ObjectivesObjectives

Define “Services”Define “Services”

Identify Characteristics of ServicesIdentify Characteristics of Services

Developing Marketing Strategies for Developing Marketing Strategies for Services.Services.

Changing Structure of Changing Structure of Employment Employment

with Economic Developmentwith Economic Development

Time, per Capita Income

Shareof Employment

Industry

Services

Agriculture

Source: IMF

A General Idea about ServiceA General Idea about Service

Definition Of Service.Definition Of Service.

Service Provider ( Man, Machine,Both)Service Provider ( Man, Machine,Both)

Service can be directed Service can be directed towards( Individual, Object).towards( Individual, Object).

Extent to which Service has gone Extent to which Service has gone (IRCTC).(IRCTC).

A SERVICE IS AN ACTIVITY OR A SERIES OF ACTIVITIES OF MORE OR LESS INTANGIBLE NATURE THAT NORMALLY,NOT NECESSARILY, TAKES PLACE IN INTERACTIONS BETWEEN THE CUSTOMER & EMPLOYEE/ PHYSICAL RESOURCE OF SERVICE PROVIDER, WHICH ARE PROVIDED AS SOLUTION TO CUSTOMER PROBLEMS.

SERVICES: DEFINITION

Service DefinedService Defined

Instrumental activityInstrumental activity

For consumptionFor consumption

Consumer participationConsumer participation

No ownershipNo ownership

The Service

Intangibility

Perish ability

HeterogeneityInseparability

CHARACTERISTICS OF SERVICES

IntangibilityIntangibility

InseparabilityInseparability

HeterogenityHeterogenity

PerishabilityPerishability

Can’t be seen, tasted, felt, heard, or smelled before purchase.

Can’t be separated from service providers.

Quality depends on who provides them and when, where and how.

Can’t be stored for later sale or use.

Characteristics of ServicesCharacteristics of Services

Meaning of IntangibilityMeaning of Intangibility

Services cannot be inventoriedServices cannot be inventoriedServices cannot be patentedServices cannot be patentedServices cannot be readily Services cannot be readily

displayed or communicateddisplayed or communicatedPricing is difficultPricing is difficult

Intangibility-Tangibility SpectrumIntangibility-Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

Intangibility: Implications & StrategiesIntangibility: Implications & Strategies

Cannot see or feel, Cannot see or feel, smell, hear, or smell, hear, or taste taste

Cannot be StoredCannot be Stored

No ready DisplayNo ready Display

Communication Communication ProblemProblem

No PatentNo Patent

Stress symbolic Clues Stress symbolic Clues

Associate tangible Associate tangible symbol with servicesymbol with service

Tangible cues like Tangible cues like membership cardsmembership cards

WOM, Personal SourceWOM, Personal Source

Organizational ImageOrganizational Image

Post Purchase Post Purchase CommunicationCommunication“You’re in good

hands with Indian Airlines.”

Meaning of PerishabilityMeaning of Perishability

It is difficult to synchronize It is difficult to synchronize supply and demand with supply and demand with servicesservices

Services cannot be returned or Services cannot be returned or resoldresold

Perish ability: Implications & Perish ability: Implications &

StrategiesStrategies Cannot be storedCannot be storedNo InventorizationNo InventorizationLost sale = lost Lost sale = lost incomeincome

Demand management Demand management to Cope up with to Cope up with FluctuationsFluctuations ForecastingForecasting Supply managementSupply management

Better Match through Better Match through ProcessesProcesses

Pricing adjustmentsPricing adjustments

Meaning of HeterogeneityMeaning of Heterogeneity

Service delivery and customer satisfaction Service delivery and customer satisfaction depend on employee actions, therefore depend on employee actions, therefore Standardization is difficult. Standardization is difficult.

Service quality depends on many uncontrollable Service quality depends on many uncontrollable factors, so Quality Control is Difficult .factors, so Quality Control is Difficult .

There is no sure knowledge that the service There is no sure knowledge that the service delivered matches what was planned and delivered matches what was planned and promotedpromoted

Heterogeneity or Variability:Heterogeneity or Variability: Implications & StrategiesImplications & Strategies

Provided by peopleProvided by peopleInherent varianceInherent varianceStandardization and Standardization and quality Control quality Control difficultdifficult

StandardizationStandardization Personnel Personnel

selectionselection TrainingTraining AutomationAutomation

IndustrializationIndustrialization

CustomizationCustomization

Meaning of Inseparability:Meaning of Inseparability:Simultaneous Production & Simultaneous Production &

ConsumptionConsumptionCustomers participate in and Customers participate in and

affect the transactionaffect the transactionCustomers affect each otherCustomers affect each otherEmployees affect the service Employees affect the service

outcomeoutcomeDecentralization may be Decentralization may be

essentialessentialMass production is difficultMass production is difficult

Inseparability: Implications & Inseparability: Implications &

StrategiesStrategies

Tangible productsTangible products

ProductionProduction SaleSale ConsumptionConsumption

TimeTime

ProductionProductionSaleSale

ConsumptionConsumption

Intangible productsIntangible productsSelection & Selection & Training of Training of Contact PersonsContact Persons

Manage Manage CustomersCustomers

Multi-site Multi-site OperationsOperations

• Marketing Intangibles

• Relationships of Provider to Customer

• The Service Encounter Connection

• Simultaneous Production and

Consumption

• No Storage or Inventory

• Quality Control

Six Distinctions: Between Goods & Services

Service Characteristics and Marketing Implication for Strategic Decisions

-

Service Characteristics Marketing Implications Strategies

Intangibility Cannot be stored, No patents, Communication problem, No ready display, Pricing difficulties

Tangible clues, Personal sources, Post purchase comm. WOM, Organizational image Cost accounting for prices    

Inseparability Consumer involved in production, No mass production, Supply demand match

Selection training of contact person, Manage consumer, Multi-site location

Heterogeneity Standardization & Quality control difficult

Industrialize & Customize

Perishability No inventorization Cope with fluctuating demand & match through process

The Services Marketing TriangleThe Services Marketing Triangle

Internal Marketin

g

Interactive Marketing

External Marketin

g

Company(Management)

CustomersEmployees

“Enabling thePromise”

“Delivering the Promise”

“Setting thePromise”

Ways to Use the Ways to Use the Services Marketing TriangleServices Marketing Triangle

Overall Strategic Overall Strategic AssessmentAssessment

• How is the service How is the service organization doing organization doing on all three sides of on all three sides of the triangle?the triangle?

