Services Marketing

INTRODUCTION TO SERVICES MARKETING Unit 1

What are Services ? ?

perishable products

Services are intangible, inseparable, variable, and Services are deeds, processes, and performances

Include all economic activities whose output is not

physical product, is generally consumed at the time it is produced, and provides added value in forms that are essentially intangible concerns of its first purchaser

Service Vs Customer Service

Customer service is the service provided in support of companys core products
Answering questions, taking orders, dealing with

billing issues, handling complaints, scheduling

maintenance or repairs

Typically there is no charge for customer service

TANGIBILITY SPECTRUM
The broad definition of services implies that intangibility is a key determinant of whether an offering is a service. There are very few pure services or pure goods

SALT SOFT DRINKS DETERGENTS AUTOMOBILES COSMETICS

FAST FOOD OUTLETS

ADVERTISING AGENCIES

AIRLINES
INVESTMENT MANAGEMENT

TANGIBILITY SPECTRUM

CONSULTING
TEACHING

SERVICE SECTOR
The portion of the economy that produces intangible goods

Service sector is the lifeline for the social economic growth

of a country Largest and fastest growing sector globally The growth associated with development caused by service sector has the ability to transform a developing

country to a developed one.

This sector dominates with the best jobs, best

talent and best incomes!!!!!!

Industries within the Service Sector

Trade, hotels, & restaurants Trade Hotels & restaurants Transport, storage, & communication Railways Transport by other means Storage Communication Financing, insurance, real estate, &business services Banking & insurance Real estate, ownership of dwellings, & business services Community, social, & personal services Public administration & defence Other services Construction Total services (excluding construction) Total services (including construction) 06-07 07-08 08-09 09-10 10-11* 11-12** 17.1 17.1 16.9 16.6 16.9 25.2# 15.4 15.4 15.3 15.1 15.4 1.7 1.7 1.5 1.4 1.5 8.2 8.0 7.8 7.8 7.7 0.9 1.0 0.9 1.0 0.8 5.7 5.6 5.5 5.3 5.4 0.1 0.1 0.1 0.1 0.1 1.5 1.4 1.4 1.5 1.4 14.8 5.5 9.3 15.1 5.5 9.6 15.9 5.6 10.3 15.8 5.4 10.4 16.4 5.8 10.6 16.9

12.8 5.2 7.6 8.2 52.9 61.0

12.5 5.1 7.4 8.5 52.7 61.2

13.3 5.8 7.5 8.5 53.9 62.4

14.5 6.7 7.9 8.2 54.7 63.0

14.3 6.3 7.9 8.2 55.1 63.3

14.2

8.1 56.3 64.4

SERVICES MARKETING
Services Marketing refers to the marketing of services as against tangible products. Services marketing first came to the fore in the 1980s when the debate started on whether marketing of services was significantly different from that of products so as to be classified as a separate discipline.

Services Characteristics
Goods Services Resulting implications Services cannot be inventoried Services cannot be easily patented Services cannot be readily displayed or communicated Pricing is difficult Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

Tangible

Intangible

Standardized

Heterogeneous

Services Characteristics
Goods Services Inseparability simultaneous production and consumption

Production separate from consumption

Resulting implications Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential It is difficult to synchronize supply and demand with services Services cannot be returned or resold strong recovery strategies required when things go wrong

Non-perishable

Perishable

Services Marketing Triangle

COMPANY

INTERNAL MARKETING

EXTERNAL MARKETING

EMPLOYEES INTERACTIVE MARKETING

CUSTOMERS

External marketingMaking Promises

Company makes promises to its customers regarding
what they can expect and how it will be delivered The service employees, the design and dcor of the facility, and the service process itself also communicate and help to set customer expectations Promises should be consistent and realistic There is a tendency to overpromise

Interactive MarketingKeeping Promises

Most critical from the customers point of view It occurs in the moment of truth when the customer interacts with the organization and the service is produced and consumed Reliability of service is tested every time the customer interacts with the organization

Internal MarketingEnabling Promises

Takes place through enabling of the services
Providers must have the skills, abilities, tools, and motivation to deliver Promises are easy to make, but unless providers are recruited, trained, provided with tools and appropriate internal systems, and rewarded for good service, the promises may not be kept

 Employee satisfaction and customer satisfaction are inextricably linked .

