Services Marketing

Recap

SSD – SMG - 2. 1
 Proliferation of Services

Older Economy = > New Economy = >

Banking & Insurance Mobile Telephony

Transportation Hospitals & Healthcare
Tourism & Hotels Personal Care
Public Utilities Education & Training
Auditing & Taxation Mngment Consulting

SSD – SMG - 2. 2
 Broad Learning Objectives

 Nature & Imp of Services Marketing

 Difference vis-à-vis Product Marketing
 Unique Characteristics of Services
 Challenges in Marketing of Services
 Strategies for Services Marketing
 Understanding nuances within sector

SSD – SMG - 2. 3
Services Sector :
The Global Powerhouse
Country % GDP % Emplyd

U.S.A 72 78
France 64 69
U.K 63 66
Canada 62 66
Japan 57 61
India ? ?
SSD – SMG - 2. 4
Global Majors in Services

MasterCard / Visa
CitiCorp / Amex
Marriott /
InterContinental
Macdonald’s / Pizza Hut
Hertz / Avis
Prudential / Allianz

SSD – SMG - 2. 5
Services :The Indian Scenario

The Growth Story in India :

 Share of GDP up from 26% in 1980s to

40 % + in 2000.
 Fastest growing sector for 15 years in a row.
 Biggest contributor to exports for 10 years in a
row.
 Highest PCI for those in employment.
 Creating new jobs at 3:1 to Industry.

SSD – SMG - 2. 6
 Factors driving services growth

Shift away from Industrial Economy

New jobs creation is 3 : 1
Emphasis on Excellence , esp B2B
Core Competence = > Process = > BPO
Strategic Competitive Advantage
Low product differentiation
Automobiles / Computers / Telephony

SSD – SMG - 2. 7
 Factors driving services growth

Major developments in Technology

Satellite Com => Real Time => ITES
Information & Comncn Explosion
Global Village => Customer Needs
Customer Focus => Performance Linkages
Value seeking customers => Amex Cards
Professionalisation of Education
Quality & Quantity of Skillsets

SSD – SMG - 2. 8
 Services : Some Misconceptions

 Services grow at the expense of

other sectors.
Facts do not support.
Industrial production has grown.
BPO / ITES created a huge growth.

SSD – SMG - 2. 9
 Services : Some Misconceptions

 Service : A necessary evil

Traditional view : Repair & Grievances
Modern Approach: Add value,differentiate

 Services : Labour Intensive

Traditional jobs : Restaurants
Modern offerings : Telecom / Utilities

SSD – SMG - 2. 10
 Defining Services

All economic activities whose output

 Is not a physical product
 Is generally consumed instantaneously
 Provides value-addition in some form
 To meet largely intangible concerns of consumers.

eg Beautician’s / Grooming Services

SSD – SMG - 2. 11
Diff’ between Goods & Services

 Services are quite different from ‘Goods’

 Tangibility / Output / Ownership / Value-addn / Cost
 Difference / Distance , is fast getting blurred
 Hybrids / Value-added products are the new norm
 Stand-alone goods marketing may get extinct

SSD – SMG - 2. 12
 Classification of Goods

 By Market segment :
Consumer : apparel / magazines / jewellery
Industrial : Cement mixers / Chillers / Cranes

 By Durability :
Durable : Motorcycles / Computers
Non-Durable : Tooth Paste / Coffee

SSD – SMG - 2. 13
 Classification of Goods

 By Degree of Regulation :
Regulated : Drugs / Explosives / Arms / Forex
Non-Regulated : Soft-drinks / Appliances

 By Degree of Customer Contact :

High Contact : Medical Diagnostics / MF Computers
Low Contact : Stationery / Foodgrains

SSD – SMG - 2. 14
 Classification of Services

BY END USER / CUSTOMER :

 B2C : Personal Finance / Taxi / Training

 B2B : Advertising Agencies / Consulting
 Industrial : Plant Maintenance / Designing

SSD – SMG - 2. 15
Classification of Services ..Contd

By Tangibility :

 Directly tangible : ATMs,Car Rental,Wash

 Along w T- Goods: AMCs for Computers
 Almost intangible: Psychotherapy , Lawyers

SSD – SMG - 2. 16
Classification of Services

By Degree of Skill Required :

Professional : Doctors / Auditors / Lawyers
Semi-Skilled : Plumbing / Electrical Repair / Taxi
Unskilled : Washing / Security / Shoe-shine

By Degree of Regulation :
Regulated : Public Utilities / Insurance
Non-Regulated : Travel / Property Maintenance

SSD – SMG - 2. 17
Classification of Services

By Degree of Customer involvement :

Self-Service : ATM / Eateries
Interpersonal : Training / Coaching / Hair-Styling
Remote Service : Dry-Cleaning / Lawn Mowing

SSD – SMG - 2. 18
Classify the following Correctly :

 Architect’s Services
 Courier Services
 Personal Fitness Trainer
 Portfolio Management
 Bell – Boy at a hotel reception
 SAP Trainer at a computer institute

SSD – SMG - 2. 22
 Special features of services

 Intangibility = > Unseen , Untouched

= > Customer Confidence
= > Customer Valuation
Customers seek ‘evidence of quality’
 Inseparability = > Integrated w offerer
Service provider participates ,
so does the customer !!

SSD – SMG - 2. 23
 Special features of services

 Variability = > Consistency

Service Quality Uniformity
Articulation by Customer

 Perishability = > Non-storability

Direct Opportunity Costs
Matching demand & supply

SSD – SMG - 2. 24
Services : The Key Issue

TANGIBILITY
Or Lack of it !!

SSD – SMG - 2. 25
 Adding dimensions to Tangibility

Tangibilising the Intangible

 Tangible Actions : Services Directed Towards :

Customer’s Body :
Transportation / Healthcare
Beautician / Fitness Trainer

Customer’s Possessions :
Freight Transportation / Warehousing
Landscaping / Laundry

SSD – SMG - 2. 26
 Adding dimensions to Tangibility

Tangibilising the Intangible

 Intangible Actions : Services Directed Towards :

Customer’s Minds :
Advertising / PR / Education
Religious Discourses / Television

Customer’s Intangible Assets :

Accounting / Data Transmission
Life Insurance / Portfolio Management

SSD – SMG - 2. 27
Services v/s Product Mktng

Distinct Consmp Immediate Unique ,Customer Influe

Nonperishable Perishable Inventory,Syncg Demand
No Participation Interactive QC , Cust Satisfaction
Wide Reach Ltd Reach Limited Market
Cost-plus Pricing Arbitrary Pricg Pricing Strategy , Balance

SSD – SMG - 2. 28
Challenges for Service Marketers

 Service Quality defining? Intangibility & Variability

 Service Quality maintaining? Integrated Offering
 Org structure? Mktng+Opns+HR interlinked
 Fluctuating Demand ? Perishability
 Balancing Act? Standardisation v/s Personalisation
 Competition Thwarting ? Patenting Problems/Entry
 Consistent Communication?Extended Marketing
Mix
Direct com to customers by frontline

SSD – SMG - 2. 29