Services Marketing

Objectives
 To discuss the introduction to Service Marketing
 Differentiate between Services & Products
 Explain the features and characteristics of services
 Explain the Classification of Services
 Explain Services Marketing Mix – 7P’s
 Discuss the Challenges for Services
 Why study services marketing?

 Significantly different from goods

marketing
 Relatively new discipline with a strong
interdisciplinary base
 importance of services sector
 70% - 80% GDP in highly dev. economies
 Service sector in India approx 50%
 Transformation of the service economy
International Government Social Business Advances in
-isation regulation changes trends technology
• ‘Hollowing • Deregulation/ • Increased • Relaxation of • Convergence
out’ effect privatisation consumer professional assn. of computers
• Increased • New trade expectations standards and
services agreements in • Increased • Marketing telecommuni-
trade services affluence and emphasis by non- cations
• Global leisure time profit
• Miniaturisation
customers • Working organisations
women • Outsourcing • Digitalisation
• Quality
• Enhanced
movement
• Franchising software

Increased demand and competition

Facilitated by information technology

Growth and focus on service marketing and management

 What is a Product?
 Anything that can be offered to a
market for attention, acquisition, use,
or consumption and that might satisfy a
want or need.

Includes: Goods, services, events,

persons, places, organizations, ideas, or
some combination thereof.
 What is a Service?
“A form of product that consists of activities, benefits, or
satisfactions offered for sale that are essentially intangible
and do not result in the ownership of anything.”
“Services are deeds, processes, and performances”.
- Valarie Zeithaml & Mary Jo Bitner
 Examples of Service Industries

 Health Care
 hospital, medical practice, dentistry, eye care
 Professional Services
 accounting, legal, architectural
 Financial Services
 banking, investment advising, insurance
 Hospitality
 restaurant, hotel/motel, bed & breakfast,
 ski resort, rafting
 Travel
 airlines, travel agencies, theme park
 Others:
 hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club
Fed Ex Example
 The Nature of A Service

“ The service product is essentially a

bundle of activities, consisting of the core
product - which in Federal Express’ case
consists of transporting packages
overnight and delivering them next
morning to the addressee, plus a cluster of
supplementary services.”
 The Nature of A Service

The Example of Federal Express

Advice and
Communication
Bill Statements
Order Taking
Overnight
Transportation Problem Solving
Supplies and Delivery of
Packages
Tracking
Pick-up
Documentation
Characteristics of Services
Tangibility of goods and services
 Implications of Intangibility

Services cannot be inventoried

Services cannot be patented
Services cannot be readily displayed
or communicated
Pricing is difficult
 Strategies for intangibility

 provide tangible evidence

 symbolic cues (i.e. uniforms, logos)
 tangible cues (i.e. membership cards, ticket,
certificates)
 reduce risk
 emphasise reputation and qualifications
 service guarantees
 inform and educate customers
 Heterogeneity (Variable)
 service quality varies across service encounters
 service encounter is the interaction between service
employee and customer
 ‘moments of truth’
 service people are central to service delivery
 service is delivered in ‘real’ time
 Implications of Heterogeneity

Service delivery and customer satisfaction depend

on employee actions
Service quality depends on many uncontrollable
factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted
 Strategies for Variability
 customer surveys and feedback
 training in interpersonal and technical skills
 provide product knowledge
 ensure back-stage systems support front line
staff
 use standardisation strategies
 franchising, scripts
 build quality into all processes
 Inseparable
 simultaneous production and consumption
 the service provider is the product
 the customer is involved (partial employee)
 other customers may be present
 Implications of Simultaneous
Production and Consumption
Customers participate in and affect
the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
 Strategies for inseparability
 manage the service encounter
 scripts and roles
 front-line staff need both technical and interpersonal skills
(recruit & train)
 educate the customer (provider –marketer)
 manage customer interactions
 manage the physical evidence
 develop customer service policies and service recovery
procedures
 Perishable
 services cannot be stored
 need to manage supply and demand
 Implications of Perishability

