MARKETING OF

SERVICES - I

The Service Product

 The Service Product
2 1. “The formulation of an activity or benefit which is
essentially intangible in nature and does not lead to the
ownership of anything.”
2. A service product is bought and used for the
benefits it offers.
3. It has strong links between the service
user/customer and the service deliverer.
4. The service product has four levels:
• The consumer benefit concept
• The service concept
• The service offer
• The service delivery system

MARKETING OF SERVICES - I
 The Service Product
3 Level 1 CONSUMER BENEFIT Concerned with the benefits that the
CONCEPT clients/customers seek
Translated into

Level 2 SERVICE CONCEPT Concerned with what general benefits the

service organization has to offer
Translated into

Concerned with more detailed shaping of the

Level 3 SERVICE OFFER service concept. Decisions and clarifications
regarding tangible and intangible service
elements, Service forms (in what way/how
to provide the service), Service levels
(quality and quantity)
Translated into
Creation and delivery of the service product
using guidelines built into the service offer.
Level 4 SERVICE DELIVERY
Concerned with people, process, physical
SYSTEM
evidence, etc.
MARKETING OF SERVICES - I
 The Service Product
4 1. The consumer benefit concept
1. Bateson suggests that the consumer benefit concept for any firm is a
bundle of functional, psychological and effectual (well
designed to serve its purpose) attributes, which need to be
separated from the product itself.
2. The consumer benefit concept cannot exist without a service
delivery system.
3. There are challenges in the clarification, elaboration
and translation of the consumer benefit concept:
• Consumers are unable to properly express what benefits
they actually want from a service.
• Benefits sought by customers may change over time.
• Difficulty in prioritizing and measuring the benefits
desired by the customers.

MARKETING OF SERVICES - I
 The Service Product
5 2. The service concept
1. This is the definition
of the general benefits the
service organization offers based on the benefits
the consumers desire. Here the organization has to answer to
pertinent questions:
a. What business are we in?
b. What needs and wants do we attempt to meet?
2. Gronroos suggests that at least two levels of service concept are
possible to define:
a. The general level concept (the catering service
provides all sorts of delicious foods).
b. The specific level concept (the catering service
provides Continental, Italian and Chinese food
items)

MARKETING OF SERVICES - I
 The Service Product
6 2. The service concept
3. Eiglier and Langeard suggest that the service concept must be
translated into the “Service Formula”, which entails determining:
a. The service benefits that the firm is aiming to serve.
b. The service features that best express the consumer benefit.
c. The service process (ways and means the service is produced,
distributed and consumed).
d. The market segment.
e. The client interface (human vs. machine based).
f. The image of the service (this has to facilitate communication
between the service organization and its potential clients.
4. Sasser et al. suggest the service concept is a total service
package, i.e., it is the definition of the service offer in
terms of the bundle of goods and services sold to the
consumer as well as the relative importance of this
bundle to the consumer.

MARKETING OF SERVICES - I
 The Service Product
7 3. The service offer
1. Following are the determinants of service offer:
 What services will be provided?
 When services will be provided?
 Who will provide them?
2. A service offer consists of both tangible and intangible elements some of
which are controllable and some of them uncontrollable.
• The cleanliness of a hotel or size of food portions served in a
restaurant are controllable elements of a service. The same is true for
the attention given by an air hostess to passengers or the speed at
which telephones are answered in a bank.
• Hotel management requires the receptionist to greet the guests at the
reception desk. This is a controllable element, but the warmth of the
greeted guests is largely uncontrollable. Similarly to promote a
quiet and peaceful hotel environment is uncontrollable, as some
guests may be noisy and interfering with the peace and enjoyment
of other guests.
3. Three components affect the decision making of managing a service offer:
Service Elements, Service Forms and Service Levels.
MARKETING OF SERVICES - I
 The Service Product
8 3. The service offer
a. Service Elements: These are the bundle of tangibles and intangibles
which form the service product.
Example: The bundle of goods and services offered at a restaurant could
be:
• The physical items or facilitating goods (food, drink)
• The explicit services affecting the senses (taste, aroma, service)
• The psychological benefits (comfort, status, prestige)

Levitt and Shostack stress the importance of managing the

tangible evidence in the sales of intangibles, i.e., tangibilizing
the intangibles, managing the physical evidence and restating
the presence and performance of services, as customers
don’t usually know what they are getting until they
don’t get it.