Marketing Mix
Elements an organization controls that can be used to
satisfy or communicate with customers Traditional marketing mix- 4Ps

Expanded mix

People
All human actors who play a part in service delivery
and thus influence the buyers perceptions
Firms personnel Customer Other customers in the service environment

Physical evidence
The environment in which the service is delivered

and where the firm and customer interact, and any

tangible components that facilitate performance or communication of the service
Packaging, Brochures, Furnishings, Uniforms

Process
The actual procedures, mechanisms, and flow of
activities by which the service is delivered
The service delivery Operating systems

Can have standardized approach or customized approach

Reasons for the growth in Services Sector

Broadly categorized into two:
o Growth in intermediate demand from firms o Growth in final demand from customers

Reasons for the growth in Services Sector

Broadly categorized into two:
o Growth in intermediate demand from firms
With the growth of competition and the pace of change in consumer exposure and expectations forced organizations to look for specialized services. The wave of specialist services during the last three decades changed management philosophies and encouraged them to outsource many services.

Reasons for the growth in Services Sector

Broadly categorized into two:
o Growth in final demand from customers
Increase in affluence (250 M middle income group & 1.5 L
millionaires- travel, entertainment)

More Leisure time (education, skill development, personal

care)

Working woman (baby sitting, fitness, health care) Growth in population of DINKS (disposable income) Greater life expectancy (health services) Greater complexity of products (maintenance services)

Reasons for the growth in Services Sector

Broadly categorized into two:
o Growth in final demand from customers
Greater complexity in life (tax consultants, counselling,
employment services)

Greater concern for resources scarcity and ecology

(mostly government initiated- conservation of forests/ animals)

Increasing number of new products

(consultancy services)

The Young (tend to use more and more services than the
older generation)

SERVICE SECTOR TRENDS

Share of different Services in GDP

Trade, hotels, & restaurants Trade Hotels & restaurants Transport, storage, & communication Railways Transport by other means Storage Communication Financing, insurance, real estate, &business services Banking & insurance Real estate, ownership of dwellings, & business services Community, social, & personal services Public administration & defence Other services Construction Total services (excluding construction) Total services (including construction) 06-07 07-08 08-09 09-10 10-11* 11-12** 17.1 17.1 16.9 16.6 16.9 25.2# 15.4 15.4 15.3 15.1 15.4 1.7 1.7 1.5 1.4 1.5 8.2 8.0 7.8 7.8 7.7 0.9 1.0 0.9 1.0 0.8 5.7 5.6 5.5 5.3 5.4 0.1 0.1 0.1 0.1 0.1 1.5 1.4 1.4 1.5 1.4 14.8 5.5 9.3 15.1 5.5 9.6 15.9 5.6 10.3 15.8 5.4 10.4 16.4 5.8 10.6 16.9

12.8 5.2 7.6 8.2 52.9 61.0

12.5 5.1 7.4 8.5 52.7 61.2

13.3 5.8 7.5 8.5 53.9 62.4

14.5 6.7 7.9 8.2 54.7 63.0

14.3 6.3 7.9 8.2 55.1 63.3

14.2

8.1 56.3 64.4

Annual growth in Services GDP

Trade, hotels, & restaurants Trade Hotels & restaurants Transport, storage, & communication Railways Transport by other means Storage Communication Financing, insurance, real estate, &business services Banking & insurance Real estate, ownership of dwellings, & business services Community, social, & personal services Public administration & defence Other services Construction Total services (excluding construction) Total services (including construction) 06-07 07-08 08-09 09-10 10-11* 11-12** 11.1 10.1 5.7 7.8 9 11.2 # 10.8 9.8 6.7 8.3 9.1 14.4 13 -3.3 2.8 7.7 12.6 12.5 10.8 14.8 14.7 11.1 9.8 7.7 9.4 6.8 9 8.7 5.3 7.2 8.4 10.9 3.4 14.1 8.7 7.9 24.3 24.1 25.1 31.7 27.2 14 20.6 9.5 2.8 1.9 3.5 10.3 10.1 10.1 12 16.7 8.4 6.9 7.6 6.3 10.8 10.3 10.3 12 14 10.4 12.5 19.8 7.4 5.3 10 9.4 9.4 11.3 7.8 12 18.2 7.2 7 10.5 10 10.4 14.5 6.9 4.5 1.3 7.3 8 9.3 9.2 9.1

