INTRODUCTION

➢ What is Service?
➢ What are the Key points of service?
➢ Define Service Marketing.
➢ Distinguish between physical goods and services.
➢ Explain the Characteristics of services.
➢ Service Profit Chain
➢ Major service marketing tasks
 ✓Service
➢“Service is an act or
performance offered by one
party to another that is
essentially intangible and
does not result in the
ownership of anything.”
➢It is the part of the product or
the full product for which the
customer is willing to see
value and pay for it.
➢For example, hospitality, car
rental, air travel etc.
 Key points of service
• It is intangible.
• It does not result in ownership.
• It may or may not be attached with a physical
product
 Service Marketing
➢Services Marketing refers to the marketing of
services.
➢Service marketing is a sub field of marketing
which covers the marketing of services.
➢Service marketing is the promotion of economic
activities offered by a business to its clients.
➢Service marketing might include the process of
selling telecommunications, health treatment,
financial, hospitality, car rental, air travel, and
professional services.
 Difference between physical goods and service

Physical goods Service

Tangible Intangible

Homogeneous Heterogeneous

Production and distribution are Production, distribution and

separated from consumption consumption are simultaneous
processes
A thing or object An activity or process

Customers do not participate Customers participate in

in the production process production
Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

 Characteristics of services
There are six characteristics to a service:
❑Lack of ownership
❑Intangibility
❑Inseparability
❑Perish ability
❑Heterogeneity
❑Involvement
Each of these need to be taken into account
when marketing a service.
 Characteristics of services (1)
❑Lack of Ownership
You can not own a service and you can not store
a service like you can store a product. Services
are used or hired for a period of time. For
example when you buy an aeroplane ticket to fly
to the USA, you are buying a service which will
start at the beginning of the flight and finish at
the end of the flight. You can not take the
aeroplane flight home with you.
 Characteristics of services (2)
❑Intangibility
Services are intangible and do not have a physical
existence. Hence services cannot be touched,
held, tasted or smelt. This is most defining feature
of a service and that which primarily differentiates
it from a product.
 Characteristics of services (3)
❑Heterogeneity/Variability
Given the very nature of services, each service
offering is unique and cannot be exactly repeated
even by the same service provider. While products
can be mass-produced and be homogenous the
same is not true of services.
 Characteristics of services (4)
❑Perish ability
Services cannot be stored, saved, returned or
resold once they have been used. Once
rendered/delivered to a customer the service is
completely consumed and cannot be delivered to
another customer.
 Characteristics of services (5)
❑Inseparability/Simultaneity of production and
consumption
Services cannot be separated from service
providers. This refers to the fact that services are
generated and consumed within the same time
frame. E.g.: a haircut is delivered to and
consumed by a customer simultaneously.
 Characteristics of services (6)

❑Involvement
One of the most important characteristics of
services is the participation of the customer in
the service delivery process. A customer has
the opportunity to get the services modified
according to specific requirement.
 Service Profit Chain
Internal Satisfied Greater Satisfied Healthy
service → and → service → and loyal → service
quality productive value customers profits
service and
employees growth
 Service profit chain
• The chain that links service firm profits with
employee and customer satisfaction.
• Internal service quality: superior employee
selection and training, a quality work
environment, and strong support for those
dealing with customers, which results in . . .
• Satisfied and productive service employees:
more satisfied, loyal, and hardworking
employees, which results in . . .
• Greater service value: more effective and
efficient customer value creation and service
delivery, which results in . . .
• Satisfied and loyal customers: satisfied
customers who remain loyal, repeat purchase,
and refer other customers, which results in . . .
• Healthy service profits and growth: superior
service firm performance.
 Major service marketing tasks
• Service companies want to increase three major marketing
tasks:
• Competitive differentiation: The solution to price competition
is to develop a differentiated offer, delivery, and image.
– The offer can include innovative features that set one
company’s offer apart from competitors’ offers.
– Service companies can differentiate their service delivery by
having more able and reliable customer-contact people,
developing a superior physical environment in which the
service product is delivered, or designing a superior delivery
process. For example, many grocery chains now offer online
shopping and home delivery as a better way.
– Finally, service companies also can work on differentiating
their images through symbols and branding.
• Service quality: A service firm can differentiate
itself by delivering consistently higher quality
than its competitors provide.
• Productivity: With their costs rising rapidly,
service firms are under great pressure to increase
service productivity. They can do so in several
ways.
– 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 or
– The provider can “industrialize the service” by adding
equipment and standardizing production or
– They can harness the power of technology.