• Where are the Where are the weaknesses?weaknesses?

• What are the What are the strengths?strengths?

Specific Service Specific Service ImplementationImplementation• What is being promoted What is being promoted

and by whom?and by whom?

• How will it be delivered How will it be delivered and by whom?and by whom?

• Are the supporting Are the supporting systems in place to systems in place to deliver the promised deliver the promised service?service?

The Services Triangle & The Services Triangle & TechnologyTechnology

Company

CustomersProviders

Technology

ISSUES IN FRONT OF THE MARKETERISSUES IN FRONT OF THE MARKETER

Managing DifferentiationManaging DifferentiationOffersOffers

DeliveryDelivery

ImageImage

Managing QualityManaging QualityStrategic ConceptStrategic Concept

Commitment of Top ManagementCommitment of Top Management

High StandardsHigh Standards

Monitoring SystemMonitoring System

Customer ComplaintsCustomer Complaints

Satisfying Employees.Satisfying Employees.

Company

CustomersProviders

Technology

ISSUES IN FRONT OF THE MARKETERISSUES IN FRONT OF THE MARKETERContd…….Contd…….

Managing ProductivityManaging ProductivityReduce CostReduce Cost

Train EmployeesTrain Employees

Product Support Service ManagementProduct Support Service ManagementProduct ReliabilityProduct Reliability

Duration of DowntimeDuration of Downtime

OverheadsOverheads

After Sales SupportAfter Sales Support

Company

CustomersProviders

Technology

7 Ps of Integrated Service 7 Ps of Integrated Service ManagementManagement

Product elementsProduct elements

Promotion and educationPromotion and education

Place, cyberspace, and timePlace, cyberspace, and time

Price and other user costsPrice and other user costs

PeoplePeople

ProcessProcess

Physical evidencePhysical evidence

(1) Product Elements(1) Product Elements

All Aspects of Service Performance that All Aspects of Service Performance that Create ValueCreate ValueCore product featuresCore product featuresBundle of supplementary service elementsBundle of supplementary service elementsPerformance levels relative to competitionPerformance levels relative to competitionBenefits delivered to customersBenefits delivered to customersGuaranteesGuarantees

The Service PackageThe Service Package

Corporate IMAGEWORD OF MOUTH

MARKETING COMMUNICATION

The core service

Facilitating service

Supporting service

The Services Concept

Accessibility of Services

Interaction

Consumer Participation

Elements of Augment Service OfferingsElements of Augment Service Offerings

Accessibility of Accessibility of ServiceService

No. of skilled personalNo. of skilled personal

Working HoursWorking Hours

LocationLocation

Exterior and interior of service outletExterior and interior of service outlet

Infrastructure, hardware, documentationInfrastructure, hardware, documentation

The number and knowledge of consumers The number and knowledge of consumers simultaneously involved in the processsimultaneously involved in the process

Interaction with Interaction with service service organizationorganization

Interaction between the employees and Interaction between the employees and consumersconsumers

Interaction with the physical and technical Interaction with the physical and technical resourcesresources

With customers involvedWith customers involved

Customer Customer ParticipationParticipation

Customer awarenessCustomer awareness

Customer preparedness to share the informationCustomer preparedness to share the information

Customers willingness to share information and Customers willingness to share information and use service equipmentuse service equipment

Developing New Service OfferingDeveloping New Service OfferingStage IStage I Consumer Benefit Consumer Benefit

ConceptConceptCustomer seekCustomer seek

Stage IIStage II Service conceptService concept Should offerShould offer

Stage IIIStage III Service offerService offer Element, form, level, Element, form, level, quantityquantity

Stage Stage IVIV

Service Delivery Service Delivery SystemSystem

Benchmarks, Benchmarks, process, people and process, people and facilityfacility

Stage VStage V Managing Image Managing Image & Communication& Communication

Support, perception Support, perception enhancement.enhancement.

(2) Price(2) Price

GUIDELINESGUIDELINES

Handle demand fluctuationsHandle demand fluctuations

Based on cost take into account the Based on cost take into account the tangible cluestangible clues

Provide vale addition and quality indicationProvide vale addition and quality indication

competitivecompetitive

Pricing of ServicesPricing of Services

Managing Customer Outlays Relative to Managing Customer Outlays Relative to Corporate RevenuesCorporate Revenues

Quoted price level and trade marginsQuoted price level and trade margins

Discount termsDiscount terms time, volume, user sensitivetime, volume, user sensitive

Price-setting mechanismPrice-setting mechanism determined by seller or negotiation/barterdetermined by seller or negotiation/barter auction/reverse auction auction/reverse auction

Credit termsCredit terms

Pricing Tactics of ServicesPricing Tactics of Services

DIFFERENTIAL / Flexible pricingDIFFERENTIAL / Flexible pricing

Diversionary pricingDiversionary pricing

DiscountDiscount PricingPricing

Guarantee pricingGuarantee pricing

HIGH PRICE MAINTENENCE pricingHIGH PRICE MAINTENENCE pricing

Loss leader pricingLoss leader pricing