services marketing

1. Introduction to Services
Marketing
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 1

2. Module – I Overview
• Importance of Service sector.
• Why study service marketing.
• “Service”.
• Nature of Services.
• Characteristics of services
• Goods vs Services
• Service Mix
• Classification of services
• Service marketing framework
• Challenges in Service
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 2

3. The Service Management Decision Framework
W h a t B u s in e s s A r e W e In ?
W h a t S e r v ice P r o ce s s e s C a n B e U s e d in W h o A r e O u r C u s to m e r s a n d H o w S h o u ld
O u r O p e r a tio n ? W e R e la te to T h e m ?
W h a t S h o u ld b e th e C o r e a n d S u p p le m e n ta r y
E le m e n ts o f O u r S e r v ic e P r o d u c t?
W h a t P r ice S h o u ld W e C h a r g e H o w S h o u ld W e C o m m u n ic a te W h a t
fo r O u r S e r v ic e s ? O u r S e r v ic e H a s to O ffe r ?
W h a t A r e th e O p tio n s fo r D e liv e r in g H o w C a n W e B a la n c e P r o d u c tiv ity
O u r S e r v ice ? a n d Q u a lity ?
H o w S h o u ld W e M a tc h D e m a n d a n d P r o d u c tiv e C a p a c ity ?
W h a t A r e A p p r o p r ia te R o le s fo r P e o p le a n d Te c h n o lo g y ?
H o w C a n O u r F ir m A c h ie v e S e r v ic e L e a d e r s h ip ?
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 3

4. How Important is the Service Sector in
Our Economy?
• In most countries, services add more economic value than
agriculture, raw materials and manufacturing combined
• In developed economies, employment is dominated by service
jobs and most new job growth comes from services
• Jobs range from high-paid professionals and technicians to
minimum-wage positions
• Service organizations can be any size—from huge global
corporations to local small businesses
• Most activities by government agencies and nonprofit
organizations involve services
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 4

5. 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%
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 5

6. Evolving of Services
• Changing pattern of government regulations.
• Privatization of some public/ nonprofit service
• Technological innovations.
• Internationalization & Globalization.
• Expansion of leasing & rental business.
• Manufacturers as service providers.
• Hiring of employees.
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 6

7. 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.
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 7

8. What is a Service?
• An act or performance offered by one party to another
(performances are intangible, but may involve use of
physical products)
• An economic activity that does not result in ownership
• A process that creates benefits by facilitating a desired
change in customers themselves, physical possessions, or
intangible assets
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 8

9. Government Sector
Courts
Employment. Exchanges Services
Hospitals
Municipal Services
Post Office
Schools, Colleges etc
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 9

10. Business Sector
Airlines
Banks Services
Insurance
Management
Consultants
Lawyer's
Doctors
Motion Pictures
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 10

11. Manufacturers
Computers Operators
Legal Staff Services
Accountants
Administrative Staff
Supportive Staff
Security Staff
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 11

12. “ Something that can be bought and
sold but which cannot be dropped on
your foot !”
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 12

13. 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
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 13

14. Internal Services
• Service elements within an organization that facilitate creation of--or
add value to--its final output
• Includes:
– accounting and payroll administration
– recruitment and training
– legal services
– transportation
– catering and food services
– cleaning and landscaping
• Increasingly, these services are being outsourced
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 14

15. Need For Services & Products
Old Age Care
Senior Citizen
Home
Wheel Chair
Dental Care
Dental Chair
Dental Equipments
Photography
Camera
Films
Printing
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 15

16. Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 16

17. 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
Fed Ex Example of supplementary
services.”
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 17

18. 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
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 18

19. Characteristics of Services
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 19

20. INVEN
TORY
INSEPARABILITY
INCONSISTENCY
INTANGIBILITY
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 20

21. Intangibility
No physical attributes
Nobody cares
As much ..Taj
Impossible to
taste
feel
I’ve got a piece
hear Of rock…
smell before buying Prudential
Cant be easily displayed
Macdonald ..the
Family restaurant
Inference from place,people
price,symbols…..
University Degree
tangible evidence of
Transform intangibility to knowledge acquired
tangibility Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 21

22. Tangibilising the Intangibles:
Strategies
Visualization
Association
Physical Representation
Documentation
People Involvement
Place Advantage
Promotion
Branding
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 22

23. Tangibilising the Intangibles
Visualization
Hotels depicting benefits of dinning
at restaurant through Advertisement
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 23

24. Tangibilising the Intangibles
Association
Air India Used Friendly Maharaja
Shah Rukh with Air-tel
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 24

25. Tangibilising the Intangibles
Physical Representation
Citibank credit Card in Gold or Platinum
Symbolizes wealth & Status
Airlines Dress Symbolizes visibility,
reliability and cleanliness
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 25

26. Tangibilising the Intangibles
Documentation
Citing fact & figures in support of
performance
• Major Awards Won By Jet Air
• % Of People Preferring Jet Air
• Number. One Company in Market Share
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 26

27. Tangibilising the Intangibles
People Involvement
People are often Critical Element in service
Delivery
Training People To be courteous in Hotel
for Service Delivery
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 27

28. Tangibilising the Intangibles
Place Advantage
The clean, well laid down interiors of a
Hotel Room depicts the quality of service
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 28

