Services Marketing

Unit -1
Introduction to Services Marketing
Services Definition
Every day we interact with various economic activities like – getting
courier delivered at the requested address, making phone call to friend,
relative, or client, having coffee at coffee shop, or taking metro to
commute office. Such activities are called services because they involves
deed or act and offered by one party to another for sale. 

Services differ from goods in many ways. The way a product is produced,
distributed, marketed, and consumed is not the way a service is. Hence, a
different marketing approach is necessary for the marketing of services.

Today, in this post we are going to explain – What services are? What are
the characteristics of services? How services are marketed?

Definition of Services

According to American Marketing Association services are defined

as “activities, benefits or satisfactions which are offered for sale or
provided in connection with the sale of goods.”

According to Philip Kotler and Bloom services is defined as “any activity

or benefit that one party can offer to another that is essentially intangible
and does not result in the ownership of anything. Its production may or
may not be tied to a physical product.”

 Unique characteristics and marketing challenges of services

1.      Intangibility– Services are cannot be touched or hold, they are intangible in
nature. For example – you can touch your Smartphone. But, you cannot hold or touch
the services of your telecom service provider. 
2.      Inseparability– In case of services the production, distribution, and consumption
takes place simultaneously. These three functions cannot be separated.

3.      Variability– It is impossible to provide similar service every time. You’ll experience

some change every time you buy a particular service from a particular service
provider. For example – Yesterday you had a coffee at CCD. Today, you are again at
CCD to have a coffee, but you have got different place to sit today; the person served
you coffee is different today; other people having coffee are also different today.
Hence, your experience of having coffee today is different as compared to yesterday. 

4.      Perish-ability– You can store goods, but it is not so in the case of services.
Services get perished immediately.  

5.      Participation of customer– Customer is co-producer in production of services.

For delivery customer involvement is as important as is of the service provider. For
example – if you went to a parlour for haircut, how it cannot be possible without your
presence and involvement. 

6.      No ownership– In the sale of services, transfer of ownership not take place. It
means to say that consumer never own the services.

Marketing of Services

A different marketing approach is necessary for services marketing, because services

differ from goods in many respects.

Difference between Services and Goods

Basis Services Goods

 Services are
Goods are tangible in
intangible in nature.
Tangibility nature. They can be
They cannot be
touched and hold.
touched or hold.

Services are Function of

inseparable in nature. distribution and
Production, consumption of
Separability distribution, and goods can be
consumption of separated from the
service take place function of
simultaneously. production.

Services cannot be
owned. They can be
Ownership Goods can be owned.
hired for a specific
time period.

Services get perished

after a specific time Goods can be stored
Perish-ability
period. It cannot be for future use.
stored for future use.

Services are more Goods are less

heterogeneous. It is heterogeneous. It is
Heterogeneity
very difficult to make possible to make
each service identical. each goods identical.

Customer Service in a service firm is highly interactive in nature. Customer interacts

with the firm physical facilities, personnel, and tangible elements like the price of the
service. The success of any service firm depends on how its performance is judged and
perceived by the customer. Today, Service Firms are becoming highly competitive, so,
it is essential for service firms to provide high quality services for their survival.

An expanded marketing mix for services was proposed by Booms and Bitner (1981),
consisting of the 4 traditional elements–product, price, place, and promotion and three
additional elements–physical evidence, participants, and process. These additional
variables beyond the traditional 4 P’s distinguish ‘customer service’ for service firms
from that of manufacturing firms.

Challenges of Services Marketing
It is a challenging task to manage a service or product industry. These challenges
however are different and unique for each industry. Some of the challenges that are
faced while managing, growing and making profit from a service industry are discussed
below, these factors do not readily apply to the product industry.  

1.      Services are intangible and so customers cannot see or hold them before they buy
it. Buyers are therefore uncertain about the quality of service and feel they are taking a
risk. The buyer is unable to conceptualize and evaluate a service from beforehand.
From the seller’s perspective he finds it challenging to promote, control quality and set
the price of the service he is provide. Unlike products the intangible nature of service
causes difficulties to both client and the firm. 

