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Services Marketing
DEPARTMENT OF MANAGEMENT STUDIES
Course Plan for the Academic Year : 2014-15Department : Management StudiesProgramme : Management StudiesYear & Semester : II & III SemesterSubject Code : Subject : Services MarketingName & Designation of the faculty : K.Senthil / Sr.Asst.Prof
Chapters Learning Outcomes Evaluation Weightage
Introduction
Students can understand the services, characteristics, growth, differentiate goods and services and classify the services Internal
1. Unit Test2. Case Analysis3. Assignment4. Internal Test5. Online Quiz6. Model Exam
20 MarksService Marketing opportunities
Understand market potential, extended marketing mix, trends, segmentation, targeting and positioning
Service Design & Development
Understand life cycle, new development, blue print and service quality measurement
Service Delivery, Pricing & Promotion
Understand strategies related to positioning, pricing, promotion & Delivery
ExternalWritten Exam 80 Marks
Service Strategies
Can chalk out strategies for the various service industries
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
CHETTINAD COLLEGE OF ENGINEERING & TECHNOLOGYDEPARTMENT OF MANAGEMENT STUDIES
LESSON PLANCODE :
SUBJECT: SERVICES MARKETING
FACULTY : K.SENTHIL
Unit – 1S.NO TOPICS Prd Book Page Method
1 Introduction to service marketing, definition 1124
1-43
1-5PPT
2 Service Economy, Scope of services, Growth of Service sectors 1
34517
4-111-55-94-1935-38
PPTOHP
3 Growth of Service sectors by comparing GDP and Employment opportunities of various countries 1
4516
1-55-94-19
6
PPTOHP
4 Reasons for the growth of services 1
3457
4-111-55-9
35-38
PPTOHP
5 Nature and characteristics of services 1 47
646-54 PPT
6 Difference between goods and services 1 5 12-14 PPT
7 Characteristics of Services 1
4567
8-1212-149-1346-54
PPT
8 Challenges and Issues in Service Marketing 1
4567
8-1212-149-1346-54
PPT
9 Challenges and Issues in Service Marketing 1
4567
8-1212-149-1346-54
PPT
Total 9
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Unit – 2
S.NO TOPICS Prd Book Page Method
1 Assessing Service Market Potential 1 4 29-38 PPT
2 Assessing Service Market potential 1 4 29-38 PPT
3 Classification of services 1 64
13-1820-27
PPTOHP
4 Service Marketing Mix 1 41
3325-27 PPT
5 Service Marketing Mix 1 41
3325-27 PPT
6 Environment & Trends 1 1 4-19 OHP
7 Market segmentation 1 78
95-10594-112 PPT
8 Market segmentation 1 78
95-10594-112 PPT
9 Target market 1 78
107-11094-112 PPT
Total 9
Unit -3
S.NO TOPICS Prd Book Page Method
1 Service level 1174
62-65142-15085-93
PPT
2 Service life cycle 1178
65-70263-270121-123
PPT
3 New service development 1
4158
72-7794-96
200-205123-129
PPT
4 Service blue printing 1517
205-213214-221275-285
PPT
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
5 Service blue printing 1 56
205-213116 PPT
6 Service quality 1467
258-27282-102289-314
PPT
7 Service quality 1 46
258-27282-102 PPT
8 Service quality 1 67
82-102289-314 PPT
Total 8
Unit -4S.NO TOPICS Prd Book Page Method
1 Service positioning strategies 1 76
111-131270-274 PPT
2 Positioning Maps 1 76
111-131274-275 PPT
3 Designing Service Delivery 1 47
188-216273-283 PPT
4 Distribution of services 1 16
249-263228-242 PPT
5 Distribution of services 1 16
249-263228-242 PPT
6 Pricing of services 1 4 102-110 PPTOHP
7 Pricing of services 1 76
169-197201-222
PPTOHP
8 Pricing of services 1 7 169-197 PPTOHP
9 Service Marketing Triangle 1 1 1 OHP
10 Integrated Service Marketing Communication 1 47
112-153201-213
PPTOHP
11 Integrated Service Marketing Communication 1 67
342-368225-244
PPTOHP
Total 11
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Unit -5S.NO TOPICS Prd Book Page Method
1 Marketing of Health Services 1 1 403-409 PPT
3 Marketing of Hospitality 1 1 403-409 PPT
4 Marketing of Tourism 1 1 403-409 PPT
5 Marketing of Finance 1 1 403-409 PPT
6 Marketing of Logistics 1 1 403-409 PPT
7 Marketing of Educational services & Consultancy 1 1 403-409 PPT
8 Marketing of Entertainment & Public Utility 1 1 403-409 PPT
Total 08
Total – 45 Periods
References:
1. Balaji, “Service Marketing”, S.Chand, New Delhi, 2002
2. Christopher Lovelock, “Service Marketing”, Perason Education Asia, 2001
3. Cengiz Hawksever etal, “Service Marketing”
4. Vasanthi Venugopal, “Service Marketing”, Himalaya Publishing House
5. Valarie.A.Zeithaml, et.al., “Services Marketing”, Tata Mcgraw Hill, 2000
6. Kenneth E-Clow, “Service Marketing Operations Management and Strategy”, Biztantra,
7. Rampal Gupta, “Service Marketing”, Galgotia Publishing Company, New Delhi
8. Govind Apte, “Services Marketing”, Oxford University Press, New Delhi 2004
9. Statistical Data Collected from various websites
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
ASSIGNMENT
1) Identify growth rate ( 10 years) of your preferred service industry ( Completion of half unit)
2) Select one service provider in your town identified the problems faced by them because of
service characteristics ( Completion of 1 unit)
3) Identify the service quality dimensions of your preferred services and measure the service
