Service Marketing

Module I
1.Service Definition
2. Goods –Services Continuum
3. Scope of Service
4. Characteristics of Service
5. Few additional Characteristics of
Service
6. Classification of Services
7. Service Economy
8. Challenges in Service Marketing
2
 “ A service is an act of performance that one party can
offer to 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.”
- Philip Kotler

SERVICE DEFINITION 3

8/27/2019 Jitendra Patel, Assistant Professor , PIMR

 Definition of Services
Intangible activities

that are the main object

of a transaction

designed to provide
want-satisfaction to
customers

Supplementary Services

support the sales

of a good or service
Goods-Services Continuum
 Scope of Services

Not For
Profit
For Profit

Non Profit
Characteristics of Services

Intangibility
Perishability

Inseparability Heterogeneity
 CHARACTERISTICS OF SERVICE
MARKETING

1. INTANGIBILITY
2. PERISHABILITY
3. INSEPARABILITY
4. HETEROGENEITY
5. OWNERSHIP
6. SIMULTANEITY
7. QUALITY MEASUREMENT
8. NATURE OF DEMAND
 1. INTANGIBILITY
 Services are intangible we cannot touch them as they are
not physical objects.

 A consumer feels that he has the right and opportunity to

see, touch, hear, smell or taste the goods before they buy
them but his is not applicable to services.

 The services are not known to the customer before they

take them.
 INTANGIBILITY EXAMPLE

 Mobile network
providers like
Vodafone , Airtel ,
Reliance , etc.
 2. PERISHABILITY

 Value of service exists at the point when it is

required.

 Services perish as soon as they are used.

 Services last for a specific time and

cannot be stored like a product for later use.
 Perish ability Example

A Airline Service can only sell ticket prior to the departure of

aircraft
 3. INSEPARABILITY

 Services cannot be separated from the service provider.

 Thus, the service provider would become a part of a

service.

 Production and consumption of services go hand

in hand.
 INSEPARABILITY EXAMPLE

 Taxi operator drives taxi, and

the passenger uses it.
 The presence of taxi driver is essential
to provide the service.
 4. HETEROGENEITY

 The quality of services cannot be standardized.

 Systems and procedures are put into place to make

sure the service provided is consistent.

 The service firms should make an effort to deliver

high and consistent quality by selecting good and
qualified personnel for rendering the service.
HETEROGENEITY EXAMPLE

 Live concerts like

singing , dancing and
comedy shows , movies
, etc.
 5. OWNERSHIP

 In the sale of goods, after the completion of process,

the goods are transferred in the name of the buyer
and he becomes the owner of the goods.

 But in the case of services, the users have only an

access to services.

 They cannot own the service.

 OWNERSHIP EXAMPLE
Membership of a gym
 6. SIMULTANEITY

 Services cannot move through channels of

distribution and cannot be delivered to the potential
customers and user.

 Either users are brought to the services or providers

go to the user.

 It is right to say that services have limited

geographical area.
 COST & SIMULTANEITY EXAMPLE

 When the producers approach the buyer to deliver

services the cost of those services is increased. On
the other hand it cost time and money for the
buyers to come to producers directly.

 A doctor’s visit to home.

 Electronics service, repair & maintenance centers.

 7. QUALITY MEASUREMENT

 A service sector requires another tool

for measurement.

 We can measure it in terms of service level.

 It is very difficult to rate or

quantify services.
 QUALITY MEASUREMENT
EXAMPLE
 We can quantify the food served in a hotel but
the way waiter serves the customer or the
behaviour of the staff, timely delivery , hygiene
etc. cannot be ignored while rating the total
process.

 Thus the firm sells good atmosphere,

convenience of customers, consistent quality
of services, etc.
 8. NATURE OF DEMAND

 The services are fluctuating in nature.

 The demand of services can be abnormal,

sudden seasonal, situational & dependent.

 Therefore, while identifying the salient

features of services one cannot ignore the
nature of demand.
 NATURE OF DEMAND EXAMPLE

• Service quality level deteriorates during peak hours

in hotels, transportation etc.

