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1. Short Course : July 2013
By Prof S K Palekar
3 Sessions on Services Marketing
Audience : PGDM – IM
The objective is to prepare you for consulting, business
development and operations roles in IT and ITES industries
These slides will be put up on http://

2. Learning Objectives about Services
Introduction to services
How is it different than products
How do services create value for the customer
How can you compete in services
You can use services but cannot carry them and own

3. Service sector is fastest growing (Rs ‘000 Crores)
Indian GDP
159
244
463
888
1736
104
154
280 480
831
209 243
339
445
554
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1970 1980 1990 2000 2007
SER
IND
AGRI

4. Who is in Service !
 Trading
 Government / Public Admn / Defense
 Banking & Insurance
 Transport of people and goods
 Communications
 Customer contact : reception, selling, telemarketing
 Personal service : teacher, waiter, hair stylist
 Installation and repair
 Housekeeping : Laundry, sweeping, floor care, polishing
 Health and patient care : nurses
 Entertainment and Tourism
 Housing : construction and fabrication, masons, guards
 Professionals : Lawyers, architects

5. “Boxed “ Products
“Intangible” Services

6. Generally there is neither a pure product, nor a pure service

7. HUL sells products
but customers buy products + services
Customers of Dove soap need BOTH products and services
Service costs
 Trade margins
 Advertising
 Transportation
 People
 Administration
You may be making a product
But customers want to buy services along with it

8. Fishermen : “More fish : less cost” solution
Cummins : Diesel Engines
Promoters go and meet the fishermen and get acquainted
Promoters explain type of engines and applications
Promoters answer their queries and convince them
Distributors stocks engines and spares and ensure availability
Distributors take orders, invoice, collect payment
Technical installs and trains
After sales service for maintenance and repairs
Customers Buy Solutions involving Service.
You may think you are selling products.
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9. Role of Service as a competitive weapon
My product best
My price lowest
I am close to you
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10. Role of Service in a corporate turnaround
Scandinavian Airlines
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11. Upper Part of Maslow’s Pyramid
expands faster with affluence
Service
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12. Tailored Suit
(S) Quality cannot be pre-inspected : largely intangible
Tailor’s role is to measure, advise, stitch and make it look good on you.
(S) Quality depends on the quality of the tailor
a bad tailor can ruin your suit. A good tailor can make you look good.
(P) Only a brief contact for measurement and trial is needed
Except measurement and trial the customer is not needed
(S) Suit is made to order and customized
A tailor makes to order and does not keep readymade products
Fabric is product but tailoring is largely a service.
Tailoring cannot be scaled up quickly
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13. Car Loan
(P) Interest rate and terms can be pre-inspected
Interest rate and commercial terms are tangible
(P) Main value (Commercial Terms) not People dependent
Response time, paper work, complaint resolution does depend on people.
(P) Customer presence is necessary only for a little time
Filling out forms and giving documents
(P) Capacity to give loans is not perishable
Front ( sales and reception ) capacity can get unutilized if no customer
Car Loan is a product. Can be scaled up quickly.
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DUSHYANT CORPORATE TRAINERS

15. How Profit is Made
Value
Price
Cost
• Studying the market conditions
• Selecting the right customers
• Developing the right value proposition
• Selecting the right delivery channels
• To be different than the competition
• Purchasing efficiency
• Downgrading specifications
• Value engineering
• Reduction of waste
Profit

16. The Process of Marketing
Whom to serve ? Whom to fight?
Create Attractive value? Capture some of it ?
Go to market & “sell” the valueUndertake value creation activities
Measure satisfactionMeasure Profit

17. Important Difference
In a product business the company creates a structure of high level and
experienced specialist departments manned by experts to perform the tasks of
discovering, diagnosing, designing and delivering at different locations and times
and most of these are invisible to the customer.
In a service business many of these functions are done by the front line service
providers : they assess, diagnose, design and deliver in real time at the location
when the customer is present and watching

18. Discover Diagnose Design Deliver
Customer
Service Employees
Management
The job of management in services is to create context, culture & employees
“Service Value” is co-created between Customer & Service Employees
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19. Service Operations Model
Management
BuyerEmployee
A lot of value gets created in this interaction
Managing employees
To make them
Manage customers
Managing customer
Expectations
and satisfaction
Employees is the “first market”. Poor marketing
to them results into poor marketing ultimately
Selecting & Influencing employees.
Based on knowledge or attitude?
Actual interaction, observation and
demonstrated leadership