quality with the help of survey from 50 customers (Completion of 3 unit)
4) Find out the positoning strategy adopted by the preferred service organization (Completion of
3-1/2 Unit)
5) Chalk out service marketing strategies of your preferred service organization
CASE STUDY
1. Will they turn Again - Service delivery - Service Marketing – Rampal Gupta Page – 539
2. The United Indian Bank - Consumer Behaviour - Services Marketing – Govind APTE,
Page – 55
3. Marketing Consultancy Services – Service product Component – Service marketing –
Rampal Gupta, Page – 544
Faculty HOD
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
CHETTINAD COLLEGE OF ENGINEERING & TECHNOLOGYDEPARTMENT OF MANAGEMENT STUDIES
MaterialSUBJECT: SERVICE MARKETING
FACULTY : K.SENTHIL
Unit – 1
Definition:
“Activities, benefits, or satisfactions which are offered for sale or provided in connection with
the sale of goods”
-American Marketing of Association – (1960)
“Services are separately, identifiable, intangible activities which provide want satisfaction when
marketed to consumers and / or industrial users and which are not necessarily tied to the sale of a
product or another service”
- William J.Stanton – (1974)
“An activity or a series of activities which take place in interaction with a contact person or a
physical machine and which provides consumer satisfaction”
- Lehtinen – (1983)
“Any activity or benefit that one party can offer to another that essentially intangible and odes
not result in the ownership of anything”
- Philip Kotler and Bloom – (1984)
“A service is an activity or series of activities of more or less intangible natue that normally, not
necessarily take place in interactions between the customer and service employees and / or
physical resources or goods and / or systems of the service provider, which are provided as
solutions to customer problems”
- Christian Gronroos – (1990)
“Services are deed, processes, and performances”
- Zeithmal V.A. and Mary Jo Bitner – (1996)
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Evolution of Service Marketing:
Fisk, Brown and Bitner identify three distinct stages in the evolution of services
marketing. They are as follows.,
1) Crawling out stage - took place prior to 1980
2) Scurrying stage - between 1980 to 1986
3) Walking erect stage - from 1986 to 2000
4) Galloping Stage - From 2000 to till date
Crawling out stage - took place prior to 1980
In this stage discussion centered around the need for a separate body of literature to deal
with the specific problems of the services sector.
Donnelly highlighted differences between the marketing channels used for services and
those used for physical goods and implications for marketing strategy. Marketing traditionalist
argued that service organization did not need a separate body of theory, and that existing
marketing theories could, and should, be applied to service organizations. They considered
services as an offer tied up with physical product. Services marketing academics and
practitioners argued that services required special treatments as a result of their distinctive
characteristics.
Scurrying stage - between 1980 to 1986
Efforts were made to classify services more clearly and attention focused heavily on the
crucial issue of managing quality in service operations. Zeithaml, Berry and Parasuraman
developed their pioneering gaps model. Booms and bittner developed their expanded marketing
mix for services which took into account the distinctive characteristics. They add three more p’s
to the original marketing mix. They are people, process and physical evidence. For the first time
text books on services marketing began to be produced.
Walking erect stage - from 1986 to 2000
Since 1986 there has been almost no discussion of whether services are different from
goods, but rather the literature has focused on specific marketing problems on service
organizations. They include consideration of service encounters, service design, perceived
service quality and customer satisfaction, internal marketing and relationship marketing.
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Galloping Stage:
Since 2000, there has been an increase growth of the service sector and services are the
main contributors to the GDP of the country.
Service Based Economy:
Services marketing concepts and strategies have developed in response to the tremendous
growth of service industries, resulting in their increased importance to United States and world
economies. In 1999 the service sector represented 80% of total employment and at least 78% of
the Gross domestic product of the United States. Industrialized nations use a standard called the
Gross Domestic Product to measure the output. GDP, is one of the ways for measuring the size
of its economy. The GDP of a country is defined as the market value of all final goods and
services produced within a country in a given period of time. It is also considered the sum of
value added at every stage of production of all final goods and services produced within a
country in a given period of time.
