Subject: MARKEITNG OF SERVICES

ASSIGNMENT 1

1. Define the service marketing

2. What are the characteristics of services

3. Discuss the segmentation and targeting in service marketing

4. Explain the service quality

5. Write a short note on zone of tolerance

 DR.KNMIET, MODINAGAR

Subject: MARKEITNG OF SERVICES

ASSIGNMENT 2

1. Explain the service marketing mix.

2. What do you mean by product planning?

3. Discuss the promotion in service marketing

4. Explain the role of technology in service marketing.

5. Write short note physical evidence.

 DR.KNMIET, MODINAGAR

Subject: MARKEITNG OF SERVICES

ASSIGNMENT 3

1. Discuss the marketing of financial services.

2. Explain the targeting positioning and segmentation in financial services.

3. Discuss the marketing mix in insurance sector.

4. Discuss the marketing mix in home loans.

5. Discuss the marketing mix in banking.

 DR.KNMIET, MODINAGAR

Subject: MARKEITNG OF SERVICES

ASSIGNMENT 4

1. What are the recent trends in international marketing?

2. What are the global driving forces in international marketing?

3. Discuss the global marketing.

4. What are the global perspectives of services?

5. What is the importance of service sector international trade?

Service Marketing
What is Service Marketing?
A Service is an economic activity, that is intangible or not be touched, not be stored, and not be
owned. Postal service Delivering mail is a Service, and the use of expertise like person visiting a
doctor is also a service. A service is consumed at the point of sale and does not result ownership.

A product is material or tangible in nature, can be touched, can be stored, and a product can also
be owned, but it is not so in case of a service.

Nature of Service
1. Lack of ownership
One cannot own or store a service as it can be done in case of a product. Service is consumed at
the point of sale and does not result ownership. Services are used or hired for a period of time.
For example buying a movie ticket the service lasts for two or three hours, but customer want
and expect complete entertainment and excellent service for that time period.

2. Intangible
Services are intangible in nature, you cannot touch it, cannot see it, cannot taste it. You cannot
touch or hold a service as you can do with a product. For example one cannot touch or hold the
services provided by his financial adviser. This makes it difficult to evaluate the quality of
service prior to consuming it since there are fewer attributes of quality in comparison to a
product.

3. Inseparable
Service is inseparable in nature means to say that it cannot be separated from the service
provider. A product when produced can be taken away from its producer whereas a service is
produced at or near the point of purchase. For example visiting a restaurant, you order your meal,
wait for the meal, meal delivered to you and services provided by waiter/waitress are all part of
service production process and is inseparable.

4. Perishable
Service last for specific time period, it cannot be stored as like a product for future use. Service
production and utilisation goes simultaneously. For example watching a movie in cinema hall,
service will only last the duration of the show. Again because of this time constraint consumers
demand more.

5. Heterogeneous
It is very difficult to make each service experience identical, for example you travelling by plane
the service quality may differ from the first time you travelled by that airline to the second,
because the air hostess is less or more experienced. Systems and procedures are followed in
service production process to minimise this heterogeneity and to provide consistent services all
the time.

Service Firms
Customer Service in a service firm is highly interactive in nature. Customer interacts with the
firm physical facilities, personnel, 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.

Marketing Mix for a Service Firm

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 Ps distinguish ‘customer service’ for service firms from that of manufacturing firms.

Physical Evidence
Physical Evidence such as infrastructure, interior, decor, environmental design, business card, etc
that establishes firm's image and influences customer's expectations. Tangible clues help
customer judging the quality of service before service usage or purchase. Before service usage
the service is known by the tangible elements that surrounds it. In product marketing quality of
product is judged by the product itself.

Participants
Participants in service environment also provides clues about what the customer should
expect. There is more variability among service outcomes in labour-intensive services than in
machine-dominated service delivery; bank customers who use human tellers will experience far
more service variability than those using automatic teller machines. Training the personnel
adequately is a major factor influencing the provision of quality service. Hence, providing
customer service in a service industry depends not only on recognising customer desires and
establishing appropriate standards, but also on maintaining a workforce of people both willing
and able to perform at specified levels.

