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Marketing Of Marketing Of ServicesServices
MBA-SEM-IIIMBA-SEM-III
TERM-01-2012TERM-01-2012
MODULE-01MODULE-01Duration-3 Lectures.Duration-3 Lectures.
► INTRODUCTION TO SERVICES INTRODUCTION TO SERVICES MARKETINGMARKETING
► Definitions.Definitions.► Characteristics & classification of Characteristics & classification of
servicesservices► Services economy Services economy ► Nature and scope of Nature and scope of ► service market potential service market potential
GoodsGoods - things you can touch - “tangible”
ServicesServices - things you can’t touch - but you can see their effect “intangible”“… services are not physical, they are intangible…”
A Service is a type of a product.
“… a deed performed by one party for another…”
Services have special characteristics that make them different than products.
Service
A product without physical characteristics;
a bundle of performance and symbolic attributes designed to produce consumer want satisfaction.
Service Defination
Definition of Service-2Definition of Service-2
►A service is an act for performance of A service is an act for performance of an essentially intangible nature that an essentially intangible nature that does not result in the ownership of does not result in the ownership of tangible product or commodity but tangible product or commodity but serves to create value and benefits for serves to create value and benefits for customer.customer.
““There are no such thing as There are no such thing as service industries.There are only service industries.There are only
industries whose service industries whose service components are greater or less components are greater or less than those of other industries. than those of other industries.
Everybody is in service.” Everybody is in service.”
-Theodore Levitt--Theodore Levitt-
► TangibleTangible touchtouch seesee tastetaste smell smell
► IntangibleIntangible can’t seecan’t see can’t touchcan’t touch can’t smellcan’t smell can’t tastecan’t taste
Tangible / Intangible AttributesTangible / Intangible Attributes
Not in the text
What is a service What is a service Services are deeds, processes and performances.Services are deeds, processes and performances. Service industries and companies – industries and Service industries and companies – industries and
companies typically classified within the service companies typically classified within the service sector whose core product is a service.sector whose core product is a service.
Services as products – a wide range of intangible Services as products – a wide range of intangible product offerings that customers value and pay for in product offerings that customers value and pay for in the marketplace.the marketplace.
Customer service – the service provided in support of Customer service – the service provided in support of a company's core product.a company's core product.
Derived service – the value derived from physical Derived service – the value derived from physical goods is really the service provided by the good, not goods is really the service provided by the good, not the good itself. the good itself.
DefinitionsDefinitionsJames SchorrJames Schorr
• At Procter & Gamble:At Procter & Gamble: “ “ A product is A product is something a consumer something a consumer purchases and takes purchases and takes away with him or away with him or consumes or otherwise consumes or otherwise uses. If it is not uses. If it is not physical, not something physical, not something that they can take that they can take away or consume, then away or consume, then we call it a service”we call it a service”
• At Holiday Inns:At Holiday Inns: “… “…people are buying people are buying a hotel experience. I’m a hotel experience. I’m selling the room, the selling the room, the way they treat you at way they treat you at the front desk, the way the front desk, the way the bellman treats you, the bellman treats you, the way the waitress the way the waitress treats you – it’s all treats you – it’s all mixed together in a mixed together in a consumer’s mind when consumer’s mind when he makes a hotel he makes a hotel decision”decision”
Services (examples)Services (examples)
Casino / HotelsCasino / Hotels
Continuing Care Continuing Care Retirement CommunitiesRetirement Communities
Diet and Weight Diet and Weight Reducing CentersReducing Centers
Environmental ConsultingEnvironmental Consulting
Golf Courses and Country Golf Courses and Country ClubsClubs
Hazardous Waste Hazardous Waste CollectionCollection
Medical CentersMedical Centers
Industrial Design Industrial Design ServicesServices
Investment Banking Investment Banking
Management Management Consulting ServicesConsulting Services
Satellite Satellite TelecommunicationsTelecommunications
Internet Search Internet Search Engine providerEngine provider
Goods and Services: Scale of Elemental Dominance
Not in the text
1. Intangibility - “u can’t touch this”
2. Production (or performing the service) and Consumption (using the service) - happens at the same time
3. Heterogeneity - services are not always delivered the same way
4. Perishability - cannot be put in inventory or stored for later useie. You can’t buy 2 haircuts
4 Characteristics of Services
1. Intangibility - “u can’t touch this”
• Services cannot be stored
• Services cannot be protected through patents
- therefore a really great travel package and service can be copied
a really great physical object can be patented, and NOT allowed to be copied
Characteristics of Services
1. Intangibility - “u can’t touch this”
• Hard to explain and display Services if you can’t see them
• Prices are difficult to set - depends on customers expectations
Characteristics of Services
Not in the text
2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time
Characteristics of Services
•mass production of services is hard to do
Not in the text
2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time
Characteristics of Services
Marketing Strategies
• Emphasize how much you train your people - so their ability to give you good service will be high
• Have many locations so customers can get to you
• ie. Insurance sales come to your homeNot in the text
3. Heterogeneity - services are not always delivered the same way
It is very difficult to standardize services
eg. A machine can make ice cream cones a standard size 100% of the time
A person filling an ice cream cone with a scoop cannot do it the same amount each time, unless you use a machine to dispense the ice cream
Characteristics of Services
Not in the text
3. Heterogeneity - services are not always delivered the same way
It is very difficult to standardize services
eg. A Taxi driver cannot drive you to the office in exactly the same time each day because the traffic patterns change
eg. A travel agent can sell you a vacation package - but cannot guarantee you will like the trip exactly the same way another tourist did.