5.9

4.8 9.4 8.8

SECTORAL PERCENTAGE SHARE OF GDP

Year
1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2005-06 2008-09

Agriculture & Allied Activities

55.28 50.81 44.31 37.92 31.37 23.89 19.54 16.95

Industry
10.65 13.18 15.46 17.45 19.80 19.99 19.36 18.50

Services
34.07 36.01 40.23 44.63 48.83 56.12 61.10 64.55

Share and growth of services sector in 2009-10

State wise data:

Employment Stats
80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00

58.43
Rural

Agriculture & allied

60.67 20.90 70.63 32.27 19.74 09.38 09.61

Urban Rural Urban Rural Urban Rural Urban
Industry Services with construction Services without construction

State-wise Employment in Different Sectors (per 1000 employed people)

State/UT Agriculture & allied Rural 687 Urban 53

Industry
Rural 97 Urban 241

Services with construction Rural 217 Urban 705

Services without construction Rural 150 Urban 583

Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Delhi Goa Gujarat Haryana Himachal Pradesh Jammu &Kashmir Jharkhand

757 725 669 849 0 239 783 598 629 597 548

140 27 146 53 1 14 53 53 85 110 52

32 38 53 39 120 365 62 98 53 84 92

41 137 121 282 285 289 306 319 149 227 160

213 257 279 112 879 397 156 304 320 316 361

817 833 732 666 712 696 641 627 767 662 787

158 222 174 83 542 353 112 195 167 218 145

722 757 609 553 682 552 576 511 676 552 602

State-wise Employment in Different Sectors (per 1000 employed people)

State/UT

Agriculture & allied

Rural 757 357 824 794 534 707 806 741 676 618 633 539 Urban 94 110 98 47 205 58 360 219 103 83 70 0

Industry
Rural 67 132 48 52 90 56 14 17 84 81 54 48 Urban 221 178 203 236 118 65 53 35 215 249 186 99

Services with construction

Rural 176 511 128 154 377 236 180 241 240 298 312 414 Urban 686 711 700 716 677 877 587 745 683 669 743 901

Services without construction

Rural 132 357 62 116 240 178 128 200 144 168 110 282 Urban 558 570 569 638 604 780 499 684 549 552 595 874

Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Odisha Punjab Rajasthan Sikkim

State-wise Employment in Different Sectors (per 1000 employed people)

State/UT Agriculture & allied Rural 637 306 695 669 563 430 31 591 548 452 461 637 Urban 136 21 54 91 36 30 22 38 394 277 29 136

Industry
Rural 117 63 41 76 173 91 145 160 340 57 144 117 Urban 276 89 199 257 279 98 122 632 177 164 201 276

Services with construction Rural 246 633 263 257 265 477 826 251 110 491 396 246 Urban 586 891 747 653 683 873 856 332 430 558 770 586

Services without construction Rural 146 244 131 134 206 330 629 155 106 361 238 146 Urban 482 716 629 551 621 766 778 315 398 483 647 482

Tamil Nadu Tripura Uttarakhand Uttar Pradesh West Bengal A & N Islands Chandigarh Dadar & Nagar Haveli Daman & Diu Lakshadweep Pondicherry Tamil Nadu

International Comparison
Share of Services Rank Country (% of GDP) 2001 2009 2010
1 2 3 4 5 6 7 8 9 10 US Japan China Germany France UK Italy Brazil Spain Canada 77.0 69.8 39.8 69.7 76.5 73.9 70.1 65.3 65.7 64.9 79.0 71.7 42.1 73.7 78.9 78.8 73.6 67.6 70.5 70.7 78.2 70.0 41.8 72.5 78.1 78.4 73.3 66.8 71.0 70.2

Services Growth Rate (%) 2001 2009 2010

2.9 2.0 10.3 2.1 1.7 3.5 2.3 1.8 3.4 3.6 -1.4 -4.8 9.6 -1.6 -1.1 -3.2 -2.9 3.0 -1.0 0.1 1.2 2.9 9.6 2.3 0.2 1.1 1.2 4.8 0.7 2.5

11
12

India
Russia

50.0
63.3

56.5
62.0

57.0
61.5

7.5
3.2

10.1
-5.6

7.7
2.9

World

68.1

68.7

67.8

2.9

-0.9

2.5