Process
The how of service delivery is called the ‘process’ or the ‘functional ’ quality. The attitudes and
behaviour of service personnel influence perceived service performance. These behaviours are
usually associated with what is called the ‘process’. For example, when things go wrong in a
service encounter, employees frequently attempt to sooth disgruntled customers by apologising,
offering to compensate, and explaining why the service delivery failure occurred. Any of these
behaviours may influence customer attributions about the firm ’s responsibility for the failure and
the likelihood of it occurring again

7 Ps of the Service Marketing Mix

The customer service for a service firm cannot be explicitly divided into pre-transaction and
post-transaction elements, because production and consumption of a service occurs at the same
time. The service provided can prove effective in terms of satisfying the customer, only if the
gap between expected service and perceived service is bridged. The wider this gap –the more the
number of disappointed customers; and disappointed customers may cause the image of the firm
to deteriorate.

1. Product/Service
Most services are intangible because they are performances rather than objects, precise
manufacturing specifications concerning uniform quality can rarely be set. Because of this
intangibility, the firm may find it difficult to understand how consumers perceive their services.
For developing a good customer service, the service marketer should stress on tangible cues and
also create a strong organisational image. This can be done by communicating clearly to the
customers the features of the service being provided.

2. Price
Because of the intangible nature of the service –price becomes a pivotal quality indicator in
situations where other information is not available. It is essential, therefore that the service firm
engage in competitive pricing. Being an important tangible cue, price of the service is an area in
which the service marketer can concentrate to get a competitive edge. In the case of pure
services, as in the present context, like medical services or legal services price is an important
factor because it is a basis for the customer to make a final choice among several competing
service organisations.

3. Place
Because services are performances that cannot be stored, service businesses frequently find it
difficult to synchronise supply and demand. Also, services cannot be inventoried for the same
reason. Consequently the service firms must make simultaneous adjustments in demand and
capacity to achieve a closer match between the two. Also, the firm could use multisite
locations to make the service more accessible to the users. If the service is located in a remote
area, regardless of the other advantages of the service, customers would not be motivated to
use the service.

4. Promotion
The service marketer should constantly simulate word-of-mouth communications apart from
using regular advertising. If customers in an existing market, for some reason or another have an
image of the firm which does not correspond with reality, traditional marketing activities can be
expected to be an effective way of communicating the real image to the market. Communication
includes informing the customers in a language they can understand. Specially in services post-
purchase communication is very important, because retaining existing customers is as important,
or even more important than attracting potential customers.

5. Physical Evidence
Physical evidence, as already discussed under the services marketing mix, like the environmental
decor and design significantly influence the customer’s expectations of the service. Since
services cannot be readily displayed, firms should create a conducive environment that help the
customers to develop a positive perception of the service. For example, people would not like to
wait for a medical service or a legal service, if the atmosphere of the place they are made to wait
is unpleasant. Customers can be put off by a mere change in the layout of the service facility or
even the absence of clear signboards.

6. Participants
Most services are highly labour intensive; the behaviour of the personnel providing the service
and the customers involved in production (due to the inseparable nature of services), have an
effect on providing efficient customer service. To achieve customer-oriented personnel, the
organisation needs to recruit and select the right people, and offer an appropriate package of
employment, in order to enhance their skills and encourage them. Because of the constant
interaction between the employees involved in the service, and the customers–there is a mutual
dependence between the two. If the customers are dissatisfied, employees experience discomfort
working with unhappy customers, and customers are unhappy because the employees were
not trained in customer satisfaction. The extent of this mutual dependence influences the
customer’s perception of the service.

7. Process
In the ‘how’ of the service delivery is extremely important because the service and the seller are
inseparable. The functional quality, or the ‘how’ of service delivery is especially important to
service industries, as it is difficult to differentiate the technical quality, or the ‘what’ of service
delivery. Previous experience with a service also influences the expectations of the customer. If
the customer has had a bad experience with the
service on any previous occasion, it will influence his or her future perceptions of the service. It
is essential to train the front line employees, whose actions and behaviour influence the
customer’s opinions of the organisation and the actual service provided.

