The document provides an overview of services marketing. It begins with an outline of 15 topics related to marketing different types of services. These include understanding services, service customers, managing service quality, and marketing specific industries like banking, insurance, telecom, tourism, and hospitality. The document then shifts to discussing the marketing machine and how different inputs can produce different marketing strategies. It provides perspectives on how marketers and consumers interact and the factors marketers can control versus those they cannot. Finally, it discusses realities of viewing marketing from different perspectives and comparing the marketer's view to the customer's view.

1. UNDERSTANDING
SERVICES
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2. Contents
1 . Understanding Services.
2. Understanding Service Customers.
3. Creating Services and Managing Service Delivery Process.
4. Managing Demand and Capacity.
5. Pricing of Services and Revenue Management.
6. Communicating and Promoting Services.
7. Managing Physical Evidence of Service.
8. Managing People in Service Industry.
9. Managing Service Quality.
10. Managing Relationships and Building Loyalty.
11. Marketing of Banking Services.
12. Marketing of Insurance Service.
13. Marketing of Telecom Services.
14. Marketing Tourism Services.
15. Marketing of Hospitality Services.
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3. The Marketing Machine
Government Technology
Uncontrollables
Competitors Needs
Marketing Concept
Environmental Analysis
Behavior and Segmentation Analysis Marketing
Marketing Research Strategy
Marketing Mix
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4. The Marketing Machine
If you know how the marketing machine works, and can turn
the crank, you will always produce the correct marketing
strategy.
The machine does not change.
The only thing that changes are the inputs.
Different inputs produce different outputs.
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5. The Marketing Machine
If the machine never changes, then there is no such thing as:
International Marketing
Industrial Marketing
Services Marketing
eMarketing
Non-Profit Marketing
………..???
5

6. (A mental view of a scene)
Perspective
SET OF PERSPECTIVES IN
CONSUMER BEHAVIOR
MARKETER
CONSUMER
PUBLIC POLICY
MAKETERS AND CONSUMERS ARE ACTIVE
ON DAILY BASIS
MARKETING DECISIONS
CONTROLLABLE (4P’s) UNCONTROLABLE(5C’s)
Customers Channels
Marketing mix
Conditions Competitors
elements
Company,
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7. Realistic view
This realistic view is important to the
marketer because ,
2. It gives an external view of the customer.
3. An aggregate view of the customer
4. A product specific view of the customer
5. A brand preference /purchase point of view
6. A behavioral influence orientation
• who does or does not use the product
• Who uses the competitors Brand 7

8. Comparison of two perspectives
Perspective Marketer’s Customer’s
characteristics perspective perspective
Point of view External Internal
(buyers) (me)
Level of interest Aggregate Individual
(markets) (myself)
Scope of interest Product specific Across products
(what I make) (what I buy)
correct choice Brand specific Best alternative
(my brand) (best brand for me)
Role of influence Influence Handle behavioral
behavior influences
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9. What are services
• Services are deeds,processes and
performance
• Intangible, but may have a tangible
component
• Generally produced and consumed at the
same time
• Need to distinguish between SERVICE
and CUSTOMER SERVICE 9

10. Basic Differences between
Goods and Services
• Customers do not obtain ownership of services
• Service products are intangible performances--not
objects
• Customers often actively involved in production
process
• Other people may form part of product experience
• More variability in operational inputs and outputs--
harder to improve productivity, control quality
• Often difficult for customers to evaluate
• Absence of inventories after production
• Time factor is more important--speed may be key
• Delivery systems include electronic and physical
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channels

11. Challenges for Services
• Defining and improving quality
• Communicating and testing new services
• Communicating and maintaining a consistent image
• Motivating and sustaining employee commitment
• Coordinating marketing, operations and human resource
efforts
• Setting prices
• Standardization versus personalization

12. The Service Sector
• Includes businesses, government agencies, nonprofits
• 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
• In most countries, adds more economic value than agriculture, raw
materials and manufacturing combined
• In India -- world’s largest democracy-- services account for 46% of
GDP
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13. GDP by Industry in india ,
1999
A g r ic u ltu r e , F o r e s tr y,
F is h in g a n d M in in g F in a n ce , In s u r a n ce
7% a n d R e a l E s ta te
20%
M a n u fa c tu r in g
16%
W h o le s a le a n d
G o ve rn m e n t R e ta il Tr a d e
( M o s tly S e r v ic e s ) 17%
12%
O th e r S e r v ic e s S E R V I C E S
10% Tr a n s p o r t, U tilitie s
B u s in e s s a n d C o m m u n ic a tio n s
H e a lth 8%
S e rv ice s
5%
5%
Source: Bureau of Economic Analysis, December 2000
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14. Changing Structure of Employment
as Economic Development Evolves
Share of
Employment
Agriculture
Services
Industry
Time, per Capita Income Source: IMF
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15. Some Industries in the Service
Sector
• • Health care
Banking, stockbroking
• Education
• Lodging
• Wholesaling and retailing
• Restaurants, bars,
• Laundries, drycleaning
catering
• Repair and maintenance
• Insurance
• Professional (e.g., law,
• News and entertainment architecture, consulting)
• Transportation (freight • Internet and Web services
and passenger) • BPO
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16. 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
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17. Figure 1-1
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics
Fast-food
 Outlets
 Intangible
Dominant
Tangible

