By Ms.

Shubhika Gaur
 Unit 1: Introduction to Services Marketing
• Introduction: Definition, Characteristics, and Classification of Services
• Difference between Product and Services Marketing
• Paradigms in Services Marketing, Present Marketing Environment
• Services Marketing Mix: Understanding the 7 Ps
• Strategies for Services Marketing; Why marketing of services
• Difference between Goods & Services: Challenges and implications
• Strategies to combat these challenges
 Relevance of service
marketing subject
Services play a crucial role in today's economy, accounting for a significant
portion of economic activities in many countries.
• Dominance of the Service Sector- In many economies, the service sector has
become the dominant contributor to GDP.

• Intangibility and Inseparability-Services are intangible and often inseparable

from the provider. This poses unique challenges in marketing.

• Customer Experience-The quality of the customer experience is crucial in

services. Unlike products, services involve direct interaction with customers.

• Innovations in Technology-The quality of the customer experience is crucial in

services. Unlike products, services involve direct interaction with customers.
Services are essentially intangible activities that are separately
identifiable and provide the satisfaction of wants.

Their purchase does not result in the ownership of anything

physical.

A service is an intangible economic activity that is performed by one

party (the service provider) to fulfill a need or meet the demands of
another party (the service recipient or customer).
 What is Service Marketing?
• Service marketing is simply the process of promoting and selling a service or
an intangible good to a specific group of people.

• It is a new way of marketing that has become very popular and helps
companies all over the world promote their services.

• Service marketing is different from product marketing, which involves

promoting a product that can be seen.

• Instead, service marketing involves promoting a service that can’t be seen

but is still sold to customers. Customers can choose from a wide range of
services.
• Service marketing is marketing based on relationship and value.

• The American Marketing Association defines services as activities, benefits,

or satisfactions that are offered for sale or provided with the sale of goods to
the customer, that is, pre-sale and after-sales services.

• Berry states, ‘while a product is an object or physical thing, a service is a

deed, performance, or an effort’.
For example, a business that's selecting a range of
company cars may have the opportunity to test
drive the vehicles before signing a lease, but the
insurance that covers the fleet is an intangible or
invisible, yet necessary requirement that the
customer cannot try.
 Services Marketing
• Healthcare industry Examples
Doctors, nurses, surgeons, and other people who work in hospitals are great
examples they sell their health services.

• Hospitality industry
The hospitality industry is made up of places like hotels and restaurants that
serve food, and rent rooms.

• Professionals services
Accountants, lawyers, teachers, writers, carpenters, chefs, electricians, and
plumbers are all examples of service-based jobs.
 Services are
intangible

Services Services
have varying relate to
costs performance

Characteristics
of service
marketing
Services are Services are
perishable not owned

Services are
inseparable
from
providers
 Services are intangible
• McDougall and Snetsinger (1990) defined intangibility as “the lack of physical
evidence” and “the degree to which a product or a service cannot provide a
clear concrete image”. Services cannot be seen, tasted, felt, heard, or smelled
before buying.
• While customers can test, keep and use physical products, they can only
experience services. The purchase of a service depends on the customer's
knowledge and understanding of what the company is offering.
A customer of a hair salon only has an appointment and the promise of
a fresh haircut.
Salon conveys the idea that its service is professional yet personalized

The salon’s exterior and interior should look clean and showcase high-
Example? quality products, the staff needs to dress properly and be welcoming
and approachable toward customers

The salon’s value proposition should extend to its online presence; its
website, social media, email campaigns, loyal customer programs, and
other communication should convey feelings of professional service
and quality.
 Services relate to performance
• The better the service, the more likely the business is to succeed. The
hospitality industry is a perfect example of a performance-related
service. A good experience at a restaurant is likely to see repeat
customers, while a poor experience can see customers drop.

Excellent food

Seating, Ordering, Paying

• Services are not owned:-While customers can keep physical documents as
evidence of receiving a service, such as an insurance policy, the customer
does not own the service itself.

• Services are inseparable from providers:- A user does not take the service
away from the provider but instead experiences the service. The provider
maintains the service and that service is continually provided to other
customers. Therefore, providers are integral to the delivery of a service.
Airtel offers products and services both for the end consumer as well as
for businesses.
2G, 3G and 4G wireless services, mobile commerce, fixed line services,
high speed DSL broadband, IPTV and Digital TV.