CountryGDP Agricultu
re%
Industry%
Service%
AgricultureMillion $
IndustryMillion $
ServiceMillion $
World46660
000 4% 32% 64% 186640014931
20029862
400European Union
13620000 2.10%
27.30%
70.50% 286020
3718260
9602100
United States
13220000 0.90%
20.40%
78.60% 118980
2696880
10390920
Japan49110
00 1.60%25.30
%73.10
% 7857612424
8335899
41Germany
2858000 0.90%
29.10% 70% 25722
831678
2000600
China25120
00 11.90%48.10
% 40% 29892812082
7210048
00United Kingdom
2341000 1%
25.60%
73.40% 23410
599296
1718294
France21540
00 2.20%20.60
%77.20
% 4738844372
416628
88
Italy17800
00 2%29.10
% 69% 3560051798
012282
00Canada 10890 2.30% 29.20 68.50 25047 31798 74596
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
00 % % 8 5
Spain10810
00 3.90%29.40
%66.70
% 4215931781
472102
7
India79610
0 19.90%19.30
%60.70
% 15842415364
748323
3South Korea
768500 3.30%
40.70% 56% 25361
312780
430360
Mexico74150
0 3.90%25.70
%70.50
% 2891919056
652275
7
For three successive year, the Indian economy has registered a highly impressive
growth during fiscal 2005-06. Sustained manufacturing activity and impressive performance of
the services sector with reasonable support from the recovery in agricultural activity have
added greater momentum to this growth process. After recording some slowdown in the third
quarter (October-December) of 2005-06, real gross domestic product (GDP) registered a sharp
increase in the fourth quarter (January-March) of 2005-06 benefiting from a pick-up in almost
all segments of agriculture, industry and services. According to the revised estimates released
by the Central Statistical Organization (CSO) in May 2006, real GDP accelerated from 7.5 per
cent in 2004-05 to 8.4 per cent during 2005-06. The Indian economy has, thus, recorded an
average growth of over 8 per cent in the latest three years (2003-04 to 2005-06).
Growth Rates of Real GDP
(Base Year : 1999-2000) (Per cent)
Sector2000-01
to 2002-03 (Average
2003-04
2004-05
2005-06
2004-05
2005-06
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Agriculture -0.2 10.0 0.7 3.9 3.5 -0.2 -1.2 1.5 3.4 4.0 2.9 5.5Allied Activities (23.5) (22.2) (20.8) (19.9) - - - - - - - -1.1 Agriculture -0.5 10.7 0.7 - - - - - - - - -Industry 5.2 6.6 7.4 7.6 6.6 8.0 8.1 6.8 9.5 6.3 7.0 7.9
(19.7) (19.5) (19.5) (19.3) - - - - - - - -2.1 Mining and Quarrying
4.4 5.3 5.8 0.9 8.2 6.0 5.7 3.7 3.1 -2.6 0.0 3.0
2.2 Manufacturing
5.7 7.1 8.1 9.0 6.6 8.3 9.2 8.1 10.7 8.1 8.3 8.9
2.3 Electricity, Gas and Water Supply
2.8 4.8 4.3 5.3 4.9 7.9 3.1 1.4 7.4 2.6 5.0 6.1
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Services 6.6 8.5 10.2 10.3 10.0 8.2 10.6 11.6 10.1 10.3 9.7 11.0(56.8) (58.3) (59.7) (60.7) - - - - - - - -
3.1 Trade, Hotels, Restaurants, Transport, Storage and Communication
8.5 12.0 9.7 11.0 10.2 12.9 10.6 11.5 10.6 11.2 11.7 11.0
3.2 Financing, Insurance, Real Estate and Business Services
6.5 4.5 9.2 9.7 8.8 7.5 9.7 10.7 8.8 10.5 8.9 10.5
3.3 Community, Social and Personal Services
4.1 5.4 9.2 7.8 10.7 4.8 8.5 12.7 7.3 8.0 8.4 7.6
3.4 Construction
5.9 10.9 12.5 12.1 8.9 6.8 20.8 13.5 12.4 12.3 11.5 12.0
Real GDP at Factor Cost
4.6 8.5 7.5 8.4 7.9 6.7 7.0 8.6 8.5 8.4 7.5 9.3
Indicators of Service Sector Activity(Growth rates in per cent)
Sub-sector 2004-05 2005-06 April2005 2006
Tourist arrivals 23.7 11.7 19.7 $ 20.0 $Commercial vehicles production 28.6 10.6 -5.3 49.7Railway revenue earning freight traffic 8.1 10.7 14.9 11.0New cell phone connections 10.4 89.4 7.6 167.0Cargo handled at major ports 11.3 10.3 15.8 -2.0Civil aviationa) Export cargo handled 12.4 7.3 12.0 10.1b) Import cargo handled 24.2 15.8 14.6 19.9c) Passengers handled at international terminals 14.0 12.8 9.9 16.2d) Passengers handled at domestic terminals 23.6 27.1 19.2 54.0Roads: Upgradation of Highways 16.1 -23.4 – –Cement 8.2 10.7 12.6 $ 8.9 $Steel 7.6 6.0 13.9 $ 7.5 $Aggregate deposits 11.9 22.3 14.9 @ 20.7 @Non-food credit 31.6 38.4 31.0 @ 32.9 @
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Central Government expenditure 5.6 2.2 -1.0 $ 53.9 $
$ : April-May.@ : Year-on-year as on July 7.