• E-Retailers offering huge discounts on festive

occasions

• A marketer should effectively utilize the capacity

without deteriorating the quality to meet the
demand.
 FEW ADDITIONAL

I. Services are CHARECTERISTICS

sold exclusively on the
basis of benefits they offer.
II. Services cannot be made available in advance.
III. Time utility is critical.
IV. Services cannot be transferred.
V. A service once consumed cannot be returned.
• Classification of Services
 Classification based on service
tangibility
• Services linked to tangible goods.
• Inorder to experience the service
customers should first purchase the product.
• Eg alterations, warranties
 Tangible goods linked to services

• Service provider offer tangible goods for

use along with the services.
• Eg. Theaters offer 3d glasses along with movie
 Classification on the business
orientation
• Non profit organization: govt
schools a social service.

• Commercial organization.
 Classification on the basis of
requirement of skill and expertise

• Professional services
– Requires a set of qualification skills
adequate training etc.eg lawyer, pilot

• Non professional services

– Do not require any set of skills training.
– Eg house keeping, babysitting etc
Classification on the basis of end user
• Consumer services: beauty care hair care
• Business to business services: market research
and consultancy
• Industrial services: machine installations
 Consumer services
• Pure services : Activities performed that do not include a
tangible product.
• Non-good services - Personal/professional service for a fee.
• Example: tax preparation.
• Owned-good services - Activities that alter, improve,
or repair products already owned.
• Example: dry cleaning, appliance repair service.
• Rented good services - Provide a product to use for a brief
period for a fee. Example: carpet cleaners, movie rental.
Classification of Services on the basis of People involvement
Classification of Services on the basis of People
involvement
Classification on the Basis of Customization
Classification on the Basis of Nature of Demand
 SERVICE ECONOMY
• The world economy is evolving into a service-
driven economy as reliance on value-based
service increases.
 Service Economy

– The growth of the service sector has long been

considered as an indicator of a country's economic
progress.
– Services are continually being launched to satisfy
our existing needs and to meet needs that we did
not even know we had.
– Service organizations can vary in size from large
corporations to small, locally owned businesses.
 Service Economy

– The way consumers handle financial transactions

with banks, has evolved as our needs as a society
have evolved. Fifteen years ago, no one would
have anticipated the need for online banking and
yet today many of us feel we can't live without it.
This is a service that has continually changed to
satisfy existing needs.
 Service Economy
• As of 2008, services constituted over 50% of GDP in low
income countries.
• As their economies continue to develop, the importance
of the service sector continues to grow.
• For instance, services accounted for 47% of economic
growth in sub-Saharan Africa over the period 2000–2005,
while industry only contributed 37% and agriculture only
16% in that same period.
• This means that recent economic growth in Africa relied as
much on services as on natural resources or textiles,
despite many of those countries benefiting from trade
preferences in primary and secondary goods.
IT Sector Growth in India
 Service Economy
• The services sector is not only the dominant
sector in India’s GDP, but has also attracted
significant foreign investment flows,
• contributed significantly to exports as well as
provided large-scale employment.
• India’s services sector covers a wide variety of
activities such as trade, hotel and restaurants,
transport, storage and communication, financing,
insurance, real estate, business services,
community, social and personal services, and
services associated with construction.
 Market Size of Service Sector in India
• The services sector is the key driver of India’s economic growth. The sector
contributed around 66.1 per cent of its Gross Value Added growth in 2015-16,
thereby becoming an important net foreign exchange earner and the most
attractive sector for FDI (Foreign Direct Investment) inflows.!

• According to a report by leading research firm Market Research Store, the Indian
telecommunication services market is expected to grow by 10.3 per cent year-on-
year to reach US$ 103.9 billion by 2020.

• The Indian digital classifieds industry is expected to grow three-fold to reach US$
1.2 billion by 2020, driven by growth in horizontal classifieds like online services,
real estate and automobiles.#

• Out of overall services sector, the sub-sector comprising financial services, real
estate and professional services contributed US$ 305.8 billion or 20.5 per cent to
the GDP. The sub-sector of community, social and personal services contributed
US$ 188.2 billion or 12.6 per cent to the GDP.
 Service Economy
• Gadget wood, an on-demand repair services & refurbishment company,
has raised US$ 6 million from private equity fund Carpediem Capital,
which will be used for expanding its presence to other geographies,
starting with the metros and moving to set up a presence across 10 cities
by 2017, and broaden the scope of its repairs capabilities to include,
laptops, wearable tech and LEDTVs.
• Online food ordering and delivery service firm Swiggy, owned by Bundl
Technologies Private Limited, has raised US$ 15 million in a fresh funding
round led by Bessemer Venture Partners along with existing investors SAIF
Partners, Norwest Venture Partners, Accel Partners, and Apoletto Asia.
• Factset, a US-based financial data and analytics firm, plans set up its
largest global office at Divyasree Orion Special Economic Zone (SEZ) in
Gachibowli, Hyderabad.