Consumers can only purchase the

services
• Services are perishable:- A service lasts only for as long as a customer
experiences it. A musical band provides a service to their fans in an arena and the service
lasts for the duration of the concert.
Once the band has left the stage and the fans have exited the
building, the service is over.

• Services have varying costs:- A physical product usually costs the same to
every customer, but a service cost may vary.

A plumber's charge for a repair can differ depending

on the complexities of the job, the amount of time
required to complete the work and the materials
used.
 Classification of Services
a) Services for people – Like Health care, restaurants, and saloons,
where the service is delivered by people to people.
b) Services for goods – Like transportation, repair and maintenance,
and others. Where services are given by people for objects or goods.
 2) Classification of services based on intangibility

a) Services directed at people’s mind – Services sold through influencing the

creativity of humans are classified on the basis of intangibility.
b) Services directed at intangible assets – Banking, legal services, and
insurance services are some of the services most difficult to price and
quantify.
Difference between Product and
Services Marketing
BASIS FOR COMPARISON PRODUCT MARKETING SERVICE MARKETING

Meaning Product marketing refers to the process Service marketing implies the marketing
in which the marketing activities & of economic activities, offered by the
functions are aligned to promote and business to its clients for adequate
sell a specific product for a particular consideration.
segment.

Marketing mix
4 P's 7 P's

Sells
Value Value & Relationship

Who comes to whom?

Products come to customers. Customers come to service.

Transfer It can be owned and resold to another It is neither owned nor transferred to
party. another party.

Returnability Products can be returned. Services cannot be returned after they

are rendered.

Tangibility They are tangible, so customer can see They are intangible, so it is difficult to
and touch it, before coming to the buying promote services.
decision.
BASIS FOR COMPARISON PRODUCT MARKETING SERVICE MARKETING

Separability Product and the company producing it, Service cannot be separated from its
are separable. provider.

Customization Products cannot be customized as per Services vary from person to person, they
requirements. can be customized.

Imagery They are imagery and hence, receive They are non-imagery and do not receive
quick response from customers. quick response from customers.

Quality comparison Quality of a product can be easily Quality of service is not measurable.
measured.
 Paradigms in Services Marketing
• In services marketing, there are several paradigms that help us understand
and analyze the nature of services and the strategies involved in marketing
them. These paradigms provide different perspectives and frameworks for
approaching services marketing.

• The present marketing scenario is a lot more different from what it used to be
earlier. The belief, mindset, perception and attitude of the consumers have
changed tremendously.

The Production The Customer The Relationship

Paradigm Paradigm Paradigm
 The Production Paradigm
• The production paradigm focuses on the efficient delivery of services
by optimizing operational processes and resources.

• It emphasizes standardization, consistency, and cost-effectiveness.

• In this paradigm, the primary goal is to maximize efficiency and

minimize costs.

• The focus is on achieving economies of scale, streamlining service

delivery processes, and ensuring reliability and quality.
 The Customer Paradigm
• The customer paradigm places the customer at the center of the
marketing strategy.

• It recognizes that customers play an active role in the service delivery

process and their satisfaction is crucial for business success.

• This paradigm emphasizes understanding customer needs,

preferences, and expectations, and tailoring services to meet those
requirements.

• It also emphasizes building long-term relationships with customers

through personalized experiences, excellent service quality, and
customer engagement.
 The Relationship
• The
Paradigm
relationship paradigm emphasizes the importance of building and
maintaining long-term relationships with customers.

• It recognizes that customer loyalty and repeat business are critical for
sustainable success in service marketing.

• This paradigm focuses on developing trust, mutual understanding, and strong

relationships with customers.

• It involves strategies such as personalized service, customization, ongoing

communication, and loyalty programs to foster customer loyalty and
encourage positive word-of-mouth.
 Present Marketing Environment
• The marketing environment is constantly evolving, shaped by various factors
that influence how businesses operate and interact with their target markets.
Here are some key aspects of the present marketing environment:

Digital Customer Data-driven

Transformation Empowerment Marketing

Sustainability Globalization
and Social and Market
Responsibility Expansion
 Digital Transformation
• The rapid advancement of technology has significantly transformed the
marketing landscape.