Agriculture:
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry,
logging and fishing accounted for 18.6% of the GDP in 2005, employed 60% of the total
workforce[3] and despite a steady decline of its share in the GDP, is still the largest economic
sector and plays a significant role in the overall socio-economic development of India. Yields per
unit area of all crops have grown since 1950, due to the special emphasis placed on agriculture in
the five-year plans and steady improvements in irrigation, technology, application of modern
agricultural practices and provision of agricultural credit and subsidies since the green
revolution. However, international comparisons reveal that the average yield in India is generally
30% to 50% of the highest average yield in the world.[50]
Industry
India is fourteenth in the world in factory output. They together account for 27.6% of the
GDP and employ 17% of the total workforce.[3] Economic reforms brought foreign competition,
led to privatisation of certain public sector industries, opened up sectors hitherto reserved for the
public sector and led to an expansion in the production of fast-moving consumer goods.[54]
Post-liberalisation, the Indian private sector, which was usually run by oligopolies of old
family firms and required political connections to prosper was faced with foreign competition,
including the threat of cheaper Chinese imports. It has since handled the change by squeezing
costs, revamping management, focusing on designing new products and relying on low labour
costs and technology.[55]
Services:
India is fifteenth in services output. It provides employment to 23% of work force, and it
is growing fast, growth rate 7.5% in 1991–2000 up from 4.5% in 1951–80. It has the largest
share in the GDP, accounting for 53.8% in 2005 up from 15% in 1950. [3] Business services
(information technology, information technology enabled services, business process outsourcing)
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
are among the fastest growing sectors contributing to one third of the total output of services in
2000. The growth in the IT sector is attributed to increased specialisation, availability of a large
pool of low cost, but highly skilled, educated and fluent English-speaking workers (a legacy of
British Colonialism) on the supply side and on the demand side, increased demand from foreign
consumers interested in India's service exports or those looking to outsource their operations.
India's IT industry, despite contributing significantly to its balance of payments, accounted for
only about 1% of the total GDP or 1/50th of the total services.[57] Excellent infrastructure in the
service sector and the lowest communication cost has helped India to be a dominant player in
these sectors.
Environmental Trend and Emerging Service markets
Environmental
TrendService Market
Consumer Affluence
Dine out habits, travel, entertainment, clubs, repairs and servicing,
health care, carpet and dry cleaning, domestic services, banking and
investments, retailing, insurance.
Working WomenDomestic services, travel, nurseries, fast food restaurants, financial
services, marriage counseling, retailing, personal care.
Greater Life
Expectancy
Hospitals, nursing homes, entertainment, travel, resorts, leisure
services, investments and banking
Complexity of LifeTravel, legal aid, tax counseling, professional services, airlines,
courier services, insurance banking.
New young / YouthEntertainment, leasing, fast food, travel, picnic resorts, educational
institutes, tutorial aids, counseling, retailing
Corporate Crowd
Hotels, advertising, legal services, recruitment services, management
consultants, health care, airlines, travel booking, courier services,
insurance, banking, marketing research.
Product innovationRepair and servicing services, training and education, sharing
services.
Growing Product
ComplexitiesExpert advice, specialists
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Reasons for Growth in Service Sector:
Movement to information age
Shift to industrialized economy
Aging population
Longer life expectancies
Increase leisure time
High per capita income
Changing social and cultural values
Advances in technology
Changing Life Style
Increase in Affluence Lawn Care, Carpet and Dry cleaning
Increase in Leisure Time Travel agencies & resorts, entertainments
Women in working places Day Care nurseries, Home help & away from home meals
Changing World
Increase Complexity of life Accounting services, legal advisors
Increase Life Expectancy Nursing homes, Health care, gyms
Ecology and Resources Bus services, car rentals, lease finance, concerns Environmental consultants
Changing Economies
Globalisation Courier Services
Privatisation Telecom, Cellular, Internet
Changing Technology
New products Computer aided services
Product Complexity Annual Maintenance, contracts
Growth of Service Industries: Cause and Effect
Cause Effect
Technological advances Higher complexity of products requiring skilled specialists
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Globalization More business internationalizationDeregulation policies Privatization of regulated sectorsCompetition and need for higher productivity Specialization / Expert Knowledge
Cost effectiveness drives Optimum manpower use and sub-contracting less critical functions
Computer ExplosionSpeed of work performance and availability of sound, motion and picture at a affordable cost
Overall increase in affluence
Increased spending power wish for comforts, resulting in demand for those services which consumer himself does not want to perform anymore
Increasing percentage of working women Work performed by women earlier when at home now being done by somebody else
More leisure time Shift towards pleasure / entertainment
Greater Life expectancy Desire to live long has resulted in special care facilities
Increase complexity of life Need for services of specialists because of complex issues required to be handled
Scarcity of resources and concern about ecology
Need for services which can supplement and meet resources crunch
Demographic changesDual career families where parents have less time to prepare meals and do house keeping
Urbanization Fast, mechanical, and self centered life and deterioration in law and order
Evolving Environment of Services:
Changing patterns of government regulation
Relaxation of professional association restrictions on marketing
Privatization of some public and not profit services
Technological innovations
Growth of service chain and franchise networks
