Introdn to Service Mktng

8/12/2019 Introdn to Service Mktng

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MMS 4th Sem





Service: “Deeds, processes and performances”

Deeds- actions of the service provider

Process- steps in the provision of the service

Performance – Customer understanding of how

the service has been delivered

Zeithmal



Some Service Industries Hotels- Hospitality

Airlines-Transportation

Weight ReducingCenters-Beauty and

Health care

Advertising

Legal services

Hospitals –Health care

Banking

Railway-Public service

organization

Education

Design Services

Investment Banking andSecurities Dealing

Management Consulting

Services

Satellite Telecommunications-

telecom

Telemarketing Bureaus

Entertainment-Media

Tourism



efining the Essence of a

Service• An act or performance offered by one party to another

• An economic activity that does not result in

ownership……(Philip Kotler)

• …Services…anything that cannot be dropped on your foot

(The Economist)

• There is no such thing such as service industries. There are

only industries whose service component is greater or less

than other industries. Everybody is in service industry

(Theodore Levitt)

• Eg: A car rental is handled in a “standardized” manner,

whereas an insurance contract requires a high level of

personal interaction



Internal Services

• Service elements within an organization that add

value to its final output

• Includes:

– accounting and payroll administration

– recruitment and training

– legal services

– catering and food services

– cleaning and landscaping

• Increasingly, these services are being outsourced





Finance, Insurance,

Real Estate

20%

Wholesale and

Retail Trade

16%

Transport, Utilities,

Communications

8%Health

6%

Business

Services

5%

Other Services 11%

Government

(mostly services)

13%

Manufacturing 14%

Agriculture, Forestry,

Mining, Construction 8%

SERVICES



Performed by individuals (babysitter,domestic help)

Performed by machine (vending machine,ATM )

Directed to customers (men, women)

Directed to customer’s possession (money,

property, car)



A pure tangible product (includescommodities like toothpaste, rice, cerealsetc., where no service accompanies theproduct)

A tangible good with accompanying services(consumer durables like television,

refrigerators which have installation & aftersales services)



A major service accompanying minor goodsservices (first class air travel has customizedservices)

A pure service (consultancy, teaching,babysitting)



Fast food restaurant Plumbing repair

Office cleaning

Health club Airline flight

Retail bankingInsurance

Weather forecast

Salt

Soft drinks

CD Player Golf clubs

New car Tailored clothing

Furniture rental

Lo Hi

Hi

Intangible Elements



Intangibility



A pure service cannot be seen, touched ,tasted or smelt

Can be only experienced by customers

Cannot be examined before purchase

Quality cannot be measured



Inseparability of

Production andConsumption



In production of goods production &consumption are said to be separable

For services, producer & consumers mustinteract in order to realize the benefits of aservice

Production consumption of services is

hand-in-hand



(E.g.: 1. A slight misbehavior of hotel

receptionist may turnoff the customerforever. The same is not true in goodspurchases

2.The marketing class in b-school is cancelleddue to non arrival of faculty although the

students were present in full strength3. During surgery both doctors & patientshould be present)



Perishability



Services cannot be stored or inventoried Has to be transacted during the given time

If there is no transaction, the service loses itsvalue

(Eg: 1. An empty seat in movie theatre & anaero plane is an opportunity lost forever

2. Empty seats for B-school session is alost opportunity )



No constant pattern of demand throughout Daily variation (restaurants at lunchtime)

Seasonal variation (hotels during summervacation)

Cyclical variation (mortgages)



Severe difficulties during exceptionally highor low demands

Hence, service quality deteriorates duringpeak hours

Some measures to counter perish ability

• (Movie theatres-matinee shows & shows

before 12pm have cheaper tickets)• (Discounts on resorts/hotels on week days)

• (Happy hours @ restaurants)



Heterogeneity/Variability



Service is always unique-it cannot beduplicated

2 service reps will always give different levelsof service

Eg: the customer experiences different

quality/levels of service of two differentbranches of the same bank



Can be reduced by building strong brands

Can also be reduced by computerized voicesystems & automation of services



The students of a B-school could have acertain subject taught by 3 different faculties,& each delivery would be vastly different

A theatre actor in a play would give differentlevels of performances in different stageshows



Lack of Ownership



When goods are brought ownership istransferred from seller to buyer

When a service is performed, no ownership istransferred from seller to the buyer

The buyer merely buys a right to a service

process



Intangibility

Inseparability ofProduction andConsumption

Difficult for Customer to Evaluate

Customer Does Not Take PhysicalPossession

Difficult to Set and Justify Prices

Service Processes Usually Not Protectableby Patents

Service Provider Cannot Mass-ProduceServices

Customer Must Participate in Production

Other Consumers Affect Service

Outcomes

Service

Characteristics Resulting Marketing Challenges

Sources: K. Douglas Hoffman and John E. G. Bateson, Essentials of Services Marketing , (Fort Worth:Dryden Press, 1997) pp. 25-38; Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, DeliveringQuality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); andLeonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free

Press, 1991), p. 5.



Service

Characteristics Resulting Marketing Challenges

Perishability

Heterogeneity

Services Cannot Be Stored

Very Difficult to Balance Supplyand Demand

Unused Capacity Is Lost Forever

Demand May Be Very Time-Sensitive

Service Quality Is Difficult toControl

Difficult to Standardize Service

Delivery

Sources: K. Douglas Hoffman and John E. G. Bateson, Essentials of Services Marketing , (Fort Worth:Dryden Press, 1997) pp. 25-38; Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, DeliveringQuality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); andLeonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free

Press, 1991), p. 5.



The Anil Dhirubhai Ambani Group has developed a logo afterhaving worked on it for almost nine months.