2.      Defining and improving quality in the service industry is a major challenge. Unlike
products very often services are produced and consumed simultaneously. As a result
service quality management faces challenges that the product industry never ever
comes across. In the product industry the manufacturer gets ample opportunity to test
his products before they reach the market. In case of a quality issue the problem is
taken care of during the quality check and customer satisfaction is taken care of.
However during service production the customer is right in front. To guarantee
customer satisfaction in this scenario is a major challenge. 

3.      In case of the service industry the customer first needs to develop trust in the
service organization before he buys their services. The client often gives more
importance to the amount of faith he has on the service organization than the services
being offered and their value proposition. 

4.      Service industry faces competition not only from fellow service industry but also
from their clients who often question themselves whether or not they should engage a
service at all. 

5.      Most of the product companies have dedicated sales staff while in the service
industry the service deliverers often do the selling. Coordinating marketing, operations
and human resource efforts is a tedious task. 

6.      Passion works for the service industry. More the passion, spirit and desire among
the service staff more is the revenue generation and success generated every day.
There is a direct correlation between staff passion and financial success and similarly
 lack of passion leads to failure in the service industry. Staffs need to be constantly
motivated and efforts have to make to sustain employee commitment. 

7.      While testing new services is a constant challenge communicating about these

services simultaneously is also not easy. 

 
8.      Setting prices does not come easily for service industry. 

9.      Standardization versus personalization is another major issue the service industry

has to face.

In order to assess that, you need to understand

the key points yourself.

Understanding how a service is different

A product is a physical thing, something you can touch. Usually something you buy and
take away. Services are different. But how? And why does it matter?

The easiest way to explain is to use an example. Let’s look at wedding photography.

It’s intangible
You will get images of some sort as an end result, but they’re not necessarily a physical
product. You can turn them into a physical product. A wedding album. A calendar. A
fridge magnet. You may even get one or more of those physical products as part of
your overall service package. But what you are really buying is the time and expertise
of your photographer. The ability to create great images and memories of your special
day.

It’s variable
The photos of your wedding will not be the same as the photos of anyone else’s
wedding. 

         The circumstances are different. The location. The weather. The guests. The time of
day. 

         The photographer is (often) different. Even if two wedding parties use the same
photographic studio, the individual photographer on the day may not be the same.
Stylish Sally and Winsome Will have different shooting styles. 

         Even the same photographer may deliver differently on different days. Maybe
Stylish Sally has a stinking cold and doesn’t want to be out in the rain. She’ll do her best
to deliver a great job, but she may not have the easy touch she does on a sunny day
when she’s feeling fine. 

Intangibility and Variability make it hard for customers (and service providers, too)

to set expectations and define quality. 

         How do you know, in advance, that you’re going to get great photos of your
wedding? You don’t. You can’t test them. How do you know which service provider to
trust? 

         How do you compare one offering to another? 

         What if you don’t like the end result? Are you entitled to a full refund? Sally has
already spent all that time and effort on your wedding. You can’t give it back or get it
exchanged, the way you would a camera or a washing machine which didn’t work. 

         How do you assess the quality anyway? What’s the objective standard for a ‘good’
or a ‘great’ wedding photo?

It’s inseparable
You went with Stylish Sally over Winsome Will. If Stylish Sally is sick on the day and
sends Winsome Will instead, you won’t be happy. The photography service is
inextricably linked to the person providing it.

It’s also linked to the wedding. The photographer has to be at the wedding – there’s no
other way to get the photos. And the customer – the bride, the groom, their families
and friends – are equally linked. The customer is, in a very real way, part of the service.

It’s perishable
There’s no way to ‘stock up’ on a service. No way to store inventory. Your wedding is a
one-off event, and everything you want, including your photographer, has to be
available on that day.

Inseparability and Perishability present other challenges for services which don’t

apply to products.

Quality
If your service is dependent on the customer, how do you ensure consistent quality?
The customer dependency is clear in photography, but it’s equally applicable in other
service businesses.  If you’re supporting an IT network and your client has a 7 year old
server and won’t invest in a new one, how do you ensure reliability? What if you’re
completing a tax return and they won’t provide receipts and details of expenses? At
NoBull we provide marketing services. We need to know who your target client is.
‘Everyone’ is not a clear answer or a good target – but we’ve had clients say that! (At
least at the beginning, we work to pin them down.)