20. Nature of Service
Intangible
Low search attributes ( which can be inspected prior to purchase )
Person dependent
High in experience attributes ( can be felt but not inspected )
Reputation / Reference dependent
High in credence attributes ( cannot be felt also )
Needs each customer’s presence / input
Customer and provider needed in the same place at the same time
Perishable
Demand -Supply synchronization difficult , Capacity planning key.
Peak and Lean times a regular phenomenon.
Standardization and efficiency of machines   Customization and warmth of people
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21. TYPES OF SERVICES
BASED ON “CONTACT”
HIGH-END CONTACT SERVICES
 Professional services needing high level of education and experience
(architects, doctors, professors, lawyers, pilots)
MID END CONTACT SERVICES
 Technical services based on knowledge of technology. (nursing, tailoring,
repairing). Or Customer care services involving personality and social
skills (air hostess, handling complaints, salespersons, reception)
LOW END CONTACT SERVICES
 Routine services that can be performed by almost anyone with little
training. (cleaning, guard duty, door keeping)
AUTOMATABLE SERVICES
 Simple services which can be automated (shoe shine, vending packaged
products, ticketing on the net, giving cash against cards)

22. Different types of persons needed for service
RARE EXPERTISE / JUDGEMENT / SKILL
Expertise / Experience Lawyer
Perform Singer, Dancer, Teacher, Priest
Judgment / Decision Doctor
MEDIUM EXPERTISE / JUDGEMENT / SKILL
Empathy Sales Executives
Conversation / Sociability Customer Relation Executives
Awareness and Feedback Barber, Tailor
LOW EXPERTISE / JUDGEMENT / SKILL
Physique Laborer, Guard
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23. High Contact Service Encounters
S E R V I C E S C A P E
MOOD
INTERACTION
PERSON
TRAINING / EXPECTATIONS
RESOURCES
MOOD
SCRIPT / INTERACTION
M O M E N T O F T R U T H
PERSON
NEED
EXPECTATION
encounter

24. People-intensive Services
Costs
Main investment and cost is in
selection, training, motivation & retention of people
People Selection Criteria
Good social skills of dealing with customers individually
and to have a good EQ .
In professional service you need judgment and experience.
In performing arts you need flair, temperament
Trained to follow
Consultative, diagnostic, solution providing, counseling
Customer orientation at the front end
routine / standard operating process at the back end

25. Equipment –Intensive Services
Costs
Main investment and cost is in the machines
People Selection Criteria
Good technical qualification / knowledge
Trained to follow routine / standard operating process
Dealing with the Customer : Transactional
Classification
automated services
vending machines, automated car washes
monitored by unskilled labor
dry cleaning, door keepers, cleaning
operated by skilled labor
excavators, airline pilots,

26. Value embedded in encounters
between doctor and patient
DIAGNOSIS

27. Value embedded in encounters
between airline staff and passengers
CUSTOMER CARE

28. Value embedded in encounters
between a singer and audience
ENTERTAINMENT

29. Value embedded in encounters
between a priest and parish
FAITH

30. High and Low Contact Service - 1
Location ( Where to locate )
High contact : Convenient to customer
Low contact : Near labor or Transportation source
Service Scape ( How to layout and do interiors)
High contact : set up like a customer reception / contact / service
area. Presentable, inviting, facilitate interaction with staff, and
waiting and serviceb.
Low contact : set up like a job work shop : for efficiency
 Quality Control
High Contact : customized benchmarks – customer present and
actively influences – can see all Ps - defects and all
Low Contact : since there is no customer during production, it is
possible to run using standard benchmarks and rework is possible
to correct the defects

31. High and Low Contact Service - 2
How the operations are organized ?
High Contact : Pace is set by the location and time of customer
requests for service. Customer is present, sees process,
intervenes, directs but also likes to see the process. A key issue is
how to handle demand peaks and how to shape the demand
Low Contact : Customer is absent and is concerned with
completion date and final result. He does not see the people and
the process. Hence grouping (batching) and scheduling is possible.
Pace can be set internally and can be the “average demand”.
Front Line Worker Skills
High Contact : Capable of interacting with customers, capable of
using judgment , capable of using his talent
Low Contact : Only Technical skills are needed

32. High and Low Contact Service - 3
Service Process
High contact : Mostly front-room activities. The service may
change during delivery in response to customer.
Low contact : Mostly backroom activities planned and executed
with minimal interference from customer
Service Package
High contact : Varies with customer : many choices and outcomes
Low contact : Fixed, less extensive

