Introduction to Services Marketing Prepared by: Ms. Megha Mody
Assistant Professor Marwadi Education Foundation
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Overview What are services? Why services marketing? Role of
services in the economy Powerful forces that are transforming
service Markets Service and Technology Distinctions between
Services and Goods; Services Services Marketing Mix Framework for
effective services marketing strategies
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What are services? Services : Are economic activities offered
by one party to another Most commonly employ time-based
performances to bring about desired results in: Recipients
themselves Objects or other assets for which purchasers have
responsibility In exchange for their money, time, and effort,
service customers expect to obtain value from Access to goods,
labor, facilities, environments, professional skills, networks, and
systems; But they do not normally take ownership of any of the
physical elements involved.
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What are services? Any activity or benefit that one party can
offer to another which is essentially intangible and does not
result in the ownership of anything. Services are deeds, processes
and performances. Services involve a form of rental, offering
benefits without transfer of ownership Include rental of goods
Marketing tasks for services differ from those involved in selling
goods and transferring ownership
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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 airline, travel agency, theme
park Others hair styling, pest control, plumbing, lawn maintenance,
counseling, services, health club, interior design
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Cont Five broad categories within non-ownership framework:
Rented goods services Defined space and place rentals Labor and
expertise rentals Access to shared physical environments Systems
and networks: access and usage
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Temporary rights.
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Cont
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DOCTORS/BEUTICIANS/MECHANIST S/STAFF SCIENTISTS
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AMUSEMENT PARKS / CLUBS / GYM
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WIFI/SOCIAL MEDIA/ BANKING/TELECOMMUNICATION
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Cont Distinction between.. 1.Service Industries and Companies
2.Services as a Product 3.Customer Services 4.Derived Services
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Characteristics of Services Compared to Goods Intangibility
Perishability Simultaneous Production and Consumption
Heterogeneity
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Goods versus Services
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Cont 1.Higher Intangibility 2.Lack of ability to store them for
future use 3.Greater interaction between the customer and the
service factory 4.Greater variability in service delivery 5.Greater
variability among service customers Expectations..
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Implications of Intangibility 1.Services cannot be inventoried
2.Services cannot be easily patented 3.Services cannot be readily
displayed or communicated 4.Pricing is difficult
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Implications of Heterogeneity 1.Service delivery and customer
satisfaction depend on employee and customer actions 2.Service
quality depends on many uncontrollable factors 3.There 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 and demand with services Services cannot be returned or
resold
Role of services in the economy Contribution of Services
Industries to Global GDP
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Estimated Size of Service Sector in Selected Countries
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Contribution Of The Service Sector To GDP In INDIA India's
services sector Contributes around 60% to the GDP of the country,
35% to employment, 25% to total trade, around 40% to exports, 20%
to imports and accounts for more than 50% of FDI into the
country.
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Powerful Forces Are Transforming Service Markets
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Government Policies Business Trends Social Changes Advances in
IT Globalization Innovation in service products & delivery
systems, stimulated by better technologyCustomers have more choices
and exercise more power Success hinges on: Understanding customers
and competitors Viable business models Creation of value for
customers and firm New markets and product categories Increase in
demand for services More intense competition Forces Transforming
the Service Economy
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Government Policies Business Trends Social Changes Advances in
IT Globalization Changes in regulations Privatization New rules to
protect customers, employees, and the environment New agreement on
trade in services Forces Transforming the Service Economy (1)
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Mobile phone SMS/1 hr cutting off the call Ban on smoking in
restaurant Privatization of Transportation sector Increased taxes
to Aviation Industry Premium calculators Grievance redressal
cell
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Government Policies Business Trends Social Changes Advances in
IT Globalization Rising consumer expectations More affluence
Personal Outsourcing Increased desire for buying experiences vs.
things Rising consumer ownership of high tech equipment Easier
access to more information Immigration Growing but aging population
Forces Transforming the Service Economy (2)
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Home delivery/TGB ANNIVERSARIES/ Higher spending on Tourism
Home Cleaning/baby seating Higher spending on luxury Services- SPA
n all.. Increased users of Computers, mobile phones etc..