• The widespread adoption of digital platforms, social media, mobile devices,

and data analytics has provided new opportunities for businesses to reach
and engage with their customers.

• Digital marketing strategies, such as content marketing, social media

marketing, influencer marketing, and search engine optimization, have
become essential for businesses to stay competitive and connect with their
target audience.
 Customer Empowerment
• Customers today have access to vast amounts of information, enabling them
to make more informed decisions.

• They have higher expectations for personalized experiences, transparency,

and value. Social media and online reviews have empowered customers to
share their opinions and influence the reputation of brands.

• As a result, businesses need to prioritize customer-centricity, deliver

exceptional experiences, and actively listen to and engage with their customers
to build trust and loyalty.
 Data-driven Marketing
• The abundance of data available through various sources, such as online
activities, social media interactions, and customer behavior, has enabled
marketers to gain deeper insights into their target audience.

• Data analytics and marketing automation tools allow businesses to analyze

customer data, segment markets, and personalize marketing campaigns.

• This data-driven approach helps optimize marketing strategies, improve

targeting, and enhance the overall effectiveness of marketing efforts.
Sustainability and Social
Responsibility
• There is an increasing emphasis on sustainability and corporate social
responsibility (CSR) in the present marketing environment.

• Customers are more conscious of environmental and social issues, and they
expect businesses to act responsibly.

• Brands that prioritize sustainable practices, ethical sourcing, and community

involvement tend to attract and retain customers who align with their values.
Incorporating sustainability and CSR into marketing strategies can enhance
brand reputation and contribute to long-term success.
Globalization and Market
Expansion
• Globalization has opened up new markets and opportunities for businesses
to expand beyond their traditional boundaries.

• With advancements in transportation, communication, and e-commerce,

companies can now reach customers in different regions more easily.

• However, expanding into new markets also requires understanding cultural

differences, local regulations, and adapting marketing strategies accordingly.
Cross-cultural marketing and localization have become crucial considerations
for businesses looking to expand globally.
 Services Marketing Mix
• The service marketing mix is also known as an extended marketing mix and is
an integral part of a service blueprint design. It consists of 7 P’s which are
product, price, place, promotions, people, process and physical evidence.
The service marketing mix consists of 7 P’s as compared to the 4 P’s of a
product marketing mix. Simply said, the service marketing mix assumes the
service as a product itself. However, it adds 3 more P’s which are required for
optimum service delivery.
 1) Product
The product in service marketing mix is intangible in nature. Like physical
products such as a soap or a detergent, service products cannot be measured.
Tourism industry or the education industry can be an excellent example. At the
same time service products are heterogenous, perishable and cannot be
owned.

The service product thus has to be designed with care. Generally service blue
printing is done to define the service product.

For example – a restaurant blue print will be prepared before establishing a

restaurant business. This service blue print defines exactly how the product (in
this case the restaurant) is going to be.
 2) Place
Place in case of services determines where is the service product going to be
located.

The best place to open up a petrol pump is on the highway or in the city. A
place where there is minimum traffic is the wrong location to start a petrol
pump.

Similarly, a software company will be better placed in a business hub with a lot
of companies nearby rather than being placed in a town or rural area.
 3) Promotion
Promotions have become a critical factor in the service marketing mix. Services
are easy to be duplicated and hence it is generally the brand which sets a
service apart from its counterpart lot of banks and telecom companies
promoting themselves rigorously.

Why is that? It is because competition in this service sector is generally high

and promotions is necessary to survive. Thus banks, IT companies, and
dotcoms place themselves above the rest by advertising or promotions.
 4) Pricing
• Pricing in the case of services is rather more difficult than in case of products.
If you were a restaurant owner, you can price people only for the food you
are serving. But then who will pay for the nice ambiance you have built up for
your customers? Who will pay for the band you have for music?

• Thus these elements have to be taken into consideration while costing.

