Subject: Service Marketing

CAT-1 Notes

1.1.Advanced Technologies in Service Industry:

• AI and Machine Learning Integration

Artificial Intelligence (AI) and Machine Learning have ushered in a revolution in IT

services. Organizations, including mobile app developers, now employ AI-driven solutions
to enhance customer experiences, automate tasks, and extract valuable insights from data.

• Cloud Computing

Cloud computing is a paradigm that involves delivering computing services over the
internet. Instead of owning and maintaining physical servers or computing infrastructure,
users can access and use computing resources, such as servers, storage, databases,
networking, software, and analytics, on a pay-as-you-go basis.

• Advancements in Cybersecurity

Cybersecurity is crucial to staying ahead of evolving cyber threats and protecting sensitive
information, systems, and networks. As technology continues to advance, so do the
capabilities of cyber attackers, making it essential for cybersecurity measures to adapt and
improve.

• 5G-Powered Innovations

The rollout of 5G networks is opening new opportunities for IT services. Faster

connectivity and lower latency are driving innovations in IoT, augmented reality, and
remote collaboration.

• Blockchain Integration

Blockchain technology extends beyond cryptocurrencies. It now finds applications in

supply chain management, smart contracts, and data security, affecting various industries
and attracting the attention of software developers.
 • Quantum Computing Research

Quantum computing has the potential to accelerate machine learning algorithms, enabling
faster data processing and pattern recognition. This could lead to improved predictive
analytics, personalized services, and more efficient decision-making in various service
sectors.

• Robotic Process Automation (RPA)

Robotic Process Automation (RPA) refers to the use of software robots or "bots" to
automate repetitive, rule-based tasks within business processes. RPA technology allows
organizations to streamline and optimize their workflows by automating routine tasks that
are traditionally performed by human workers

• Augmented Reality (AR) and Virtual Reality (VR)

Augmented Reality (AR) and Virtual Reality (VR) are immersive technologies that alter
the perception of reality, providing users with interactive and enhanced experiences. While
AR and VR have unique characteristics, the continued development and integration of these
technologies contribute to the evolution of immersive computing, offering diverse and
innovative applications across various industries.

• DevOps and Agile practices

DevOps and Agile practices are two closely related approaches that aim to improve
collaboration, efficiency, and the overall software development and delivery process. While
Agile focuses on the iterative and incremental development of software, DevOps extends
this approach to include the operations and deployment phases.

1.2. Significance of Service Marketing

• Relationship Marketing and Loyalty Programs:

Building strong relationships with customers is essential for service providers.
Relationship marketing emphasizes ongoing interactions, personalized communication,
and understanding customer needs. Loyalty programs incentivize repeat business,
creating a sense of loyalty and enhancing customer retention.
• Eg: Amazon Prime leverages loyalty programs by offering various benefits like free
shipping, exclusive deals, and streaming services, fostering customer loyalty and
retention.
 .
• Internal Marketing and Employee Engagement:
Internal marketing focuses on communicating and aligning employees with the
organization's service vision. Engaged and motivated employees are more likely to
deliver exceptional service, contributing to a positive customer experience. The internal
culture influences the external customer perception.
Eg: Zappos focuses on employee satisfaction and empowerment, believing that happy
employees lead to happy customers, which reflects in their exceptional customer
service and loyalty.
• Service Recovery and Handling Complaints:
Service recovery is critical for maintaining customer satisfaction. Effective handling of
complaints and service failures can turn a negative experience into a positive one.
Service recovery strategies demonstrate a commitment to customer satisfaction and can
lead to increased loyalty.
• Eg: Nordstrom excels in service recovery. Their customer service policy is famously
lenient; they accept returns without question and go above and beyond to address
customer complaints. This approach creates positive customer experiences even after
initial dissatisfaction

• Intangibility and Tangibilization:

The intangibility of services makes it challenging for customers to evaluate them before
purchase. Tangibilization involves creating tangible cues, such as marketing materials,
branding, and physical evidence, to convey the value and quality of the service. This
helps in building customer confidence and trust.
Eg: Airbnb effectively markets its accommodations by showcasing detailed property
descriptions, high-quality images, and guest reviews, providing a sense of tangibility to
the otherwise intangible experience of staying in someone's home.

• Customer Participation and Co-Creation:

In services, customers often play a role in the creation and delivery of the service.
Service marketing emphasizes customer participation and co-creation, involving
customers in the design and improvement of services. This collaborative approach
enhances customer satisfaction and loyalty.
 • Eg: IKEA is a prime example; they engage customers by allowing them to walk
through showrooms, pick their furniture, and assemble it themselves. This involvement
creates a sense of co-creation, making customers feel part of the process.