• LogixHealth Private Limited, a wholly-owned subsidiary of LogixHealthInc,

USA, plans to invest around US$ 15 million and hire 1,000 people for its
upcoming facility in Coimbatore.
 Service Economy
• Meru Cab Company Pvt Ltd, the Mumbai-based radio cab service, has raised Rs 150
crore (US$ 22.37 million) from Brand Capital, the investment arm of Bennett
Coleman and Co, which will be used to fund advertising and provide user
incentives including discounts and loyalty schemes.
• SSG Capital Management Group, a Hong Kong based Private Equity (PE) investor,
has acquired a 40 per cent stake in the logistics company Future Supply Chain
Solutions (FSC), for Rs 580 crore (US$ 86.5 million) from existing shareholders
including Future Retail (FRL) and Fung Group, promoted by billionaire Victor Fung.
• Vistra Group Ltd, a Hong Kong-based professional services provider, has acquired
IL&FS Trust Company Ltd, India’s largest independent corporate trust services
provider, which will enable Vistra to expand the platform to provide a broader suite
of corporate and fiduciary services and thereby gain a foothold in the Indian
corporate services market.
• Pink Blue Supply Solutions Pvt. Ltd, a clinical supplies provider, has raised Rs 1.5
crore (US$ 0.22 million) in a seed round of funding from TermSheet.io, a
transaction-focused service provider for start-ups and investors, which will be used
to ramp up technology, improve customer experience and operational capabilities,
put in place smart supply chain management across hospitals and clinics, and hire
larger teams.
 Service Economy
• IcertisInc, a contract management software maker for enterprises based out of Pune and Mumbai in
India, has raised US$ 15 million in series B round of funding from Ignition Partners and Eight Roads
Ventures, which will be used to invest in marketing and expand its global operations.
• OfBusiness, an online marketplace for business-to-business (B2B) commerce, has raised US$ 5
million in series A funding round led by Matrix Partners India, which will be used to expand the
team and build a technology platform for small and medium enterprises (SMEs).
• Credit Analysis and Research (CARE Ratings) has signed Memorandum of Understanding (MoU) with
Japan Credit Rating Agency, Ltd (JCR) to collaborate with each other as strategic business partners.
• Shuttl, an Indian bus aggregator platform headquartered in Gurgaon, has raised US$ 20 million in
Series A funding from Lightspeed, Sequoia India and Times Internet Ltd.
• Indian logistics platform Rivigo has raised US$ 30 million in debt and equity in Series B financing
round, led by SAIF Partners. The firm aims to use the raised funds to achieve its target of scaling 10
times in the next 12 months.
• Taxi service aggregator Ola plans to double operations to 200 cities in current fiscal year. The
company, which is looking at small towns for growth, also plans to invest in driver eco-system, such
as training centers and technology upgrade, besides adding 1,500 to 2,000 women drivers as part of
its pink cab service by women for women.
 Service Economy
• The Government of India plans to significantly liberalise its visa regime, including allowing multiple-
entry tourist and business visas, which is expected to boost India's services exports.

• Mr Ravi Shakar Prasad, Minister of Communication and Information Technology, announced plan to
increase the number of common service centres or e-Seva centres to 250,000 from 150,000
currently to enable village level entrepreneurs to interact with national experts for guidance,
besides serving as a e-services distribution point.

• The Central Government is considering a two-rate structure for the goods and service tax(GST),
under which key services will be taxed at a lower rate compared to the standard rate, which will
help to minimize the impact on consumers due to increase in service tax.

• By December 2016, the Government of India plans to take mobile network to nearly 10 per cent of
Indian villages that are still unconnected.

• The Government of India has proposed provide tax benefits for transactions made electronically
through credit/debit cards, mobile wallets, net banking and other means, as part of broader
strategy to reduce use of cash and thereby constrain the parallel economy operating outside
legitimate financial system.

