Importance of Marketing in Service Industry

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Shiv S Tripathi Assistant Professor

Calcutta Business School

Service

A Service is something that is essentially

intangible, and does not result into

ownership of anything.

It may or may not have an element of product.

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Service Tangibility Spectrum

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Qualities of Services

• Intangible

• Inseparable

• Variable

• Perishable

• Autonomy

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Services Sector includes

• IT & ITES • Education • Trade • Financial Services (BFSI) • Media • Hospitality • Tourism • Transportation & Warehousing • Public Utilities • Real Estate & Lease • Public Administration & Defence • Professional Services like legal, accountancy, audit, consulting etc.

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Share of different services categories in GDP

SST/ IMSS/25-01-2013/Jamshedpur 6

Services GDP vs. Overall GDP Growth Rate

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Source: Economic Survey 2011-12

State-wise growth of Services sector in 2009-10

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Source: Economic Survey 2011-12

Evaluation of Alternatives by a Customer

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Most Goods

Most Services

The Service Ps

• People

• Process

• Physical Evidence

Are added to the basic 4 Ps of Marketing i.e.

Product

Price

Promotion and

Physical Distribution

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Importance of Marketing in Services

Product

• Goods are tangible, services are intangible.

• Services impact customers more than goods do.

• Goods’ features, ingredients, price etc. can be highlighted while marketing, whereas service being intangible requires credence factors

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Importance of Marketing in Services

Price

• Price of Goods is justified in all cases whereas it is difficult almost everytime to justify the price of even the smallest service as there is no standard.

• Price of goods can be increased or decreased and can be justified by improved features or discounts whereas if price of a service is reduced it points out poor quality. Similarly price hikes are very difficult to justify.

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Importance of Marketing in Services

Promotion

• All sorts of mass media can be used for goods like cars, FMCG products, consumer durables etc., whereas only specific media can be used for promoting services.

• Word of mouth publicity (nowadays social media marketing) is most credible vehicle for promoting services.

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Importance of Marketing in Services

Physical Distribution

• The same goods can be delivered all across the globe without any variation whereas services are bound to differ from even shop to shop

• The service provider needs to audit its resources and competencies and accordingly decide about a place

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Importance of Marketing in Services People

• People are not very important in marketing goods whereas they are most important in services

• Due to the people element there is a variability in service as everybody can’t have the same talent/behaviour

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Importance of Marketing in Services

Process

• Process of manufacturing, distribution etc is not important as long as the goods are working fine. In services the process like promptness, order/sequence, usefulness, simplicity etc. are very important to leave a lasting impression.

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Importance of Marketing in Services

Physical Evidence

• Service Quality is often judged or misjudged by the physical setting of the place where the service is being provided e.g. transportation, education, hotels, restaurants etc.

• Still if physical evidence is appealing, people are good but processes are messy, customers tend to be dissatisfied. Similarly if physical evidence is appealing, processes are good, people will make a difference.

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Importance of Marketing in Services

Segmentation

• A broad segment can be selected to market goods as anybody can purchase them, whereas services cater to very specific segments

• E.g. there are specific needs of each segment of education viz. school, college, university, whereas a bookseller can cater to everybody’s needs.

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Importance of Marketing in Services

Target Market

• The exact idea of target market is essential before the launch of any service whereas a broad idea will do for goods.

• Goods can shift its customers base very easily but in case of services it is difficult.

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Importance of Marketing in Services

Positioning

• Positioning of services depends upon the people, process, physical evidence and word of mouth.

• A failed product may still be tried by the consumers because of other reasons but a failed service will be tried rarely by them.

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THANK YOU

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