Scheduling
Most weddings are on Saturdays. A specialist wedding photographer may be turning
work away because he’s booked every weekend for the next 12 months, but still have
nothing to do from Monday to Friday. What about a landscape gardener or a builder?
Growth and scalability
You only have so many hours.  You can’t just get more of your service produced.  You
can take on staff, but then you have to handle the ‘variability’ issue all over again.  How
do you ensure your new staff are delivering to the same standard? And how do you
recoup the overhead you spend training them?

You can use incentives like variable pricing to spread the demand a bit, but that raises
a whole set of other issues.

Pricing
A cake costs the same on Monday as it does on Saturday. Does a photographer?
Probably not. But how much should the price difference be?

What about your new junior photographer, who’s handling your overflow work? You
vouch for his work, but he’s not you. Your customers aren’t quite so confident. Would a
lower price get him more work? Or would it cut into your margin too much? Would it
make people think you were overcharging for your own time and expertise?

…and how do you handle the client with champagne tastes and a beer budget?

Payment Terms
For most products, you pay and you take the product away. Or you pay online and it’s
delivered soon after. (If it’s a high price item like a car, you may get financing to spread
the cost. But that’s an add-on service, which you pay extra for. It’s not the product
itself.) But what happens with a service? No one wants to be paying the photographer
at the wedding itself. 

         Some services are completely prepaid, like concert tickets. 

         Others are generally paid for afterwards.  You get a bill after you’ve eaten your
meal, not before. 

         Many have more complex terms, including a deposit and a final payment.  When you
stay in a hotel, you generally give a credit card in advance, then settle up on departure. 
With a service, once it’s delivered, you can’t get it back. There’s risk for the customer if
they don’t get what they want and they’ve paid already. There’s risk for the provider if
nothing is paid upfront. Payment terms are a way of balancing those risks.

 Growing importance of services sector in India

In India, the importance of services sector has been increasing continuously decade
after decade. With the continuous expansion of services sector, both in terms of
volume and diversity, the importance of services sector has been increasing at a high
speed.

The following are some of the importance’s of

services sector in Indian economy:

(i) Contribution of GDP:

The share of total services sector in India’s GDP (at constant prices), which is
constituted by trade, hotels, transport, storage and communications, banking,
insurance, real estate, community and personal services, but excluding construction
increased from 28.5 per cent in 1950-51 to 31.8 per cent in 1970-71 and then finally to
51.3 per cent in 2013-14.

But the share of total services sector, excluding construction, to India’s GDP at factor
cost (at current prices) increased rapidly from 30.5 per cent in 1950- 51 to 50.8 per
cent in 2010-11 and then to 55.7 per cent in 2011-12.

If construction is also included, then the same share of services sector increased from
56.8 per cent in 2000-01 to 59.6 per cent in 2013-14. Among the major components of
services sector, the share of transport, Communication and trade in India’s GDP (at
constant prices) increased from 11.0 per cent in 1950-51 to 18.6 per cent in 2013-14.

The share of community and personal services to GDP (at constant prices) marginally
increased from 8.5 per cent in 1950-51 to 12.9 per cent in 2013-14. The share of finance
insurance, real estate and business services increased from 9.0 per cent in 1950-51 to
19.8 per cent in 2013-14.

Thus it has been observed that the contribution of services sector into GDP of India
has been increasing at considerable proportion and thereby it has proved to be a major
sector among all the three sectors of the economy.

(ii) Higher CAGR and Rapid Growth of Services Sector:

The importance of services sector to Indian economy can also be traced from its
attainment of higher compound annual growth rate (CAGR). The CAGR of the services
sector attained at 10.0 per cent for the period 2004-05 to 2011-12 has been found to
be higher than the 8.6 per cent of CAGR of Gross Domestic Product (GDP) of India
during the same period, which clearly indicates that the services sector has outgrown
both the industry and agriculture sectors, showing its supremacy among all three
sectors of the economy in recent years. Such rapid growth of the service sector has
resulted considerable changes in the GDP of the country.