 It is difficult to synchronize supply and

demand with services
 Services cannot be returned or resold
 How can demand be managed?
 accurate demand forecasting
 develop off-peak and on-peak strategies
 use reservation systems and differential
pricing
 employ part-time staff
 extend hours of operation
 Provide self-service options (i.e. ATMs,
internet banking)
Goods versus Services
 Classification of Services
Based on Degree Of Cust. Involvement
( Lovelock)
1. People Processing
2. Possession Processing
3. Mental Stimulus Processing
4. Information Processing
 Four Categories of Services Based on
the Process Used
 People Processing  Mental Stimulus Processing
 Tangible Acts Directed  Intangible Acts Directed Toward
Toward People People
 e.g. airlines, hospitals,  e.g. consulting, education,
hair stylists, fitness psychotherapy, broadcasting
centers  Information Processing

 Possession Processing  Intangible Acts Directed Toward

Intangible Assets
 Tangible Acts Directed
 e.g. accounting, banking,
Toward Possessions financial services
 e.g. repair services,
landscaping, house
cleaning services
 Levels of Customer Contact with Service
Organizations

Emphasizes encounters
High with service personnel

M o v ie T h e a te r s

M a il B a s e d R e p a ir s

In te r n e t- b a s e d
S e r v ic e s

Emphasizes encounters Low

with equipment
 Other Classification of Services
 Degree of Tangibility
 Based on Skills and Expertise Required-e.g. Professional &
non professional

 Business Orientation of service provider

 Type of end user
 Labour Intensive
Services Marketing Mix
 Traditional Marketing Mix

All elements within the control of the firm that

communicate the firm’s capabilities and image to customers
or that influence customer satisfaction with the firm’s
product and services:
 Product
 Price
 Place
 Promotion
An expanded marketing mix for services

Product
People (service)
Process
Place,
Place &
cyber- Customers Price
Time
space Customers
Customers Price
& time

Promotion

Physical evidence
People
 All human actors who play a part in service
delivery and thus influence the buyer’s
perceptions: namely, the firm’s personnel, the
customer, and other customers in the service
environment.

customer
service employees
other customers
Physical Evidence
 The environment in which the service is
delivered and where the firm and customer
interact, and any tangible components that
facilitate performance or communication of the
service.

•atmosphere
décor, music etc.
•equipment
•facilities
•uniforms
Process
 The actual procedures, mechanisms, and flow
of activities by which the service is delivered—
the service delivery and operating systems.

service delivery systems

•back stage
•front stage
procedures
policies
Expanded Marketing Mix for Services
 Expanded Marketing Mix for
Services
PEOPLE PHYSICAL PROCESS
EVIDENCE
Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicating Signage Level of customer

culture and values involvement

Employee research Employee dress

Other tangibles
 The Services Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing
“enabling the “setting the
promise” promise”

Employees Interactive Marketing Customers

“delivering the promise”
 Services Marketing Triangle
Applications Exercise
 Focus on a service organization. In the context
you are focusing on, who occupies each of the
three points of the triangle?
 How is each type of marketing being carried out
currently?
 Are the three sides of the triangle well aligned?
 Are there specific challenges or barriers in any of
the three areas?
 Ways to Use the
Services Marketing Triangle
Overall Strategic Assessment
• How is the service
organization doing on all
three sides of the triangle?
• Where are the
weaknesses?
• What are the strengths?
Specific Service Implementation
• What is being promoted and
by whom?
• How will it be delivered and
by whom?
• Are the supporting systems in
place to deliver the promised
service?
 Challenges for Services
 Defining and improving quality
 Communicating and testing new services
 Communicating and maintaining a consistent image
 Motivating and sustaining employee commitment
 Coordinating marketing, operations and human resource
efforts
 Setting prices
 Standardization versus personalization