Introduction to Services

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Factors Influencing the Growth of Service Sector

 Demographic Changes
 Social changes: Demand for consumer services, including
retailing, real estate and personal financial services

 Economic changes: advertising and marketing research &

Communication, travel and information services

 Technological changes
 Political changes and legal changes: Legal and other
professional services

 Policy changes
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 REASONS FOR THE GROWTH OF SERVICES IN INDIA

 Economic affluence: The rural households in the upper income

category is growing
 Changing Role of Women: Defense services, police services,
postal services, software services, health services, hospital
services, entertainment industries, BPOs
 Cultural Changes: education, health care, entertainment,
telecommunication, transport, tourism
 I.T. Revolution: Social marketing
 Development of Markets: wholesale and retailers
 Market orientation: Production to market orientation

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 Health-Care Consciousness: fitness clubs, diagnostic centres, medical
counselling, health-related information sites
 Economic liberalization: Banking, Insurance, Power projects,
Telecommunication, Hospitality sector, Health Services, Entertainment,
Air transport, and Courier services
 Rampant migration: Real estates, rentals, transportation and
infrastructure services
 Export potential: banking, insurance, transportation co data services,
accounting services, construction labour, designing, entertainment,
education, health services, software services and tourism
 Service tax: Hotels and restaurants, transport, storage and
communications, financial services, real states, business services and
social and personal services
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Definition of Service

“Service is an activity that has an element of

intangibility associated with it and which involves
the service provider’s interaction either with
customers or with the property belonging to the
customer”.
- Adrian Payne

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 Tangibility Spectrum
 Services can be classified on the basis of tangibility
like following…
 A pure tangible good
 A tangible good with accompanying services
 A major service accompanying minor goods and
services
 A pure service

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Characteristics of Services
 Intangibility (hair style)

 Heterogeneity (Quality varies over time)

 Inseparability (Cannot separate service from

service provider)

 Perishability (Food items)

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 Generic Differences Between Goods & Services

 Nature of the product

 Problems in quality control
 Involvement of the customer in production and
delivery
 Absence of inventory
 Structure and nature of distribution channels

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Generic Differences Between Goods & Services

 Importance of prompt services

 Difficulty in evaluating service quality

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 Myths About Services
Examples

 Services is a necessary evil for GE, Motorola

manufacturing firms
 Service sector is labor-intensive and less
productive
 Service firms earn less revenue when Wal-Mart
compared to other two sectors
 Growth in service economy is linked to ICICI, HDFC,
growth of the public sector services KOTAK

 Marketing a service is not different from

marketing a product
 Growth in service sector eliminates jobs
from the manufacturing
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The Services Marketing Triangle

Company

Internal External
Marketing Marketing

Front-Line Customers
Employees
Interactive
Marketing

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 The Service Marketing Mix

 People

 Physical Evidence

 Process

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 Development Frameworks for Analyzing
Services

 Type of service
 Nature of relationship shared by the customer with
service organization
 Service delivery
 Type of demand and supply of services
 Extent to which service provider need to customize
services

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 Customer Gap

 CG is the difference between Expected service &

Perceived service.
 Customer expectation are standards or reference
points that customer bring into the service
experience
 Customer perceptions are subjective assessments of
actual service experience.

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 Provider Gaps

 Gap 1: Not knowing what customer expect

 Gap 2: Not selecting the right service designs &
standards
 Gap 3: Not delivering to service designs &
standards
 Gap 4: Not matching performance to promises

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 GAP 1-Not knowing what customer Expect

 Inadequate marketing research orientation

 Lack of upward communication

 Insufficient relationship focus

 Inadequate service recovery

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 GAP 2-Not having right service quality design & standards

 Poor service design

 Absence of customer driven standards

 Inappropriate physical evidence.

-Failure to develop tangibles

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GAP 3-Not delivering to service designs & standards

 Deficiencies in human resource policies

 Customer who don’t fulfill roles

 Problems with service intermediaries

 Failure to match supply & demand

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GAP 4-Not matching performance to promises

 Lack of integrated services marketing

communication

 Ineffective management of customer expectation

 Overpromising

 Inadequate horizontal communication

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