• Service Quality and Customer Experience:

Service quality is a key determinant of customer satisfaction. Service marketing
strategies focus on consistently delivering high-quality services to meet or exceed
customer expectations. A positive customer experience contributes to customer loyalty
and positive word-of-mouth.
Eg: Singapore Airlines. Their service marketing focuses on providing exceptional in-
flight experiences. From comfortable seating to gourmet dining and exemplary service,
they prioritize the overall experience, ensuring customer satisfaction and loyalty.

1.3. Technologies in Health Care sector:

• Electronic Health Records (EHR) and Health Information Systems:

Centralized and digitized health records allow seamless sharing of patient information
among healthcare providers. EHR systems enhance coordination, reduce errors, and
improve overall patient care.
• Telemedicine and Remote Patient Monitoring:
Telemedicine enables remote consultations between healthcare providers and patients,
improving accessibility to medical advice. Remote patient monitoring involves using
wearable devices and sensors to collect real-time health data, allowing continuous
monitoring and timely interventions.
• IoT and Wearable Devices:
Internet of Things (IoT) devices and wearables, such as smartwatches and fitness
trackers, collect and transmit health-related data. This information helps in preventive
care, early detection of health issues, and monitoring chronic conditions.
• Big Data Analytics and Predictive Analytics:
Analyzing large volumes of healthcare data helps identify patterns, trends, and potential
health risks. Predictive analytics can be applied to forecast disease outbreaks, optimize
resource allocation, and personalize treatment plans.
• Artificial Intelligence (AI) in Diagnostics:
AI technologies, including machine learning and deep learning, are used for image
analysis, diagnostics, and treatment recommendations. AI applications can assist
healthcare professionals in making more accurate and timely decisions.
• Robotics in Surgery and Healthcare Assistance:
Surgical robots and robotic-assisted surgeries enhance precision and allow for
minimally invasive procedures. Robots are also employed for tasks such as medication
delivery, patient assistance, and rehabilitation.
• Blockchain for Data Security:
Blockchain technology ensures the security and integrity of healthcare data. It enables
transparent and secure sharing of patient information while maintaining privacy and
compliance with regulations.
• Mobile Health (mHealth) Applications:
Mobile applications offer a range of healthcare services, including appointment
scheduling, medication reminders, and health monitoring. These applications promote
patient engagement and empower individuals to take control of their health.
• Smart Hospitals and Infrastructure:
Smart hospitals integrate technologies for improved operational efficiency, energy
management, and patient services. Automated systems for appointment scheduling,
check-in, and inventory management contribute to a more streamlined healthcare
environment.
• Personalized Medicine:
Advances in genomics and personalized medicine allow healthcare providers to tailor
treatment plans based on an individual's genetic makeup, lifestyle, and specific health
conditions.
• Health Chatbots and Virtual Health Assistants:
AI-powered chatbots and virtual assistants provide immediate responses to health-
related queries, offer guidance on symptoms, and assist with medication management.
They enhance accessibility to healthcare information.
• Cybersecurity Measures:
Robust cybersecurity protocols are essential to protect sensitive healthcare data. Smart
Healthcare Systems prioritize data security to ensure patient privacy and compliance
with regulations.
1.4. Strategies implemented by health care

• Patient-Centric Approach:

Emphasizing patient satisfaction and experience is crucial. Healthcare providers strive

to create a patient-centric culture where the needs and preferences of patients are
prioritized.

• Digital Marketing:

Utilizing online platforms and digital channels to reach and engage with patients. This
includes a well-designed website, social media presence, online advertising, and search
engine optimization (SEO).

• Content Marketing:

Sharing relevant and valuable healthcare information through blogs, articles, videos,
and other content formats. This not only educates patients but also establishes the
healthcare provider as an authoritative source.

• Community Involvement:

Participating in local events, health fairs, and community outreach programs to build
relationships and increase visibility within the community

• Patient Referral Programs:

Encouraging existing patients to refer others through incentive programs. Word-of-

mouth marketing is powerful in the healthcare industry, and satisfied patients can be
effective advocates.

• Online Reviews and Testimonials:

Managing and encouraging positive online reviews can enhance the reputation of
healthcare providers. Many patients rely on reviews and testimonials when selecting a
healthcare service.

• Community Health Camps:

Organizing health camps in rural and underserved areas to provide free or discounted
healthcare services. This not only addresses the healthcare needs of the community but
also serves as a promotional activity for the healthcare provider.
 • Focus on Preventive Healthcare:

Emphasizing preventive healthcare measures through awareness campaigns,

screenings, and vaccination drives. Preventive healthcare is gaining importance in
India, and healthcare companies can market services that promote overall well-being.