Conclusion
What the customer actually gets out of the service, and how he or she perceives the service may
not always match. So the customer’s judgement or evaluation of the service is the crucial factor
in the delivery of a service. But service marketers can influence these perceptions to a
large extent by controlling favourably the service marketing mix variables. It is all the more
difficult because a service cannot be broken down into logical steps or sequences.

If service organisations pay more attention to their employees as well as their customers, it
would increase both employee motivation as well as customer satisfaction.
Service Marketing
What is Service Marketing?
A Service is an economic activity, that is intangible or not be touched, not be stored, and not be
owned. Postal service Delivering mail is a Service, and the use of expertise like person visiting a
doctor is also a service. A service is consumed at the point of sale and does not result ownership.

A product is material or tangible in nature, can be touched, can be stored, and a product can also
be owned, but it is not so in case of a service.

Nature of Service
1. Lack of ownership
One cannot own or store a service as it can be done in case of a product. Service is consumed at
the point of sale and does not result ownership. Services are used or hired for a period of time.
For example buying a movie ticket the service lasts for two or three hours, but customer want
and expect complete entertainment and excellent service for that time period.

2. Intangible
Services are intangible in nature, you cannot touch it, cannot see it, cannot taste it. You cannot
touch or hold a service as you can do with a product. For example one cannot touch or hold the
services provided by his financial adviser. This makes it difficult to evaluate the quality of
service prior to consuming it since there are fewer attributes of quality in comparison to a
product.

3. Inseparable
Service is inseparable in nature means to say that it cannot be separated from the service
provider. A product when produced can be taken away from its producer whereas a service is
produced at or near the point of purchase. For example visiting a restaurant, you order your meal,
wait for the meal, meal delivered to you and services provided by waiter/waitress are all part of
service production process and is inseparable.

4. Perishable
Service last for specific time period, it cannot be stored as like a product for future use. Service
production and utilisation goes simultaneously. For example watching a movie in cinema hall,
service will only last the duration of the show. Again because of this time constraint consumers
demand more.

5. Heterogeneous
It is very difficult to make each service experience identical, for example you travelling by plane
the service quality may differ from the first time you travelled by that airline to the second,
because the air hostess is less or more experienced. Systems and procedures are followed in
service production process to minimise this heterogeneity and to provide consistent services all
the time.

Service Firms
Customer Service in a service firm is highly interactive in nature. Customer interacts with the
firm physical facilities, personnel, 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.

Marketing Mix for a Service Firm

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 Ps distinguish ‘customer service’ for service firms from that of manufacturing firms.

Physical Evidence
Physical Evidence such as infrastructure, interior, decor, environmental design, business card, etc
that establishes firm's image and influences customer's expectations. Tangible clues help
customer judging the quality of service before service usage or purchase. Before service usage
the service is known by the tangible elements that surrounds it. In product marketing quality of
product is judged by the product itself.

Participants
Participants in service environment also provides clues about what the customer should
expect. There is more variability among service outcomes in labour-intensive services than in
machine-dominated service delivery; bank customers who use human tellers will experience far
more service variability than those using automatic teller machines. Training the personnel
adequately is a major factor influencing the provision of quality service. Hence, providing
customer service in a service industry depends not only on recognising customer desires and
establishing appropriate standards, but also on maintaining a workforce of people both willing
and able to perform at specified levels.

Process
The how of service delivery is called the ‘process’ or the ‘functional ’ quality. The attitudes and
behaviour of service personnel influence perceived service performance. These behaviours are
usually associated with what is called the ‘process’. For example, when things go wrong in a
service encounter, employees frequently attempt to sooth disgruntled customers by apologising,
offering to compensate, and explaining why the service delivery failure occurred. Any of these
behaviours may influence customer attributions about the firm ’s responsibility for the failure and
the likelihood of it occurring again

7 Ps of the Service Marketing Mix

The customer service for a service firm cannot be explicitly divided into pre-transaction and
post-transaction elements, because production and consumption of a service occurs at the same
time. The service provided can prove effective in terms of satisfying the customer, only if the
gap between expected service and perceived service is bridged. The wider this gap –the more the
number of disappointed customers; and disappointed customers may cause the image of the firm
to deteriorate.

