INTRODUCTION TO SERVICES

MARKETING
• At the end of this module the learning
outcomes are
• what is the concept of services ?
• why do we need to understand services
Marketing ?
• What is the basic differences between
Goods and Services ?
• What is the concept and importance of
Services Marketing Triangle ?
Hitesh Manocha Introduction to services 1
 INTRODUCTION TO SERVICES
MARKETING
Suggested Readings
• Marketing Management
By
Kotler, 15th edition, Chapter 14

Hitesh Manocha Introduction to services 2

 INTRODUCTION TO SERVICES
MARKETING

• What are services

• Services are
– Deeds
– Processes
– Performances
• Predominantly Intangible

Hitesh Manocha Introduction to services 3

 What is a Service?
A service is any act of performance that
one party can offer 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.
 Service Sectors

Private
Government
nonprofit

Business Retail
Manufacturing
General Motors’ OnStar Service
Categories of Service Mix

Pure
Pure tangible
tangible good
good

Good
Good w/
w/ accompanying
accompanying services
services

Hybrid
Hybrid

Service
Service w/
w/ accompanying
accompanying goods
goods

Pure
Pure service
service
 Service Distinctions
• Equipment-based or people-based
• Service processes
• Client’s presence required or not
• Personal needs or business needs
• Objectives and ownership
 INTRODUCTION TO SERVICES
MARKETING
Example
Education
• Interacting with students
• Sit in a class room
• Certain deeds, processes & performances
• Provide books, reading material which are
tangible .
• The entire experience is predominantly
intangible. Books /reading materials are
tangible.
Hitesh Manocha Introduction to services 9
 INTRODUCTION TO SERVICES
MARKETING
Car – Servicing
• Car is a good
• Car manufacturers offer warranties and
repair services .
• Even a goods manufacturer offer
services

Hitesh Manocha Introduction to services 10

 INTRODUCTION TO SERVICES
MARKETING
Tangibility spectrum
• Products are of two types
1. Goods
Predominantly tangible
2. Services
Predominantly intangible
• Intangibility is the key determinant of
services.
• Intangibility is produced in all sectors of
the economy.
Hitesh Manocha Introduction to services 11
 Tangibility Spectrum
Salt
 Soft Drinks

 Detergents
 Automobiles
 Cosmetics
Fast-food
 Outlets

 Intangible
Dominant

Tangible

Dominant Fast-food
Outlets 
Advertising
Agencies

Airlines 
Investment
Management 
Hitesh Manocha Introduction to services
Consulting  12
Teaching
Continuum of Evaluation for Different Types
of Products
 INTRODUCTION TO SERVICES
MARKETING
Trends in Services sector
• Services
• Dominant sector of the economy
• USA
By 2001, services contributed 80% of the GDP.
• India
It is 60% in 2006.

Hitesh Manocha Introduction to services 14

 INTRODUCTION TO SERVICES
MARKETING
Services Sectors
• Not all services have grown at same rate .
• Phenomenal growth
– Information Technology
– Business process outsourcing
– Banking
– Telecom

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 INTRODUCTION TO SERVICES
MARKETING
Why Services Marketing
.
• Services based economy.
• Service as a business imperative in
manufacturing.
• Deregulated industries and professional service
needs.
• New technologies have created need for
services
• Services Marketing is different.

Hitesh Manocha Introduction to services 16

 INTRODUCTION TO SERVICES
MARKETING
Services based economy
• Major contributor of GDP is services.
• Increasing percentage of contribution
• Employment oriented
• Employment is a key concern in many
countries
• Six out of Ten jobs are created by the services
sector.
Governments have realized the importance of
creating and promoting services.
Hitesh Manocha Introduction to services 17
 INTRODUCTION TO SERVICES
MARKETING
Service as a Business Imperative in
Manufacturing
• Now manufacturing sector
• Automobiles manufacturers
• Computers
• Aircrafts
• Industrial equipment
• Customers expect superior services from
manufacturers.
• Manufacturers differentiate their offering based on the
services provided.
Hitesh Manocha Introduction to services 18
 INTRODUCTION TO SERVICES
MARKETING
Deregulated industries & professional
service needs
• Most Services
– Regulated / controlled by government.
• Recent years
– Trends of privatization
• Severe competition
• Demand for new services.
Hitesh Manocha Introduction to services 19
 INTRODUCTION TO SERVICES
MARKETING
New Technologies have created need for
services.
• Rapid technological changes
• Pagers
• Cellular mobile
• Internet
• Entertainment
• Educating customers
• How these can be used to our advantage?
• Demand for service providers.
Hitesh Manocha Introduction to services 20
 INTRODUCTION TO SERVICES
MARKETING
Services Marketing is Different
• Can you handle services in the same
way as goods.
• No
• How to handle a product which is
intangible
– Selling car vs airlines
• Need for new skills.
Hitesh Manocha Introduction to services 21
 INTRODUCTION TO SERVICES
MARKETING
Goods versus Services marketing

Four Major differences .

