SERVICES MARKETING

SERVICES
“Services are activities, benefits or satisfaction
which are offered for sale or provided in connection
with sale of goods”. - The American Marketing
Association

“Services are those separately identifiable

essentially intangible activities, which provide
want satisfaction when marketed to consumers
and/or industrial uses and which are not necessarily
tied to the sale of a product or another service”. -
Stanton
COMPONENTS OF SERVICE

Physical
Product
 1. The Physical Product
The various products marketed by a firm involve the
physical transfer of ownership of those products.
They are tangible and their quality is standardised.

For Example, physical products include T.V., Radio,

Refrigerators, Computers, Hair oil, Vacuum Cleaner,
Washing Machine, etc.
 2. Service Product
A service is an activity or benefit that one party can
offer to another which is essentially intangible in
nature. Service involve some interaction with
customers without effecting transfer of ownership.
For example, people visiting exhibitions, trade fairs
are allowed to inspect the consumer durables
without being approached by sales representatives.
Salesmen are trained in making proper approach to
the customer visiting their showrooms.
 3. Service Environment
The potential customers form an impression about
the service on the basis of service environment. The
service environment represents the physical back
drop that surrounds the service.
For example, providing hygienic food is the core
service in a hotel or restaurant. Customers expect
the restaurants to be maintained clean, offer flexible
dining hours prompt service, soft music, décor, exotic
menu etc.
 4. Service Delivery
The Service delivery is one of the important
components of service. Service delivery is of great
importance to the customer’s overall perception
about the quality of service. The service provider
should give due consideration to the way service is
rendered to customers. Services are created as they
are consumed.
SERVICES
CHARACTERISTICS OF SERVICES

1. Intangibility
2. Inseparability
3. Heterogeneity (Individuality or Variability)
4. Perishability
5. Ownership
6. Absence of Quantitative measurement
 CLASSIFICATION OF SERVICES
1. Classification of Services by Adrian Payne
(a) Communications and information services
(b) Public utilities, government and defence
(c) Health care
(d) Business, Professional
and Personal Services
(f) Recreational and hospitality services
(g) Education; and
(i) Other non-profit organisations
 CLASSIFICATION OF SERVICES
2. Classification of Services
by Christopher
Lovelock
 Nature of Service Act
 Type of relationship that the
service organisation has with its
customers
 Scope for Customisation and
Judgement in
DeliverySystem
 Nature of demand and supply for
the service
 CLASSIFICATION OF SERVICES

2. Industrial Service:
1. Consumer Service:  Financial Services
 Food Services  Insurance services
 Hotels and Motels  Transport & warehousing
 Personal care services  Engineering services
and
 Car services firms
 Entertainment services  Advertising
 Transport services promotion
 Communication Services services
 Insurance services  Office services,
 Financial services
 Management
consultancy
services.
 CLASSIFICATION OF SERVICES –
Philip Kotler
1. Pure Tangible Goods
2. Tangible Goods with accompanying services
3. Hybrid
4. Major service with accompanying minor goods
and services
5. Pure service
 SERVICES DESIGN

A service involves creation and delivery of core

benefits in order to satisfy an identified need of the
customer. As a process, it refers as to how a service
is provided or delivered to a customer. In a
competitive market, the importance of the actual
process in service delivery has been recognised.
 Service Customer
Service Customer
Performance Experience
Requirements Expectations
Standards With service

Service Design

Service Custom Service Customer

Product Operati er Provider
Facilitie Encounter Provider
Design ons Service behaviour
s Design Environment interaction
Process Process
Design Design

Service
Quality
Factors Influence Designing Service Process

1. The Service Itself

2. Customer Participation in the process
3. Location of Service Delivery
4. Level of Customer Contact
5. Degree of Standardisation
6. Complexity of the service
Mgt model for Service Design / Stages /
Process

Developing Specifying Generating

design design & evaluating Developing
attributes performance design design details
standards concepts

Improving Assessing Measuring Implementing

performance satisfaction performance the design
 BLUEPRINTING
A service blueprint is a flow chart of the service
process. It conveys the service concept by showing all
the elements or activities and their sequencing and
interaction. It is pictorial description of the service
system showing the service at an overview level. It
explains how each job or department functions in
relationship to the service as a whole. Blueprinting
was developed by Shostak in 1987.
STAGES IN PREPARATION OF BLUEPRINTING

