Introduction to Services Marketing

Under the aegis of Dr. Garima Gupta

Group I
Topic I & II of Teaching Pedagogy
I

Theoretical Standpoint
• Applying product marketing techniques to services

• Branding services

• Internal marketing of services

• Creating a niche for services

• Direct sales of services internationally

II

Recent Trends & Developments

• Improving interpersonal skills

• Changing Business definitions

• Climate consciousness

• IT & Globalization

• Setting up of global bodies

III

Meaning & Nature of Services

“There are no such thing as service industries. There are only industries
whose service components are greater or less than those of other
industries. Everybody is in service.”

-Theodore Levitt-
A service is an act or performance offered by one party to another. Although the
process may be tied to a physical product, the performance is transitory, often
intangible and does not normally result in ownership of any factors of production.

A service is an economic activity that creates value and provides benefits for
customers at specific times and places by bringing about a desired change in, or on
behalf of, the recipient of service.
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
 Difference Between Goods & Services
Physical goods Services
Tangible Intangible
Homogeneous Heterogeneous
Production and distribution are separated Production, distribution and consumption
from consumption are simultaneous processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller
interaction

Customers do not participate in the Customers participate in production

production process

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership
IV

Characteristics of Services
Customers do not obtain ownership of services

Service products are ephemeral & cannot be inventoried

Intangible elements dominate value creation

Customers may be involved in the production process

Other people may form a part of the product

There is greater variability in operational inputs & outputs

Many services are difficult for customers to evaluate

Time factor assumes greater importance

Distribution channels take different forms

Customers do not obtain ownership of services

• Customers do NOT own tangible elements

• Exceptions: Food Services, Installation of spare
parts during delivery of Repair Services, Car
Rental, Loan etc

• Marketing Implication
– Pricing
– Time Based Calculations
– Customer-Choice Behavior Analysis
Service products are ephemeral & cannot be
inventoried
• Transitory & Perishable
• Demand < Supply: Wastage of unused capacity
• Demand > Supply: Disappointed Customers

• Managerial Implications:
– Smoothening Demand Levels
– Targeting Right segments at right time
 Intangible Elements Dominate Value Creation
• Managerial Implication:
– Employ Physical images & metaphors to
demonstrate competency
Customers May Be Involved in the Production Process

• Customers participate in creating the service product

• Self-service, withdrawing money from ATM,
cooperation with service personnel in settings such
as hair dressing, hotels, colleges etc

• Managerial Implication:
– Training the customer
– Treating the customer well: convenient location and time,
user friendly etc
 Other People May Form Part of the Product

• Customer <-> Service Personnel

• Customer <-> Other Customers

• Managerial Implication:
– Special care to selecting, training & motivating
employees
– Managing & Shaping customer behavior
 Greater Variability in Operational I/P & O/P

• Difficulty in Standardizing & Controlling quality

& consistency in both inputs & outputs
• All the more difficult for services that are
consumed as they are produced
• Mistake are more likely to occur
• Difficult to shield the customers from service
failures
 Difficult for Customers to Evaluate

• Search Properties
– Color, Shape, Price, Fit, Feel etc
• Experience Properties
– Discerned only after purchase or during consumption
– Taste, wear ability, ease of handling, quietness etc
• Credence Properties
– Difficult to evaluate even after consumption
– Requires expertise in areas
– Surgery, Professional Services, Technical Repairs
 Difficult for Customers to Evaluate

• Managerial Implication:
– Reduce customer’s perceived risk
– Helping them match their needs to specific service
features
– Educating them as to what to expect both during
and after service delivery
– Considerate and ethical treatment of customers
 Time Factor Assumes Greater Importance

• Many services are delivered in real time & in the

presence of customers
• Customers are time sensitive
• Willing to pay more for faster services
• Speed is critical

• Managerial Implication:
– Extended hours services
– 24x7 Services
 Distribution Channels Take Different Forms

• Electronic Delivery of Services is expanding

rapidly
• Information-based component of service can be
delivered instantaneously anywhere in the
world

• Managerial Implication:
– Small businesses can offer their services
inexpensively across vast geographic distances
V

Classification of Services
 Classification by Industry
• Entertainment Industry
• Education
• Telecommunications
• Finance & Insurance
• Transportation
• Public Utilities
• Government Services
• Health
• Hospitability Industry
• Business Services
• Telecommunications
• Trading
 Classification by Target Effect
Based on Degree Of Customer Involvement:

1. People Processing: Services aimed at physical care e.g. Healthcare,

clinics, restaurant, hospitals, hair stylists, fitness centers

2. Mental Stimulus Processing: Services aimed at mind of customer e.g.

Education, information, entertainment, consulting, psychotherapy

3. Possession Processing: Services aimed at physical possession & tangible

assets e.g. repair & maintenance, laundry, repair services, landscaping,
house cleaning services

4. Information Processing : Services for intangible assets e.g. Banking,

legal consultation, brokerage, financial services.
 Classification by Degree of Customer Contact

• High Degree (Every day) – TV channels, mobile etc.

• Moderate Degree (Regular) – Teacher, Barber,

washer man etc.

• Low Degree ( Occasional ) – Priest, Doctors etc.

 Others
• Skill level of service provider
– Professional/ Nonprofessional
– Teacher, Doctor, Engineer, Accountant

• Labor intensiveness
– People-based/Equipment-based
– Mechanic, Electrician, Plumber, Artisan, Laborer

• Goal of the service provider

– Profit /Nonprofit
VI

The Services Marketing Mix

 Level
Promotion:

Level
Promotion Blend, Salespeople,
Promotion:
Number Selection, Training &

Price
Promotion Blend, Salespeople,

Allowances
In centives,
NumberAdvertising Targets, Med
Selection, Training & ia

Price
Price:
Allowances
Types, of Ads, Copy Thrust, Sales

Differentiation,
In centives,
TypesAdvertising Targets, Med ia

Price:
Promotion,
Types, Types of Ads, Pu blicity
Copy Thrust, Sales

Differentiation,
Promotion, Pu blicity

Flexibility,
Discount
Terms,
Flexibility,
Discount
Terms,
Mix
Traditional Marketing
Product
Physical

Storage, Managing Channels

Product
Levels,

Storage, Managing Channels

Physical

Locations, Transportation,
Packaging,
Levels,

Lines,

Locations, Transportation,
Intermediaries, Outlet
Packaging,
Lines,
Product:

Intermediaries,
Channel Outlet
Type, Exposure,
Features

Warra
Product:

Channel Type,
Place:Exposure,
Features,

Place:
Branding
Accessories,
nties,
Branding
Accessories,
, Quality

Warranties,
Qua lity

etcetc
 Activities,
Standardization
& Customization

Physical
Evidence:
Facility Design,
Employee
Uniform, Other
Tangible elements

People:
Employee Recruiting,
Training, Motivation,
Reward System,
Team Work
Relevant Questions Please!

THANK YOU