Internationalization and globalization
Pressures to improve productivity
The service quality movement
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Services Marketing
Expansion of leasing and rental businesses
Manufacturers as service providers
Need for public and non profit organizations to find new income
Hiring and promotion of innovative mangers
Competitive Trends for the New Millennium:
Customer satisfaction and customer focus
Value
Total quality management and service quality
Emphasis on service as a key differentiator in manufacturing firms
New measurement systems that link customer satisfaction with financial goals and
operational measurements
Internationalization of services
Service Characteristics:1) Intangibility
2) Perishability
3) Inseparability
4) Heterogeneity
Intangibility: -
Services are performances or actions rather than objects that cannot be seen, felt, tasted,
or touched in the same manner that we can sense tangible goods. For example the doctor is
diagnosing the problems of the patient and gives treatment for his illness. In that services the
consumer can’t able visualize the service rendered by the doctor but he can enjoy the services
done for him. Because of the intangibility of services they cannot be inventoried, patented,
readily displayed or communicated and pricing is difficult.
Perishable:-
It refers to the fact that services cannot be saved, stored, resold, or returned. A
unoccupied room of a star hotel cannot be sold on some other day or in demand period. A
unsold ticket of entertainment show cannot be added in next show. This is in contrast to the
goods that can be stored in inventory or resold another day, or even returned if the consumer is
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
unhappy. So the services are difficult to synchronize supply and demand with services and it
cannot be returned or resold.
Inseparability:-
Non-perishable goods can be suitably inventoried and sold or delivered to the customer at
a date later than that of production. But services can’t be like this because it is perishable. The
services have to be rendered in real time, when the customer needs it. Most of the goods are
produced first, then sold and consumed; most services are sold first and then produced and
consumed simultaneously. This means the customer is present while the service is being
produced and this views and may even take part in the production process. This also means that
frequently customers will interact with each other during the service production process and thus
may affect each other’s experiences. For example – Doctor can able to render service to the
patient only in the presence of the patient. Otherwise he can do it if he has some direct contact
with help of medias. Without the doctor no one can render services to the patient. So customers
participate in and affect the service and interact with each other, employees affect the service
outcome, decentralization is necessary and mass production is difficult.
Heterogeneity:-
Services are performances, frequently, produced by humans; no two services will be
precisely alike. The employees delivering the service frequently are the service in the
customer’s eyes, and people may differ in their performance from day to day or even hour to
hour. It results because no two customers are precisely alike, each will have unique demands or
experience the services in a unique way. For example- Handling a class by a lecturer is not same
in all the days. It may differ based on their situation, student’s knowledge, hour and etc. So
delivery and customer satisfaction depend on employee actions, quality depends on many
uncontrollable factors, no sure knowledge that the service delivered matches what was planned
and promoted.
Problems and Strategies in service MarketingCharacteristics Problems Strategies
Intangibility Can not be easily displayed Cannot be patented
Provide tangible cues Stimulate word of mouth Use personal source Use post purchase
communicationInconsistency Standardization hard to Stress standardization and
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Services Marketing
achieve Hard to setup quality control Can only predict quality or
determine it after service is performed
performance Focus on employee training
programes Consider licensing and other
forms of credential requirements
Inseparability Harder to mass produce product
Less efficient than goods production
Customer must be present
Needs strong training programmes, incentives
Focus on personal attention
Inventory Value can be short lived Capacity is finite Time period may be limited Cannot be inventoried
Focus on convenience saving time, fast service
Extended hours Focus on competence and
expertise Predict fluctuations in demand Manage capacity to balance
supply and demand
Classification of services:
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
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Services Marketing
Nature and Role of Goods Marketing:
Nature and Role of Service Marketing:
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Preproduction Marketing
Post production Marketing
Production
Consumption
Create Awareness
Build Brand Preferences
Demonstrate Benefits
Induction Word of Mouth Communication
Preproduction Marketing
Post production Marketing
Production consumption
Create Awareness
Build Brand Preferences
Demonstrate Benefits
Induction Word of Mouth Communication
Services Marketing
Difference between goods and services:-
Dimensions Services Goods
Characteristics
Entity Intangible Tangible
Storage Not Possible Possible
Quality Varies with time and Person Standardized
Producer Status Inseparable from service Separate from goods
Labour Intensity Tends to be high Lower
Life Still born Longer
Marketing Planning
Demand Supply Fluctuating Stabilized
Supply Constrained Flexible
Title No Ownership Ownership possible
Seasonality Present Goods specific
Consumer reaction Spontaneous Delayed
Pricing Labour based Material Based
Need satisfied More emotional More physical
Basis of Competition Personalization Technology
Channels Shorter Longer in most cases
Repairs Impossible Possible
Replacement Rare Common
Forecasting Short run Long-run
ForecastConsumer behaviour &
arrival time
Products to place to
inventory
Image Corporate Brand
Physical Movement Of the provider Of the goods
Cost Allocation Difficult Easier
Marketing Strategy
Orientation External & Internal External
Focus Customer Expectations Customer Needs
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Services Marketing
Approach Focused Can be diffused
