Characteristics of Service Marketing

Service Marketing

The four characteristics of services: The opportunities and challenges for the Indian business today

To:

Mr. Srikantan

By:

Hitesh Goyal

Reg. No. 10171808

MBA 12


Introduction:

In the past scenario, most of the organizations were production and sales oriented. They believed

that consumers would prefer only those companies’ products which are wildly available. It

demonstrates that organizations were more considered about sale and profit rather than providing

good quality and service. But in present time, the delivery of quality in service and goods has

become more precedence. Companies are more sophisticated about selling product-support

service. They provide pre-purchase and post purchase service to their customers so customers

will not switch to other company. (Kotler & Keller, 2009)

There are many research which reveals delivering good service quality helps firms in term of

making more profit, cost saving and earning market share like the Indian Railway who has done

huge amendment in their service quality and now it is started to making huge margin. Due to

heavy competition, customers have more alternative of service and products and because of this

their expectation of being served well from organization has increased. For example in 1990’s,

there was no any private firm in postal or courier service in India. We had only the Indian

Department of Post fully owned by the government. Due to monopoly, scarcity of resources and

poor service, it used to take minimum 10 to 15 days to post a letter at right address but after

globalization when FedEx and other private firms entered in this sector there is huge amendment

in this sector. These private firms take hardly one or two days to send a courier at any part of

India. They are trying to be service oriented rather be a product oriented companies. Because of

their good service, they have become market leader and the Indian Department of Post is losing

their market share. Similarly, Indians consumers do not consider high cost or money now, they

consider only about good service. If a company will not provide good service then consumers

will switch to other company. (Hoffman & Bateson, 2006)

Executive Summary:

The purpose of this report is to understand the conceptual framework of service marketing and

its characteristics, the opportunities and challenges steaming from these characteristics and

strategies suggest overcoming from these problems which I have learnt in the class.

Methodology: - I have referred various books and journals and web resources on service

marketing to complete this report.

Service Marketing Page 2


Main Finding and Conclusion: - After completing this report I have found that delivering

constantly good service to consumers is difficult but at last it profitable for every organization.

An organization can reduce these threats and challenges by improve its service quality,

communicate with customers such as doing surveys, collecting sampling at set level of time and

deliver the service or products at right time which help to increase the customer satisfaction.

Overview of Service Marketing:

Service marketing is the act which one party provide to other in form of value added service, and

it cannot be tangible and changing of ownership. It is all about relationship with users,

experience about particular service, process of that service and creating value and trust between

service provider and user. Service is also considered as an element which helps firms to

distinguish itself to its competitor. (Lovelock, Wirtz & Chatterjee, 2006) The service component

can be amajor or miner of total offering such as:

Tangible goods with accompanying services where the offering consists of physical

goods accompanied by one or more than one services. Commanly, the more innovative,

advanced and tecnological the goods or prducts, the greater the need for high quality

supporting services such as car, mobile and laptop.

Hybrid goods and services where the offering consists equal quality of goods and

services such as people patronize restraurant for both the food and its preparation.

Major services with accompanying minor goods where the offering consists major

service along with supporting goods such as airline industry.

Pure service where the offering consists primarily of a service such as Massage Center,

Barber shop, legal services and so on. (Kotler & Keller, 2008)

In the same way service can be varied in two ways: first is equpment base such as automated car

washer, vending machine and second is people base such as legal services, accountant and

barber. Most of the services needs the presence of customers such as surgery, haircut and many

others. So, if the clients are presence then service providers must be have understanding of

customers’ need such as in any retail store, barber shop or beauty salon, operator should invest in



decoration, play background music and engage with light conversation with clint so it will be

more effective. (Kotler & Keller, 2008)

Distinctive characteristics of Services Marketing:

Services have four characteristics that greatly affect the design of marketing programs:

Intangibility

Perishability

Variability

Inseparability

Intangibility:

One of the fundamental differences between product and service cited by authors (e.g.

Srinivasan, 2007; Kotler & Keller, 2008; Lovelock, Wirtz & Chatterjee, 2006 and many others)

is ‘Intangibility’. Services are intangible. They do not have physical appearance like products.