Moreover, the growth has been specifically marked in the public services, information
technology and financial services. Of late, India has just become a service oriented
economy. The country did not follow the traditional growth models and thereby
skipped the manufacturing growth stage to directly jump from agricultural growth
stage to services growth stage.

However, the growth in services sector will definitely support growth process in
agriculture and industrial sector in reasonable proportion and thereby assist the
economy in generating employment and raising overall productivity.

The ratcheting up of the overall growth rate (CAGR) of the Indian economy from 5.7 per
cent in the 1990s to 8.6 per cent during the period 2004-05 to 2009-10 was to a large
measure due to the acceleration of the growth rate (CAGR) in the services sector from
7.5 per cent in the 1990s to 10.3 per cent during the period 2004-05 to 2009-10.

The services sector growth was significantly faster than the 6.6 per cent for the
combined agriculture and industry sectors annual output growth during the same
period. Although, the agricultural sector has been a dominant player initially, but of late
the share of services sector has also been increasing over the years, which has been
challenging the dominance of primary sector or agriculture in the later stage of
development.
(iii) Horizontally Higher Share of Services in GSDP:

The service sector has been contributing towards the gross state domestic product
(GSDP) of different states and union territories (UTs) satisfactorily in recent years. A
comparison of the shares of services in the GSDP of different states and union
territories in 2011- 12 shows that the services sector is the dominant sector in most
states of India.

States and UTs such as Tripura, Nagaland, West Bengal, Mizoram, Maharashtra, Bihar,
Tamil Nadu, Kerala, Delhi and Chandigarh have recorded a higher share of services
sector to its GSDP which are again higher than all India shares (55.7 per cent) of its
services sector.

Chandigarh with an 85 per cent share and Delhi with 81.8 per cent share top the list.
This has resulted a horizontal spread of higher share of services sector in GSDP of a
number of states.

(iv) Employment Generation of Services Sector:

The important of services sector can also be realised from its contribution towards
generation of employment in India. Although the primary sector (mainly agriculture) is
the dominant employer followed by the services sector, the share of services sector
has been increasing over the years and that of the primary sector has been decreasing.

Between 1993-94 to 2009-10, there has been a sharp fall in the share of primary sector
in employment from 64.75 per cent in 1993-94 to 53.2 per cent in 2009-10.

But the consequent rise in share of employment of the other two sectors was almost
equally divided between secondary and tertiary sectors. However, while agriculture
continues to be the primary employment providing sector, the services sector
(including construction) is in the second place.

During the same period, the share of services and construction sectors in employment
increased from 19.70 per cent to 25.30 per cent and 3.12 per cent to 9.60 per cent
respectively.

As per National Sample Survey Organisation (NSSO) report on Employment and

Unemployment Situation in India in 2009-10, on the basic usually working persons in
the principal and subsidiary statuses, for every 1000 people employed in rural India,
679 people are employed in the agriculture sector, 241 in the services sector (including
construction) and 80 persons in the industrial sector.
Again in urban part of India, 75 persons are employed in the agriculture, 683 persons in
the services sector (including construction) and 242 persons in the industrial sector.
Moreover, construction, trade, hotels and restaurants and public administration,
education and community services are the three important employment providing
service sectors.

Studies further reveals that the tertiary employment share have strong upward slopes
in all the income quintiles covered both in urban and rural areas with higher income
quintiles having higher share in each successive NSSO round. Thus tertiary
employment growth is steadying moving from being an absorber of low income of
labour to providers of high income jobs.

State-wise, there are wide differences in the share in employment of different sectors
in rural India. It is found that some work-eastern states like Sikkim, Tripura and Manipur
have a high share of employment in the services sector and again some city states like
Chandigarh and Delhi also have very high shares of employment in services like 826
and 879 respectively out of 1000 employed people.

Moreover, among the major states, Kerala has a high share of employment in the rural
services sector at 511 persons out of 1000 persons. Construction; trade, hotels and
restaurant; and public administration, education and community services are the three
major employment providing services sectors in all these different states.