1. Intangibility
2. Heterogeneity
3. Simultaneous production and consumption
4. Perishability

Hitesh Manocha Introduction to services 22

 Differences Between
Goods and Services

Intangibility Heterogeneity

Simultaneous
Production Perishability
and
Consumption
Hitesh Manocha Introduction to services 23
 INTRODUCTION TO SERVICES
MARKETING
Intangibility

• Cannot be
– seen
– felt
– tasted
• Difficult to grasp mentally.
• Marketing implications.
• How to sell something which cannot be seen, felt or
tasted
• Can be copied by competitors.

Hitesh Manocha Introduction to services 24

 INTRODUCTION TO SERVICES
MARKETING
Heterogenity

– Delivered by human beings

– No two services are exactly alike
– Human beings are moody
– Causes heterogenity

Hitesh Manocha Introduction to services 25

 INTRODUCTION TO
SERVICES MARKETING
Heterogeneity
McDonald’s
• More than 25000 outlets
• Consistent service quality
• Across world
• How
• Training to outlet personnel

Hitesh Manocha Introduction to services 26

 INTRODUCTION TO SERVICES
MARKETING
Simultaneous production and
consumption
• Goods
– First Produced
– Then consumed
• Services
• Most services exhibit simultaneous
production and consumption
Hitesh Manocha Introduction to services 27
 INTRODUCTION TO SERVICES
MARKETING
Simultaneous production and
consumption
Beauty parlor
INTRODUCTION TO SERVICES MARKETING

– Services will start

– When customer is seated
– Production is instant
– Consumption is instant.
Hitesh Manocha Introduction to services 28
 INTRODUCTION TO SERVICES
MARKETING
Simultaneous production and
consumption
Marketing Implications
• Mass production difficult
• Mistakes by employees visible
• Employees need to be well trained
• Services need to be decentralized
– Convenient locations
Hitesh Manocha Introduction to services 29
 INTRODUCTION TO SERVICES
MARKETING
Perishability
• Services cannot be
– Saved
– Stored
– Resold
– Returned

Hitesh Manocha Introduction to services 30

 INTRODUCTION TO SERVICES
MARKETING
Perishability
Examples
• One empty seat in airlines.
• One empty room in hotel.
• Can you return a bad haircut.

Hitesh Manocha Introduction to services 31

 INTRODUCTION TO SERVICES
MARKETING
Marketing Implications
Perishability
• Accurate demand forecasting
• Strong recovery strategies
• When things go wrong?
• How to regain customer goodwill ?

Hitesh Manocha Introduction to services 32

 Services are Different
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production Simultaneous Customers participate in and affect the transaction.
separate from production and Customers affect each other.
consumption consumption Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with
services.
Hitesh Manocha
Services cannot be returned or resold.
Introduction to services 33
 Services Marketing
Marketing Strategies for Service firms
Service-profit chain links service firm profits with
employee and customer satisfaction.
–Internal service quality
–Satisfied and productive service employees
–Greater service value
–Satisfied and loyal customers
–Healthy service profits and growth

Hitesh Manocha Introduction to services 34

 Services Marketing
• Good service firms use marketing to
position themselves strongly in chosen
target markets.
• FedEx promises to take your packages
“faster, farther”; Angie’s List offers
“reviews you can trust.” At Hampton, “We
love having you here.”

Hitesh Manocha Introduction to services 35

 Services Marketing
• In addition to traditional marketing mix
activities, services require additional
marketing approaches.

Hitesh Manocha Introduction to services 36

 Services Marketing
• Internal service quality requires superior
employee selection and training, a quality
work environment, and strong support for
those dealing with customers.

Hitesh Manocha Introduction to services 37

 Services Marketing
• Satisfied and productive service
employees are more satisfied, loyal, and
hardworking employees.

• Greater service value relates to more

effective and efficient customer value
creation and service delivery.

Hitesh Manocha Introduction to services 38

 Services Marketing
• Satisfied and loyal customers make
repeat purchases and refer other
customers.

• Healthy service profits and growth

relate to superior service firm
performance.

Hitesh Manocha Introduction to services 39

 INTRODUCTION TO SERVICES
MARKETING
Services Marketing Triangle
• For service marketers to succeed three
types of marketing need to be carried
out.
• External Marketing
• Internal Marketing
• Interactive Marketing

Hitesh Manocha Introduction to services 40

 The Services Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing
enabling setting
promises promises

Employees Interactive Marketing Customers

keeping promises

Hitesh Manocha Introduction to services 41

 INTRODUCTION TO SERVICES
MARKETING
External Marketing
• Between Company & Customers
• What you communicate to customers?
• Create customer expectations
• Traditional promotional techniques

Hitesh Manocha Introduction to services 42

 INTRODUCTION TO SERVICES
MARKETING
Example
Public Sector Banks
• Cheque withdrawl norms - 10 mts
• Draft preparation norms – 2 Hrs.
• Do you receive the same in the given
stipulated time?

