1.services mktg introduction 28.10.09

8/8/2019 1.Services Mktg Introduction 28.10.09

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SERVICES MARKETING -

INTRODUCTION



HOW IMPORTANT IS THE SERVICE SECTOR IN

OUR ECONOMY ?

In most countries, services add more economic valuethan agriculture, raw materials and manufacturingcombined

In developed economies, employment is dominated by

service jobs and most new job growth comes fromservices

Jobs range from high-paid professionals andtechnicians to minimum-wage positions

Service organizations can be any size³from hugeglobal corporations to local small businesses

Most activities by government agencies and nonprofitorganizations involve services



WHY SERVICES MARKETING

Bcoz services differ from goods in many respects.

Services are intangible. Goods are tangible

Services are heterogeneous. Goods are homogeneous

Services are produced in buyer-seller transactions.Goods are produced in factory

Production, distribution and consumption take placesimultaneously in the case of services. In the caseof goods, the three are separate and independent

functions Services cannot be stored. Goods can be stored.

In the sale of services, transfer of ownership will nottake place, whereas in the case of goods it does takeplace.



DEFINITIONS

AMA ² activities, benefits or satisfactions which

are offered for sale or provided in connection with

the sale of goods.

Kotler ² any activity or benefit that one party can

offer to another that is essentially intangible and

does not result in the ownership of anything.



Five categories of products

Pure tangible goods

y Agricultural produce and unbranded products, soaps, toothpasteetc.,

Tangible goods with services

bikes, cars, home appliances

Hybrid services

Like restaurants

Services with accompanying tangible goods tours and travel services

Pure services

teaching, consultancy etc.,



Characteristics of services

Intangibility Inseparability

Variability

Perishability

People Participation No Ownership



THE N ATURE OF SERVICES

regardless of the ´productµ, there is aservices component to the offerings of allfirms

in some cases, a service is the principalpurpose of the transaction, as in the rentalof a car, a haircut, or legal services -- werefer to this as the core servicecore service

in others, service is performed in support of the sale of a tangible product -- these arereferred to as supplementary servicessupplementary services



Canned

foods

Ready-

madeclothes

Auto-

mobiles

Draperies,

Carpets

Rest-

aurantmeals

Repairs:

auto, house,landscaping

Air

travel

Insurance,

Consulting,Teaching

MOSTLY GOODS MOSTLY SERVICES

The Goods-Services Continuum



0

20

40

60

80

100

120

Tangible goods Tangible goods

with some

services

good n services in

equal measure

services with

minor goods

pure services



Implications in Marketing the Services

Intangibility

y Cannot be communicated

y Comparative presentation is not possible

y Consumer suspects due to absence of concrete evidences

y No impulse purchase

Inseperability

y Problems of market expansion

y Maintenance of service quality

y Limited production and operations capacity

Variability

y Limited scope for standardisation

y Not possible to communicate exactly what the consumer is going

to receive



Perishability

y

Storage of services is not possibley Time pressure in sales

People participation

y Customers are not controllable

y Service providers are unique nature

y Customers are evaluating at every stage of service production



Classification of services

1)Classification by Industry:

Government services, Finance, insurance, Education, Transportation,

trading, telecommunications, health, entertainment, etc

2)Classification of services by Target Effect:

Services aimed at physical care such as health care beautyclinics, gymnasiums and restaurants

Services for intangible assets such as banking, legalconsultation, accounting , brokering, insurance and securities services

Services aimed at the mind of the customer such aseducation, broadcasting, information, entertainment, etc

Services aimed at physical possessions and tangible assets such astransport, vehicle repair and maintenance, cleaning , laundry etc.,



What are the problems that a marketer faces due

to customer involvement in services delivery?



Flowcharting the Service Processes

Eg: Stay at a Budget Hotel Repair TV set or Music System

Selecting a telecom service



CUSTOMER INVOLVEMENT IN SERVICE ENCOUNTERS

A service encounter is a period of time duringwhich customer interact directly with a service.

It is important to under the customer·sinvolvement in a given service environment todeliver quality service.

Is customer·s expectations change during thecourse of service delivery in view of perceivedquality at each step and number of steps in theprocess?