1. Product/Service
Most services are intangible because they are performances rather than objects, precise
manufacturing specifications concerning uniform quality can rarely be set. Because of this
intangibility, the firm may find it difficult to understand how consumers perceive their services.
For developing a good customer service, the service marketer should stress on tangible cues and
also create a strong organisational image. This can be done by communicating clearly to the
customers the features of the service being provided.

2. Price
Because of the intangible nature of the service –price becomes a pivotal quality indicator in
situations where other information is not available. It is essential, therefore that the service firm
engage in competitive pricing. Being an important tangible cue, price of the service is an area in
which the service marketer can concentrate to get a competitive edge. In the case of pure
services, as in the present context, like medical services or legal services price is an important
factor because it is a basis for the customer to make a final choice among several competing
service organisations.

3. Place
Because services are performances that cannot be stored, service businesses frequently find it
difficult to synchronise supply and demand. Also, services cannot be inventoried for the same
reason. Consequently the service firms must make simultaneous adjustments in demand and
capacity to achieve a closer match between the two. Also, the firm could use multisite
locations to make the service more accessible to the users. If the service is located in a remote
area, regardless of the other advantages of the service, customers would not be motivated to
use the service.

4. Promotion
The service marketer should constantly simulate word-of-mouth communications apart from
using regular advertising. If customers in an existing market, for some reason or another have an
image of the firm which does not correspond with reality, traditional marketing activities can be
expected to be an effective way of communicating the real image to the market. Communication
includes informing the customers in a language they can understand. Specially in services post-
purchase communication is very important, because retaining existing customers is as important,
or even more important than attracting potential customers.

5. Physical Evidence
Physical evidence, as already discussed under the services marketing mix, like the environmental
decor and design significantly influence the customer’s expectations of the service. Since
services cannot be readily displayed, firms should create a conducive environment that help the
customers to develop a positive perception of the service. For example, people would not like to
wait for a medical service or a legal service, if the atmosphere of the place they are made to wait
is unpleasant. Customers can be put off by a mere change in the layout of the service facility or
even the absence of clear signboards.

6. Participants
Most services are highly labour intensive; the behaviour of the personnel providing the service
and the customers involved in production (due to the inseparable nature of services), have an
effect on providing efficient customer service. To achieve customer-oriented personnel, the
organisation needs to recruit and select the right people, and offer an appropriate package of
employment, in order to enhance their skills and encourage them. Because of the constant
interaction between the employees involved in the service, and the customers–there is a mutual
dependence between the two. If the customers are dissatisfied, employees experience discomfort
working with unhappy customers, and customers are unhappy because the employees were
not trained in customer satisfaction. The extent of this mutual dependence influences the
customer’s perception of the service.

7. Process
In the ‘how’ of the service delivery is extremely important because the service and the seller are
inseparable. The functional quality, or the ‘how’ of service delivery is especially important to
service industries, as it is difficult to differentiate the technical quality, or the ‘what’ of service
delivery. Previous experience with a service also influences the expectations of the customer. If
the customer has had a bad experience with the
service on any previous occasion, it will influence his or her future perceptions of the service. It
is essential to train the front line employees, whose actions and behaviour influence the
customer’s opinions of the organisation and the actual service provided.

Conclusion
What the customer actually gets out of the service, and how he or she perceives the service may
not always match. So the customer’s judgement or evaluation of the service is the crucial factor
in the delivery of a service. But service marketers can influence these perceptions to a
large extent by controlling favourably the service marketing mix variables. It is all the more
difficult because a service cannot be broken down into logical steps or sequences.

If service organisations pay more attention to their employees as well as their customers, it
would increase both employee motivation as well as customer satisfaction.
Service Encounter / Moment of Truth
A moment of truth is usually defined as an instance wherein the customer and the
organization come into contact with one another in a manner that gives the customer an
opportunity to either form or change an impression about the firm. Such an interaction
could occur through the product of the firm, its service offering or both. Various instances could
constitute a moment of truth - such as greeting the customer, handling customer queries or
complaints, promoting special offers or giving discounts and the closing of the interaction.