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Government Policies Business Trends Social Changes Advances in
IT Globalization Push to increase shareholder value Emphasis on
productivity and cost savings Manufacturers add value through
service and sell services More strategic alliances Focus on quality
and customer satisfaction Growth of franchising Marketing emphasis
by nonprofits Forces Transforming the Service Economy (3)
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Aviation company- low cost/ Online ticket booking Car- after
sale services ING vaishya/ kingfisher Jet/ Healthcare ind.- Hinduja
Hospital macD
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Government Policies Business Trends Social Changes Advances in
IT Globalization Growth of Internet Greater bandwidth Compact
mobile equipment Wireless networking Faster, more powerful software
Digitization of text, graphics, audio, video Forces Transforming
the Service Economy (4)
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OLX.IN Online education Mobile banking/Internet banking Online
ticket booking/Online ordering Bandwidth 2g and 3G Online complaint
redressal
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Government Policies Business Trends Social Changes Advances in
IT Globalization More companies operating on transnational basis
Increased international travel International mergers and alliances
Offshoring of customer service Foreign competitors invade domestic
markets Forces Transforming the Service Economy (5)
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TOURS AND TRAVEL COMPANIES- HOTELS/ TATA DOCOMO IT GAMING/
ENROID APPLICATION
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Why study Services Marketing? Service-based economies Service
as a business imperative in manufacturing and IT Deregulated
industries and professional service needs Services marketing is
different Service equals profits
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Service and Technology Potential for new service Offerings New
ways to deliver services Enabling both Customers and Employees
Extending the Global reach of services The internet is a service
The paradox and dark side of technology and services.
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Eight Central Paradoxes of Technological Products
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Traditional Marketing Mix All elements within the control of
the firm that communicate the firms capabilities and image to
customers or that influence customer satisfaction with the firms
product and services: Product Price Place Promotion
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Expanded Mix for Services - The 7 Ps Marketing can be viewed
as: A strategic and competitive thrust pursued by top management A
set of functional activities performed by line managers A
customer-driven orientation for the entire organization Marketing
is only function to bring operating revenues into a business; all
other functions are cost centers. The 7 Ps of services marketing
are needed to create viable strategies for meeting customer needs
profitably in a competitive marketplace
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Traditional 4 Ps Applied to Services (1) Product elements
Service products are at the heart of services marketing strategy
Marketing mix begins with creating service concept that offers
value Service product consists of core and supplementary elements
Core products meet primary needs Supplementary elements are
value-added enhancements.
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Event management / Accounting
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Traditional 4 Ps Applied to Services (2) Place and time Service
distribution can take place through physical and non-physical
channels. Some firms can use electronic channels to deliver all (or
at least some) of their service elements. Information-based
services can be delivered almost instantaneously electronically.
Delivery Decisions: Where, When, How Time is of great importance as
customers are physically present. Convenience of place and time
become important determinants of effective service delivery.
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Hotel / Transportation/ Airport
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Traditional 4 Ps Applied to Services (3) Price and other user
outlays Marketers must recognize that customer costs involve more
than price paid to seller Identify and minimize non-monetary costs
incurred by users: Additional monetary costs associated with
service usage (e.g., travel to service location, parking, phone,
babysitting, etc.) Time expenditures, especially waiting. Unwanted
mental and physical effort. Negative sensory experiences. Revenue
management is an important part of pricing.
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Mentally Stressed Person, Travelling & Money
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Traditional 4 Ps Applied to Services (4) Promotion and
Education Plays three vital roles: Provide information and advice.
Persuades the target customers of merit of service product or
brand. Encourages customer to take action at specific time
Customers may be involved in co-production so: Teach customer how
to move effectively through the service process Shape customers
roles and manage their behavior
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Tripada
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Extended Mix for Managing the Customer Interface Process How
firm does things may be as important as what it does. Customers
often actively involved in processes, especially when acting as
co-producers of service Operational inputs and outputs vary more
widely Quality and content varies among employees, between
employees Variations can be with different customers Variations
from time of the day
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Queue In The Banks
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Cont Variability can be reduced by: Standardized procedures
Implementing rigorous management of service quality Training
employees more carefully Automating tasks Train employees in
service recovery procedures Manage process design and flow of
customers
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Extended Mix for Managing the Customer Interface (2) Physical
environment Design services cape and provide tangible evidence of
service performances Create and maintain physical appearances
Buildings/landscaping Interior design/furnishings
Vehicles/equipment Staff grooming/clothing Sounds and smells &
Other tangibles Manage physical cues carefully can have profound
impact on customer impressions
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Mosquitoes In The Hotel
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Extended Mix for Managing the Customer Interface (3) People
Interactions between customers and contact personnel strongly
influence customer perceptions of service quality Well-managed
firms devote special care to selecting, training and motivating
service employees Other customers can also affect ones satisfaction
with a service
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Insurance People
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Expanded Marketing Mix for Services
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Ways to Use the 7 Ps Overall Strategic Assessment How effective
is a firms services marketing mix? Is the mix well-aligned with
overall vision and strategy? What are the strengths and weaknesses
in terms of the 7 Ps? Specific Service Implementation Who is the
customer? What is the service? How effectively does the services
marketing mix for a service communicate its benefits and quality?