HIGH-CONTACT AND LOW-CONTACT SERVICES

High Contact Services Customers visit service facility and remain throughout

service delivery

Active contact between customers and service personnel

Includes most people-processing services

Low Contact Services

Little or no physical contact with service personnel Contact usually at arm·s length through electronic or

physical distribution channels

New technologies (e.g. Web) help reduce contact levels



Service encounter: A period of time during whichcustomers interact directly with a service

M oments of truth: Defining points in service delivery

where customers interact with employees or equipment

Critical incidents: specific encounters that result in

especially satisfying/dissatisfying outcomes for either

customers or service employees



THE PURCHASE PROCESS FOR SERVICES

P re-purchase Stage

Awareness of need

Information search

Evaluation of alternative service suppliersService Encounter Stage

Request service from chosen supplier

Service delivery

P ost-purchase Stage

Evaluation of service performance

Future intentions



A SERVICE BUSINESS IS A S YSTEM COMPRISING THREE

O VERLAPPING SUBSYSTEMS

Service Operations (front stage and backstage)

Where inputs are processed and service elements created.

Includes facilities, equipment, and personnel

Service Delivery (front stage) Where ´final assemblyµ of service elements takes place

and service is delivered to customers

Includes customer interactions with operations and other

customers

Service M arketing (front stage)

Includes service delivery (as above) and all other contacts

between service firm and customers



SERVICE M ARKETING S YSTEM:

HIGH CONTACT SERVICE - HOTEL

TheCustomer

TechnicalCore

Interior & ExteriorFacilities

Equipment

Service People

Other

Customers

Other

Customers

Advertising

Sales Calls

Market Research

Surveys

Billing / Statements

Miscellaneous Mail,

Phone Calls, Faxes, etc.

Random Exposure to

Facilities / Vehicles

Chance Encounters

with Service Personnel

Word of Mouth

Service Operations System

Backstage(invisible)

Front Stage(visible)

Service Delivery System Other Contact P oints

Service M arketing System



SERVICE M ARKETING S YSTEM:

(2) LOW CONTACT SERVICE--CREDIT C ARD

TechnicalCore

Mail

Self Service

Equipment

Phone, Fax,Website

The

Customer

Service Operations System

Service Delivery System Other Contact P oints

Backstage

(invisible)

Front Stage

(visible)

Advertising

Market ResearchSurveys

Random ExposuresFacilities, Personnel

Word of Mouth

Service M arketing System



Internal marketing : the company has to provide

the work space, equipments and also to recruit

and train the appropriate employees, channel

partners, distributors, franchisees.

Interactive Marketing: The providers do

interactive marketing with the customer. Theprovider is the face of the company and

represents the company. Both the customer as

well as provider gets instant feedback about each

other during service transaction. Theirtransaction reflects the perception of the quality

of the service.



REASONS FOR GROWTH IN SERVICES SECTOR

Intermediate Demand from firms

Demand from customers

y Higher Disposable Incomes

y Greater life expectancy ² Increased conscious of health

y The Young generation - More leisure time

y Social changes - Working woman

y Greater complexity of products due to advances in Product

Technology

y Change in Government Attitude



F ACTORS THAT INFLUENCE

CUSTOMER EXPECTATIONS OF SERVICES

Predicted Service

Explicit & ImplicitService Promises

Word-of-Mouth

Past ExperienceDesired Service

ZONEOF

TOLERANCE

Adequate Service

Personal Needs

Beliefs aboutWhat Is Possible

Perceived Service Alterations

Situational Factors



COMPONENTS OF CUSTOMER EXPECTATIONS

Desired Service Level: wished-f or level of service

quality that customer believes can and should be

delivered

Adequate Service Level: minimum acceptable level of service

P redicted Service Level: service level that customer

believes f irm will actually deliver

Z one of Tolerance: range within which customers arewilling to accept variations in service delivery



Is product attributes affect ease of evaluation?



Create a simple flow chart for a service you are

familiar with and define the front stage and back

stage activities?



I s it possible for customers to be delighted by very

ordinary services?



Research shows that delight is a function of 3

components

y Unexpectedly high levels of performance

y Arousal (e.g., surprise, excitement)y Positive affect (e.g., pleasure, joy, or

happiness)

1.services mktg introduction 28.10.09

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