Operations
Production Spontaneous Time-spread
Customer involvement High Low / absent
Physical presence of the
customerEssentials Hardly necessary
Physical surrounding Very important Not so important
Standardization Only for routine services All over
Facility location Close to customer Near supply
Facility designTo accommodate physical /
psychological needsTo enhance production
Product designEnvironmental plays a vital
roleOnly physical product
Process designImmediate effect on
consumersCustomer not involved
Scheduling As per customer interest Completion fates
Production planning Smoothing results in losses Possible
Inventory Personnel Raw materials
Quality control Variable standards Fixed
Quality objective Zero defection Zero defect
Worker skill Interaction Technical
Time standard Loose Tight
Capacity planning Fluctuation Average
Wage payment Time based Unit based
Type of technology Generally soft Generally hard
Delivery Along with production Separate from production
Organizations
Structure Flatter Taller
Role of higher levels Supportive Demanding
Communication Criss-cross Mainly vertical
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Services Marketing
Service Marketing Mix:
Product: - Service is an intangible product. It consists of a bundle features and benefits that
have relevance to a specific target market such, there is a high level of flexibility and opportunity
to be innovative is designing a product offer.
Price: - The pricing decision is a critical one in services too, as this component of the marketing
mix alone determines the revenue of the firm. Consumer sensitivity to price would be higher in
services than in goods. Though the basic methods of pricing are the same as in goods, the
pricing strategies for services basically depends upon value perceptions of various group of
people that are targeted by the organization.
Place: - Services are intangible as well as inseparable. These two characteristics do not allow a
service firm to follow the same channel options available for goods marketing. Due to the
intangible character of service, traditional wholesalers and retailers cannot be used. As service
cannot be stored and cannot be separated from producers, retailing cannot be an independent
activity in services marketing. Production, distribution and consumption are simultaneous
activities in services. However services have an advantage of using a direct selling approach,
through which services can be offered to the customer at a lower cost.
Promotion: - Consumers are co-producers in the service business. The quality will not only
depend upon the performance of the service provider but also on the performance of the service
consumer. Very few service organizations or service concepts can have readily available mature
performers as consumers. It is the responsibility of service organizations to educate and if
necessary, train customers so as to make them prepared to use the service efficiently. A well
designed promotional programme is on immense help to organizations to inform, persuade, and
train customers to better their experiences.
People: - Service organizations are people oriented. Employees of a service firm constitute the
major competency in undertaking business operations. Every employee of the service
organization is a marketing person, who undertakes either fulltime or part time marketing
activity. Whether an employee is involved in direct contact with the customer or not, if he was
placed on the line of visibility, his behavior, activities, and performance will have a direct
influence on consumer. Service employees are to be trained and motivated for better
performance in marketing activities.
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Services Marketing
Process: - It is a functional activity that assures service availability and quality. The way the
physical setting is designed technically and hoe the functions are scheduled and routed to provide
promised terms, the management of process is to manage service encounters (the interaction
between service employees and customers, customers and service environment, systems and
other facilities) effectively.
Physical Evidence:- Most services cannot be offered without the support of tangibles. Though
customers cannot see the service, they can definitely see the tangible associated, examine them
and try to form an opinion on the service provider. The entire physical object used as evidence
by the customer to assess and expect performance from the service provider. Physical evidence
play a critical role in shaping consumer perceptions and also expectations.
S.No Marketing Mix
1 Product
Physical good feature, quality level, accessories, packaging,
warranties, product line, branding, service lines and after
sales service
2 PriceFlexibility, Price level, Terms, Differentiation, Discounts,
Allowances, Commissions, Perceived Value
3 Place
Channel type, Exposure, Intermediaries, Outlet Locations,
Transportation, Storage, Managing Channels, Accessibility,
Coverage
4 Promotion
Promotion blend, Sales people number, selection, training,
incentives, Advertising Targets, media types, types of ads,
copy thrust, Sales promotion, Public Relations, and Publicity
5 People
Employees recruiting, training, motivation, rewards,
teamwork, Customer education training, Communicating
culture and values, Employees research, Attitudes
6 Process
Flow of activities, Standardardized, Customized, Number of
steps, simple, complex, level of customer involvement,
Policies, Procedures, Employee discretion, Customer
involvement
7 Physical Facility design, aesthetics, functionality, ambient conditions,
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Services Marketing
evidence
Equipment, Signage, Employee dress, Reports, Business
cards, Statements, Guarantees, Furnishing, Colour, Layout,
Noise level
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Services Marketing
UNIT – 2
Marketing Management Process:-
“Analysis, planning, implementation, and control of programmes, designed to create
build and maintain beneficial exchange with target buyers for the purpose of achieving
organizational goals”. - Philip Kotler –
Process:-
Organizing Marketing Planning:-
Developing marketing strategy requires market planning and it is usually preceded by
market analysis. By strategic planning the companies decides what it wants to achieve through
its business based on the marketing opportunities, threats and current market situations. The
marketing information can be gathered thorough marketing research and marketing intelligence.
