SERVICES MARKETIN

GEDDA DIVAH N. DAYANDANTE

ATENEO DE NAGA UNIVERSITY

“Tangible products may not exist at all were it not for a series of services performed in order to produce them and to make them available to consumers.”

“A person providing a service was just as capable of giving utility to the recipient as a person producing a tangible product.”

- Alfred MarshallPrinciples of Services Marketing

Adrian Palmer6th Edition

SERVICESThe production of an essentially intangible benefit, either in its

own right or as a significant element of tangible product, which through some form of

exchange, satisfies an identified need.

Service Sector has grown strongly in recent years!!!

Growth of service-based economies

We need to hedge this with a few caveats:• Some service activities previously classified as manufacturing or

agricultural now being classified as service sector• Many service sectors do not fall neatly into one of the classifications• Methods used to measure services differ between countries• The intangible nature of services can make them relatively difficult to

measure

Becoming a service-based economies even at the expense of the manufacturing sector

• Growth in service sector reflects the prosperity of manufacturing sector• Comparative cost advantage in production of services needs to be

examined closely• Over-reliance on the service sector could pose strategic problems• Many newer service industries may destabilize local economies

because they cant be set up and closed down easily

Distinguishing Features of Services

Intangibility

A pure service cannot be assessed using any of the physical senses – it is an

abstraction that cannot be directly examined before it is

purchased.

Inseparability

The consumption of a service is said to

be inseparable from its means of production.

Producer and consumer must interact in order for the benefits of the service to be realized.

Variability

VARIABILITYOF

SERVICES

Services are produced ‘Live’

Often no chance to correctmistakes before consumption

Often reliant on fallible human inputs

May be difficult to ‘blueprint’ service process

Leads to

VARIABILITYOF

SERVICES

Services are produced ‘Live’

Often no chance to correctmistakes before consumption

Often reliant on follible human inputs

May be difficult to ‘blueprint’ service process

Leads toResults in

High level of perceived risk for buyers

Difficulty in presenting an image of consistent quality

Difficulty in developing strong brands

Perishability

Services differ from goods in that they cannot be stored.

SERVICEPERISHABILITY

Inability to store services

Fluctuating patterns of demand

Short-term supply inelasticity

Leads to

SERVICEPERISHABILITY

Inability to store services

Fluctuating patterns of demand

Short-term supply inelasticity

Leads toResults in

Problems where demand pattern is difficult to predict

Requirement for ‘just-in-time’ production of services

If not managed effectively, congestion at peak periods and unused capacity at off-peak periods

Ownership

When the service is performed, no

ownership is transferred from the seller to the

buyer.

The Service Offer

Core service is best understood in terms of the essential benefit that a service provides.

The secondary service offer refers to the manner in which the core service offer is actually delivered, covering issues such as installation, delivery,

credit availability and after-sales service.

CORE SERVICE

SECONDARY SERVICE

Core Benefit:Peace of Mind

Features:period of policy,

flexibilitybenefits payable

Tangibles:brochures,

policy documents

Packaging:Other benefits

included in packaging (e.g. advice services

Quality:level of customer

satisfaction sought with respect to outcomes and

processes

Accessibility:whether available direct or through insurance brokers

Processes:methods used to process policies

and claims

Branding:Importance of

company’s reputation

CORE SERVICE

SECONDARY SERVICE

Core Benefit:

Features:

Tangibles:

Packaging:

Quality:

Accessibility:

Processes:

Branding:

Travel &Tours

Classification of Services

Marketable vs marketable services Business-to-business vs consumer services The significance of the service to the buyer

Extent of customer involvement The pattern of service delivery

People-based vs equipment-based services Process vs outcome-based services

High-knowledge vs low-knowledge services Multiple classification

Marketable vs unmarketable services

DesirableThe benefits are essentially external

CultureCommonly provided within household units

Business-to-business vs consumer services

For individuals, for own enjoyment or benefit; no further economic benefits results from consumption

Brought by business in order that it can produce something else of economic benefit

The significance of the service to the buyer

Fast moving-consumer goods (fmcg’s) are purchased frequently, are of low value, are consumed rapidly and

are likely to be purchased on impulse

Long lasting services may be purchased infrequently, and when they are, the decision-making process takes

longer and involve more people

Extent of customer involvement

Involvement refers to the attachment that the individual has with a product.

Involvement is associated with risk. High and low involvement.

In service, involvement refers to the extent to which customers personally interacts with the production process.

The pattern of service delivery

The marketing of a service is likely to be affected by the manner in which it is typically delivered:

• Some services are supplied on a continuous basis whereas other services are only supplied when needed (fixed phone line and repair of faulty phone)

• Some services are provided on the basis of an on-going relationship with the service provider while other services are typically provided casually (season ticket to attend football matches and buying a ticket at the gate)

People-based vs equipment-based services

Fortune-tellerCar park

While equipment can generally be programmed to perform consistently, personnel need to be recruited, trained and monitored.

People-based services can usually allow greater customization of services to meet individual customer needs

Marketable vs marketable services Business-to-business vs consumer services The significance of the service to the buyer

Extent of customer involvement The pattern of service delivery

People-based vs equipment-based services Process vs outcome-based services

High-knowledge vs low-knowledge services Multiple classification

Process vs outcome-based services High-knowledge vs low-knowledge services

Multiple classification

Defining marketing in a service context

Chartered Institute of Marketing

The management process which identifies, anticipates and supplies customer requirements and efficiently profitable.

Narver and Slater (1990)

Defines a firm’s marketing orientation in terms of three principal components:

• Customer orientation – that an organization has a sufficient understanding of its target buyers that allows it to create superior value for them.

• Competitor orientation – defined as an organization’s understanding of the short-term strengths and weaknesses and a long-term capabilities and strategies of current and potential customers.

• Interfunctional co-ordination – refers to the manner in which an organization uses its resources in creating superior value for target customers.

Areas of Service provision where the role of marketing is debatable:

• Essential public services• The provision of services by non-for-profit

organizations• The debate about the environmental

impacts of market-based competition

• Essential public services

Some have argued that vital public services should not be left to decisions made by profit-seeking companies whose individual objectives may be contrary to the greater public interest.

In theory:Markets would punish companies that did not serve public interest, because they would lose customers and eventually go out of business.

In reality:Markets may not be efficient, or sufficiently rapid, in punishing companies that do not satisfy the wider public good.

•Voluntary and not-for-profit sector marketing

Why should you need marketing to promote a school which should be judged by the quality of its

teaching?

Role of Marketing

• Essential public services• The provision of services by non-for-profit

organizations• The debate about the environmental

impacts of market-based competition

•Marketing and ecological responsibility

Oxford University’s Environmental Change Institute:In 2015 aviation will be contributing up to two-thirds if the government’s total carbon dioxide emission target if uncontrolled demand continues to grow, even if technological and air traffic management improvements are taken into account.

Tourism development in many countries may lead to a shortage of water for local inhabitants.

Goods marketing and Services marketing

differentiate