In urban India the shares of employment in services in most of the states varied like
833 in Assam, 877 in Meghalaya, 732 in Bihar, 787 in Jharkhand, 711 in Kerala, 716 in
Maharashtra, 743 in Rajasthan, 653 in Uttar Pradesh, 641 in Gujarat, 586 in Tamil Nadu
and 683 in West Bengal out of 1000 employed people.

(v) Contribution to India’s Services Trade:

The services sector is also playing an important role sector in raising the volume of
exports in the country. Thus India is moving towards a services-led export growth in
recent years. During 2004-05 to 2008-09 as per the Balance of Payment (BoP) data,
merchandise and services exports grew by 22.2 and 25.3 per cent respectively.

Again India’s share of services exports in the world export of services, which increased
from 0.6 per cent in 1990 to 1.0 per cent in 2000 and further to 3.3 per cent in 2011, has
been increasing faster than the share of merchandise exports in world exports.
Services growth slowed in 2009-10 as a result of the global recession, but the decline
was less pronounced than the slowdown in merchandise export growth and has
recovered rapidly in 2010-11.
As per BoP data of the RBI, India’s services exports grew at a CAGR of 20.6 per cent
during the period 2004-05 to 2010-11, compared to the 19.7 per cent CAGR of
merchandise exports during the same period. If we enter into the details of services
sector, CAGRs of financial services (29.2 per cent) were at higher level while that of
software at 21 per cent was at lower level.

In terms of size, software is a major services export category, accounting for 41.7 per
cent of total services exports in 2010-11. The CAGR for import of services was 20.2 per
cent compared to the CAGR of merchandise imports, at 21.4 per cent. Among the
various items of services imports, non-software services (22.6 per cent) and
transportation (20.5 per cent had high CAGRs.

Moreover, the overall openness of the economy reflected by total trade including
services as a percentage of GDP showed a higher degree of openness at 55.0 per cent
in 2011-12 compared to 25.4 per cent in 1997-98 and 38.1 per cent in 2004-05.

(vi) Contribution towards Human Development:

Services sector has a lot of contribution towards human development in our country.
Accordingly, services sector has been rendering some valuable services, viz., health
services, educational facilities, IT and IT enabled services (ITes), skill development,
health tourism, sports, cultural services etc. which are largely responsible for human
empowerment and improvement of quality of life of the people in general.

(vii) Services Sector Growth and FDI Inflows:

Modest growth of services sector has made ample scope for the smooth inflow of FDI
into the country. FDI also plays a major role in the dynamic growth of the services
sector. On the positive side, at global level, medium term prospects for services are
generally better than those manufacturing sector with international investment in the
services sector expected to grow relatively faster.

Moreover, many transnational companies, which some years ago were mainly focused
on their home markets, are now pursuing their internationalization strategies involving
ambitious investments abroad. Developing and transition economies particularly in
Asia are considered as most attractive destinations. Accordingly, India has been largely
considered as favoured destination for increasing flow of FDI.
Although flow of foreign direct investment (FDI) into services sector of the country is
maintaining a positive trend but the ambiguity in classifying various activities under
the services sector poses differently in the measurement of flow of FDI into this sector.

However, the combined FDI share of financial and non- financial services, computer
hardware and software, telecommunications and housing and real estate can be
broadly taken as rough estimates of FDI share of services.

Such FDI share of services was 40.5 per cent of cumulative FDI equity in flows during
the period April 2000 to December 2012. Including the construction sector (6.5 per
cent), the share of services in FDI inflows increases to 47.0 per cent.

If the shares of some other services like hotels and tourism, trading, information and
broadcasting, consultancy services, ports, agriculture services, hospital and diagnostic
centres, education, air transport including air freights and retail trading are included
then the total share of cumulative FDI inflows to the services sector would be around
58.4 per cent.

However, in terms of cumulative FDI equity inflows during April 2000 to December
2011, the financial and non-financial services are found to be the largest recipients with
20.1 per cent,
(31.7billion),whichisagainfollowedbytelecommunicationswith7.9percent(31.7billion
),whichisagainfollowedbytelecommunicationswith7.9percent( 12.5 billion), computer
hardware and software with 6.9 per cent
(10.9billion),housingandrealestateswith6.9percent(10.9billion),housingandrealestate
swith6.9percent( 10.9 billion), and construction activities 6.5 per cent ($ 10.2 billion)
share.
The shares of financial and non-financial services sector in total FDI inflows from these
sourcing countries are Mauritius 20.1 per cent Singapore 30.6 per cent, U.K 29.5 per
cent, USA 21.9 per cent and Japan 11.9 per cent.