33. Product –Service continuum
 “Pure Product”   “Pure Service”
Teaching is almost pure service ( Mostly intangible )
Meal in a sit down diner is both product ( food) and service ( 3Ps)
Match box is almost a pure product
7 Ps of Marketing Mix” ( Way to influence the market )
4 Ps : Product like : Product, Place ( Location ), Price, Promotion
3 Ps : High contact like : People, Process, Physical Evidence / Proof
serviceProduct
INSPECTABLE
EXPERIENCED
BELIEVED

35. High Contact Service
value creation
Customers are homogenized
through filtration, access, fencing, selection
Service providers are selected
Through filtration, access, fencing, selection
To match with the expectations of the customers
Service providers are prepared to handle the job
Customer expectations / scripts are communicated
Service delivery process is taught
Servicescape is appropriate : Facilities and processes
Keep in mind technical logic, customer logic and employee logic
Mechanism to handle complaints and counsel
The ultimate objective is
The “service encounter" should be satisfying
for the customers as well as employees

36. In high contact service
Variations are common
On both the sides !
Mismatch of expectations is common
Complaints should not be treated as exceptions
Complaint handling mechanisms
Counseling is a regular business process
Customer recovery is an important process`

37. Positioning  Marketing Mix
Product
Product
Place
Price
Promotion
Service
People
Process
Physical Evidence ( Proof )

38. WHAT MAKES THE SERVICE BUSINESS WORK
Leadership provided from the top is an extremely
valuable input in the working of a service business. Some
of the great service organizations have become so
because of the way they
select employees
induct them on the job
train them
motivate them
provide social glue
recognize them
incentivize them
promote them
develop them

39. Service Profit Chain Model
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There is no absolute quality standard In service
Since there is nothing that can be objectively specified,
People judge service subjectively by how they felt
Service Quality = Actual Service – Expected Service

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Keys to customer satisfaction in services are
1. How to manage customer expectations
2. How to have a good service design
3. How to plan service delivery
4. Dealing with dissatisfied customers
5. Reducing the service gap

42. How to Manage customer expectations ?
Admission / filtration process that accepts customers
whose expectations can be met / exceeded
Communicating with the customers so that the
expectations are brought in line with what can be
delivered
Rejecting customers whose expectations cannot be met
Get existing customers to bring new customers
Get existing customers to meet new customers

43. How to have a good service design?
 What to plan ?
Location, Layout, Fittings, Furnishings, Equipment,
Signage, Comfort, Lighting, Temperature, Colors
How to plan ? Keep in mind
Positioning : who do you want to serve? Who
competes for these customers ? How do you compete?
Logic : Customers, Employees, technical and legal
demands.

44. How to Plan / Execute Service delivery ?
( Service Marketing Mix )
Standard 4 Ps of products
Physical / Material product
Price
Place (location)
Promotion ( communication to attract customers, manage
expectations and inform at site)
3 Ps of services
People ( front line service providers, front line supervisors,
leaders up the line)
Processes (of discovering needs, diagnosing what needs to be
done, designing a solution and deploying the solution)
Proofs (because service is intangible, customers need evidence
and proof)

45. Dealing with dissatisfied customers
Service being intangible, there is an ample scope for
interpretation and subjectivity on both sides - provider
and receiver - and hence complaints is a normal
phenomenon in the marketing of services.
How complaints are handled is a very important part of
service marketing. Complaints - if not handled well - can
lead to loss of customers but if they are handled well,
they can lead to customers who spread good word about
the company. This is called service recovery.

46. Constantly trying to reduce the "service gap”
Knowledge Gap : is between what the customer really
wants vis-a-vis what the service provider thinks he wants
Planning Gap : is between what the service provider
knows he must deliver
vis-a-vis what he has planned to deliver
Delivery Gap is between what the service provider has
planned to deliver
vis-a-vis what he lands up delivering
Promise Gap is between what the service delivers vis-a-
vis what he promises to deliver.

47. Service Gap Model
Customer Gap Provider Gap
Expected Service
Perceived Expectation Knowing
Satisfaction Design / SOP / Standards Planning
Deliver : Design / SOP / Standard Doing
Communicated to customers Promise
Perceived Delivery
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48. Consumer Behavior in Services
RISKY : Higher perceived risk in buying a service.
REAL TIME : Place of production and use is same.
INCONSISTENT : Quality consistency difficult to achieve.
CAPACITY : Not possible to use the capacity fully
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