Dominant Fast-food
Outlets 
Advertising
Agencies

Airlines 
Investment
Management 
Consulting  17
Teaching

18. Differences Between
Goods and Services
Intangibility Heterogeneity
Simultaneous
Production Perishability
and
Consumption
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19. Implications of Intangibility
Services cannot be inventoried
Services cannot be patented
Services cannot be readily
displayed or communicated
Pricing is difficult
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20. Implications of Heterogeneity
Service delivery and customer
satisfaction depend on employee actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the
service delivered matches what was
planned and promoted
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21. Implications of Simultaneous
Production and Consumption
Customers participate in and affect the
transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
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22. Implications of Perishability
 It is difficult to synchronize supply and
demand with services
 Services cannot be returned or resold
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23. Services are Different
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production Simultaneous Customers participate in and affect the transaction.
separate from production and Customers affect each other.
consumption consumption Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with
services.
Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”
Journal of Marketing 49 (Spring 1985): 33-46. 23

24. The Services Marketing Triangle
Company
(Management)
Internal External
Marketing Marketing
“enabling the “setting the
promise” promise”
Employees Interactive Marketing Customers
“delivering the promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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25. Ways to Use the
Services Marketing Triangle
Specific Service Implementation
• What is being promoted and by
Overall Strategic whom?
Assessment
• How will it be delivered and by
• How is the service whom?
organization doing on
all three sides of the • Are the supporting systems in
triangle? place to deliver the promised
service?
• Where are the
weaknesses?
• What are the
strengths?
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26. The Services Triangle
and Technology
Company
Technology
Providers Customers
Source: Adapted from A. Parasuraman
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27. Distinctive Aspects of
Service Management
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28. 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 ?
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29. Service Decision Framework
What Business Are We In?
• With what industry is our service
associated?
• With what other goods and services do
we compete?
• What forces for change do we face?
• What solutions do we offer to meet
customer needs? (How do we create
value?)
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30. The “8Ps” of Integrated Service
Management vs. the Traditional “4Ps”
• Product elements
• Place, cyberspace, and time
• Process
• Productivity and quality
• People
• Promotion and education
• Physical evidence
• Price and other user outlays
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31. 8Ps: (1) Product Elements
All Aspects of Service Performance that Create Value
• Core product features
• Bundle of supplementary service elements
• Performance levels relative to competition
• Benefits delivered to customers
• Guarantees
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32. 8Ps: (2) Place, Cyberspace, and Time
Delivery Decisions: Where, When, and How
• Geographic locations served
• Service schedules
• Physical channels
• Electronic channels
• Customer control and convenience
• Channel partners/intermediaries
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33. 8Ps: (3) Process
Method and Sequence in Service Creation and Delivery
• Design of activity flows
• Number and sequence of actions for customers
• Providers of value chain components
• Nature of customer involvement
• Role of contact personnel
• Role of technology, degree of automation
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34. 8Ps: (4) Productivity and Quality
Synergy in Value Creation for Customers and the Firm
• Achieve productive transformation of inputs to outputs
– efficiency (cost control, avoidance of waste)
– effectiveness (value added, including quality and timeliness)
• Attain customer-defined quality standards
– reliability
– responsiveness
– competence/trust
– human dimensions
– tangibles
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35. 8Ps: (5) People
The Human Side of the Enterprise
• The right employees performing tasks well
– job design
– recruiting/selection
– training
– motivation
– evaluation/rewards
– empowerment/teamwork
• The right customers for the firm’s mission
– fit well with product/processes/corporate goals
– appreciate benefits and value offered
– possess (or can be educated to have) necessary skills
– firm is able to manage customer behavior
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36. 8Ps: (6) Promotion and Education
Informing, Educating, Persuading, and Reminding Customers
• Marketing communication tools
– media elements (print, broadcast, outdoor, retail, Internet,
etc.)
– personal selling, customer service
– sales promotion
– publicity/PR
• Imagery and recognition
– branding
– corporate design
• Content
– information, advice
– persuasive messages
– customer education/training 36