Importance
In today’s increasingly service driven markets and with the proliferation of multiple providers for
every type of product or service, moments of truth have become an important fact of customer
interaction that marketers need to keep in mind. They are critical as they determine a customer ’s
perception of, and reaction to, a brand. Moments of truth can make or break an organization ’s
relationship with its customers.

This is more so in the case of service providers since they are selling intangibles by creating
customer expectations. Services are often differentiated in the minds of the customer by promises
of what is to come. Managing these expectations constitutes a critical component of creating
favorable moments of truth which in turn are critical for business success.

Moments of Magic and Moments of Misery

Moments of Magic: Favorable moments of truth have been termed as ’moments of magic ’.
These are instances where the customer has been served in a manner that exceeds his
expectations. Eg: An airline passenger being upgraded to from an economy to a business class
ticket or the 100th (or 1000th) customer of a new department store being given a special discount
on his purchase. Such gestures can go a long way in creating a regular and loyal customer base.
However, a moment of magic need not necessarily involve such grand gestures. Even the
efficient and timely service consistently provided by the coffee shop assistant can create a
moment of magic for the customers.

Moment of Misery: These are instances where the customer interaction has a negative outcome.
A delayed flight, rude and inattentive shop assistants or poor quality of food served at a
restaurant all qualify as moments of misery for the customers. Though lapses in service cannot
be totally avoided, how such a lapse is handled can go a long way in converting a moment of
misery in to a moment of magic and creating a lasting impact on the customer.
Customer Needs and Expectations
Customer needs comprise the basic reason or requirement that prompts a customer to approach a
service provider. For instance, a person visits a restaurant primarily for the food it serves. That is
the customer’s need. However, the customer expects polite staff, attentive yet non intrusive
service and a pleasant ambience. If these expectations are not properly met the guest would leave
the restaurant dissatisfied even if his basic requirement of a meal being served has been met.
Thus knowing and understanding guest expectations is important for any service provider.

Customer Satisfaction, Dissatisfaction and Delight

Based on the quality of the service experience a customer will either be satisfied, dissatisfied or
delighted. Knowing a customer’s expectation is instrumental in developing a strategy for meeting
and exceeding customer expectations.

1. Customer Dissatisfaction: This is a situation when the service delivery fails to match up
to the customer’s expectations. The customer does not perceive any value for money. It ’s
a moment of misery for the customer.
2. Customer Satisfaction: In this case, the service provider is able to match the customer ’s
expectations and deliver a satisfactory experience. However, such a customer is not
strongly attached to the bran and may easily shift to a competing brand for considerations
of price or discounts and freebies.
3. Customer Delight: This is an ideal situation where the service provider is able to exceed
the customer’s expectations creating a Moment of Magic for the customer. Such
customers bond with the brand, are regular and loyal and will not easily shift to other
brands.

Meeting and Exceeding Customer Expectations

Exceeding customer expectations is all about creating that extra value for the customer. The
hospitality industry specializes in creating customer delight.

Example, most 5 star hotels maintain customer databases detailing room order choices of their
guests. So if a guest has asked for say orange juice to be kept in the mini bar in his room, the
next time that he makes a reservation at the hotel, the staff ensures that the juice s already kept in
the room. Such small gestures go a long way in making customers feel important and creating
customer delight.

Another novel way of exceeding guest expectations is often demonstrated by travel companies.
Since, they usually have details on their customers ’ birthdays, they often send out an email
greeting to their guests to wish them. This not only makes an impact on the guest but also helps
to keep the company acquire ‘top of the mind recall’ with the guest.

Maintaining Service Quality

There are basically two approaches that any organization can have towards maintaining service
standards - a proactive approach or a reactive approach.

Proactive: A proactive approach entails actively reaching out to customers and trying to gather
their feedback on service quality and suggested areas of improvement. This can be done by way
of

 Surveys and administering questionnaires

 Gap Analysis, and

 Staff training
a. Surveys and questionnaires: Such an approach helps a brand to anticipate customer
demands and expectations and align its service offering accordingly. Also, the findings of
such surveys can help to identify common issues and demands of customers hence
helping a company to customize its service offering.
b. Gap Analysis: Another approach that is adopted for analyzing service quality is that of
the gap analysis. The company has an ideal service standard that it would like to offer to
its customers. This is contrasted with the current level of service being offered. The gap
thus identified serves both as a measure and as a basis for planning a future course of
action to improve the service offering.
c. Staff Training: Another crucial aspect of the proactive approach is staff training.
Companies nowadays spend generously on training their personnel to adequately handle
customer queries and/or complaints. This is particularly true if a company is changing its
service offering or going in for a price hike of its existing services. For example, when a
fast food chain increases the price of its existing products, the staff has to handle multiple
customer queries regarding the hike. Lack of a satisfactory explanation would signify
poor service standards and lead to customer dissatisfaction.

