SERVICE

MARKETING
BBA 3 AND BMPR 3

1
 INTRODUCTION

• Service marketing is marketing

based on relationship and value.
• It may be used to market a service
or a product.
• With the increasing prominence of
services in the global economy,
service marketing has become a
subject that needs to be studied
separately. 2
 INTRODUCTION…

• Marketing services is different from

marketing goods because of the
unique characteristics of services
namely, intangibility, heterogeneity,
perishabil­ity and inseparability
• In many developed economies,
employment is dominated by service
jobs and most new job growth comes
from services.
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 INTRODUCTION…

• The service economy has been

growing at a rapid pace after the
World War II.
• For example in a most developed
country like United States of America,
more than 75% of its working
population has been employed in
service provision industry, such as
banking, hospitals, real estates,
insurance, transportation, etc. 4
 INTRODUCTION…

• In fact many services contain at

least some goods element such as a
bank Statement, Insurance sticker,
bus/plane tickets etc.
• Services have played crucial role in
the global economy changes,
because services are becoming the
way organization meet with their
markets. 5
6
 INTRODUCTION…

• Already organizations have

discovered that their survival is no
longer exclusively depends on the
products they offer, but also on the
additional offering (services) they
make to their customers that
differentiate them from their
competitors.

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 INTRODUCTION…

• Initially the development of services

marketing focused on service industries.
• However manufacturing and technology
industries recognize it as a pre requisite
to compliment their products, in order to
compete successfully in the market
place.
• It can be argued that , in most
industries, providing services is no
longer an option but a necessity
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 INTRODUCTION…

• Nowadays Customers are educated

and demand not only quality
products but also high levels of
services to accompany them.
• Service organizations therefore need
to adapt to customers’ view on
services in order to assess whether
the services they provide are
perceived by customers as better
than those provided by others. 9
MEANING OF SERVICE

• According to Kotler “ Service is any

activity or benefits 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.
• Valarie, A Zeithaml et al “ services
are deeds, process and performance
provided or co-produced by one entity/
person for another entity/person”. 10
 MEANING OF SERVICE …

• Gronroos (1990);services is an
activity or series of activities of a
more or less tangible nature
normally, but not necessarily takes
place in interaction between
customers and service employees
and or physical resources or goods
or systems of the service provider,
which are provided as a solutions
to customer problems. 11
 T Y P E S O F S E RV I C E S

• Types of Services
1. Core Services: A service that is the
primary purpose of the transaction.
Eg: a haircut or the services of lawyer
or teacher.
2. Supplementary
Services: Services that are rendered
as a corollary to the sale of a tangible
product. Eg: Home delivery options
offered by restaurants above a
minimum bill value. 12
 MEANING OF SERVICE
MARKETING

• Services marketing is a broad

category of marketing strategies
focused on selling anything that is
not a physical product.
• This includes everything from
personal services like medical care
and spa treatments, to the rental of
vehicles and spaces, to experiences
like concerts and dance lessons.. 13
CHARACTERISTICS OF SERVICES

The services posses five unique

characteristics namely;-
1. Intangibility,
2. Perishability,
3. Inseparability,
4. Variability/heterogeneity
5. Lack of ownership.
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15
 1. INTANGIBILITY

• This is a dominant characteristics of

services.
Services can never be touched, seen,
felt or tasted, in a sense manner that
you can sense tangible goods.
• It can not be displayed or
communicated.
• The customer can only touch certain
tangible component such as equipments,
machines used in service provision.
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 2. INSEPARABILITY

• In most cases the service operations,

production and consumption can not
be separated, thus it is very difficult
to separate the service provider from
the service performance.
• Customers are normally present at
and during the service performance
and play an active role in the service
production process.
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 INSEPARABILITY CONT…

• The quality of service

performance is dependant on the
interaction between the service
provider and the customer.
• During the service provision
customer and service provider
must be present.
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3. PERISHABILITY

• This is inability of a service to be

stored.
It means that if the service is not
avail on time, then it is not there.
• Perishability is a major concern of a
service marketers because it
inevitably leads to supply and
demand problem.
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 PERISHABILITY CONT…

• For example if a flight from Dar

es salaam to Mwanza Scheduled
on October 1st, 2017 at 1200hrs
is not available, it means that it
can not be offered again at the
same day and time even if it will
be rescheduled.
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4. HETEROGENEITY / VARIABILITY

• This refers to difficulty in applying

quality standards for identical
services. It is closely linked to
inseparability.
• The main reason for heterogeneity
is the human element present in
the service delivery process.
• The quality of the services depends
on the service provider
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4. HETEROGENEITY CONT …

• Services are heterogeneous since

in most industries, the service
delivery process involves a lot of
human interaction between the
service provider and the customer.
• Since human behavior is subjective
and unpredictable, no two sets of
services can be identical in their
details and results.
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5. LACK OF OWNERSHIP

• Customers receive only the right to

a service process when they
purchase it.
• It is assumed that payment of
services buys only the right to
access to a service facility or
process and not physical transfer of
ownership to customers.
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5. LACK OF OWNERSHIP CONT…

• Even companies don’t own and

control services the way they can
control tangible products.
• This is because service delivery
depends on human interactions
between the service provider’s
employees and customers.