37. 8Ps: (7) Physical Evidence
Providing tangible evidence of service performances
• Create and maintaining physical appearances
– buildings/landscaping
– interior design/furnishings
– vehicles/equipment
– staff grooming/clothing
– other tangibles
• Select tangible metaphors for use in marketing communications
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38. 8Ps:
(8) Price and Other User Costs
Managing Customer Outlays Relative to Corporate Revenues
• Quoted price level and trade margins
• Discount terms
• Price-setting mechanism
– determined by seller
– negotiation/barter
– auction/reverse auction
• Credit terms
• Strategies to minimize other user costs
– out-of-pocket financial expenses (e.g., travel, phone)
– time investments and mental/physical effort
– negative sensory experiences
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39. The PRICE of Marketing
P
R s Planning
I s Research
C s I mplementation
E
s Control
s Evaluation
Morrison, A.M.

40. Hospitality and Travel Marketing System
Planning & Research
1. Where are we now?
Analysis & Strategy
2. Where would we like to be?
Implementation
3. How do we get there?
Control
Morrison, A.M. 4. How do we make sure we get there?40

41. The Iceberg Nature of
Hospitality and Travel Marketing
In some ways, hospitality
and travel marketing is Morrison, A.M.
like an iceberg
s Some of it is “above-the-waterline” and
marketing ‘people’ tend to notice it
more and pay the most attention to it.
s The “I” in PRICE.
s This is also the part of marketing that
is most ‘visible’ to customers; the
advertising and other promotions done
by our industry.

42. The Iceberg Nature of
Hospitality and Travel Marketing
In some ways, hospitality
Morrison, A.M.
and travel marketing is
like an iceberg
s Most of it is “below-the-waterline” and is
what we tend not to notice and pay the
least attention to.
s This is not something that the customer
sees.
s The “PRCE” in PRICE.

43. The Iceberg Nature of
Hospitality and Travel Marketing
What we tend to notice and Morrison, A.M.
pay most attention to
Implementation
What we tend not to notice and
pay the least attention to
Research Control
Planning Evaluation
But remember, it’s not the tip of the iceberg --
the part that we see most readily -- that sinks the ship!

44. Factors Stimulating Competition and Innovation in
the Service Economy
• Government Policies (e.g., regulations, trade agreements)
• Social Changes (e.g., affluent, time poor, seek experiences)
• Business Trends
– Manufacturers offer service
– Growth of chains and franchising
– Pressures to improve productivity and quality
– More strategic alliances
– Marketing emphasis by nonprofits
– Innovative hiring practices
• Advances in IT (e.g., speed, digitization, wireless, Internet)
• Internationalization (travel, transnational companies)
44

45. Some Impacts of Technological
Change
• Radically alter ways in which service firms do business:
– with customers (new services, more convenience)
– behind the scenes (reengineering, new value chains)
• Create relational databases about customer needs and
behavior, mine databanks for insights
• Leverage employee capabilities and enhance mobility
• Centralize customer service, be faster and more
responsive
• Develop national/global delivery systems
• Create new, Internet-based business models
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46. Relating the 8Ps to the
Service Decision Framework
W H A T B U S IN E S S A R E W E I N ?
W h a t S e rv ic e P ro c e s s e s C a n B e U s e d in W h o A re O u r C u s to m e r s a n d
O u r O p e ra ti o n ? ( P R O C E S S ) H o w S h o u ld W e R e la t e t o T h e m ?
W h a t S h o u ld b e t h e C o r e a n d S u p p le m e n t a r y E le m e n t s
o f O u r S e r v i c e P r o d u c t? ( P R O D U C T E L E M E N T S )
W h a t P r i c e S h o u ld W e C h a r g e ? H o w to C o m m u n i c a te ? ( P R O M O T I O N &
(P R IC E A N D O TH E R U S E R O U TL A YS ) E D U C A TIO N , P H YS IC A L E V ID E N C E )
O p t i o n s f o r D e li v e r y ? ( P L A C E , C Y B E R S P A C E H o w C a n W e B a la n c e
& TIM E , P H YS IC A L E V ID E N C E ) P R O D U C T IV ITY A N D Q U A L ITY ?
H o w S h o u ld W e M a t c h D e m a n d a n d P r o d u c t i v e C a p a c i t y ?
W h a t A r e A p p r o p r i a t e R o le s f o r P e o p le a n d T e c h n o lo g y ? ( P E O P L E )
H o w C a n O u r F irm A c h ie v e S e rv ic e L e a d e rs h ip ?
46

47. Services Marketing
Gap Theory:
Satisfaction is a function of the gap between expected service
and perceived service.
An extension of buyer behavior
What you thought was going to happen versus your perception of
what happened
Key is to minimize the gap
Give the customer what they expect…?
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48. tksabarwal@gmail.com
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