They cannot be felt; touched until they are bought for example a person getting cosmetic surgery

cannot be seen until he or she purchase or use the service. So a company should demonstrate

their service quality through physical evidence. (Srinivasan, 2007)

So, it is very important for any company to show physical evidence of their service to customers

for example FedEx. It is one of the largest logistic and courier services provide company. It is in

both businesses “Business to Business where it helps companies in import-export of raw material

and Business to Customers.” It has many evidence of service quality or physical evidence for

example FedEx puts every courier in wood box for protection, they package it in proper manner,

it has scheme like if a courier will not reach at a time then it will pay back all money to its

consumers. In the same way FedEx has their huge transport services such as Cargo planes,

Trucks, Van. FedEx have good technologies such as internet service, ERP, GPS software which

help them to find out the position of courier. It provides free insurance of the courier to their

customers so if the courier lost then they will pay compensation. They have their huge logo,

dress, branch in all cities whether it is metropolitan or tire one or two cities which is totally vice-

versa to Indian Department of Post where they do not have good infrastructure, technology and

trained workforce. If there is good physical evidence then it will make great impact on



customers. (FedEx, 2009)

Challenges:

Intangibility of services can cause lack of assurance and confidence on the part of the customers.

There are some issues like it is complicated for customers to evaluated the service quality and

similarly it is difficult for firm to set the price advertise and display the services. To overcome

this customers tend to look for evidence in quality. Service companies should try to express their

service quality through presentation and physical evidence of efforts made by firm to provide

good quality service.

If we talk about Indian consumers, there are some methods follow by them before using any

services and products such as firstly they want to see, touch and feel the products then they make

decision to buy it but services are intangible. So, it cannot be seen, touched and felt. This is one

of the main challenges for Indian companies.

How to overcome from these challenges?

Place: If we take retail sector as an example the interiors and exteriors of store should

have clean line. The layout of chairs, and desks, visual merchandising of the store and the

traffic flow should be planned carefully. The billing line should not get overly long.

People: There should be sufficient numbers of billing counters and employees in retail

store to manage the crowed. They should always be ready to help customers.

Equipments: Computers, chairs, desks, background music, paintings, trolleys and other

important products should be and look like ‘State of the Art’.

Symbols and communication materials: Printed materials and symbols such as text,

photos and name should suggest fast services. (Bruhn & Georgi, 2006)

Perishability:

Challenges:

Service cannot be inventoried therefore Perishability can be a problem when demand fluctuates.

The process, service relevant resources and the system are assigned for delivery of a service



during a set period of time. If the schedule customer does not request and consume the service

during the set time then the service cannot be stored and performed next time for him for an

example a barber can serves another client when scheduled time started or time slot is over but a

plane cannot charge for an empty seat after departure. (Hoffman & Bateson, 2006)

The main challenge for service providing companies is if the schedule customer does not request

and consume the service during the set time then the service cannot be stored and performed next

time for him. A service provider cannot charge any service charge from customers as he can do

in product oriented situation.


Several strategies can produce a better match between supply and demand in a service business:

On the supply side:

Part time employees can help a business to serve peak demand for an example some

colleges add part time faculties when enrollment goes up which help a firm to meet the

demand successfully.

A company should use better technology to improve their work efficiency.

On demand side:

A company should differentiate its price according to demand which help them to create

the demand for an example in theater when movie released at that time the ticket price

should be high because of more demand but after some days firm should decrease the

price of ticket to increase the demand.

Reservation system can be a way which can help company to manage the demand.

The above characteristics are usually referred to in many texts which show that what makes

services marketing so different to product oriented company.

Variability:

Challenges:

The other difference between product and service is Variability. Variability and People (1 st p of



3’P) are one of the main part of Service Marketing. Each time service is differ and varies for the

next delivery even if the same service provider serves the same service and same service

consumer requests the same service. Because of the service quality depends on who provides

them, where, when and to whom services are highly variable. Those companies who have people

base service process it is difficult for them to deliver same kind of service every time constantly.

It is difficult to achieve the control on quality. (Bruhn & Georgi, 2006)

If we talk about “Mumbai Dabbawala”, they are considered as ‘Six Sigma’ and the ‘Management

Guru’. They have Six Sigma at 99.99% level; it means in every 600000 lunch Tiffin delivery,

they forget one lunch Tiffin or they made mistake after every 600000 lunch Tiffin. Every day

about 200000 Lunch Tiffin are delivered by near 5000 daddawala. They are trying to make 100%

but due to people base service, they make mistake at some point of time. They have started

online booking, coupon service and transport service to reduce the mistake ratio. So it shows that

Variability is the part of Service Marketing. A company can minimize Heterogeneity by using

new technology but they cannot stop it. Invest in good hiring and training procedure but they

cannot stop it fully.


