The Importance

of Services

Services as a percentage of employment

(Projected by 2018)
10 20 30 40 50 60 70 80 90 100
80%

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 Service Dominant Logic
Service offered differentiates goods
competitively.

Services are Co created…….

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 • Dommino, Indigo
• Horlicks, Diet Coke
• Ponds ,Dettol
• Berger paints, Eureka Forbes
• Naukri.com, MakemyTrip.com

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 • JIT as a service differentiator
• Low calorie health drink
• Customer knowledge
• Relationship
• Convinience
• And……………Cocreating with Customer

• l

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 How Services
Differ from Goods
No physical object makes it hard to
Intangible
Intangible communicate benefits.

Production and consumption are

Inseparable
Inseparable simultaneous, meaning the
consumer takes part in production.

Services depend on their

Heterogeneous
Heterogeneous employees for quality, which makes
consistency difficult to achieve.

Services cannot be saved, and it is

Perishable
Perishable challenging to synchronize supply
and demand.

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 Components of Service Quality
The
The ability
ability to
to perform
perform the the
Reliability
Reliability service
service right
right the
the first
first time.
time.
The
The ability
ability to
to provide
provide
Responsiveness
Responsiveness prompt
prompt service.
service.
The
The knowledge
knowledge and
and courtesy
courtesy
Assurance
Assurance of
of employees.
employees.
Caring,
Caring, individualized
individualized
Empathy
Empathy attention
attention to
to customers.
customers.
The
The physical
physical evidence
evidence
Tangibles
Tangibles of
of the
the service.
service.

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 Exhibit 12.1
Gap Model of Service Quality

7
 Marketing Mixes for Services

Develop marketing
mixes for services

4
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 The Service Offering

Core
Core The
The most
most basic
basic benefit
benefit the
the
Service
Service consumer
consumer is
is buying.
buying.

Supplementary
Supplementary A
A group
group of
of services
services that
that support
support
Service
Service or
or enhance
enhance the
the core
core service.
service.

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 The Service Mix
 Determine what new services to introduce

 Determine target market

 Decide what existing services to maintain

and to eliminate

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 Place (Distribution) Strategy

Convenience
Convenience

Number
Number of
of outlets
outlets

Direct
Direct or
or indirect
indirect
distribution
distribution

Location
Location

Scheduling
Scheduling

11
4
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 Promotion Strategy
Stress tangible cues

Use personal information

sources
Create a strong
organizational image

Engage in postpurchase
communication

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 Price Strategy

Pricing Challenges for Services

 Define the unit of service consumption

 Determine if multiple elements are

“bundled” or priced separately

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Relationship Marketing in Services

Discuss relationship
marketing in services

5
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 Internal Marketing

Internal
Internal
Marketing
Marketing

Treating employees as
customers and
developing systems and
benefits that satisfy their
needs.

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Figure 12.4 Types of
Marketing in Service
Industries
Figure 12.3 Root Causes of
Customer Failure

Source: Stephen Tax, Mark Colgate, and David

Bowen, MIT Sloan Management Review (Spring
2006): pp. 30–38. ©2006 by Massachusetts
Institute of Technology. All rights reserved.
Distributed by Tribune Media Services.
 Improving Service Quality
• Listening • Surprising
• Reliability customers
• Basic service • Fair play
• Service design • Teamwork
• Recovery • Employee
research