(viii) Contribution towards Development of Infrastructure and

Communication Services:

Services sector has also been playing an important role in developing expanding and
management of infrastructure with a special emphasis on development of
transportation and communication services. In a developing country like India the
importance of development of infrastructural facilities is quite high.

The contribution of transport, storage and communication to the GDP at factor cost (at
current prices) in India ranges from 8.2 per cent in 2006-07 to 7.1 per cent in 2011-12.
(ix) Contribution towards Growth of IT and ITeS:

The services sector has also paved the way for a continuous growth of its IT and IT
enabled services (ITeS) sector and thereby helping the economy of the country to
attain higher growth both in terms of GDP share, employment, exports etc. which has
put India on the global map.

The IT and ITeS sector of the country has developed an image of a young and resilient
global knowledge power and has earned a brand identity in this sector.

The IT and ITeS industry has four major sub-components : IT services, business process
outsourcing (BPO), engineering services and research and development (R&D), and
software products. This IT and ITeS sector has been generating considerable amount of
revenues and employment in the economy.

As per NASSCOM estimates, India’s IT and BPM sector (excluding hardware) revenues
were to the tune of US $ 95.2 billion in 2012-13 and has been able to generate direct
employment for nearly 2.8 million persons and indirect employment of around 8.9
million persons in the country.

Moreover, as a proportion of national GDP, IT and ITeS sector revenues have grown
considerably from 1.2 per cent in 1997-98 to an estimated 7.5 per cent in 2011-12.

Software exports from India in 2011-12 stands as

US 69billionascomparedtoUS69billionascomparedtoUS 59 billion in 2010-11. It is also
observed that exports continue to dominate the IT and ITeS industry and constitute
about 78.4 per cent of total industry revenue. Moreover, the CAGR of the domestic
sector has also been remained at high level of 12.8 per cent as compared to the 14.2 per
cent for exports during the Eleventh Plan period.
The growth rate of the domestic sector of IT-ITeS and exports sector in 2010-11 were
20.6 per cent and 18.8 per cent respectively as compared to that of 9.7 per cent and
16.4 per cent growth rate attained respectively in 2011-12. Consistent and growing
demand from US is largely responsible for increasing its share in total exports of India’s
IT and ITeS services from 61.5 per cent to 62.0 per cent in 2011-12.

Moreover, emerging markets of Asia Pacific and the rest of the world also contributed
to overall growth of IT and ITeS sector of the country. Thus the Twelfth Plan aims to
harness the potential of the software and services sector to contribute to country’s
development and growth, particularly in terms of investments, exports employment
generation and contributive to GDP and to retain India’s leadership position as a global
IT-BPO destination.
(x) Contribution towards Development of Some Social Services:

Services sector is also playing an important role in the development and expansion of
some social services like sports, cultural services etc. Sports promotes physical fitness
and develops human personality which also played an important role in national
identity, community bonding and international bonding.

Moreover, cultural activities, or services include recreation and entertainment and

radio and TV broadcasting besides other related cultural services. To meet the
objective of preserving and promoting all forms of art and culture, a variety of activities
are being undertaken by the Government of India.

A total allocation of Rs 3,555 crore was made to this sector during the Eleventh Plan.
However, cultural activities are becoming increasing by important in the modern post
industrial knowledge based economy.

Throughout the world they have been recognized as an important component of

growth and job creation as well as a vehicle of cultural identity. India exported US $ 4
billion worth of creative services in 2010 at a CAGR of 26 per cent.

As per the report of Ernst and young, the Indian media and entertainment industry is
valued at US 16.3billionin2010 and is projected to growth CAGR of
12percentinthenextfouryears(2011−14)toreachavalueofUS16.3billionin2010andispro
jectedtogrowataCAGRof12percentinthenextfouryears(2011−14)toreachavalueofUS 26
billion.
Thus services sector has been playing an important role in promoting some valuable
social services for overall enrichment of the society. Thus services sector has attained
a considerable size and dimension in its forms of activities and has been playing an
important role in a highly populous country like India.

