Services Marketing

The service sector

The services sector has been growing at a rate of 8% per annum in recent years

More than half of our GDP is accounted for from the services sector

This sector dominates with the best jobs, best talent and best incomes

What is services?It is the part of the product or the full product for which the customer is willing to see value and pay for it.

What is a service?

It is intangible.It does not result in ownership.It may or may not be attached with a

physical product

Difference between physical goods and servicesPhysical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are separated from consumption

Production, distribution and 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 production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Services could meet

Personal needs – haircuts, tution, massage parlours

Business needs – courier services, office cleaning services, delivering fresh flowers

Characteristics of servicesIntangibilityInseparabilityPerishabilityHeterogeneity

Characteristics Unique to Services

Intangible Actions or events

Can’t be seen, held, or touched Heterogeneous

No two service experiences alike

Service quality depends on uncontrollable factors

Actual service often not what was planned

Production and consumption inseparable Services can’t be saved, returned, or resold

Once services are delivered, they are lost

Difficult to synchronize supply and demand

Asim Sarwar

Consumer Behavior in Services

Overview the generic differences in consumer behavior between services and goods

Introduce the aspects of consumer behavior that a marketer must understand in six categories of consumer behavior:

• Need Recognition• Information search• Evaluation of service alternatives• Service purchase and consumption• Post purchase evaluation• Role of culture

Recognition of Need:

Primary Need : Need by occasion urgency and priority

Secondary need : Follow up needs to primary demands which could include both goods as well as services.

The need recognition is the first and most important step in the buying process. If there is no need, there is no purchase. This recognition happens when there is a lag between the consumer’s actual situation and the ideal and desired one.

Maslow’s Hierarchy of Needs

Esteem Needs

Social Needs

Safety Needs

Physiological Needs

Self-Actualization

Consumer Behavior in Services

Information search▪ Personal and non-personal sources▪ Perceived risk

Previous personal experience Word of Mouth recommendation(WOM) Reference groups Media communications Internet sources 

Evaluation of service alternatives During the evaluation of alternatives stage, the

consumer evaluates all the products available on a scale of particular attributes.

Post purchase Behavior Post-purchase behavior is when the customer

assesses whether he is satisfied or dissatisfied with a purchase.

If the product has brought satisfaction to the consumer, he will then minimize stages of information search and alternative evaluation for his next purchases in order to buy the same brand. Which will produce customer loyalty.

Categories in Consumer Decision-Making and Evaluation of Services

Information Search

Evaluation of Alternatives

Purchase and Consumption Post-Purchase

Evaluation

Use of personal sources Perceived risk

Evoked set Emotion and mood

Service provision as drama Service roles and scripts Compatibility of customers

Attribution of dissatisfaction Innovation diffusion Brand loyalty

Culture Values and attitudes Manners and customs Material culture Aesthetics Educational and social

institutions

Ali Kamran

Factors Effecting decision making process

Culture 1. Sub culture2. Social class

Social factors1. Reference Group2. Family3. Role and status

Personal Factors1. Age 2. Occupation3. Lifestyle

Psychological Factors1. Motivation2. Perception

Consumer Evaluation Processes for Services

Search Qualities attributes a consumer can determine

prior to purchase of a product Experience Qualities

attributes a consumer can determine after purchase (or during consumption) of a product

Credence Qualities characteristics that may be impossible

to evaluate even after purchase and consumption

Gaps Model of Service Quality

Customer Gap:▪ difference between expectations and

perceptions Provider Gap 1:

▪ not knowing what customers expect Provider Gap 2:

▪ not having the right service designs and standards

Provider Gap 3:▪ not delivering to service standards

Provider Gap 4:▪ not matching performance to

promises

The Customer Gap

ExpectedService

PerceivedService

GAP

Service Marketers can influence

Make realistic accurate promises that reflect the service actually delivered rather than idealized version of service.

Ask contact people for feedback on the accuracy of promise made in advertising and selling • Ensure service tangibles accurately reflect the type and level of service provided.

Use market research to determine sources of derived customer expectation and their requirement.

Educate customers to understand their role and perform better.

Identify influencers and opinion leaders for the service and concentrate marketing efforts on them.

Building Customer Relationship

GettingEnhancingRetainingSatisfying

The first step in managing a loyalty based business system is finding and acquiring the right customers.

After acquisition of the desirable customers the next step is to build relationships and turn them into loyal customers who will generate a growing revenue stream for the company.

A loyal customer is a consistent source of revenue for the organization. This loyalty has to be sustained by continuously providing superior quality and value.