Services Marketing

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Marketing

Marketing as per Peter Drucker – the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.

Chartered institute of marketing– marketing as the process of discovering, expecting and suiting the customer needs and at the same time making profits.

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Services

• “When u build a manufacturing plant, it starts depreciating on the day it opens.

• The well – served customer, on the other hand, is an appreciating asset.

• Every small act on his or her behalf ups the odds for repeat business and priceless word – of – mouth referral”

-Tom Peters management guru3

Services

1. •Service is performance•Service does not mean ownership of anything

2. •Goods are produced.•Services are performed.

3. •Service is purchased.•Service purchased –is just the use of/access to facility.

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Services

• Traditionally difficult to define.• Which services are created and

delivered to customer are difficult to define because many inputs & outputs are intangible.

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Service …definition

• Service is an act or performance offered by one party to another . Although the process may be tied to a physical product, the performance is essentially intangible and does not result to any owner ship of any factor of production.

• Services are economic activities that create value and provide benefits for customers at specific times, place.

• Philip Kotler ---”service is any activity of benefit 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

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Service sector….

• Comprises of bulk of today’s economy.• US – 73% & Canada 67% of GDP.• Consists of vide variety of industries that sell to individual customers ,

business customers , government customers , NGO’s.• Change in economy – boom in agriculture, manufacturing – increased

demand for brand new services and traditional services.

• Japan -- is it still known for being a manufacturing country ??????

• India too is following the footsteps…..

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Service organizations…

• Large international corporations –airlines , banking, telecom, hotel chains, freight transportation…..

• Locally owned small business– restaurants, laundries, taxi services, internet services, courier etc.,…

• B-2- B services…• Franchised service outlets--- food , education…

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Gats Classification.

General agreement on trade in services classifies 155 activates as service.Major 11 categories are1. Business services.2. Communication.3. Construction & Engg.4. Distribution.5. Education.6. Environment.7. Finance.8. Health.9. Tourism.10. Recreation.11. Transport

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Classification of services..

High contact services Medium contact services Low contact services.

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High C.S.

• Hair dressing

• medical services Banking, purchase of retail goods.

Medium C.S.

• Management consulting

• Insurance

• Personal financial services.

Low C.S.

• Radio services

• Information processing services.

• Remote fixes of software

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Reasons for growth of services industry…

Reason Effect Service effected

Affluence Per capita income Pest control, personal security, Interior design. beauty parlors, event management etc..

Leisure time Travel & Holiday Travel agencies, Hotels, entertainment, career prospects

Health Consciousness Awareness Health clubs, Spas, Old age homes , gyms, yoga, meditation

Working Couples Working wives Day care centers, home delivery, packed food

Product complexity Variety available Water purifiers, Microwaves, PC, (= AMC)

Life complexity Lack of time Tax consultants, legal service, property advisors, Investment advisors..

Resource scarcity & Ecology Need of conservation Car pools, water management, high rise apartments ..

New Products IT PCO, pager, e- commerce , Internet service provider, mobile service providers, cyber café

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• Tangibility -- The quality of being perceivable by touch.

• Intangibility--The quality of being intangible and not perceptible by touch

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Tangibility Spectrum

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Differentiating services from goods…

Pure tangible goods Wheat ,sugar, soap, cosmetic etc.

Tangible good –Accompanied service Computer, cars air conditioners, machinery-after sales service

Major service accompanying minor goods & service

Beauty saloon providing cosmeticsChild care centers providing baby food.

Pure service Surgery, consultancy teaching

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Goods vs. services

• Unique characteristics that distinguish goods from service

• Services are performance , deeds efforts.• Services can’t be felt, seen ,tasted or touched as goods.

• Example movie tickets vs. shoes.

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Characteristics of services

• Intangibility• Heterogeneity• Inseparability.• Perishability

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Intangibility• Product is physical.--- Can be felt ,seen , smelt, tested..• Service is not tangible till it is experienced or consumed.• Different people have different expectations with regard to the same

service…• Quality of service not strictly measurable…..

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Problems with intangibility -

• Lack of ability to be stored.• Lack of protection of patents.• Difficulty in displaying or communicating services.• Difficulty in pricing services.

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Solutions to intangibility problems.

Use of tangible clues. – assist customer in making service evaluation. ( insurance advt. in media…) ( ICICI bank --- strong ATM network….) Use of personal source of information. ( due to lack of objective means of evaluation

customer looks to wards friends , family ) offering incentive to existing customers for

roping in new customers) Creation of strong organizational brand. ( results in loyalty i.e. Maruti , Sony) In separatibility– 1.Service provider physical connection to service being

provided. 2.Customer’s involvement in the service process. 3.Involvement of other customer in the service process.

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Problems caused by inseparability

• Physical presence of the service provider ---like dentist.• Evaluation of the service provider done by language, clothing, personal

hygiene, IP communication skills.• Face to face interaction with customer– make employee satisfied.• Involvement of customer in the service production process… a) customer to be physically present to receive service. b) Customer need to be present to start the service –dry cleaning,

auto repair etc.. c) Need of the customer to be mentally present -- thru internet..

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Unlike goods which are first produced ,sold , consumed…services are first sold, produced and consumed.

