Services Marketing Management

Session 1
Introduction to Services
Management
 Characteristics of a Service
• Intangibility
• Heterogeneity
• Inseparability of Production and Consumption
• Customer Participation

Are Services really different?

 Intangibility
Inverted
Meaning Dispelling the Myth Perspective Implication
The focus of
Services Often have
manufacturing is myopic
tangible Results
and goods oriented
Services Unless
Lack the Tangible goods are often Consumers buy services tangibility has a
tactile purchased for intangible even when a tangible marketing
quality of benefits product is involved advantage, it
the should be
Product eliminated
Tangibility can often be a
Intangibles such as
limiting factor in
brand image is important
Distribution
 Heterogeneity

Inverted
Meaning Dispelling the Myth Perspective Implication

Tangible Goods are

often
heterogeneous
The normative
Homogeneity in
Unlike Goods, Marketing Goal
Production is often
Services should be
viewed
cannot be customization
Heterogeneously in
standardized Many services are rather than
Consumption
relatively standardization
standardized
 Inseparability
Dispelling
Meaning Perspective Inverted Implication
the Myth

Only
manufacturi
The ng benefits
from The normative
consumer
Unlike Goods, efficiency of Marketing Goal
is always
Services are seperability should be
involved
simultaneously maximizing
in the
produced and consumer
productio
consumed Seperability involvement in
n of the
limits value creation
value
marketability
 Perishability
Inverted
Meaning Dispelling the Myth Perspective
Implication

Tangible Goods are also

perishable

The normative
Services Many services result in long
goal of an
cannot be lasting benefits Value is created at the
enterprise is
produced point of
to reduce
ahead of consumption and
Both Tangible and Intangible inventories
time and not in the Factory
capabilities can be and maximize
inventoried
inventoried service flows

Inventory represents an
additional cost
 Intangibility
• Meaning
– Incorporeal Existence
– Abstractness
– Generality
– Non-searchability
– Mental Impalpability
• Patenting a Service?
• Communicating a Service: Transformational
Advertising
• Is tangibility good?
 Inseparability
• Question of Services Inventory?
– Problem of Demand Management and Seasonality
– Problem of Operations
– Problem of Prices
• Is carrying inventory Good?
 Heterogeneity
• Service Quality depends on
– Actors
– Audience
– Props
– Décor
• Is standardization good?
 Customer Participation
• Outcome versus Process Consumption.
• Surrogate Consumption
• Customer Knowledge, willingness and ability
to participate.
• Good?
 So What is the Difference?
• The Issue is to understand Tangible Goods as
equipment to provide Services. In fact, They
have a nested relationship. The fact that some
aspects of Services are given up (Conversion
from Labor to Capital investment) in the
course of standardization.
The Tangible Goods—Services
Continuum
Services Tangible
Goods

Consumer Productivity
Satisfaction
 So Challenges?
• What Challenges? The Only Challenge is to
market the product as it should be marketed
without using the crutches of either
production or finance or what not! Services
Marketing is Pure Marketing in its Pristine
Form—There is no escape from this!
• The Other Challenge is to get away from the
“product” mindset—and move from merely
distributors to Marketers.
 Fundamental Nature of Services
• Customers interact with the production resources of
the service firm; the focus is the “Process” of
production which is not there in Traditional Marketing.
• Role of marketing changes from bridging the gap
between production and consumption to being a part
of the production process itself! Therefore, the
following concepts developed in Services
– Interactive Marketing
– Part time marketers
– Internal marketing
– Relationship Marketing
 What is Marketing?
• Marketing is the science of Transactions—if there is
no transaction—there can be no marketing!
• The job of a marketer is deceptively simple—have
some combination of the 4’Ps so that the probability
of a transaction with a customer increases with
respect to that of a competitor.
• Thus, this transaction or exchange happens between
the organization and customer each bringing their
own expectations, perceptions, motivations etc to
the table
 Technical/ Physical
/Corporate Quality and
Brand Image/Information

Organization
1. Culture Customers
2. Perceptions 1. Culture
3. Analysis 2. Perceptions
4. Strategy 3. Motivations
5. Implementation 4. Expectations
6. Control

Patronage/Payment/
Recommendation/ Information

What helps this transaction? 4 Ps of Marketing!