Reactive: A reactive approach basically consists of resorting to a predetermined service recovery

mechanism once a customer complains about poor service quality. It usually starts with
apologizing to the customer and then taking steps to redeem the situation. The fundamental flaw
with this approach is that, here the customer has already had a bad experience of the brand ’s
service.

Measuring Service Quality

Another crucial element to be kept in mind while seeking to maintain service quality is to have in
place a metric for ‘measuring’ quality. The particular parameters selected would depend on the
type of business, service model and the customer expectations. For example: at a customer
service call center of a telecom provider, the metric for measuring service quality could be the
average time taken for handling a call or rectifying a complaint. For a fast food outlet, the
metrics for measuring service quality of the sales staff could be the number of bills generated as
a percentage of total customer footfalls or the increase in sales month on month.

Once a system is put in place for measuring quality, a standard can then be mandated for the
service standard the organization is seeking to maintain.
The SERVQUAL service quality model was developed by a group of American authors, 'Parsu'
Parasuraman, Valarie Zeithaml and Len Berry, in 1985. It highlights the main components of
high quality service. The SERVQUAL authors originally identified ten elements of service
quality, but in later work, these were collapsed into five factors - reliability, assurance, tangibles,
empathy and responsiveness - that create the acronym RATER.

Businesses using SERVQUAL to measure and manage service quality deploy a questionnaire
that measures both the customer expectations of service quality in terms of these five
dimensions, and their perceptions of the service they receive. When customer expectations are
greater than their perceptions of received delivery, service quality is deemed low.

In additional to being a measurement model, SERVQUAL is also a management model. The

SERVQUAL authors identified five Gaps that may cause customers to experience poor service
quality.

Gap 1: between consumer expectation and management perception[edit]

This gap arises when the management does not correctly perceive what the customers want. For
instance, hospital administrators may think patients want better food, but patients may be more
concerned with the responsiveness of the nurse. Key factors leading to this gap are:

 Insufficient marketing research

 Poorly interpreted information about the audience's expectations
 Research not focused on demand quality
 Too many layers between the front line personnel and the top level management

Gap 2: between management perception and service quality specification[edit]

Although the management might correctly perceive what the customer wants, they may not set
an appropriate performance standard. An example would be when hospital administrators
instruct nurses to respond to a request ‘fast’, but may not specify ‘how fast ’. Gap 2 may occur due
the following reasons:

 Insufficient planning procedures

 Lack of management commitment
 Unclear or ambiguous service design
 Unsystematic new service development process

Gap 3: between service quality specification and service delivery

This gap may arise through service personnel being poor training, incapable or unwilling to meet
the set service standard. The possible major reasons for this gap are:

 Deficiencies in human resource policies such as ineffective recruitment, role ambiguity,

role conflict, improper evaluation and compensation system
 Ineffective internal marketing
  Failure to match demand and supply
 Lack of proper customer education and training

Gap 4: between service delivery and external communication

Consumer expectations are highly influenced by statements made by company representatives
and advertisements. The gap arises when these assumed expectations are not fulfilled at the time
of delivery of the service. For example, the hospital printed on the brochure may have clean and
furnished rooms, but in reality it may be poorly maintained, in which case the patients'
expectations are not met. The discrepancy between actual service and the promised one may
occur due to the following reasons:

 Over-promising in external communication campaign

 Failure to manage customer expectations
 Failure to perform according to specifications

Gap 5: between expected service and experienced service

This gap arises when the consumer misinterprets the service quality. For example, a physician
may keep visiting the patient to show and ensure care, but the patient may interpret this as an
indication that something is really wrong.