Unit I

Introduction To Services
Marketing
Objectives
◦Introduction to Services concept
◦Classification of Services
◦Services Marketing Triangle
◦Challenges of Service Marketing
◦Factors stimulating growth
◦Marketing of goods vs marketing of services
◦Goods – Services Continuum
◦Service Environment – Internal and External
◦Consumer Behavior and Positioning of a Service
Introduction
◦Services refers to the intangible aspect offered with products or offered solely.

◦Services marketing emerged as a separate field of study in the early 1980s,

following the recognition that the unique characteristics of services required
different strategies compared with the marketing of physical goods.

◦Services marketing typically refers to both B2C and B2B services, and includes
marketing of services such as telecommunications services, financial services,
all types of hospitality, tourism leisure and entertainment services, car
rental services, health care services and professional services and trade
services.
◦Service marketers often use an expanded marketing mix which consists of
the seven Ps: product, price, place, promotion, people, physical evidence and
process.
◦A contemporary approach, known as service-dominant logic, argues that the
demarcation between products and services has diminished.
◦The S-D logic approach is changing the way that marketers
understand value-creation and is changing concepts of the consumer's role in
service delivery processes.
◦The service sector grew 12.75 per cent year-on-year in 2018-19.
◦The sector has contributed 54.17 per cent of India’s Gross Value Added at
current price in 2018-19*. Net service exports stood at US$ 60.25 billion in
April-December 2018
◦As of 2018, 34.49 per cent of India’s employed population was working in the
services sector
Features
1. Intangibility
2. Perishability
3. Inseparability
4. Variability / Heterogeneity
5. Ownership
6. Simultaneity
7. Quality measurement
8. Nature of demand
Difference between Physical goods and
Services
Physical Goods Services

◦ Tangible ◦ Intangible
◦ Homogeneous ◦ Heterogeneous
◦ Production and distribution are ◦ Production, distribution and
separate from consumption consumption are often simultaneous
◦ A thing ◦ An activity or process
◦ Can be stocked ◦ Cannot be stocked
◦ Transfer of ownership ◦ No transfer of ownership
◦ Not so Labor intensive industry ◦ Labor intensive industry
◦ Goods can be Resold ◦ Services cannot be Resold
 Classification of Services
1. End User: individual; B2B; industrial end user

2. Degree of Tangibility: highly tangible; highly intangible

3. People based services: high contact; low contact

4. Expertise: highly professional; non professional

5. Profit Orientation: commercial; Non profit org

Service Marketing Triangle
◦This model is developed by Christian Gronoos.
◦It identifies the 3 areas for successful marketing
◦The first phase is Internal Marketing – Enabling the Promise.
◦ It talks about selling the service or motto first to the employees.
◦ Eg – BMW; Sahara Grp; Vijay Sales; Google emp policies etc
◦ It is essential to spread the vibes outside
◦The second phase is External Marketing – Setting the Promise.
◦ It talks about AIDA model and delivers through the 4 Ps
◦ Eg – Aditya Birla Grp; Airtel; TATA; Papaya restaurant; Dominos etc
◦ It creates goodwill and depends on CCPR
◦The third connecting phase is Interactive Marketing – Delivering the Promise.
◦ Most critical for the success of the brand and company
◦ Eg – Zomato; Emirates, Holiday Inn; Marriot etc
 Challenges of Service Sector

1. Intangibility
2. Trust factor
3. Production and consumption is simultaneous
4. Unknown and unorganized competition
5. Dynamic
6. Depends on products and other branding aspects
Factors leading to growth of service
marketing