• Partnerships with NGOs and Nonprofits:

Collaborating with non-governmental organizations (NGOs) and nonprofits to address

public health issues. This could involve supporting community health projects,
conducting health awareness programs, and providing healthcare services in
collaboration with these organizations.

1.5. Business Models in Service Industry

• Consulting Model
Businesses offer expert advice, knowledge, and guidance to clients. Consultants
typically charge fees for their time, expertise, and recommendations. Example:
Deloitte, a global professional services firm that provides consulting, audit, tax, and
advisory services to clients.
• Gig Economy Model
Freelancers charge clients for the specific tasks or projects they complete, often through
platforms that connect them with potential clients.Example: Upwork, a platform that
connects freelancers with clients seeking various services such as writing, graphic
design, and programming. (Gigwalk, Caviar, Shiftgig, Handy etc)
• Subscription-Based Model:
Customers pay a recurring fee for access to a service. This model is common in
industries such as software-as-a-service (SaaS), streaming services, and membership
programs. Example: HelloFresh provide subscription-based meal kit delivery service,
providing customers with recipes and pre-measured ingredients for home-cooked
meals.(Spotify, Blue Apron, Peloton)
• Outsourcing Model:
Businesses contract out specific tasks or functions to external service providers.
Outsourcing can include functions like customer support, IT services, and human
resources. Example: Accenture, a global professional services firm that offers
outsourcing services in areas such as IT, business process outsourcing, and consult
• Sharing Economy Model:
Platforms facilitate peer-to-peer transactions, allowing individuals to share resources or
services. Examples include ride-sharing services, accommodation-sharing platforms,
and coworking spaces. Example: Turo, Ola and Uber a peer-to-peer car-sharing
platform that allows individuals to rent out their cars to others
• Partnership Model:
Businesses form strategic partnerships to offer complementary services or enhance their
service offerings. This can involve revenue-sharing or collaborative marketing efforts.
Examples: Hilton and American Express partnership, where Hilton Honors members
can use co-branded credit cards to earn points for hotel stays.
• Franchise Model:
Successful service concepts are replicated through franchise agreements. Franchisees
pay fees to the franchisor for the right to operate under an established brand and benefit
from support and resources. Example: 7-Eleven is a convenience store chain with a
franchise model that allows entrepreneurs to own and operate their own 7-Eleven stores.
The model includes support in areas like inventory management and store layout
• Brokerage Model:
Businesses act as intermediaries, connecting buyers and sellers of services. Brokers
earn a commission or fee for facilitating transactions. Real estate and insurance brokers
are examples of this model. Example: Keller Williams Realty, RE/MAX, Century 21-
They earn a commission on each successful real estate transaction.
• Integrated Solutions Model:
Businesses offer comprehensive solutions by bundling various services together. This
approach provides customers with a one-stop-shop for their needs. Example: Siemens,
a global conglomerate that provides integrated solutions in areas such as energy,
healthcare, and transportation by combining products and services.
1.6. Consumer behaviour Models:

1.6.1. Howard-Sheth Model:

The Howard Sheth Model is an approach for analysing the combined impact of the social,
psychological and marketing factors on the buying behaviour or preference of the consumers
and the industrial buyers into a logical order of information processing. John Howard and
Jagadish Sheth introduced the Howard Sheth Model in the year 1969. The concept was
published in their book ‘The Theory of Buyer Behaviour’.

1.Input Variables

The stimulus inputs refer to the idea or information clue about the brand and its product in
terms of product quality, distinctiveness, price, service offered and availability.

These can be further classified as follows:

1. Significant Stimuli: The significant stimuli are the physical traits of the product and
the brand. It includes the product’s price, quality, availability, distinctive characteristics
and service.
2. Symbolic Stimuli: The marketing strategies like advertisement and publicity creates a
psychological impact on the buyer’s perception of a product’s rhetorical and visible
features.
3. Social Stimuli: The social stimuli comprises of the various environmental factors
which are considered as a source of information for the buyers. It includes family, social
class and reference groups.
2. Constructs

The hypothetical constructs depict the central part of the model. It includes all those
psychological variables which play a vital role in the buyer’s decision-making process.

Perceptual Constructs

These components define the consumer’s procurement and perception of the information
provided at the input stage.It is an essential element since it drives the buyer’s brand selection
and purchases, which includes:

• Sensitivity to Information: The buyer’s level of understanding or openness towards

the information received by him/her.
• Perceptual Bias: On the grounds of individual perception of each brand, the buyer is
partial towards a particular brand.
• Search for Information: The buyer also seeks for more information to ensure the right
decision-making.

