MARKETING OF SERVICES

LEARNING OBJECTIVES
Increasing importance of services in
economies
All principles of marketing apply to services
The nature and special characteristics of
services
Managing service quality, productivity and
personnel
Learning Objectives (Contd.)
How to position a service organization and
a brand
The service marketing mix
How businesses should manage service
encounters and service recovery
Innovations in services
Learning Objectives (Contd.)
Difficult to provide a single definition of
service
Concept of service has to be understood
either as an exclusive offering from a
company that is primarily intangible, or as a
part of the service-product mix that a
company offers
SERVICE LEVELS
Service is an intangible offering with little or no
transfer of physical products to the customer
Service is one part of product-service mix being
offered to customers
The main offering is the product but the supplier
also provides some services
Every product or service or any combination of a
mix of the two, ultimately is supposed to provide
service for customers
INCREASING IMPORTANCE OF
SERVICES
Advances in technology
Growth in per capita income
A trend towards outsourcing
Deregulation
Increasing growth in retailing due to
increase in propensity to consumer
ALL PRINCIPLES OF MARKETING
APPLY TO SERVICES
Services impact customers more directly
than products do
Marketing of services has to be more
deliberate and considered
Service provider has to carefully audit his
resources and competencies
Positioning must be razor sharp
Services more intractable than products
All Principles of Marketing Apply to Services (Contd.)
Service provider must define service very
precisely and also design the appropriate
service-product mix
Promotion more challenging due to
intangible nature of services
Same basic service can be provided in
vastly different service facilities providing
different levels of amenities and luxuries
All Principles of Marketing Apply to Services (Contd.)
Same service can be delivered in various
ways
Marketing mix conveys the positioning of a
service

All Principles of Marketing Apply to Services (Contd.)
NATURE OF SERVICES
Intangibility
Inseparability
Presence of other consumers
Variability
Perishability
MANAGING SERVICES
Managing service quality
Companies rated higher on service quality
perform better in terms of market share
growth
Big gap exists between the expectations of
the customers and the level of the service
they get Real barriers while matching
expected and perceived service levels of
customers

Managing Services (Contd.)
Does not understand customer requirements:
Misconception barriers arise when
companies misunderstand customer
expectations
No resources: A company may understand
customer expectations but is unwilling to
provide resources to meet them
Bad delivery: The company is not able to
deliver the expected service


Managing Services (Contd.)

Managements will: A management
eager to improve quality is able to do it
Exaggerated expectations: Exaggerated
promises may become a problem
Meeting customer expectations
Important to understand and meet
customer expectations
Consumers of services value not only the
outcome of the service encounter but also
the experience of taking part in it
Access: Is the service provided at
convenient locations and at convenient
times, with little waiting period in availing
the service?
Reliability: Service provider should be
able to deliver the promised service each
time the customer decides to avail of it
Credibility: Can customers trust the
service company and its staff?
Security: Can the services be used
without risk?

Meeting Customer Expectations (Contd.)
Understanding customer: If the
company understands the expectations
and also has the capability to serve
them, the customer is satisfied with the
service outcome
Responsiveness: How quickly do service
staff respond to customer problems,
requests and questions?
Behavior of employees: Do service staff
act in a friendly and polite manner?
Meeting Customer Expectations (Contd.)
Competence: Performance of the
primary service will depend on the
knowledge and competencies of the
service providers
Communication: Is the service described
clearly and accurately?
Physical evidence: The company should
provide physical evidence to customers
which will assure customers that they will
be provided a good service
Meeting Customer Expectations (Contd.)
Managing service productivity
Measure of relationship between the
various types of inputs that are required
to produce the service and the service
output
Conflict between improving service
productivity and raising service quality
Technology can be used to improve
productivity and service quality
simultaneously
Customer involvement in production
can be increased
Important to balance supply and
demand
By smoothing demand or increasing
flexibility of supply, both productivity
and service quality can be achieved