Marketing research is a system concerned with the structured collection of market information
about marketing effectiveness – such as brand awareness or delivery performance. Marketing
intelligence comprises of the procedure and sources used by the marketing management to obtain
pertinent information about the development in the marketing environment. Marketing research
is more structured and quantifiable and marketing intelligence is more focus on intangible ideas
and trends.
Analyzing Marketing Opportunities:
It is to identify target markets and determine the changing needs of customers and their
bases for choosing among the many alternatives offered. Consumers usually have complex and
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Organizing Marketing PlanningManaging Marketing Efforts
Analyzing Marketing Opportunities
Selection of Target Markets
Developing Marketing Mix
Services Marketing
sophisticated reasons for a choosing a particular services. So service marketers must determine
what specific needs can be satisfied by the type of service offered and what attributes of service
offering are considered most important by consumers. Marketing orientation requires
organizations to monitor their environment to adjust their offerings so that customer needs are
fulfilled.
Selecting Target Market:-
The process of identifying and evaluating marketing opportunities gives rise to the
Segmenting, Targeting and Positioning of services to the consumers. Basically services are
heterogeneous. Because of that different consumers may perceive the same service quite
differently. So marketers segment the total market into smaller target markets that are
characterize by more homogenous needs.
Once the segmented groups are analyzed, the service firm then focuses on meeting the
specific needs of one or more segments. The target market is selected by the service firm after
considering the following criteria.
1) Profitable 2) Viable 3) Accessible 4) Large enough
Positioning is an efforts taken by the service firms to develop a clear image of its services
in the minds of the customers and then to communicate this image to buyers in comparison with
their notions or images with other services.
Developing Service Marketing Mix:-
The marketing mix of services is like that for tangible products, consists of product
planning and development, pricing, promotional activities and channels of distribution and due to
its special and unique features, the marketing mix is extended to include physical evidence,
process and people.
Managing and Controlling Marketing Effort:-
In service firms large number of staff interacts with the customers in the delivery process.
So service firm must mobilize its people willingness and enthusiastic participation and resources
within the organization to put the strategic plan to work. Marketing function in the service firm
cannot be isolated from the other management activities. Heskett lays out a link of activities that
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Services Marketing
emphasis on the interrelation of various activities of the organization. These are summarized as
follows:
1) Customer loyalty drives profitability and growth
2) Customer satisfaction drives customer loyalty
3) Value drives customer satisfaction
4) Employee productivity drives value
5) Employee loyalty drives productivity
6) Employee satisfaction drives loyalty
7) Internal quality drives employee satisfaction
8) Top management leadership underlies the chain success
Service are heterogeneous in nature it is difficult to evaluate and control the service
performance. So they require (a) to minimse performance variability by motivating service
providers and (b) to obtain feedback from customers regarding their satisfaction with the service
providers, which helps to evaluate and control the performance.
Strategies to control service performance is to by establish clear standard for
performance, defining goals for service personnel and specifying the means to attain these goals.
Control system must have at least three different form of control.
1) Performance Control, (2) Profitability Control and (3) Strategic control.
Consumer Behavior:-
Marketing activities are directed towards the consumers. The ultimate success of all
economic activities depends on producing what the buyer consider suitable. The buyers had
some freedom of choice of accepting or rejecting the service of the seller. They purchase
services based on their mental and economic forces. The mental forces creates desires and wants
to satisfy pride, fear, love, fashion, etc., and economic forces which may decide the buying
pattern to choose between those wants and select according to priority of consumption. Thus the
marketer’s prime task is to find what, when, where, how and from whom the consumers decide
to purchase services. So understanding the consumer behavior is must.
There are many factors that influence consumer behavior. Potential customers are
subject to various stimuli. The service firm must understand how the consumer would respond
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Ideal Service
Desired Service
Adequate service
Predicted Service
Services Marketing
to different service feature, rice, appeals, etc along with the major forces in the marketing
environment. All these stimuli influence the buyer’s decision making process and evoke positive
or negative responses towards the services. This model of consumer behavior is called as the
stimulus response model.
Buyers Characteristics:-
a) Cultural Factors, b) Social Factors, c) Personal Factor, and d) Psychological factor
Buyer Decision Making process:-
a) Problem recognition, b) Information Search, c) Evaluation of alternatives, d) Purchase of
service and e) Post purchase decision.
