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Marketing of Services

Sonali P. Banerjee
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• Please write one sentence of your own on

Customer Service.
(5 Mins)
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• Write Minimum 5 Excuses you hear

customers’ service representative give for
offering poor or bad customer service.

(5 Mins)
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Common Excuses
• I don’t have enough time….
• I don’t get paid to be nice. I am measured
by my productivity and accuracy
• How can we do good job if the computer is
always down
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• Every customer is totally crazy today.

• I can’t deal with people who do not show
me respect.
• How can we do a good job if the other
departments do not provide the back up
we need?
• I am having a bad day.
• People are basically stupid.
• I am always too busy
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• A customer simply wants…..

You to Greet HIM

……… Value HIM
………. Help HIM
……. Listen to HIM
…… Invite HIM Back
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The service sector

• The services sector has been growing at a
rate of 8% per annum in recent years
• More than half of our GDP is accounted
for from the services sector
• This sector dominates with the best jobs,
best talent and best incomes
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Service Sector
Definition
• An industry comprised of companies that
primarily earn revenue through
providing intangible products and services.
Service industry companies are involved
in retail, transport, distribution, food services, as
well as other service-dominated businesses.
Also called service sector, tertiary sector of
industry. 
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The Nature of Services

• regardless of the “product”, there is a services
component to the offerings of all firms
• in some cases, a service is the principal purpose of
the transaction, as in the rental of a car, a haircut, or
legal services -- we refer to this as the core service
• in others, service is performed in support of the sale
of a tangible product -- these are referred to as
supplementary services
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What is services?
• It is the part of the product or the full
product for which the customer is willing to
see value and pay for it.

Difference between physical goods and
services
Physical goods
tangible
homogeneous
Production and distribution are
separated from consumption
A thing
Core value processed in factory
Customers do not participate in the
production process
Can be kept in stock
Transfer of ownership
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Services
intangible
heterogeneous
Production, distribution and
consumption are simultaneous
processes
An activity or process
Core value produced in the buyer-
seller interaction
Customers participate in production
Cannot be kept in stock
No transfer of ownership
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Strategic Product
Implications
• the core service can be enhanced through
the addition of supplementary services,
thereby creating added value
• the life cycle of services has to be
managed
• the branding of a service can be difficult as
the customer often has nothing tangible to
show
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Continued…
• Quality is hard to define, measure, control,
and communicate
• Quality is defined by the consumer
• It’s important to measure customer
satisfaction with an organization’s service
quality.
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Pricing Services
The characteristics of perishability, inability
to store, and fluctuating demand for
services create pricing challenges.
• Pricing Strategies include:
– Discount strategies: Cheaper by the week.
– A variable pricing strategy: Kids eat free,
movies cheaper on Tuesdays.
– Price competition
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Distribution of Services
• because most services are tied directly to a specific
service provider, most have been distributed directly
to customers
• with advancing technology, many firms are now
delivering services through machines
• channels of distribution are necessarily short; some
firms use one agent intermediary, such as
insurance, real estate, and travel agents
• some firms use franchises to distribute services
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Promotion of Services
• customer contact personnel represent the main
channel of customer communication
• service providers must ensure that each service
encounter is a positive one if customers are to
develop a positive image
• many professional service firms are now
permitted to advertise
• other elements of the promotional mix are used,
including publicity and community affairs
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The three additional ‘P’s of Service

Marketing
• People
• Physical evidence
• Process
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When customers visit a service

establishment
Their satisfaction will be influenced by
• Encounters with service personnel
• Appearance and features of service
facilities – exterior and interior
• Interactions with self service equipment
• Characteristics and behaviour of other
customers
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Four Rs of Service Marketing

• Retention
• Referrals
• Relationships
• Recovery
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The Changing Environment

for Services
• The boom in the service economy, reduced regulation
has created an increase in competition.
• Major focus on increased productivity, efficiency
– Work on people aspects of business:
• Education, training programs
– Change technology:
• Computer-based technologies used.
– Restructure jobs.
• Bottom line: People are key to success!
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Other Considerations in
Marketing Services
• Impact of Technology:
– Remember, not everyone likes impersonal
technology
• Performance Measurement:
– Customer perceptions are essential.
• Prospects for Growth:
– It is very likely that services will continue to take
an increasing share of the consumer pocket.
– The use of marketing programs in all services is
expected to increase considerably.
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In services, the last

experience remains uppermost
in your mind. Therefore, it is not
enough to be good, you have to
be consistently good
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Characteristics of services
• Intangibility
• Inseparability
• Perishability
• Variability
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Differentiation in services
• Offering
• Faster and better delivery
• Image
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Determinants of service quality
• Reliability – delivering on promises
• Responsiveness – willing to help
• Assurance – inspiring trust and confidence
• Empathy – individualising customers
• Tangibles- physical representation
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Customer Service Expectations
• Desired Service – the ‘wished for’ service
• Adequate Service – the service that would
be acceptable
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Zone of Tolerance

• Difference between the desired service

and the adequate service
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Don’t
• Ignore customer
• Blame customer
• Leave customer to fend for himself
• Downgrade
• Act as if nothing is wrong
• ‘pass the buck’
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Do’s
• Acknowledge problem
• Explain causes
• Apologies
• Compensate/upgrade
• Lay out options
• Take responsibility
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Adaptability
Don’t
• Promise and fail to keep them
• Show unwillingness to try
• Embarrass the customer
• Laugh at the customer
• Avoid responsibility
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Do’s
• Recognise the seriousness
• Acknowledge
• Anticipate
• Accommodate
• Adjust
• Explain rules/policies
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Spontaneity
Don’t’s
• Exhibit impatience
• Yell/laugh/swear
• Steal from customers
• Discriminate
• Ignore
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Do’s
• Take time
• Be attentive
• Anticipate needs
• Listen
• Provide information
• Show empathy
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Coping
Don’t

• Take customer’s dissatisfaction personally

• Let customer’s dissatisfaction affect others
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Types of complainers
• Passives
• Voicers
• Irates
• Activists
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• Passive complainers : they will complain

to everyone but the actual business. Since
the business is left unaware of their error
they cannot correct it and the only thing a
passive complainer succeeds in doing is
depriving the company of potential
business.
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• Voicers : These customers actively

complain to the service provider but they
are less likely to spread negetive word of
mouth to switch or to go to the third parties
with their complaints. These customers
are the Service providers best friend.
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• Irates : These consumers are more likely

to engage in negetive word of mouth to
friends and relatives and to switch
providers than are others. They are
unlikely to complain to 3rd party. Though
they are angry with the service provider,
but still believe that complaining would
have some social benefits. They usually
switch the provider.
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• Activists : These consumers complain in

an above average way in all dimensions.
They will complain to the provider. They
will tell others and they are more likely to
complain to the third parties
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Customer complaints
• It pays to resolve customer complaints
• On an average only 5 % dissatisfied
customers complain. Others simply go
over to the competitor
• A satisfied consumer speaks to an
average of 3 people on his her experience
• A dissatisfied consumer gripes to on an
average 11 persons about his/her
unpleasant experience
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Causes behind service switching

• Pricing
High Price
Price Increase
Unfair Pricing
Deceptive Pricing
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• Inconvenience
 Location
 Wait for Appointment
 Wait for Service
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• Core Service Failure

 Service Mistakes
 Billing errors

• Service Encounter Failure

 Uncaring
 Impolite
 Unresponsive
 unacknowledgeable
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• Response to Service Failure

 Negative Response
 No Response
 Reluctant Response

• Competition
 Found Better Service
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• Involuntary Switching
 Customer Moved
 Provider Closed