Hitesh Manocha Introduction to services 43

 INTRODUCTION TO SERVICES
MARKETING
Internal Marketing.
• Enables employees to keep promises
• Commitments to customers
• How to
– Train
– Motivate
– Reward the employees
• Employees have to deliver the promises made
in external Marketing
• Customer Satisfaction linked to employee
satisfaction
Hitesh Manocha Introduction to services 44
 INTRODUCTION TO SERVICES
MARKETING

CitiBank
– Rewards best employees
– Free trips abroad
– Motivated employees keep customers happy
and satisfied.

Hitesh Manocha Introduction to services 45

 INTRODUCTION TO SERVICES
MARKETING
Interactive Marketing
• Actual delivery of service
• Employee interact directly with
customers.
• Promise (as made in external marketing)
is delivered.

Hitesh Manocha Introduction to services 46

 INTRODUCTION TO SERVICES
MARKETING
Interactive marketing
State Bank of India
• Cheque withdrawl.
• External marketing promise to customers – 10 minutes
• Who processes cheques - Employees
• Actual delivery time – 15 minutes
• What are the reasons for failure
• Demotivated employees
• Disappointed customers

Hitesh Manocha Introduction to services 47

 SERVICES MARKETING MIX
Services Marketing Mix
• Traditional marketing mix
• Product
• Price
• Place
• Promotion
• For services
• Modifications in marketing mix required
• Why?
48
 SERVICES MARKETING MIX
Services
• Simultaneous production and consumption
• People involved in service delivery process
Hair dressers
Bank cashier
Doctor
Instructor
• Being intangible, customer look for ‘tangible
cues’
• Services marketers need to look for additional
variables to communicate and satisfy their
customers.
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 SERVICES MARKETING MIX
Service Marketing Mix
• How would you rate a hotel
– Design and decor
– Courtesy of employees
– How prompt they attend your request.

We need to expand traditional marketing

mix to take care of this?
50
 SERVICES MARKETING MIX
Components of Services Marketing Mix
– Products
– Price
– Place
– Promotion
– People
– Physical evidence
– Process

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 SERVICES MARKETING MIX
People
• All human actors who play a part in service
delivery and thus influence the buyer’s
perceptions.
• Namely the firm’s personnel, the customer, and
the other customers in the service environment.
• How people are dressed.
• Personal appearance.
• Their attitude and behaviour
• Importance varies from service to service.
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 SERVICES MARKETING MIX
People
FM Broadcast
– Person not visible
– Dress not that critical
– How he speaks is critical
Doctor performing surgery
– How famous is he/she
– Courtesy
– Communication
– How he encourages patient
– Performance starts after patient is seated
Role of people vary from service to service.

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 SERVICES MARKETING MIX
PHYSICAL EVIDENCE
• The environment in which the service is
delivered and where the firm and customer
interact. Any tangible components that
facilitate performance or communication of
the service.
• ‘Tangible’ representation of the service
such as brochures, letterheads, business
cards, signage, equipment.
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 SERVICES MARKETING MIX
PHYSICAL EVIDENCE
PVR Anupam
• Reservation counter
• Well dressed employees
• Computerised tickets
• Security at entrance
• Clean and tidy
• Comfortable seats
We judge quality on above parameters

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 SERVICES MARKETING MIX
PHYSICAL EVIDENCE
ABN Amro Bank-ATM
• Location of ATM
• Restricted entry
• Air Conditioned
• Attractive ATM layout
• ‘New’ currency notes
• Attractive, well laid out brochures
Image of excellent service

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 SERVICES MARKETING MIX
PROCESS

• The actual procedure, mechanism, and flow of

activities by which the service is delivered –the
service delivery and operating systems.
• Various types of service
• Simple
• Complicated
• How the service is delivered?
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 SERVICES MARKETING MIX
PROCESS-ABN AMRO Bank
• Cash withdrawl
• Earlier visit to the bank
• Present cheque
• Debit your account
• Go to cashier
• Get cash

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 SERVICES MARKETING MIX
Problems
• Customers have to visit bank
• Traffic / parking problems
• Rush in branch
• Waiting
• Customers not satisfied.
How to improve the process?

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 SERVICES MARKETING MIX
AT PRESENT
• Banking at home
• Withdrawl request on phone
• Bank employee delivers cash at home
• No hassles of parking etc.
• Process made easier
• Customers more satisfied
We need to continuously improve processes to
improve customer satisfaction.

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