29. Tangibilising the Intangibles
Promotion
Personal Care through
Promotion Campaigns offers
life long Assurance scheme
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 29

30. Tangibilising the Intangibles
Branding
The family Restaurant
Branding helps in differentiation of the
service from competitors
The world on time
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 30

31. Tangibility of goods and services
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 31

32. Product qualities affect ease of evaluation
Easy to Difficult to
evaluate evaluate
Clothing
Furniture
Vacation
Motor vehicle
Medical surgery
Lawn Fertiliser
Legal services
Computer repair
Consultancy project
Restaurant meals
High in search High in experience High in credence
qualities qualities qualities
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 32

33. Heterogeneity
(Variability/Inconsistency )
• 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
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 33

34. Inconsistency
Different services
Performance of an Artist
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 34

35. Implications of Strategies for
Inconsistency Inconsistency
• customer surveys and feedback
 Service delivery and
customer satisfaction • training in interpersonal and
depend on employee technical skills
actions • provide product knowledge
 Service quality depends • ensure back-stage systems
on many uncontrollable support front line staff
factors • use standardisation strategies
 There is no sure – franchising, scripts
knowledge that the • build quality into all processes
service delivered
matches what was
planned and promoted Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 35

36. Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 36

37. Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 37

38. Inseparability
•It can not be separated from the creator-seller of
•The product simultaneous production and consumption
•The customer is involved (partial employee)
•Other customers may be present
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 38

39. Implications of Strategies for
Simultaneous Production inseparability
and Consumption
• manage the service encounter
 Customers participate – scripts and roles
in and affect the – front-line staff need both
transaction technical and interpersonal
skills (recruit & train)
 Customers affect
– educate the customer
each other
(provider –marketer)
 Employees affect the • manage customer interactions
service outcome
• manage the physical evidence
 Decentralization may • develop customer service
be essential policies and service recovery
procedures
 Mass production is
difficult
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 39

40. Services are typically produced
And consumed simultaneously
oCo-production.. dentist/patient
oIsolated production.. T.V.serial
oSelf-services… ATM, weighing Machine
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 40

41. Inventory
•Services cannot be stored
•Need to manage supply
Empty seats at 10 am
and demand flight to Bombay does
not mean Seats may be
available in the next
flight
Empty seats in a
stadium for a
Cricket game can not
be carried
To the next game
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 41

42. Strategies for Dealing With Inventory (Perishability)
Result Of Demand Variability
Match Capacity by Shifting demand— Sunday open
Adjusting Prices- lowering or increasing prices
Stretch the existing Capacity- 24hrs banking
Stretching Facilities- adding manpower/machines
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 42

43. Goods Vs Services
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 43

44. Basic Differences between
Goods and Services
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 44

45. 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
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 45

46. An expanded marketing mix for services
Product
People (service)
Process
Place,
Place &
cyber- Customers Price
Price
Time
space & Customers
Customers
time
Promotion
Physical evidence
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 46

47. People
– All human actors who play a part in service
delivery and thus influence the perceptions: namely
the firm’s personnel, the customer, and other
customers in the service environment.
customer
service employees
other customers
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 47

48. 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
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 48

49. 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
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 49

50. Expanded Marketing Mix for Services
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 50

51. Classification of Services
Based on Degree Of Cust. Involvement
( Lovelock)
3. People Processing
4. Possession Processing
5. Mental Stimulus Processing
6. Information Processing
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 51

52. Some other classification includes-
• The degree of tangibility.
• Whether customer directed/possessions.
• Time and place of delivery.
• Level of Customization/Standardization.
• Relationship with customer.
• Demand supply fluctuation.
• Interaction with people.
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 52

53. Four Categories of Services
Employing Different Underlying Processes
What is the Who or What is the Direct Recipient of the Service?
Nature of the
DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS
Service Act?
TANGIBLE People Processing Possession Processing
ACTS
e.g., airlines, hospitals, e.g., freight, repair, cleaning,
haircutting, restaurants hotels, landscaping, retailing,
fitness centers recycling
INTANGIBLE Mental Stimulus Information Processing
ACTS
Processing (directed at intangible assets)
e.g., broadcasting, consulting, e.g., accounting, banking,
education, psychotherapy insurance, legal, research
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 53

54. Service
Marketing Framework: Analysis
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 54

55. The Services Marketing Triangle
Company
(Management)
Internal External
Marketing Marketing
“enabling the “setting the
promise” promise”
Employees Interactive Marketing Customers
“delivering the promise”
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 55

56. Ways to Use the
Services Marketing Triangle
Overall Strategic Assessment Specific Service Implementation
• How is the service • What is being promoted and by
whom?
organization doing on all
three sides of the triangle? • How will it be delivered and by
whom?
• Where are the weaknesses?
• Are the supporting systems in
• What are the strengths? place to deliver the promised
service?
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 56

57. Marketing Framework
3 C’s
Customers Competitors Company
Market Intelligence
S T P
(Segment) (Target) (Position)
Product Promotion
4 P’s
Price Place Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 57

58. Challenges for Services
• Defining and improving quality
• Communicating and testing new services
• Communicating and maintaining a consistent image
• Motivating and sustaining employee commitment
• Customer Relation Management.
• Bridging Demand- Supply
• Coordinating marketing, operations and human resource efforts
• Setting prices
• Standardization versus personalization
Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 58

59. Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal 59