Generally, service pricing involves taking into consideration labor, material
cost and overhead costs. By adding a profit mark up you get your final service
pricing. You can also read about pricing strategies.
 5) People
• People is one of the elements of service marketing mix. People define a service.
If you have an IT company, your software engineers define you. If you have a
restaurant, your chef and service staff defines you. If you are into banking,
employees in your branch and their behavior towards customers defines you.

In the case of service marketing, people can make or break an

organization.

• Thus many companies nowadays are involved into especially getting their staff
trained in interpersonal skills and customer service with a focus on
customer satisfaction. In fact, many companies have to undergo accreditation to
show that their staff is better than the rest. Definitely a USP in the case of
services.
 6) Process
• The service process is the way in which a service is delivered to the end
customer.

• Lets take the example of two very good companies – Mcdonalds and Fedex.
Both the companies thrive on their quick service and the reason they can do
that is their confidence on their processes.

• On top of it, the demand of these services is such that they have to deliver
optimally without a loss in quality. Thus the process of a service company in
delivering its product is of utmost importance. It is also a critical component
in the service blueprint, wherein before establishing the service, the company
defines exactly what should be the process of the service product reaching
the end customer.
 7) Physical Evidence
• The last element in the service marketing mix is a very important element. As
said before, services are intangible in nature.
• However, to create a better customer experience tangible elements are also
delivered with the service.
• Take an example of a restaurant that has only chairs and tables and good food,
or a restaurant that has ambient lighting, nice music good seating arrangement,
and also serves good food. Which one will you prefer? The one with the nice
ambiance. That’s physical evidence.

• Several times, physical evidence is used as a differentiator in service marketing.

Imagine a private hospital and a government hospital. A private hospital will
have plush offices and well dressed staff. Same cannot be said for a government
hospital. Thus physical evidence acts as a differentiator.
 Strategies for Services Marketing
• Service marketing strategies means the marketing strategies used for service
products. To satisfy customers the service organizations should provide
services as desired by the consumers.

• Since the service is intangible, it is very difficult to adopt suitable strategies

and measure the level of satisfaction of the customers

• When it comes to services marketing, businesses need to employ strategies

that recognize the unique characteristics of services and focus on creating
value for customers.
 Service Differentiation:
• Differentiating the services from competitors is essential for standing out in
the market. Identify your unique selling points and emphasize them in your
marketing efforts.
• Highlight the features, benefits, and advantages that set services apart,
such as superior quality, customization, convenience, expertise, or
innovative solutions.
• Differentiation helps position services as distinct and valuable, attracting
customers who are seeking those specific benefits.
 Customer Experience and
Relationship Management
• Exceptional customer experiences are crucial for
services marketing.

• Focus on providing personalized, memorable

experiences at every touchpoint of the customer
journey. Personalized Service &
Atmosphere,
• Understand the customers' needs, preferences, and Third Place Concept,
pain points to tailor services accordingly. Mobile App,
Starbucks Rewards Program,
Proactive Engagement
• Foster long-term relationships by consistently delivering
on promises, providing excellent customer service, and
proactively addressing customer concerns.
 Service Quality and
Reliability
• Quality and reliability are paramount in services marketing.

• Consistently delivering high-quality services builds trust

and credibility with customers.

• Invest in training and developing of employees to ensure Fast & Accurate Deliveries,
they have the necessary skills and knowledge to deliver User-Friendly Platform,
exceptional service.
Customer Support, On-
Time Deliveries, Inventory
• Implement quality control measures, service standards, Management
and feedback mechanisms to monitor and improve
service quality.
• Reliability and consistency in service delivery are crucial for
building customer loyalty and positive brand reputation.
 Service Innovation
• Services marketing is not static; it requires
continuous innovation to stay ahead of the
competition and meet evolving customer
needs.