What changes/ improvements are needed?
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Challenges Posed by Services
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Services Pose Distinctive Marketing Challenges Marketing
management tasks in the service sector differ from those in the
manufacturing sector. The eight common differences are: Most
service products cannot be inventoried Intangible elements usually
dominate value creation Services are often difficult to visualize
and understand Customers may be involved in co-production People
may be part of the service experience Operational inputs and
outputs tend to vary more widely The time factor often assumes
great importance Distribution may take place through nonphysical
channels
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Differences, Implications Marketing-Related Tasks Difference
Most service products cannot be inventoried Intangible elements
usually dominate value creation Services are often difficult to
visualize & understand Customers may be involved in co-
Production Implications Customers may be turned away Harder to
evaluate service & distinguish from competitors Greater risk
& uncertainty perceived Interaction between customer &
provider; but poor task execution could affect satisfaction
Marketing-Related Tasks Use pricing, promotion, reservations to
smooth demand; work with ops to manage capacity Emphasize physical
clues, employ metaphors and vivid images in advertising Educate
customers on making good choices; offer guarantees Develop
user-friendly equipment, facilities & systems; train customers,
provide good support
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Implications Behavior of service personnel & customers can
affect satisfaction Hard to maintain quality, consistency,
reliability Difficult to shield customers from failures Time is
money; customers want service at convenient times Electronic
channels or voice telecommunications Difference People may be part
of service experience Operational inputs and outputs tend to vary
more widely Time factor often assumes great importance Distribution
may take place through nonphysical channels Marketing-Related Tasks
Recruit, train employees to reinforce service concept Shape
customer behavior Redesign for simplicity and failure proofing
Institute good service recovery procedures Find ways to compete on
speed of delivery; offer extended hours Create user-friendly,
secure websites and free access by telephone Differences,
Implications & Marketing-Related Tasks
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Most Service Products Cannot Be Inventoried AIRCRAFT/ AIR
TRAVEL
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Intangible elements usually dominate value creation EXTERIOR OF
HOTEL
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Services are often difficult to visualize & understand
DOCTORS
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Customers may be involved in co-Production HAIR TREATMENT
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People May Be Part Of Service Experience SAM WALTON-
WALMART
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Operational inputs & outputs tend to vary more widely
Banking Services
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Time factor often assumes great importance Restaurant
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Distribution may take place through nonphysical channels
Premium Calculator
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Four Broad Categories of Services
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Based on differences in nature of service act
(tangible/intangible) and who or what is direct recipient of
service (people/possessions), there are four categories of
services: People processing Possession processing Mental stimulus
processing Information processing
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Four Categories Of Services
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People Processing Customers must: physically enter the service
factory co-operate actively with the service operation Managers
should think about process and output from customers perspective to
identify benefits created and non-financial costs: - Time, mental,
physical effort
Possession Processing Possession Processing Customers are less
physically involved compared to people processing services
Involvement is limited Production and consumption are
separable
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Ex. - Freight Transportation - Warehousing/Storage on rent -
Retail sealing of goods/services - Laundry - Refueling - Giving
home on rent
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Mental Stimulus Processing Mental Stimulus Processing Ethical
standards required when customers who depend on such services can
potentially be manipulated by suppliers Physical presence of
recipients not required Core content of services is
information-based Can be inventoried
Information Processing Information is the most intangible form
of service output, But may be transformed into enduring forms of
service output Line between information processing and mental
stimulus processing may be blurred.
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Ex. Letters - Research report - CDs, DVDs - Books - Analyses of
trends - Past records etc