However, the outlook and status of the services sector which had once fallen due to
the global economic slow-down and financial crisis faced by US, but the same sector
has turned its heads towards its revival and growth once again. The growing
opportunities in this sector has been generating employment to many across the
nation and are also attracting FDIs for attaining success in future.

However, the challenge faced by this sector will be to retain India’s competitiveness in
those areas where the country has made a mark viz. telecommunications, IT and ITeS
etc. Besides, India has to face another challenge to penetrate into some traditional
areas such as tourism, shipping where other countries have already established its
mark.
However, India’s potential for success in the sector is very high. Thus these challenges
faced by India need to be addressed if the country wants to realize its pipe dream of
attaining double digit growth and generating large number of employment
opportunities for its growing population in the days to come.

Finally, in a country like India, having a large size of population and presently enjoying
the merit of population dividend in the form of growing proportion of working age
population, the prospect and potential of the services sector in generating income and
employment for its people is quite bright.

Moreover, the growing volume of income and employment generated by services of

sector has been working as booster or major force for the other two sectors, viz.
industry and agriculture by creating new demand for its product which in turn help
these two sectors to attain higher growth.

Services marketing management process:

overview
An analysis of the 5 Cs, i.e. our company, customer, competitor and collaborators as parts of the
micro-environment, and the context or the macro-environment, is required to identify the value that
we can offer customers. Segmenting the market and targeting the market are processes in
identification of the customers that we decide to serve. The positioning statement is a culmination of
the identification of the value to be offered to selected customers.

Then we move ahead with designing the service product, i.e. the service outcomes that the
customer will be left with at the end of service delivery. We have to design the service process, i.e. a
blueprint of how the service is going to be delivered. We may have noted that at this stage we are
mainly creating value for the customers.

Next we have to think of delivering the value created in the above steps. We have to develop the
people, both service personnel and the customers, who would be involved in producing and
consuming the service as both of them are simultaneous activities in the case of services. We have to
think about the channels through which we are going to distribute and deliver our services. Who
would be our franchisees, retailers, agents, etc. helping to sell our service? Would customers have to
come to our service scape to receive the service or would they receive the service where they desire it
to be delivered? Would part or whole of the services be delivered over the telephone or the Internet?
These channels of service distribution and delivery are termed as the ‘place’. The ambience of the
place, the aesthetics of the equipment’s, merchandise, art and arte facts contribute to the feeling of
satisfaction or delight for the customer. Hence, these physical evidences of the service have to be
given special attention for delivering the service value.

Now we have to communicate about the service to prospective customers through the process called
promotion so that they are aware of how our service can meet their needs and the benefits that they
would receive from the service. This will attract them to our services and help them decide to
purchase our services. We would also take measures to brand our service in order to distinguish it
from competitive services according to our positioning statement. This part of the marketing process
is called communicating the service value.

Till now we have worried about providing value to our customers. It is now time to think about
capturing part of the value so that our company makes a profit to sustain and grow in the
marketplace. Moreover, the shareholders of our company would expect some dividend from our
company. We can earn revenues through the price that customers pay for our services.

The above 7Ps, i.e., product, process, people, place, physical evidence, promotion and price are
collectively called the marketing mix for services. The marketing mix has to be designed so that they
are consistent with each other and provide an image consistent with the positioning of our service in
the minds of the customer.

Once the business starts rolling, we have to plan for sustaining our business for a long period of time.
This can be done by developing new services and retaining existing customers. 

Comp Compe
Identif Custome Collabo
Context any titor
ying r rator
analysis analys analysi
value analysis analysis
is s

Identifying Segment Target Positio

2
customers ing ing ning

Creating Proce
3 Product
value ss

Physica
Delivering l
4 People Place
value evidenc
e

Communic Promotio
5
ating value n
 Capturing
6 Price
value

New Custo
Sustaining Service mer
7
value Develop Retent
ment ion