SERVICE MARKETING

Introduction to Service

 Definition
 “Service refers to social efforts which include even government to
fight five giant evils, eg want, disease, ignorance, squalor (state due
to poverty and dirt) and illness in the society”.
 “Service is an human effort which provide succour to the needy. It
may be food to hungry person, water to thirsty person, medical
service to an ailing person and education to a student, loan to a
farmer, transport to a consumer, communication aid to two persons
who want to share a thought, pleasure or pain”.
 Definition of AMA………….
GOODS Vs Service

 . Tangibility
 2. Transferability
 3. Existence
 4. Heterogeneity
 5. Reselling
 Characteristics of service
 Intangibility: Cannot be seen, tasted, felt , heard or smell before they are bought
unlike physical products. Eg. Tourist outcome
• Make tangible intangible
• Beauty parlour result
 Inseparability: Service cannot be separated from the service provider.
Production, delivery and consumption of service takes simultaneously in the
buyer-seller interactions..
 Heterogeneity: The quality of service can’t be standardized. Same type of service
can’t be sold even at same price. Price can be high or low
(cont…..)
 Ownership: Can’t own the service only can access the service.
Eg. Use of public transport, hotelroom

 Quality measurement: Very difficult to rate or quantify the total

purchase. Eg. Quantify the food served in hotel but not service
 Nature of Demand: Fluctuating nature.. Eg. Mobility of passengers
during peak and off season
 Simultaneity: Users are brought to the providers or providers go to
the users.Eg. Hotel room service
 Significance of service marketing

 Creation and expansion of job opportunities

 An optimal Utilization of Resources
 Paving avenues for the formation of capital
 Increasing the standard of living
 Environment-friendly technology
Reasons for growth of service in India

 Economic Affluence:
o Poor households are declining
o Income as well as expenditure has been pushed up
 Changing Role of Women
o 50% of population
o Life partners
o Traditional way of thinking
 Cultural changes
o Its not static; it is the process of development
o Changing role of women
o Family pattern
 IT Revolution
o Software skilled population
o IT enabled services
 Development of markets
 Unbundling corporations
 Increased consciousness of Health care
 Economic Liberalization
Goods service Continuum
 Goods service Continuum

 Goods service continuum is the tool to help to understand

differences and similarities and relation between goods and services.
 Categories
 Pure goods without any accompanying services EG. Lux soap or
Nirma detergent
 Pure services without accompany goods.Eg. Consultant or a
gymnasium
 Combinations of goods and service..Eg. Bar or restaurant along with
food, or cocktails and also the ambience, décor, hospitality and
efficient service
 Classification of Service
 A. Classification based on degree of involvement of the customer
 People processing: physically present to experience the service. Eg. School
Training center for dance, health care, passenger transport service
 Possession processing: Need not physically present but has to submit his property
to the service provider for the latter to deliver the service. Eg. Car servicing,
laundry, dry-cleaning
 Mental stimulus processing: Customer must be directed on the service in order
to experience the service. Eg. Career counselling from professional service in
adv., entertainment and education.
 Information processing: Service personal to collect informant, analyze it,
interpret and offer appropriate advice. Eg. Market research hired by a company.
 B. Classification based on service tangibility:
 Highly Tangible- Tangible product in hand. Eg. Mobile phones
 Service linked to tangible goods-offer warranty period to cust. Who
purchase products from them Eg. Organization buys a photocopying
machine
 Tangible goods linked to service- Offer Tangible product along with service
requested by the customer. Eg. Airlines along with food and magazine to
passengers.
c. Classification based on skills and expertise required
 Not –for profit organization- govt school and social orgn
 Commercial Orgn
Classification based on skills and expertise required
 Not –for profit organization- govt school and social orgn
 Commercial Orgn
d. Classification based on Type of End-user
 Consumer service: beauty care hair cutting
 Business to business- Market research, consultancy
 Industrial service- Machine Installation and plant
Maintenance.
Service Marketing
Environment
 Political- Legal Environment