MARKETING OF SERVICES - I
 The Service Product
9 3. The service offer
b. Service Forms: Service elements are offered in different
forms, such as different forms or variations in pricing:
1. Charge a unique package for the whole set of services.
2. Charge separately for each service.
3. Use a combination of the two.
Decision taken on the precise form of each service
element depends upon such factors as: market requirements,
competitors’ policies and balancing the various elements
forming the service offer.
An additional consideration is to NOT have service products
with a high degree of complexity, as they are difficult to
manage from service marketer’s perspective (in terms of
quality control, staff knowledge of service product options,
etc.) and difficult to mentally grasp by the user.

MARKETING OF SERVICES - I
 The Service Product
10 3. The service offer
c. Service Levels: These refer to the judgements made by consumers
and users of the quality and quantity of benefits they
receive.
i. Service Quality: Judgement of the worth or value of the
service product. Marketing decisions relating to service
quality are based on:
• Quality will influence both the volume of demand for a
service and who makes that demand (consumer).
• Quality will be a major positioning tool in relation to other
competitors in market.

Model of Service Quality

1. Corporate Image: Overall image of an organization with
its attractiveness.
2. Technical Image: Is organization providing the physical
attributes of the service?
3. Functional Quality: How the service is rendered?
MARKETING OF SERVICES - I
 The Service Product
11 3. The service offer
Five Determinants of Service Quality
1. Reliability-The ability to perform the promised service
dependably and accurately
2. Responsiveness-The willingness to help customers and to
provide prompt service.
3. Assurance-The knowledge and courtesy of employees and
their ability to convey trust and confidence.
4. Empathy-The provision of caring, individualized attention
customers.
5. Tangibles-The appearance of physical facilities, equipment,
personnel and communication materials.

MARKETING OF SERVICES - I
 The Service Product
12 3. The service offer
ii. Service Quantity: This is the amount of service (benefits)
provided to the user. Marketing decisions relating to
service quantity are based on:
• The volume of service delivered in a service product.
• The timing of service delivered in a service product.
• The flow of service delivered in a service product.

Example: A waiter in a restaurant may on the two

quality dimensions of appropriateness and
sensitivity to customers deliver service of the
right quality level. However, he may be found
lacking in terms of the amount of attention and
time he gives to the customers.

MARKETING OF SERVICES - I
 The Service Product
13 4. The service delivery system
Two key Elements of Service Delivery system are: People and Physical
Evidence.
People
• Individuals involved in service product performance and delivery
include organization’s own personnel. Some may be visible or
invisible to the client during the service delivery.
• They can have a direct impact on the service product; its
character and its form.
• Their attitudes, skills, knowledge and behaviour can have a
critical impact on the levels of satisfaction the consumers derive
from the service product consumption.
• Another vital group of people are past, existing or potential
consumers. They play a crucial part in producing the service
and therefore influence the service delivery process. Most
importantly, they also affect and influence each other. For
instance, customers in a cue discussing the product service or a
restaurant influenced by other consumers using the restaurant.

MARKETING OF SERVICES - I
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14 4. The service delivery system
People
• The type of people who use and consume the service effects
the image that the service organization develops and
maintains. For instance, a high-class restaurant needs high-
class clientele, or an upmarket management consultancy firm
needs nationally and internationally known clients.
• Consumers talk about their experiences of service
organizations and their comments can be a much crucial in
shaping the image (good or bad) of the firm.

MARKETING OF SERVICES - I
 The Service Product
15 4. The service delivery system
Physical Evidence
• Physical objects consist of building, plant, equipment, tools, the
layout of facilities and tangible elements of the service.
• According to Gronroos, physical or technical resources are
experienced by the users when they come to the service
company to buy and consume or when the service
employee comes to him to deliver the services.
• Rathmell used the terms, facilitating goods and support
goods to describe some of the tangible elements present in
the service delivery process.
• Facilitating goods: The physical resources that must be in
place before a service can be offered. Examples are a golf
course, a ski lift, a hospital, and an airplane.

MARKETING OF SERVICES - I
 The Service Product
16 4. The service delivery system
Physical Evidence
• Supporting goods: The material purchased or consumed by the buyer,
or the items provided by the customer. Examples are golf clubs, skis,
food items, replacement auto parts, legal documents, and medical supplies.
Another aspect is the operations data or information that is provided by
the customer to enable efficient and customized service. Examples include
patient medical records, seats available on a flight, customer preferences from
prior visits, and location of customer to dispatch a taxi.
• Intangible qualities like atmosphere/ambience and image that may be
derived from the physical objects, the people providing the service and
the setting, economic, geographic, cultural.
• The total experience which consumers may derive from the service
product usage may be due to a host of influences. For example, a
package tour’s success may depend on the exotic location or the
climate as much as upon the other participants or the hotel complex.
How will you make the total experience pleasurable for customers?

MARKETING OF SERVICES - I