Learning Constructs

The learning constructs define the buyer’s knowledge, opinion, attitude and end decision on
product or brand selection.
 • Motive: The specific goal or purpose for which the product purchase is carried out.
• Choice Criteria: The set of principles or benchmarks defined for product selection.
• Brand Comprehension: The information about the product or brand pertained by the
buyer.
• Attitude: The buyer’s perspective and willingness to purchase a product of a particular
brand defines his/her attitude.
• Confidence: The trust or faith of the buyer in a specific brand and its products builds
his/her confidence.
• Intention: The buyer’s purchase motive, preference criteria, brand comprehension,
consumer attitude and confidence, results in the selection of a particular brand.
• Satisfaction: After-purchase, the buyer evaluates his/her level of contentment, to find
out whether the product has fulfilled the expectations or not.

3.Output Variables

The output or as we say, the result of the buyer’s decision-making can be seen in the form of
his/her response towards the input variables.

It consists of five major components which are arranged systematically below:

1. Attention: The buyer’s level of concentration and alertness with which he/she
understands the information provided, is termed as attention.
2. Brand Comprehension: The awareness of the buyer regarding a particular brand and
its products is known as brand comprehension.
3. Attitude: The buyer’s evaluation of a brand in terms of individual likes and dislikes,
determines his/her behavior, interest and awareness towards it.
4. Intention: The aim or objective of the buyer for purchasing a product can be seen as
the buying intention.
5. Purchase Behaviour: All the above elements result in the actual purchase of a product
by the buyer.

4. Exogenous Variable

There are certain other external factors which influence the buying behavior of an individual
or a firm by hampering the product purchase of a preferred brand.
The exogenous variables are the environmental forces or components of this model. These are
as follows:

1. Importance of Purchase: If the buyer perceives the product to be less crucial,

involving a low cost, then there is a little brand preference.
2. Personality Variables: Personal traits like ego, self-esteem, anxiety, dominance,
authoritarian, etc. influences a buyer’s decision-making while purchasing a product.
3. Social Class: A buyer’s social group, including the family, friends and other reference
groups impact the selection or rejection of a particular brand.
4. Culture: The buyer’s values, beliefs and ideas frame his/her purchase motive and
inhibitors.
5. Organization: The buyer’s interaction with the social groups define their authority,
status and power. The hypothetical constructs of a buyer are affected by such formal or
informal communications.
6. Time Pressure: The buyer, at times, is under the pressure of taking a timely decision,
which makes him/her look for alternatives if the product of the preferred brand is
unavailable at the moment.
7. Financial Status: The buyer’s inability to purchase a product or affordability restricts
him/her from buying it.

1.6.2. Engel-Kollat-Blackwell (EKB) model:

The EKB model was created in 1968. Later this model went through several revisions, updates,
and improvements to become the Engel, Blackwell, and Miniard Model (EBM) in the
1990s.This model is also called the consumer decision model. The model is “structured around
a seven-point decision process: need recognition followed by a search of information both
internally and externally, the evaluation of alternatives, purchase, post-purchase reflection, and
finally, divestment”

Individual consumer behaviour is broken down into four sections by this model. These are
Decision process stage, Information input stage, Information processing stage and Variable
influencing the decision process.
 • Information Input Stage:

At this stage the consumer gets information from marketing and non-marketing sources, which
also influence the problem recognition stage of the decision-making process. If the consumer
still does not arrive to a specific decision, the search for external information will be activated
in order to arrive to a choice or in some cases if the consumer experience dissonance because
the selected alternative is less satisfactory than expected.

• Information Processing Stage:

This stage consists of the consumer’s exposure, attention, perception, acceptance, and retention
of incoming information. The consumer must first be exposed to the message, allocate space
for this information, interpret the stimuli, and retain the message by transferring the input to
long-term memory.

• Decision Process Stage:

The central focus of the model is on five basic decision-process stages: Problem recognition,
search for alternatives, alternate evaluation (during which beliefs may lead to the formation of
attitudes, which in turn may result in a purchase intention) purchase, and outcomes. But it is
not necessary for every consumer to go through all these stages; it depends on whether it is an
extended or routine problem-solving behaviour.

• Variables Influencing the Decision Process:

This stage consists of individual and environmental influences that affect all five stages of the
decision process. Individual characteristics include motives, values, lifestyle, and personality;
the social influences are culture, reference groups, and family. Situational influences, such as
a consumer’s financial condition, also influence the decision process.

• External influences

The external environmental influences include “Circles of Social Influence,” like culture, sub-
culture, social class, and family. Social Challenges enforce influence on the consumer’s
decision-making process. For instance, people feel uncomfortable purchasing alcoholic
beverages from a guy other than their family. Family ties give context to product decision-
making and help individuals select the products that they should buy because “family” or
common interests are usually supported by those who have been buying stuff from them for
years.