• The Reserve Bank of India (RBI) has allowed third-party white label automated teller machines
(ATM) to accept international cards, including international prepaid cards, and has also allowed
white label ATMs to tie up with any commercial bank for cash supply.
 Service Economy
• Services sector growth is governed by both domestic and global factors.
• The sector is expected to perform well in FY16. The Indian facilities
management market is expected to grow at 17 per cent CAGR between
2015 and 2020 and surpass the $19 billion mark
• booming Sector like real estate, retail, and hospitality sectors. The
performance of trade, hotels and restaurants, and transport, storage and
communication sectors are expected to improve in FY17.
• Loss of growth momentum in commodity-producing sectors had adversely
impacted transport and storage sectors over the past two years.
• The financing, insurance, real estate, and business services sectors are also
expected to continue their good run in FY17.
• The growth performance of the community, social and personal
services sector is directly linked with government expenditure and we
believe that the government will remain committed to fiscal consolidation
in FY16.
 Challenges in Service Marketing
1.Intangibility
Services are intangible and so customers cannot see or hold them before they buy
it. Buyers are therefore uncertain about the quality of service and feel they are
taking a risk. The buyer is unable to conceptualize and evaluate a service from
beforehand. From the seller's perspective he finds it challenging to promote,
control quality and set the price of the service he is provide. Unlike products the
intangible nature of service causes difficulties to both client and the firm.

2.Defining and Improving Quality

Defining and improving quality in the service industry is a major challenge. Unlike
products very often services are produced and consumed simultaneously. As a
result service quality management faces challenges that the product industry
never ever comes across.

3.Demonstrating Empathy
Convince your customers in your marketing efforts that you understand their
problems and are offering a solution. Do this using people, processes and
physical evidence.

4. Trustworthiness Among Customer

In case of the service industry the customer first needs to develop trust in the
service organization before he buys their services. The client often gives more
importance to the amount of faith he has on the service organization than the
services being offered and their value proposition.
 Challenges in Service Marketing
5.Non Product Competition
Service industry faces competition not only from fellow service industry but also from their
clients who often question themselves whether or not they should engage a service at
all!

6. Coordination with Different Department

Most of the product companies have dedicated sales staff while in the service industry the
service deliverers often do the selling. Coordinating marketing, operations and human
resource efforts is a tedious task.

7.Staff and its Passion

Passion works for the service industry. More the passion, spirit and desire among the
service staff more is the revenue generation and success generated every day. There is a
direct correlation between staff passion and financial success and similarly lack of passion
leads to failure in the service industry. Staffs need to be constantly motivated and efforts
have to make to sustain employee commitment.

8.Market Communication
While testing new services is a constant challenge communicating about these
services simultaneously is also not easy.
9.Pricing Issue
Setting prices does not come easily for service industry.
10.Customization VS Standardization
Standardization versus personalization is another major issue the service industry
has to face.
 References
1. Boundless. “The Service Economy.” Boundless Marketing Boundless, 26 May. 2016.”
Retrieved from https://www.
boundless.com/marketing/textbooks/boundless-marketing- textbook/services-marketing-
6/the-importance-of-services-48/the-service-economy-241- 7992/ last assessed on 14
December. 2016.
2. Christopher H. Lovelock, Chatterjeee (2010.), “Services Marketing – People, Technology,
Strategy”, 7th Edition, Pearson Education Asia, New Delhi,
3. George J. Stigler (1956), “Trends in Employment in the Service Industries” Retrieved from
https://www.nber.org/chapters/c2823 last assessed on 20 August 2019.
4. https://smallbusiness.chron.com/marketing-challenges-service-business-56984.html
Karen S. Johnson “Marketing Challenges in the Service Business” Retrieved last
Assessed
fromon 20 August 2019.
5. Rao (2009),” Services Marketing”, 2nd edition, Pearson Education Asia, New Delhi.
6. S. M. Jha. (2011), “Services Marketing”, Himalaya Publishing House, 7th Edition, New
Delhi.
7. Sanchit Nagar, Classification and Characteristics of Services retrieved from https://www
.slideshare.net/sanchitgangar/classification-and-characteristics-of-a-service last assessed on
20 August, 2019.
8. V. A. Zeithamal and M. J. Bitner (2008), “Service Marketing: Integrating Customer across
the Firm”, Tata McGraw Hill, New Delhi.