1. Put the service in the form of its molecular

structure
2. Divide the process into logical steps
3. Recognise the variability in the process
4. Identify the backstage actions in the process
 Technology & Service Productivity
Service organisations can improve their productivity
by introducing systems and technology in their
operations. Under the systems approach to services
marketing technology, engineering and management
sciences are implemented into service industries.
The systems approach looks at the task as a whole.
The systems approach identifies the key operations
to be performed, devises new ways of performing
each operation, eliminates superfluous practices
through new methods and improves the coordination
of processes within the system.
Application of technology to service Activities

Hard Soft Technology Hybrid

Technology Technology
 1. Hard Technology
Hard technologies substitute machinery, tools and
other engineering devices for labour intensive
performance of service work. The following
examples can be offered for the application of hard
technologies in the service sector.
Example: Automatic car washes, airport x-ray

equipment, automatic car vending

equipment, audio
computers, the consumer credit card and bank
balance checking machine.
 2. Soft Technology
Soft technology means substituting pre-planned
systems for individual service operations. Though
the systems involve some technology, the basic
characteristic is the system itself.
Example: Fast food restaurants such as MC Donald,
Wendy, Pizza hut, Kentucky Fried Chicken follow
rationale division of labour. Use of soft technologies
in these organistions ensures the benefits in the
forms of high quality, cost control, speed and
efficiency, cleanliness and low prices.
 3. Hybrid Technology
Hybrid technologies combine hardware with
carefully engineered systems to bring greater
efficiency, order and speed to the service process.
Example: The cost of energy can be substantially

saved by careful programming for types and grades

of roads, location of stops, congestion of roads, toll
road costs and mixing point access.
 Role of Technology in Service process

1. Easy accessibility of service

2. New ways to deliver service
3. Close link with customers
4. Higher level of service
5. Global reach of service
6. Cost Rationalisation
 Building Service Aspirations
The service generating organisations building service
aspirations in the process of generating demand for
the services. The aspirations may be generated in
two ways, namely, generating aspirations to serve
the users and generating aspirations to use the
services.
Service aspirations of organisation engaged in
generating services focus on offering quality services.
Quality is generally conceptualised as an attitude
towards service.
Building Service Aspirations
 Service Marketing Mix
The traditional marketing mix is considered in the
context of services. Since a different marketing mix is
needed for services some have expanded the
traditional four Ps.
1. Product
2. Pricing
3. Promotion
4. Place
5. People
6. Process
7. Physical evidence
Service Marketing Mix

Product

CUSTOMER Price

Promotion

Physical
Evidence
 Service Marketing Mix - Definition
“The marketing mix concept is a well established
tool used as a structure by marketers. It consists of
the various elements of a marketing programme
which need to be considered in order to successfully
implement the marketing strategy and positioning in
the company’s market. It is important internal
elements or ingredients that make up an
organisation’s marketing programme”.
– Adrian Payne
 Product (Service Product)
According to Adrian Payne, a product is an overall
concept of objects or processes which provide some
values to customers. Goods and services are sub-
categories of product. The term produce is used in a
broad sense to denote either a manufactured good
or product and a service. Strictly speaking,
customers are not buying goods or services but
specific benefits and value from the total offering.
This total offering to the customer is termed as
“offer”.
Product (Service Product)
Potential