• Encourage creativity and innovation within Business Model

organization to develop new service Dynamic Pricing
offerings, improve existing services, or find In-app Features,
innovative ways to deliver services. Safety Innovations
UberEats
• Stay updated of industry trends,
technological advancements, and customer
feedback to identify opportunities for
service innovation and differentiation.
 Integrated Marketing
Communications
• Create a cohesive marketing
communications strategy that integrates
various channels and touchpoints to
effectively reach and engage target
audience.
• Utilize a mix of online and offline channels, Unified Message Across
including digital advertising, social media, Channels
content marketing, email marketing, public
relations, and traditional advertising. "Don't Live Life Without
It" Campaign
Social Media and Content
• Consistency in messaging and branding Marketing
across different channels helps reinforce
organization brand identity and value
proposition.
 Situat
ion
• You are the marketing strategist for EcoHotel, an eco-friendly boutique hotel
that emphasizes sustainability and luxury in its services. The hotel has been
successful in attracting eco-conscious travelers, but you want to enhance its
market position and increase bookings.
• Brand Case:
• EcoHotel faces competition from both traditional and other eco-friendly
hotels. To improve its market presence, you need to develop and implement
effective strategies of service marketing tailored to its unique value
proposition.
• Task:
• Outline a comprehensive strategy to enhance EcoHotel's market position.
 Assignment

Why does marketing of services explain with

the help of any service industry example?
Basis Goods Services

Services are intangible that cannot

Goods are tangible items that can
Meaning be seen, felt, touched or seen; but
be felt, touched or seen.
are experienced by the consumer.

Nature Goods are tangible in nature. Services are intangible in nature.

Services are heterogeneous and

Goods are homogeneous and can be depend upon the person providing
Type
produced exactly the same. the service and the customer’s
preferences.
 One can keep goods in stock as One cannot keep services in stock as
Inventory inventory. For example, a warehouse inventory. For example, getting a
full of watches. haircut at a salon.

There is involvement or participation

Involvement of customers at the time
Involvement of customers at the time of delivery
of delivery of goods is not possible.
of services.

Once purchased, goods can be Once provided, services cannot be

Return
returned to the seller. returned to the service provider.

Perishability Goods can and cannot be perishable. Services are perishable.

 The ownership of goods can be The ownership of services cannot
Transfer of Ownership transferred from one person(seller) be transferred from one person to
to another(buyer). another.

There is inconsistency in services,

There is consistency in the case of as different customers have different
goods, as different customers get demands and get their demands
Inconsistency
standardized demand fulfilled. For fulfilled accordingly. For example,
example, laptops. different people need different
services in salons.

The production and consumption of

The production and consumption of
goods can be separated. For
services happen simultaneously. For
Inseparability example, chairs are manufactured
example, eating food at a
first and are used by consumers
restaurant.
later after a while.
 Tangibility Spectrum
• The tangibility spectrum is a concept that helps categorize products and services
based on their degree of tangibility or intangibility. It represents the range of
offerings from purely tangible products to purely intangible services. Here are the
different points on the tangibility spectrum:

• Pure Tangible Goods: These are physical products that customers can see, touch,
and possess. Examples include cars, clothing, furniture, electronics, and household
appliances. Tangible goods have high physical attributes and can be evaluated
before purchase.

• Tangible Goods with Services: Some goods come with accompanying services that
enhance their value or provide additional support. Examples include warranties,
after-sales services, installation services, or maintenance services provided with the
purchase of products. These services complement the tangible goods and add value
to the overall offering.
• Hybrid Offerings: Hybrid offerings combine elements of tangible goods and intangible
services. These offerings often involve a tangible product that is combined with an
intangible service component. Examples include a software package with installation
and technical support, a physical product with a subscription-based service, or a
physical product that requires professional expertise for optimal use.

• Intangible Services with Tangible Components: Services that have tangible components
are positioned further toward the intangible end of the spectrum. These services involve
physical elements that are essential to the service delivery process. Examples include a
spa service that uses specific products, a restaurant experience that includes food and
beverages, or a live performance that includes printed programs or merchandise.

• Pure Intangible Services: These are services that are entirely intangible and cannot be
touched or possessed. Examples include consulting, education, healthcare, banking,
insurance, transportation, and entertainment services. Pure intangible services rely
heavily on the expertise, skills, and interactions of service providers to deliver value to
customers.
• The tangibility spectrum helps businesses understand the characteristics of
their offerings and tailor their marketing strategies accordingly. It influences
aspects such as pricing, promotion, customer experience, and service
delivery. Recognizing where an offering falls on the tangibility spectrum allows
businesses to effectively communicate the value of their products or services
to customers and manage customer expectations.