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EXPANDED MIX
FOR
SERVICES

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 EXPANDED MIX FOR SERVICES

• Introduction
• Marketing mix refers to the a set of
decision related to product, price,
promotion and distribution/place for a
particular market segment or a target
market.
• Marketing mix is a set of controllable
variables such as price, product. Promotion
and distribution/ place that a marketer can
use to influence buyers response in a
given marketing environment.
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 EXPANDED MIX FOR SERVICES…

• Introduction…
• Marketing mix of a product consists
of four mainly elements.
1. Product.
2. Price
3. Promotion.
4. Place

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 EXPANDED MIX FOR SERVICES…

• Due to the nature of services based on

its unique characteristics, such as
inseparability, perishability, variability
etc, three mix were added.
• Thus service mix has 7Ps unlike physical
product which has 4Ps.
• Additional 3Ps are :-
1. People
2. Process
3. Physical evidence 28
THE 7 P ’S OF SERV IC ES MAR KETI NG …

Since 3 new elements of the services

marketing mix were added, the 7ps of
service marketing are:-
1. Product
2. Price
3. Promotion
4. Place
5. People
6. Process
7. Physical evidence 29
THE 7 P’S OF SERVICES MARKETING …

1. Product 
• In case of services, the ‘product’ is
intangible, heterogeneous and
perishable. Moreover, its production
and consumption are inseparable.
• Hence, there is scope for customizing
the offering as per customer
requirements and the actual
customer encounter therefore
assumes particular significance. 30
 THE 7 P’S OF SERVICES MARKETING …

• 1. Product cont…
• However, too much customization
would compromise the standard
delivery of the service and
adversely affect its quality.
• Hence particular care has to be
taken in designing the service
offering
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 THE 7 P’S OF SERVICES MARKETING…

• 2. Price 
• Like the physical products, the
services has a price.
• The price of the services could be
termed as a fare, entrance fee,
tuition fee, subscription fee,
consultation fee etc.
• Pricing of services is tougher than
pricing of goods. 32
 THE 7 P’S OF SERVICES MARKETING …

• 2. Price cont …
• Since products can be priced easily by
taking into account the raw material costs,
services attendant costs plus other cost
involved.
• Thus a restaurant not only has to charge
for the cost of the food served but also
has to calculate a price for the ambience
provided.
• The final price for the service is then
arrived at by including a mark up for an
adequate profit margin. 33
 THE 7 P’S OF SERVICES MARKETING…

• 3. Promotion 
• Since a service offering can be easily
replicated promotion becomes crucial
in differentiating a service offering in
the mind of the consumer.
• Thus, service providers offering
identical services such as airlines or
banks and insurance companies invest
heavily in advertising their services.
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 THE 7 P’S OF SERVICES MARKETING…

• 3. Promotion cont… 
• Promotion is very crucial in attracting
customers in a segment where the
services providers have nearly
identical offerings.
• Because services are difficult to
conceptualize, marketing them
requires creative visualization to
effectively evoke a concrete image in
the customer's mind. 35
 THE 7 P’S OF SERVICES MARKETING…

• 4. Place
• Since service delivery is concurrent
with its production and cannot be
stored or transported, the location
of the service product assumes
importance.
• Service providers have to give
special thought to where the
service would be provided. 36
 THE 7 P’S OF SERVICES MARKETING…

• 4. Place cont …
• Thus, a fine dine restaurant is
better located in a busy, upscale
market as against on the outskirts
of a city.
• Similarly, a holiday resort is better
situated in the countryside away
from the rush and noise of a city.
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 THE 7 P’S OF SERVICES MARKETING …

5. People
• People includes all human actors-
employees, buyers and other
customers.
• Since services are to be provided by
employees, the firm has to first
market the service to them to be
effective. ( internal marketing).
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 EXPANDED MIX FOR SERVICES…

• 5. People cont…
• Employees of a service firm act as
contact personnel with the customers,
therefore they should first appreciate
the service before they market it to
customers.
• It means that internal marketing should
be conducted to enable the contact
employee to respond well to customer
enquiries. 39
 THE 7 P’S OF SERVICES MARKETING …

6. Process
• This refers to actual procedures,
mechanisms and flow of activities by
which service is delivered.
• In fact customers judge services on
the operational flow or on actual
delivery thereof, and therefore
proper arrangement of service
delivery process is essential. 40
 THE 7 P’S OF SERVICES MARKETING …

• 6. Process cont…
• Basically this characteristic requires
customers to follow a series of
extensive actions to complete the
process.
• For example when a consumer want
to have a hair cut or braid her hair,
he/she must go to the salon, sit down
and cooperate with the service
provider. 41
 THE 7 P’S OF SERVICES MARKETING …

7. Physical evidence
• This refers to physical environment
where the service provider delivers
service and where the customers and
the organization interact, as well as
any other tangible components that
facilitates performance or
communication of the service.

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 THE 7 P’S OF SERVICES MARKETING …

• 7. Physical evidence cont…

• This components includes

brochures, business cards,
signage, equipment, and physical
facilities where the service is
being rendered.

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