Commonly, service buyers are aware of the variability of the service so they often talk to others

before the selection of service provider. So, to reassure, maintain and gain new consumers

companies should try to offer service quality and guarantees to reduce the consumers’ perception

of risk such as:

Task standardization: A company should improve their work method and it should

standardize the specific rules and task and then they should work according to it. Every

company should provide service blueprint to employees so they can follow it and which

can simultaneously map out the process of service.

Investment in training and right hiring: Every company should provide training to its

employees to improve their productivity and which help to lead more customer

satisfaction and achieve the economics of scale.



Monitor customer satisfaction: Every company should take customer feedback,

employees’ suggestion. They should take consumers’ survey and collect samples which

help them to improve the service.

Inseparability:

Challenges:

The other difference between product and service is Inseparability. Whereas physical goods are

firstly manufactured, put in to stock, distributed through wholesalers and retailers and consumed

later but services are produced and consumed simultaneously. A barber cannot cut hair without

the presence of customer. (Hoffman & Bateson, 2006)


To make services more effective a company should focus on these factors such as:

Training: Every company should provide training to its employees to improve their

productivity so they can help to achieve the economics of scale.

Customer involvement: There should be customer involvement in process of service

delivery such as self services.

Convenience: Location of the store, the opening and closing time of store must be

convenient for customers.

Conclusion:

After completing this report I have found that delivering constantly good service to consumers is

difficult but at last it profitable for every organization. An organization can reduce these threats

and challenges by improve its service quality, communicate with customers such as doing

surveys, collecting sampling at set level of time and deliver the service or products at right time

which help to increase the customer satisfaction. Customer access service quality by comparing



what they want or expect and actually what they got or perceive what they are getting. So an

organization should include these quality when they feed customers such as tangibility where

there should some physical evidence of service, responsiveness where consumer get response at

short time, reliability where the ability to perform service should be independent and consistently

and assurance where employee should have good knowledge, courtesy and ability to convey the

message in proper manner.

Reference:

Berry, L. L. 1999. Discovering the Soul of Service: The Nine Drivers of Sustainable Business Success. The Free Press, New York.

Berry, L., Zeithaml, V. & Parasuraman, A. Quality Counts in Services, Too. Business Horizons. May 1985; p44. Retrieved from: Business Source Premierhttp://web.ebscohost.com/ehost/detail?vid=3&hid=6&sid=b6bff9db-0bf7-4005-82c5-74372155eea7%40sessionmgr114&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN=4528473#db=buh&AN=4528473

Bruhn, M. & Georgi, D. (2006). Services marketing: Managing the service value chain. Harrow: Pearson Education


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Dion, P., Javalgi, R. & Dilorenzo, J. An Empirical Assessment of Service Expectations Model.

Service Industries Journal. October 2007; p66-86. Retrieved from: Business Source Premier,

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06783fc225e8%40sessionmgr110&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN

Hoffman, K. D., & Bateson, J. E. G. (2006). Services marketing: Concepts, strategies and cases (3rd ed.). Mason, Ohio: Thomson South-Western.

Gronroos, C. (2007). Service Management and Marketing: Customer Management in Service Competition, (3rd). Chichester, West Sussex: John Wiley and Sons, Ltd.

Kotler, P. & Keller, K. L. (2009). Marketing Managment. New Delhi: PHI learnig private limited.

Kusluvan, S. (2003). Managing Employee Attitudes and Behaviors in the Tourism and Hospitality. New York: Nova Science Publisher Inc.

Lovelock, C., Wirtz, J., & Chatterjee, J. (2006). Services Marketing. New Delhi: Pearson Education.

Mudie, P., & Pirrie, A. (2006). Services marketing management. Chennai: Butterworth-Heinemann.

Nargundkar, R. (2008). Services Marketing. New Delhi: Tata McGraw Hill.

Srinivasan, R. (2007). Services marketing: the Indian context. New Delhi: Prentice Hall Of India.

Verma, H. V. (2009). Service Marketing:Text and Cases. New Delhi: Pearson Education.

Parasuraman, A., Zeithaml, V. & Berry, L.1998. Problems and Strategies in Services marketing.

Journal of Marketing . p33-46. Retrieved from Business Source Premier

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Zeithaml, V. and Bitner, M. (2003) Services Marketing: Integrating Customer Focus Across the Firm, 3rd ed. New York: McGraw-Hill.


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Characteristics of Service Marketing