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Involvement of other customers…

• Restaurants --- Smoking in non smoking areas.. Parking full means better service / food.

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Challenge in mass production of service…

• How to successfully mass produce service…

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Solutions to inseparable problems..

• Emphasis on selection ,training public contact personnel.• Consumer management. ( reservation in restaurant…)• Use of multi site locations (ATM , McDonald's…..)

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Heterogeneity

• Heterogeneous is an adjective used to describe an object or system consisting of multiple items having a large number of structural variations.

• It is the opposite of homogneous.

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Heterogeneity

• Goods & services –Another difference- un ability to control the service quality before it reaches the customer.

• Service offered by one employee may differ from the other…• Example - McDonald's franchise – moods swings of individuals before

service.

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Solutions to heterogeneity

Customization. … Dell customization & service.

Standardization…. ATM , auto car wash, Key in orders on line.

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Perish ability..

• Service can’t be inventoried. ( Like movie tickets , airline tickets etc..)• Matching the demand & supply in service is a challenge…

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Solution to perish ability..

• Creative pricing- (early bird incentive , happy hours )• Demand strategy – (reservation system, complimentary system,

development of non peak demand)• Supply strategy. - Part time utilization. capacity sharing (Doctors

sharing cost of equipment), advance preparation of expansion, utilisation of third party, Increase in

customer participation.

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Service marketing -- system

Service marketing triangle

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Issues before a service organization

• Services premises.• Packaging.• Service personnel.• Tools & equipment used.• Customers.• Convenience.• Nature of service establishment.• Managing productivity.• Managing service quality.

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Nature of service marketing.

• Narrow definition of marketing. By service providers. – Had only Advt, sales promotion, segmentation rare, --differentiation , new product development, service quality…????

• Lack of appreciation of marketing. Skills in service org.• Difference of org. structure of service firms.• Problems in determining the cost of services.

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External marketing--making promises

Interactive marketing—keeping promises

Internal marketing –enabling promises

c.s. --- Federal express..

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Service marketing system for high contact service

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Service marketing system for Low contact service

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Tangible elements & communication components in SM

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Customer expectation & perception of service

Customer expectations

Adequate service

Desired service

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Desired service --- Adequate service

1. It is the level of service the customer hopes to receive // the level of performance wished for.

2. Lower level of service expectation that the customer is willing to accept.—based on past experience, lack of remuneration to the service provider , socio -economic background of the service provider etc…

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Zone of tolerance

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Diff. Between characteristics of goods and service

• Different goods and services have varying magnitudes of search, experience & credence qualities

• search qualities of goods can be estimated before purchase -- experience quality can be estimated only after purchase.

• Qualities that can`t be assessed completely are called Credence qualities.

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Dimensions of S.E.C. qualities

Search qualities Experience qualities Credence qualities

Tangibility Access Competence

Credibility Courtesy Security

Reliability

Responsiveness

Understanding customer

communications

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Search quality

• For services include…..• Price,• Convenience.• Mannerisms of service personnel.• Promptness of service.

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Experience qualities

• Taste of home delivered food.• Wear ability of dress bought from boutique

etc.

• Service have higher experience characteristics than goods.

• E.g. air line travel…courtesy of cabin crew, departure & arrival, quality of food, seating comfort etc..

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Credence qualities

• Customer often lack the knowledge & experience to judge the credence qualities of the service.

• E.g….. Bread may claim to have nutrition's..difficult for the customer to ascertain..

• Services of professionals –doc, consultants,…services are accepted on faith.

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Customer

• Decision • Making

»Process

& implications on service provider.

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Customer decision making process..

• Need perception.—difference in actual state & desired (Hungry –need to buy food-remove hunger)• Search for info.-need felt-decides to purchase- search for info. To full

fill needs (from –personal ,commercial ,public source, experimental) & perceived risks.(financial risk, functional ,physical, psychological, social, time risk)

• Evaluation of alternatives.—compare & evaluate services of alternatives. (Well defined attributes )e.g interior decoration –different from home to home & customer to customer.( emotions- influence on customer-evaluation ability)

• Purchase & consumption.- trail purchase, repeat purchase, long term commitment purchase)

• Post purchase evaluation.– compares performance vs. expectations. –satisfied customer becomes loyal,

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Implications for service providers

• Customer gather info. From personal source– marketer needs to be careful in satisfying existing customers.

• Services are intangible- customer needs assistance to assess value of high credence qualities.

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Customer expectations• SATISFACTION IS THE LEVEL OF A CUSTOMER`S FELT STATE RESULTING

FROM COMPARING A PRODUCT`S OR SERVICE`S PERCEIVED

PERFORMANCE STANDARD AGAINST THE CUSTOMER`S EXPECTATION…..• KOTLER

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Customer expectation• Five dimensions to measure service quality• Assurance --- to use knowledge & courteous behavior to instill trust and

confidence in customer regarding service.• Empathy– ability to show concern for customers and devote individual

attention to each customer.• Reliability—ability of service provider to accurately perform promised

service.( efficiency , handling of customer complaints, pricing etc).• Responsiveness – prompt & service.• Tangibles -- physical facilities- equipment of service, dress & appearance

of service personnel.

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