 Organization External Marketing
Internal Marketing 1. Culture
2. Perceptions Technical/
3. Analysis Physical /Corporate
4. Strategy
Job Environment / 5. Implementation Quality and Brand
Employee 6. Control Image/Information
Benefits
Customer Service Patronage/
orientation/ Process Payment/
Development/ Recommendation/
Information
Information
Service Functional Service Quality/Delivery/
Production/ Information Customers
Providers 1. Culture
1. Culture 2. Perceptions
2. Perceptions 3. Motivations
3. Motivations
4. Expectations
4. Expectations
Functional Service Quality/Delivery/
Production/ Information

Interactive Marketing Service

Marketing
Paradigm
 Understand the core issue!
• In traditional marketing • In Services marketing, in
the functional role of contrast, all employees
marketing can be are part-time marketers
specialized! Why? and consumers and all
– The very nature of the customers part time
exchange wants marketers and
specialization into sales producers
team, ad team, etc.
 So,
• With the traditional 4 ps, Services have 3 extra
Ps to take care of Interactional and Internal
Marketing
– Process
– People
– Physical Evidence
 “Act” in a service
• You can observe a lot by watching—Yogi
Berra, Baseball “great”
• Service Customers, upon entering a service
setting observe a lot of things
– Service Personnel scurrying about to create the
service
– The service ambience
– The other customers in the service setting
– The “acting” capabilities of the service personnel
“Service is theatre”
 Service as a Theatre

Back Stage Back Stage of

Front Stage of the Audience
of the Firm
Actors and Audience
Personal and/or
Impression Management Corporate Culture
Training/Rehearsal/ Past Experience
Practice of Word of Mouth effects
Secondary Support Props Marketer
Management Functions Personal Fronts Communication
Emotions
Personal & Corporate Scripts
Culture Costumes
Stage and Décor and
Design
 The Services Marketing Mix
• The Actors (service personnel)
• The Audience (Service Customers)
• The setting (Physical Infrastructure)
• The “acting” (Process)
 Marketing Questions to be asked
Marketing Mix Element Questions on each element?

Actors 1.
2.
What is the profile of the actors?
What role is to be performed by them?
3. What is the interaction between and among them?
4. What are the scripts?
5. What is the role of backstage actors?
Audience 1.
2.
What is the profile of the audience?
What role is to be performed by them?
3. What is the interaction between and among them?
4. What are the scripts?
5. What is the role of backstage audience?
Physical evidence 1.
2.
What props are necessary?
What should the costumes look like?
3. How do the actors and audience interact with the
props/costumes/décor?
Acting 1. What are the scenes and dialogue?
2. What are the outcomes of each scenes?
3. How to manage intermissions?
Gaps Model of Service Quality
CUSTOMER Expected
Service
Customer
Gap
Perceived
Service
External
COMPANY
Service Delivery GAP 4
Communications to
Customers
GAP 1 GAP 3
Customer-Driven Service
Designs and Standards

GAP 2
Company Perceptions of
Consumer Expectations
 Gap 1: What Manager thought Customer
Expected
• Broad congruence of goals
– Uncertain about Critical Services
– Uncertain about levels of services
• This is mainly due to
– Lack of Marketing Research Orientation
– Inadequate use of research findings
– Infrequent management interactions with
customers
– Lack of upward communication
 Gap 2: Wrong Standards
• Fundamental changes in work processes
• Refocusing Organisational Attitudes
• Mainly due to
– Inadequate commitment to service quality
– Perception of infeasibility
– Task Standardization
– Wrong Goal Setting
 Gap 3: Wrong Service Delivery
• High risk in labour intensive industries
– Customer Interaction Frequent
– Variations high and accommodated
– Multilayered companies—leading to lack of control
• Mainly due to
– Role ambiguity & Conflict
– Job Fit
– Technology & employee fit
– Supervisory Control Systems
– Perceived Control and Empowerment
– Teamwork
Gap 4: Promises do not match Delivery
• Over promise
• Misrepresent
• Mainly Due to
– Difficulty in communication due to impalpability of
services
– Inadequate horizontal communication
– Inadequate Franchisee Control