 Many service firms are being subject to government regulations in

addition to usual taxes, legislations and restrictions on promotion and
price discrimination.
 Regulations generally influence service business in four ways
o Range and type of competition
o Introduce certain rigidities into the marketing process
o Binding the decision-making process
o Pressure group may be established to lobby-directions being taken by
the regulatory bodies
 Economic Environment

 It is due to changing lifestyle, changing world, changing advances

and changing consumer services.
 Innovation in science and technology increase the productivity
trends
 Global environment due to cross-country issues, tariff and non-tariff
trade barriers, tend to become more restrictive in marketing of
services.
 Socio-cultural Environment

 It is the set factors including lifestyle, social values

and beliefs that affect the marketing activities of an
organization
 More status related product eg. Mercedes Benz.
 KFC, Mcdonald’s had to adapt its product in India
to suit local Palates.
 Technological Environment

 Large part of economic growth come from

technological developments
 Highly influenced life-styles, consumption pattern
and our economic well-being.
 Internet, E-commerce , video-conferencing
 Competitive environment

 Five forces AFFECTING competitive

environment
The intensity of direct competitive rivalry
The threat from alternatives
The threat from new entrants
The bargaining power of buyers
The bargaining power of suppliers
Consumer Behavior
 CONCEPTS &DEFINITION.

 CB is a branch which deals with the various stages a consumer goes through before
purchasing products or service for his end use. It is an effort to study and understand the
buying tendencies and spending patterns of consumers.
 CB is defined as the process whereby individuals decide whether, what, where, how and
from whom to purchase goods and service
 Consumer Behaviour involves the psychological processes that consumers go through in
recognizing needs, finding ways to solve these needs, making purchase decisions, interpret
information, make plans and implement these plans.
 Factors influencing consumer behaviour

• A. Cultural and social factors

 Family
 Income status
 Reference groups
 Primary groups
 Secondary groups: connected with religion, region and profession
• B.Personal and physical factors
 Education
 Occupation
 Economic position
 Status-Ascribed status and Achieved status
 Personality-Self confidence, sociability, economic, defensiveness, aggressive
 Lifestyle
 Age
 Sex
 Height and weight
 Beauty: diff. between men and women
 C. Psychological Factors
 Motivation-Goal or desire that individual seeks to satisfy…Abraham Maslow
 Perception-The way we look at the world around us
 Consumer should have selection system
 Selection attention- paying attention to only selective stimulations
 Selective distoration- The process of erasing the retained information
 Learning
 D. Attitudes and Belief: Develop attitudes through activities, interaction learning and
results
 Develop a favourable or unfavourable opinion
Consumer purchase decision process
Problem Identification and Information
definition search
 HIPS
 LIPS
 ZIPS
 Alternative Purchase and Post purchase
Evaluation consumption behaviour
 Service design  Total set  Loyalty
 Sequence of moments  Awareness set  Brand switching
 System instruments  Evoked set
 Line of visibility  Choice se
 Co-customer
 Service personnel
 compatibility
Types of Buying Behavior

 1. Complex buying behavior:

 Involves three step process
 Buyer develop belief about the product
 Buyer develop attitudes about the product
 She make a thoughtful choice
 Products which are expensive bought frequently and risky

 2.Dissonance –Reducing buyer behavior

 Highly involved in purchase but see little difference in brands
 Alert to information support his decision
 Buyer will go around but purchase when he gets good price
 3.Habitual buying behavior -Brought under conditions of low involvement. Eg. Salt
 Sometimes goes for same brand i.e. not a brand loyalty
 Influence of Advertising
 4. Variety Seeking Buying Behavior
 Low involvement but significant brand difference
 Lot of brand switching eg. chocolates
 How consumer Develop Expectations

 Customers have different types of

Expectations
 Service marketers should know about
the expectations
 Various levels of performance
 Various levels of service performance

Levels of service performance Customer Response

 Exceeding maximum  Highly satisfied and delighted

expected level
 Maximum service level  Satisfied
 Adequate service level  Indifferent
 Minimum service level  Dissatisfied
 Below minimum level  Highly dissatisfied
(Cont…)

 Maximum service level is blend what customer believes ‘can be’ and ‘ should be’. Eg.
College placement
 Minimum service level represents the lowest tolerable expectation