Managing Service Productivity (Contd.)
Managing service staff
Quality of the service experience is
heavily dependent on staff-customer
interpersonal relationship
Companies need to treat their
employees well if customers have to be
served well by their employees
Nature of the job needs and appropriate
personality characteristics to be defined
sharply while selecting service staff
Socialization allows the newly recruited
service professionals to experience the
culture and tasks of the organization
Maintaining a motivated workforce
Customer feedback essential to maintain
high standards of service quality
Employees of service organizations must
take pride in their jobs
Managing Service Staff (Contd.)
POSITIONING SERVICES
Differentiate from competition on attributes
that target customers highly value
Entails two decisions:
Choice of target market (where to
compete)
Creation of differential advantage (how to
compete)
Positioning Services (Contd.)
Determine important choice criteria of
customers carefully
Most important decision of a service
organization is selecting the factors on
which it will compete
Select a few factors and provide superlative
performances in the chosen factors
Target marketing
Differential advantage
THE SERVICES MARKETING MIX
The service
Pure services are intangible
Higher perceived risk in decision making
process
People, physical evidence and processes
provide cues about the quality of the
service
Brand name affects perceptions of service
Provide service trials wherever possible
Promotion
Intangible elements of service may be
difficult to communicate
Sales people should develop lists of
satisfied customers to be used in reference
selling
Word of mouth is critical to success
Acknowledge the dominant role of
personal influence in the choice process
and stimulate word of mouth
communication
Persuade satisfied customers to inform
others of their satisfaction
Develop materials that customers can pass
on to others
Target opinion leaders in its advertising
campaign
Encourage potential customers to talk to
current customers
Communication should also be targeted at
employees
Promotion (Contd.)
Price
An indicator of perceived quality
Important in matching demand and
supply
Price sensitivity key segmentation
variable

Setting fees levels:
Offset
Inducement
Divisionary
Guarantee
Predatory
Place
Distribution channels for services are
more direct
Production and consumption is
simultaneous
New technologies permit service
companies to provide services without
customers coming to their facility
People
Service quality is inseparable from
quality of service providers
Set standards to improve quality of
service provided by employees and
monitor their performance
Training of employees crucial
Adopt a customer-first attitude than
putting own convenience first
Employees of service organizations have
to be adept in multiple roles
Have empathy to judge the service
requirement and mood of the customer
Examine the role played by customers in
service environment
Seek to eliminate harmful interactions
People (Contd.)
Physical evidence
The environment in which the service is
delivered
Includes any tangible goods that facilitate
the performance and communication of the
service
Strengthen cues that customers search for
to judge the quality of services
Process
Procedures, mechanisms and flow of
activities by which a service is delivered
to customers
Control variations in services by targeting
smaller segment of customers
Process and its visibility are both
important for customers
Process should be employed only when it
is required to provide a service and not
because customers have come to expect
it
SERVICE ENCOUNTERS
A terrible ending usually dominates a
persons recollection of an experience
Customers who are mentally engaged in a
task do not notice how long it takes
Customers desperately want to make sense
of unexpected events
Study service encounters from customers
point of view
Finish strong
Get the bad experience out of the way
early
Segment the pleasure, combine the pain
Build commitment through choice
Give people rituals and stick to them

Service Encounters (Contd.)
SERVICE RECOVERY
Well-intentioned, prompt, and apt recovery
can assuage angry customers
Everyone in the organization must have the
skill, motivation, and authority to make
service recovery an integral part of service
operations
Production-oriented service-delivery systems
have helped in achieving consistently high
service standards
Inevitable problems will still arise, by
providing for service recovery
Good service providers cover all the costs
that a failure incurs
Customers problem is an opportunity
Companies must be responsive to customer
complaints, and encourage them to complain
Monitor areas of the organization which are
likely to throw up problems more frequently
Service Recovery (Contd.)
Solve customers problems fast because
service problems quickly escalate
Train frontline employees and empower
them
Give employees the authority, responsibility,
and incentives to help customers in unique
ways
Let customers know about corrective
measures taken and the improvement
achieved
Service Recovery (Contd.)
INNOVATION IN SERVICES
Difficulties in applying traditional methods of
research and development to services
Experiments with new services are most useful
when they are conducted live , though
cautiously
Improvements should be planned and
experimented incrementally
Innovation in Services (Contd.)
Personnel conducting the experiments
must be motivated
Successful experiment has to be persisted
with
Experiment only when it can be finally
implemented
Conducting live experiments risky and
cumbersome, but may be inevitable