since having a good
product with bad service accompanying it will not attract a buyer.
Managing product support service involves
(What companies do to ensure their product support service is the best)
 Postsale service strategy
 This involves following up on thoughts of customers after utilizing the service. Taking
their feedbacks and analyzing them. You can give a customer evaluation questionnaire.
They will give back feedback after usage. This will help a company know their strengths
and weakness in their products.
 Identifying and satisfying customer needs and relieve worries
Customers have worries when buying product service
Worry of reliability, worry of no money to do maintenance.
A company must provide the best product service to eliminate these worries and retain
customers. You can give a warranty of one year to eliminate this worry of breakdown.
Customer service imperative
To strengthen customer relation and attract many customers’ other companies give offers
like car maintenance within the first 100 miles.

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