According to company sources, the logo consists of the wordReliance in capital letters in an entirely new font along with thelineage - Anil Dhirubhai Ambani Group.

A combination of blue and red colours is meant to conveysolidity and the alphabet `A' in the Reliance name has beenconverted into two arrows arching upwards.

The new logo had to reflect the group's business interests from

telecommunications to entertainment, urban infrastructure tofinancial services, and energy to a new area such as healthcare. The need, therefore, was to evolve a logo that did not reflect

any specific product category



How are ServicesDifferent from

Products??



1. Nature of the Product –goods are objects,services are performances

2. People as Part –interactions with othercustomers & employees

3. Quality Control Problem –due to variability

problem quality of service is difficult tocontrol



4. Service for customers to evaluate

5. Services should be delivered in real time

6. No inventories for service



Characteristic Goods Service

Product Tangible Intangible

Form Manufactured Created

Customer perception Standardized To be evaluated

Measurability Objective SubjectiveUnits definition Precise General

Production/consumption Gap exists Instant

Shelf life Days to years Zero

Delivery Consistent VariablePossession Physical In the mind



Important Differences Existamong Services



People Processing Possession Processing

Mental Stimulus

Processing

Information Processing

(directed at intangible assets)

e.g., airlines, hospitals,

haircutting, restaurants hotels,

fitness centers

e.g., repair, cleaning,

e.g., consulting,

education, psychotherapy

e.g., accounting, banking,

insurance, legal

TANGIBLE

ACTS

INTANGIBLE

ACTS

DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS

What is the

Nature of the

Service Act?

Who or What is the Direct Recipient of the Service?

Tangible Actions to Customers bodies Physical Actions to Customers Goods

Intangible Actions to Customers minds Intangible Actions to Customers Assets



The ServicesMarketing Mix



Product=core product + supplementary product Core elements respond to basic need of the

customers

Supplementary services enhance the use of coreservice

Supplementary services range from neededinformation, advice, problem solving & acts ofhospitality

Benefits delivered to customers (customers don’tbuy a hotel room, they buy a good night’s sleep)



Core offer: Fast travel Secondary service offer1. Tangibles: tickets , aircrafts , cuisine, , brochures

2. Quality: class, standards of the airline

3. Features: check-in, departure, comfort, cuisine

4. Accessibility: ease of booking, location of agents



Decisions about the---average level of prices,

---discount structures,

---terms of payment

---extent to which price discrimination between twodifferent groups of customers



Online insurance comes cheaper

Priority banking accounts

Higher the premium, higher is the sumassured in case of insurance



Ease of access, which potential customershave to a service

Eg: (Involve branch locations, service outlets (ATMs)

& overseas locations Mobile offices (banker comes to the doorsteps of

the customer rather than the other way round)

ATMs in non financial institution buildings

Shared ATM networks)



Delivery Decisions: Where, When, and How

Geographic locations served

Electronic channels



Informing Educating Persuading and Reminding Customers

Marketing communication tools

◦ media elements (print, broadcast, outdoor, retail, Internet, etc.)

◦ personal selling, customer service

◦ sales promotion◦ publicity/PR

◦ Direct mail

Imagery and recognition

◦ branding

◦ corporate design

Content

◦ customer education/training



Providing tangible evidence of service performances

Create and maintaining physical appearances

◦ buildings/landscaping

◦ interior design/furnishings

◦ vehicles/equipment

◦ staff grooming/clothing

◦ sounds and smells

◦ broachers

◦ signage◦ business cards

◦ internet/ web pages

◦ equipment



Method and Sequence in Service Creation and Delivery

Design of activity flows

Nature of customer involvement

Role of contact personnel

Role of technology, degree of automation

Process --means of guaranteeing the quality of servicedelivery system improvement



Managing the Human Side of the Enterprise

The right customer-contact employees performing tasks wellto achieve specific standards

◦ job design

◦ recruiting/selection

◦ training◦ motivation

◦ evaluation/rewards

◦ empowerment/teamwork

Eg: During the car repair, the customer is not interested inproduction worker’s attire but the same is not true customerservice rep in a bank

Promotional activities of airline



Advertisement hoardings at airportsdepicted the stylish interiors of the

“Fun liners”, which conveyed

youthful, fun-filled, and world classimage

The UB groups monthlymagazine called “Pegasus”

published information about KFAalong with other information related

to UB groupKFA launched many attractive offersto promote its sales like the “King

Card” in association with ICICIBank, in August 2005.

Multiple touch points and finer

Promotional service working for thePromotional activities.

Loyalty and frequent flyer programswere also carried out



TANGIBLE DOMINANT

credit card

savings account

bank loan

investment fund

life insurance

home insurance

company insurance

INTANGIBLE DOMINANT



Financial services are not only intangible,they are very complex in nature

Relationship management is becoming moreimportant

The service level of selling the credit card is

very different as compared to a life insuranceor home insurance



Company

CustomersEmployee

ExternalMarketing

InteractiveMarketing

InternalMarketing



On the R.H.S, are the external marketingefforts-anything that communicates to thecustomer before service delivery

It comprises marketing communications likeadvertising, sales promotion, sales

management, direct marketing & publicrelations



On the L.H.S, is the internal marketing Employees are the first internal market for

the organization

Can be enhanced by the way of product

knowledge, product handling, customerhandling, in addition to motivation

The basic objective is to develop deeply

motivated & customer conscious employees



At the bottom of the triangle is the interactivemarketing

Focus is on skills of employees in handlingcustomer contact

Actual delivery of service takes place

Services marketing triangle will collapse ifemployees are unable to deliver the promises

made Customer judges on both technical &

functional parameters







Documents

Introdn to Service Mktng