1. Demographic changes – buying and spending patterns; cultural changes

2. Social changes – role of women; family structures; westernization
3. Economic changes – affluence and availability of foreign goods;
liberalization;
4. Technology changes - ecommerce
5. Political and legal changes – FDI, Make in India; GST etc
 Goods Services Continuum
◦Refers to the interdependence of goods and services being sold in an
intermingled manner.
◦This is in different proportions and unprecedented manner
◦Helps to understand the relation between products and services
◦Helps to underline the relevance and requirement of services involved in
selling of the product or idea
◦Classification are as follows:
◦Companies offering only goods – toothpastes, foodgrains etc
◦Companies offering goods and services in smaller proportions – ACs, water
purifiers, cars
◦Goods and services in equal proportions – hospitality industry
◦Services offered with minor goods sold – aviation industry
◦Pure services offered – Gyms, Salons, Education etc
 Services Marketing Environment
◦Refers to the Internal and External Environment
◦Internal or Micro:
◦Employees & Management
◦Customers
◦Competitors
◦Government
◦Community
◦External or Macro:
◦Political
◦Economic
◦Socio – Cultural
◦Technological
◦Legal
 Internal Env External Env
Interaction between organisationand Interaction between organisation and
employees customers
Customers influence the business
Management decides the policies and rules
operations
Employees derive benefits from Customers derive benefits from service
compensation plan of the company offerings

Aims at increasing employee job satisfaction Aims at achieving customer satisfaction

Includes salary raises, awards, recognitions Includes advertising, sales promotion and
etc publicity etc
Enables employees to fulfill promises Makes promises to customers

Requires vision and planning Requires feedback and control

Partnership is the focus Relationship is the focus

Consumer Behavior And Service
Positioning

◦Refers to the manner in which any consumer or customer will react or behave
to the offers made by sellers or producers
◦Service positioning is the unique identity of a service in a competitive
market.
◦A valuable position serves customer needs and stands out from the
competition in a way that has meaning to customers.
◦Some of the examples are: Convenience, Variety, Reliability, Safety,
Performance, Customer Experience etc
Buying behvaior process
Types of buying behavaior

1. Complex behavior – trials and pensive

2. Dissonance (reducing buying behavior)
3. Habitual buying behavior
4. Variety seeking behavior
 Factors affecting consumer
behavior

1. Social – family, reference groups, society, peers

2. Personal - occupation, age, economic condition, lifestyle
3. Psychological - perception, motivation, beliefs and attitudes
4. Cultural – culture, religion, values, Classes
 Customer Needs And
Expectations
◦ The shift in consumer behavior and attitudes provides opportunities for service
companies to understand and meet changing needs, continuing to adapt their
offerings over time as needs evolve.
◦ Different types of customer expectations are:
1. Desired and adequate service levels: basic expectations and these must be met
for customers to recognize the brand among the others.
2. Predicted services: the level of services customers anticipate beyond the basics.
Meeting these leads to customer satisfaction. Good service prediction causes high
adequate level and vice versa.
3. Zone of tolerance: the extent to which customers are willing to accept the
inconsistency of services provided is called Zone of Tolerance. It is the range of
service within which customers don’t pay explicit attention to the services
performed. When service falls outside this range, customers will react either
positively or negatively.
 Decision making Roles

1. Initiator: who has the need

2. Influencer: who influences the choices and options
3. Gatekeeper: who filters out the options based on different parameters
4. Decider: who makes the final decision
5. Buyer: who one purchases
6. User: who consumes the service
Positioning a service in the market
place
◦Positioning is the means by which a brand or company presents its features
and benefits to prospective customers. It is a means of establishing identity,
one that sets a business apart from competitors
◦Service positioning is the unique identity of a service in a competitive
market. A valuable position serves customer needs and stands out from the
competition in a way that has meaning to customers
◦Four principles of positioning are:
a) A company must establish a position in the minds of its targeted
customers.
b) The position should be singular, providing one simple and consistent
message.
c) The position must set a company apart from its competitors.
d) A company cannot be all things to all people it must focus its efforts.
◦ Types of Positioning Strategies
1. Product attributes and benefits: Associating your brand/product with certain
characteristics or with certain beneficial value
2. Product price: Associating your brand/product with competitive pricing
3. Product quality: Associating your brand/product with high quality
4. Product use and application: Associating your brand/product with a specific use
5. Competitors: Making consumers think that your brand/product is better than your
competitors

◦ Effective service positioning strategies:

1. Determine company uniqueness or USP – co-works; Zomato; Swiggy; Dominoes; HR
College
2. Identify current market position – where and how the company exists on brand
equity and perceptual mapping
3. Competitor positioning analysis – SWOT analysis of their services and strategies
4. Develop a positioning strategy and Repositioning – eg Airtel
Perceptual Map
◦A perceptual map is used to show consumer perception of certain brands.
The map allows you to identify how competitors are positioned relative to
you and identify opportunities in the marketplace.