Characteristics of Services
Not in the text
4. Perishability - cannot be put in inventory or stored for later use
ie. You can’t buy 2 haircuts
Demand fluctuates and changes, sometimes depending on the season, or weather
eg. Taxi in the rain, vacation in summer
Characteristics of Services
Not in the text
ServiceCharacteristics
Intangible
Inseparable
Variable
Perishable
Characteristics of servicesCharacteristics of services
Temporaryownership
So what’s it all about?So what’s it all about?
• No ownershipNo ownership• Not inventoriedNot inventoried• Intangible dominatedIntangible dominated• Customer involvement in productionCustomer involvement in production• Other customers may form part of the Other customers may form part of the
productproduct• More variability than productsMore variability than products• More difficult to evaluateMore difficult to evaluate• Time = importantTime = important
Key factors behind the growth Key factors behind the growth of servicesof services
• DemographicsDemographics• Social norms and Social norms and
workingworking• 2 income families2 income families• Increase in quality of Increase in quality of
lifelife• Greater life complexityGreater life complexity• International travel International travel
and mobilityand mobility• Increasing aspirationsIncreasing aspirations• GlobalisationGlobalisation
• E- businessE- business• IT linked to competitive IT linked to competitive
advantageadvantage• GlobalisationGlobalisation• Growth in government Growth in government
servicesservices• Mergers and acquisitionsMergers and acquisitions• Too expensive to retain Too expensive to retain
service expertiseservice expertise• Outsourcing of Outsourcing of
servicesservices
Consumer Business
Results in…Results in… In the US 80% of employment and 77% of GDP is In the US 80% of employment and 77% of GDP is
attributable to the service sector.attributable to the service sector. In the UK 63% of employment and 76% of GDP is In the UK 63% of employment and 76% of GDP is
attributable to the service sector. attributable to the service sector. • Across Europe, services account for most growth in Across Europe, services account for most growth in
new jobsnew jobs• Business services are growing even where Business services are growing even where
manufacturing is in declinemanufacturing is in decline• Service sector accounts for >50% of GNP and employs Service sector accounts for >50% of GNP and employs
>50% of work force in many Latin American countries >50% of work force in many Latin American countries • Now growing rapidly in developing nationsNow growing rapidly in developing nations
(World Bank)(World Bank)
Services dominate the Services dominate the Economy:Economy:
GDP by Industry, 2001GDP by Industry, 2001
Source: Bureau of Economic Analysis, November 2002
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
In China (2004)In China (2004)
• Services Services sector sector contributecontributed$265 d$265 billion of billion of its its economic economic growthgrowth
share of the economy
41%
46%
13%
service
Small factory
primaryindustries
AssignmentAssignment►Prepare a PPT of.Prepare a PPT of.►5 organizations providing services in different 5 organizations providing services in different
categories .categories .►How these companies tangibalise their How these companies tangibalise their
intangible services.intangible services.TOTAL OF 8 SLIDES.TOTAL OF 8 SLIDES.Presentation Time- 5 minutes.Presentation Time- 5 minutes.Give one page write up on Give one page write up on services industry services industry
relevance in today’s economyrelevance in today’s economy with facts and with facts and figures- Mention along the sources.figures- Mention along the sources.
Date of presentation- Date of presentation-