Augmented

Expected

Core Total
Product
 1. The core or generic product
The core product represents the basic services of a
product. This product is at its basic level. For
example, food served in a restaurant a bed in a hotel
room for the night safety of deposits and loanable
funds in a bank.
 2. The expected product
The expected product consists of the core product
together with the minimal purchase conditions which
need to be met. For example in a restaurant in
addition to basic food served, aspects such as
cleanliness, timely service polite and courteous
service of bearer, availability of menu and
background music are expected.
 3. The augmented product
Augmented product refers to offerings (product
benefit or services in addition to hat customers
expect). This concept enables a product to be
differentiated from another. For example, though
IBM has not got technologically advanced core
product they are praised for excellent customer
service. This adds value to their core product in
terms of reliability and responsiveness.
 4. The Potential product
Potential product refers to doing everything
potentially feasible to hold and attract the
customers. The concept of potential product of a
restaurant is viewed in terms of a pleasing flower
arrangement, manager’s word of thanks, readiness
to go out of the way to serve, etc.
 PRICE
Price plays a significant role in the marketing mix by
attracting revenue to the marketer. Pricing decisions
are important for determining the value of the
service as perceived by the customer and building of
an image for the service. Price serves as a basis for
perception of quality. The pricing strategy should be
in tune with the marketing strategy. Pricing strategy
should gain competitive advantage for the firm.
 PRICE Decisions - Reasons
1. Pricing decisions have an impact on marketing
channels. Suppliers, sales people, distributors,
competitors and customers all are affected by the
pricing system.
2. Since services are intangible in nature, pricing of
services is highly important. The price is indicative
of the quality of service that customers receive.
Customers, by going through the menu of a
restaurant can perceive the quality of food and
the restaurant’s service level.
 PRICE Decisions - Reasons
3. Pricing gives customers information about the
immediacy of delivery and the importance of
availability. Premium pricing is followed during
maximum demand period and discounted pricing
when the demand for the service is low.
4. Pricing allows homogeneous services to be
differentiated and facilitates the adoption of a
premium pricing strategy.
 PRICING Objective
The price policies for service marketers should be on
the lines of those used throughout the general field
of marketing. The pricing policy to be followed
should be based on pricing objectives. The important
pricing objectives are survival, profit maximisation,
sales maximisation, prestige and ROI.
In quoting prices, some firms try to meet
competition. Where adverse market conditions
prevail, marketers quote lower prices in order to
ensure survival in the market, even foregoing
profitability.
 PROMOTION
Promotion is an important part of the marketing mix
for many marketers. The promotion element of the
service marketing mix communicates the positioning
of the service to customers. Promotion adds
tangibility and helps the customer evaluate the
service offer. The promotion mix includes six
elements, namely (a) Advertising (b) Personal Selling
(c) Sales Promotion (d) Public Relations (e) Word of
mouth and (f) Direct mail.
PROMOTION

Personal
Selling
PROMOTION
 (a) Advertising for services
Advertising is the impersonal communication used by
service firms. Advertising in service marketing adds
to the customer’s knowledge of the service,
persuades the customer to buy and differentiates the
service from other service offerings. Persistent
advertising is, therefore, a must for the success of
the marketing of the service.
 (b) Personal Selling
Personal Selling has assumed much importance in
service firms owing to the following reasons.
a) There is a personal interaction between the
service provider and the customer
b) The service is provided by a person not a
machine.
c) “People” are becoming part of the
service product.
 (c) Sales Promotion
Those marketing activities other than personal
selling, advertising and publicity that stimulate
customers and dealers effectively such as display
shows, exhibitions, demonstrations and various non-
recurrent selling efforts not in the ordinary routine
are the sales promotional measures.
(c) Sales Promotion
TOOLS OF SALES PROMOTION

Free Offers

Contests

Discount and Commission Fairs

and Shows

Coupons, Prizes

Cash Refunds

Warranties
 (d) Publicity or Public Relations

Publicity consists of non-personal stimulation of

demand for a product or service by way of arranging
commercially significant news to have appeared in
mass media free of cost (not paid for the sponsor).
Publicity is a free news appearing in mass media
about a company and its products.
 (e) Word of Mouth Promotion
Customers who are already exposed to the delivery
of a service, share their experiences with other
potential customers. They offer advice on service
providers and businesses who are established
already. Personal recommendations through word
constitute
information source.

buying come from friends, associates collegues or

experts.
 4. PLACE
Place mix of services marketing involves the location
and channels which are the two key decision areas.
The service provider should decide as to how to
deliver the service to the customer and where this
should take place. The service provider should ensure
that the promised services reach the ultimate users
without any distortion. With regard to location, a
service firm decides where its operations and staff
are situated.
 5. PEOPLE
In all the organisations, people play a decisive role.
Employees working in the service organisations are
the contact people with the customers. Employees
working in a bank, hotel, hair-cutting saloon etc., are
all frontline people. They are in direct contact with
the customers who visit their services. The role of
these frontline people decides the success of the
service organisation. A service organisation can be
only as good as its people. The strength and success
of the service organisation lies in the quality of the
service personnel working in the organisation.
 6. PHYSICAL EVIDENCE
Physical evidence is another important variable to be
considered in the context of services marketing.
Since a service is intangible, it is important for the
client to search for evidences which enables him to
evaluate the service. Physical evidences are those
tangible clues which customers may receive during
the process of receiving the service. The customers
evaluate the worthiness of the service with the
physical evidences they receive.
 7. PROCESSES
The processes by which services are created and
delivered to the customers are an important
element of marketing mix. Customers perceive the
delivery system as a part of the service itself. The
decisions on process management are of great
importance to the success of the marketing of the
service. The processes involve the procedures, tasks,
schedules, mechanisms, activities and routines by
which a service is delivered to the customer.