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Services Marketing
The service sector The services sector has been growing at a
rate of 8% per annum in recent years More than half of our GDP is accounted for
from the services sector This sector dominates with the best jobs,
best talent and best incomes
“There are no such thing as service industries.There are only
industries whose service components are greater or less than those of other industries.
Everybody is in service.”
-Theodore Levitt-
Growing Importance of Services Economic well being increases the demand
of services Changing lifestyle Complexity of the product Higher % of women in labour force
What is services?
It is the part of the product or the full product for which the customer is willing to see value and pay for it.
What is a service? It is intangible. It does not result in ownership. It may or may not be attached with a
physical product
Characteristics of Services Intangibility Perishability Inseparability Variability Client relationships Right of owner-ship
Intangibility Hard to grasp, concept is
abstract
Dramatization often necessary for concept
Hard to separate the service provider and the service
Perishability Services cannot be stored or
held in inventory.
If not used when available, they “go to waste”.
Inseparability Outlet accessibility can limit
the area covered by the service.
Image is important: Image affects the perception of the service.
VariabilityService quality tends to
vary considerably.
Haircut from your hair dresser vs. “Javed Habib”
Client Relationships Relationships between service
organizations and customers are often close
Potential for loyalty longterm
Right of owner-ship It is not taken to the service,
we merely experience it. e.g. Services of a doctor,
lawyer, teacher, mechanic, etc..
Difference between physical goods and services
Physical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution are separated from consumption
Production, distribution and consumption are simultaneous processes
A thing An activity or process
Core value processed in factory Core value produced in the buyer-seller interaction
Customers do not participate in the production process
Customers participate in production
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership
Most products have a service component
They could be Equipment based People based – varying skill levels
Services could meet Personal needs
Business needs
The Services Marketing TriangleCompany
(Management)
Providers CustomersInteractive MarketingDelivering the Promise
External MarketingSetting the promise
Internal MarketingEnabling the promise
CATEGORIES OF SERVICES
SERVICE industries and companies SERVICE as products Customer SERVICE
SERVICE INDUSTRIES AND COMPANIES- include those industries and companies typically classified within the service sector whose core product is service.
EXAMPLE:- TAJ PALACE HOTELS (LODGING) INDIAN AIRLINES
(TRANSPORTATION) BIRLA SUN LIFE (INSURANCE) FORTIS (HEALTH CARE)
SERVICES AS PRODUCTS- companies. represents a wide range of products offerings that customers value and pay for in the marketplace. Service products are sold by services companies and by non-service
EXAMPLE: IBM AND HEWLETT-PACKARD offer
information technology consulting services to the marketplace.
CUSTOMER SERVICE- is the service provided in support of the company’s core products. Companies typically do not charge for customer service.
EXAMPLE : Customer Service Centres set up by
VODAFONE, AIRTEL etc..
Bases for Service Classification Service Tangibility
Highly tangible Service linked to tangible goods Tangible goods linked to services Highly intangible
Skills and expertise required Professional services non-professional services
Bases for Service Classification Business orientation of service provider
Not-for-profit Organisations Commercial Organisation
Type of End-user Consumer services Industrial Services
Consumer Behaviour in services Factors influencing buyer behaviour
Situational Factors Socio Cultural Factors Psychological factors Personal factors
Search, Experience, and Credence Qualities
Mostgoods
Mostservices
Easy to evaluate Difficult to evaluate
clot
hing
Jew
elry
Furn
iture
Hou
ses
Aut
omob
iles
Res
taur
ant M
eals
Vaca
tion
Hai
rcut
s
Chi
ld C
are
Tele
visi
on R
epai
r
Lega
l Ser
vice
s
Roo
t Can
al
Aut
o R
epai
r
Med
ical
Dia
gnos
isHigh in search
qualitiesHigh in
Experiencequalities
High in credencequalities
SERVICES MARKETING MIX Product Place Prize Promotion People Physical Evidence Process
Services MarketingMarketing strategy.
PricingMust be more flexibleService demand is highly volatileUse price to shift demand away from peak periods
More negotiated prices
Services MarketingService Strategy
PromotionMust promote the benefits.Build a tangible image, personalize the firm.
Personal selling is critical for the professional service provider.
Services MarketingService Strategy
DistributionLocation/convenience are criticalCannot store or ship.Can postpone, substitute
Short, Direct ChannelsIntermediaries are agents or brokers
Differentiation in services Offering Delivery Image
Managing Service quality Gap between management perceptions and
consumer expectations Gap between management perceptions and
service quality specifications Gap between service quality specifications and
service delivery Gap between service delivery and external
communication Gap between expected service and perceived
service
Determinants of service quality Reliability Responsiveness Assurance Empathy Tangibles
Moments of truth It is the customer – service encounter Every positive or negative experience of
the consumer would have fall-out on the overall service experience
In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be
good, you have to be consistently good
Services Monitoring Continuous auditing of competitor service
levels versus own company Importance - performance analysis
Importance – Performance Analysis
Concentrate here
Keep up the good work
Low priority Possible overkill
IMPORTACE
P E R F O R M A N C E
Service quality is directly proportional to employee
satisfaction
When customers visit a service establishment
Their satisfaction will be influenced by Encounters with service personnel Appearance and features of service
facilities – exterior and interior Characteristics and behaviour of other
customers
Customer Service Expectations Desired Service Adequate Service
Zone of Tolerance
Difference between the desired service and the adequate service
Service Encounter Themes Recovery Adaptability Spontaneity Coping
RecoveryDon’t
Ignore customer Blame customer Leave customer to fend for himself Downgrade Act as if nothing is wrong ‘pass the buck’
Do Acknowledge problem Explain causes Apologise Compensate/upgrade Lay out options Take responsibility
AdaptabilityDon’t
Promise and fail to keep them Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility
Do Recognise the seriousness Acknowledge Anticipate Accommodate Adjust Explain rules/policies
SpontaneityDon’t
Exhibit impatience Yell/laugh/swear Steal from customers Discriminate Ignore
Do Take time Be attentive Anticipate needs Listen Provide information Show empathy
CopingDon’t
Take customer’s dissatisfaction personally Let customer’s dissatisfaction affect others
Do Listen Try to accommodate Explain Let go of the customer
Types of complainers Passives Voicers Irates Activists
Customer complaints It pays to resolve customer complaints On an average only 5 % dissatisfied customers
complain. Others simply go over to the competitor
A satisfied consumer speaks to an average of 3 people on his her experience
A dissatisfied consumer gripes to on an average 11 persons about his/her unpleasant experience
Companies that pay importance to resolving customer complaints Pay attention to quality and training of manpower
recruited Have clear benchmarks on service quality and
communicate to employees Take remedial steps to improve customer
satisfaction and prevent repeats of customer dissatisfaction
Have a data base on customer complaints that is periodically analysed and policies adjusted
Satisfied employees will produce satisfied customers
Morale Motivation Mood
Managing Service Productivity Giving quality service is an expensive business Not every consumer is willing to pay extra for
service quality Service providers would have to find their
optimum service quality/cost ratios Can technology substitute part of the labour
content? Can customers substitute part of the labour
content? Making services obsolete by product innovations
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