Maximum
service level

Zone of tolerance

Minimum service
level
 Zone of tolerance is the extent to which customer
recognize or are willing to accept the variations between
two levels of expectations i.e. maximum level and the
minimum level. Eg. Customer going to bank for
withdrawal of money
 Tolerance zone should be low in case of important factors
and vice versa
 . Needs and wants Maximum level Marketing stimulation
. Desired expectations
.personal expectations

Zone of tolerance Word of mouth

communication

Minimum level Past experience

Service choice
Emergencies
Situational factors
 Hence the orgn need to fill the gap between consumer
expectation and perceptions
 Service provides should have proper understanding of the
behavior of consumers expectations, evaluation process
and purchase decision process.
Managing customer Expectations

 Ensuring promise reflect reality

 Should be realistic and should reflect actual service they are going to deliver
 Should not make lase and glorified promise
 Not to make customer expectation very high
 May result into customer distrust and intolerance
 Hence should focus on basic service & present an honest picture
(cont..)

 Performing the promise service reliability

 Performing the promise service right at the first time
directly contributes excellence to service
 Promise service leads to strong service leadership through
pre-post launch service testing and adequate infrastructure
like excellent training, teamwork and reward system
 Communicating effectively with customer
 Easy accessibility of company representative
 Should encourage customers to contact the company
 Employees should be rewarded for better CRM
 Adequate training to employees
 Customers feedback and suggestions for improving the
service
 Customer Expectations are based on customer experience
with the product or service, feedback received from
friends , colleagues and relatives or may be based on their
present needs.
 Customers do not expect service providers to fulfill all
their requirements but only that they deliver what they
have promised.
 The five dimensions are
 1. Assurance : This refers to ability of the service provider and his employees to use their
knowledge and courteous behavior.
 2. Empathy-refers to the service providers ability to show concern for customer
 3.Reliability- Ability of the service provider to accurately perform the promised service
 4. Responsiveness- to provide assistance and prompt service
 5. Tangibles –Infrastructure and appearence
TYPES OF SERVICE EXPECTATIONS

 Two types of Expectations

 1. Desired service-
 Service that a customer desire and hopes to receive
 Also depend on associated party.
 2. Predicted service- It is the service level between the desired and adequate service level
of a customer and lies in the zone of tolerance
 3. Zone of tolerance
 Managing customer service expectations
 1. Managing promise
 2. Reliability
 3.Effective communication
TYPES OF SERVICE
MARKETING
 SERVICE TRIANGLE

 Popular strategies developed by Christian Gronross

 It is called service Triangle
 The model proposes three-dimensional approach for the
development of the overall marketing strategy
 Internal Marketing- Between company and Employees
 External Marketing-Between Company and customers
 Interactive marketing – Between Employees and customers
Colorful_People_In_Circle.jpg

Internal Marketing

 Efficient Employees perform well even in failures of design ,

system and support services
 Employees shall be viewed as first market
 Give right perks
 Prepare and motivate employees
 Proper pay, promotion and other benefits to be designed
properly to meet their expectations
 External marketing
 It is the responsibility of the service firm to prepare the customer to
receive the service in the right perspective
 Customer education about the service
 Give consumers training to promote qualitative participation and
high level of customer perceived quality
 Interactive marketing
 It’s the stage for actual interaction between
employees and customers
 It is also called service encounters
 It has to be supported by adequate support services,
tangibles, systems, techniques and other support
material
 INTERNAL MARKETING

 DEFINITION
 According to Berry , internal marketing is the process of “viewing
employees as internal customers, viewing jobs as internal products
that satisfy the needs and wants of those internal customers while
addressing the objectives of the organization”.
 Berry and perasuraman define internal marketing as the process of
“attracting, developing, motivating and retaining qualified
employees through job-products that satisfy their needs.
 Role of Internal Marketing

 Customer attraction and retention

 Employee retention and motivation
 Corporate image
 Change management
 Organization’s performance and continuity
 Developing and Implementing internal
marketing

 Recruitment and selection

 Motivation
 Education and training m
 Coordination
 Empowerment
 Rewards
 Communication
 Knowledge sharing through knowledge management