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SERVICE MARKETING

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INTRODUCTION TO SERVICES

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Introduction

The world economy nowadays is increasingly

characterized as a service economy. This isprimarily due to the increasing importance andshare of the service sector in the economies of mostdeveloped and developing countries. In fact, thegrowth of the service sector has long been

considered as indicative of a countrys economicprogress.

Economic history tells us that all developing nations

have invariably experienced a shift from agricultureto industry and then to the service sector as the mainstay of the economy.

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Definition

The American Marketing Association defines services as -

Activities, benefits and satisfactions which are offered

for sale or are provided in connection with the sale of

goods.

Services can also be defined an actions of the organization

that maintain and improves the well being and

functioning of people.

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Services Marketing The Concept

Marketing a service is meant marketing

something intangible. It is marketing a promise ,

it is more selling yourself.

It is a Managerial process of managing the services.

It is an organized effort for providing a sound foundation

for the development of an organization.

It is a social process helping an organization to understand

the emerging social problems and to take part in the social

transformation process to justify its existence in the

society.

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Services are deeds, processes and performance

Intangible, but may have a tangible component

Generally produced and consumed at the same time

Need to distinguish between SERVICE andCUSTOMER SERVICE

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Challenges for Services

Defining and improving quality

Communicating and testing new services

Communicating and maintaining a consistent image

Motivating and sustaining employee commitment Coordinating marketing, operations and human resource

efforts

Setting prices

Standardization versus personalization

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Why service Marketing?

Upward increase in the disposable Income

Increasing specialization

Growing Fashion

Professionalization in Education Information Explosion

Sophistication in Market

Increasing Governmental Activities

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Examples of Service Industries Health Care

hospital, medical practice, dentistry, eye care Professional Services

accounting, legal, architectural

Financial Services

banking, investment advising, insurance Hospitality

restaurant, hotel/motel, bed & breakfast, ski resort,rafting

Travel

airlines, travel agencies, theme park Others:

hair styling, pest control, plumbing, lawn maintenance,counseling services, health club

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Difference between Goods and Services

Goods ServicesA physical commodity A process or activityTangible IntangibleHomogenous HeterogeneousProduction and distribution are

separation from their consumptionProduction, distribution and

consumption are simultaneous

processesCan be stored Cannot be storedTransfer of ownership is possible Transfer of ownership is not possible

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Myths about Service Industry

Service Company produces services at the expenses of

other sectors. Eg: Airlines, Education institutions.

Service production is primarily labour intensive

People satisfy their product needs before the needs forthe services

Service business are cottage industries & service jobs are

low paying.

Services are only offered by the government sector.

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Tangibility Spectrum

TangibleDominant

Intangible

Dominant

SaltSoft Drinks

Detergents

Automobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

Management

ConsultingTeaching

Fast-foodOutlets

Fast-foodOutlets

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Features of Service Marketing

Intangibility

Heterogeneity

Inseparability

Perish ability

Ownership

Simultaneity

Quality Measurement

Nature of Demand

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Intangibility

Perishability

SimultaneousProduction

andConsumption

Heterogeneity

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Implications of Intangibility

Services cannot be inventoried

Services cannot be patented

Services cannot be readily displayed or

communicated

Pricing is difficult

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Implications of Heterogeneity

Service delivery and customer satisfactiondepend on employee actions

Service quality depends on many

uncontrollable factorsThere is no sure knowledge that the service

delivered matches what was planned and

promoted

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Implications of Simultaneous Production

and Consumption

Customers participate in and affect the

transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult

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Implications of Perishability

It is difficult to synchronize supply anddemand with services

Services cannot be returned or resold

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The Services Marketing Triangle

InternalMarketing

Interactive Marketing

ExternalMarketing

Company(Management)

CustomersEmployees

enabling thepromise

delivering the promise

setting thepromise

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Ways to Use the Services Marketing Triangle

Overall StrategicAssessment

How is the serviceorganization doing onall three sides of thetriangle?

Where are theweaknesses?

What are thestrengths?

Specific ServiceImplementation

What is being promotedand by whom?

How will it be deliveredand by whom?

Are the supporting systems

in place to deliver thepromised service?

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Company

CustomersProviders

Technology

The Services Triangle and Technology

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Services Marketing Mix

Traditional Marketing Mix

All elements within the control of the firm that

communicate the firms capabilities and image

to customers or that influence customersatisfaction with the firms product and

services:

Product

Price

Place

Promotion

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Expanded Mix for Services --the 7 Ps

Product

Price

Place

Promotion

People

Process

Physical Evidence

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Expanded Marketing Mix for Services

PRODUCT PLACE PROMOTION PRICE

Ph sical oodfeatures

Channel type Promotionblend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Salespromotion

Differentiation

Warranties Trans ortation Publicity Allowances

Product lines Storage

Branding

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PEOPLE PHYSICALEVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customerinvolvement

Employee research Employee dress

Other tangibles

Expanded Marketing Mix for Services

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PerceivedService

Expected

ServiceCUSTOMER

COMPANY

CustomerGap(GAP 5)

GAP 1

GAP 2

Gaps Model of Service Quality

GAP 3

ExternalCommunications

to CustomersGAP 4Service Delivery

Customer-Driven ServiceDesigns and Standards

Company Perceptions ofConsumer Expectations

Part 1 Opener

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Gaps Model of Service Quality

Gap 1: Not knowing what customers expect

Gap 2:

Not having the right service designs andstandards

Gap 3:

Not delivering to service standards

Gap 4:

Not matching performance to promises

Gap 5:Customer Gap

Difference between expectations andperceptions

Part 1 Opener

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The Customer Gap

Expected

Service

PerceivedService

GAP

Part 1 Opener

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How to measure Service Quality?

Reliability : Ability to perform the promisedService

Tangibility: Appearance of physical facilities

and equipments Responsiveness: Willingness to provide prompt

services to customers.

Assurance: Knowledge & courtesy of employee

& their ability to convey trust and confidence.

Empathy: The caring , individualized attention

provided to the customer.