Model of Customer Expectations
Customer expectations are pretrial beliefs a consumer has about the performance of a
service that are used as the standard or reference against which service performance is judged.
Customer expectations consist of five levels: ideal service level, desired service level, adequate
service level, predicted service level, and zone of tolerance.
Zone of Tolerance
Ideal Service: - Consumer’s wished for level of services
Desired Services: - Level of performance customers want or hope to receive from a service
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
StimuliMarketing Other
7 – Ps Economic Technology Cultural Political
Buyer’s Black Box
Buyer BuyersCharacteris- Decisiontics Making
Process
Buyer’s Response
Service ChoiceDealer ChoicePurchase timing
Services Marketing
Adequate Service Level: - Minimum level of service a consumer will tolerate and accept
without being dissatisfied
Zone of tolerance: - Area between the adequate level of service and the desired level of service
Predicted service level: - Level of service consumer actually except from the service firm.
Antecedents of Customer expectations:-
Consumer expectations are influence by internal, external, situation and firm produced
factors.
Internal Factors:-
Personal Needs:- Every human being is having a need and they are also consider as hunting
animal. Because if he is satisfied on his basic need then he has some superior need and he try to
strive that. Maslow hierarch of needs model clearly explained this concept. He identifies the
hierarchy of needs; they are physiological needs, safety needs, social belongingness needs, self-
esteem needs, and self-actualization.
Level of involvement:- Consumer’s level of involvement with the service is influencing their
expectations. It has two effects on expectations. First as the level of involvement increases, the
gap between the ideal level of service and the desired level of service narrows. Second, as the
level of involvement increases, the zone of tolerance decreases. Consumers are less tolerant
when a service is less than ideal.
Past Experience:- It includes experience with a particular service vendor, experience with other
vendors within the same industry, and experience with related services.
Service Philosophy:- Personal philosophy concerning the delivery of services is also influencing
expectations. It may be nature, high standards, concerning the quality of service delivery and
very little tolerance for deviations. Other consumers have lower standards and tend to be more
tolerant of service deviations.
External Factors:-
The three external factors that affect consumer expectations are competitive options,
social context, and word – of – mouth communications. These factors can have an impact on all
four levels of expectations
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Services Marketing
Competitive options:- Consumer expectation from a particular service vendor is impacted by the
alternatives available to the consumer. In many cases, expectations of services will not only be
affected by other vendors in the same industry but by what is available in other service
industries.
Social Context:- Consumer’s social situation can have an impact on his or her expectations of
service. People’s desired level of expectations will often increase when they are with others who
are important to them, while their zone of tolerance is normally reduced.
Word of mouth communication:- It is the strongest source of information used by consumers in
forming expectations. Consumers will often seek the opinion of others before purchasing a
service. Word of mouth communication can come from three sources; personal sources, expert
sources, and derived sources and is used to solidify or establish the predicted level of service.
For services with which consumers have little knowledge or experience, word of mouth
communication can be used to establish can be used their desired and ideal levels of service.
Personal sources include friends, relatives and work associates
Expert sources are sometimes sought out, especially for high involvement purchases. Consumers
often believe experts will provide better information than personal sources.
Derived sources are third-party sources
Situational Factors:-
Situational factors such as reason for purchase, consumer’s mood, weather, time
constraints and whether the service is an emergency are influence the consumer expectations.
These are temporary changes in the normal state of things.
Firm Produced Factors:-
Firm produced factors such as promotions, price, distribution, service personnel, tangible
cues, other customers, firm image, and pre-service waiting.
Managing customer Expectations:-
As noted previously, patronage decisions are based on consumer expectations. The
expectations are high then probability of purchase is high. The expectations are low then
probability of purchase is low. Also remember that the expectations are high, and then there is a
greater chance that the service firm will not be able to meet consumer expectation and that the
customer will be dissatisfied. The reverse is true for lower expectations.
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Services Marketing
Service firm face this strange dilemma. Promoting high expectations will increase
patronage but also increase the chances of producing dissatisfied customers. Promoting lower
expectations will ensure satisfied customers, but the chances of getting customers to buy the
service are greatly reduced. Therefore, the ideal goal is to promote the exact service customers
expect. If firms can match expectations and service customers are satisfied.
Managing customer expectations is a critical component in the marketing plan of a
service business. Consumer expectations must be managed during the pre-purchase phase, the
service encounter, and the post-purchase phase.
During pre-purchase phase:-
Service providers learn what customer expects, tell customers what they can expect, and
consistently provide the service that customers expect.
During service encounter:-
Three strategies can be used for managing customer expectations. They are service
personnel must communicate with the customer during the service encounter, if possible, service
provides should modify the service to meet the customer’s expectations, and if the service cannot
be modified, the service personnel should explain why the customer’s expectations cannot be
met. The goal during this phase is to ensure the service being provided matches the consumer
expectations.
During the post purchase phase:-
Managing consumer expectations does not stop after the service is performed. Service
firms have three strategies they can use after the service has been completed. First, companies
should communicate with customers immediately after the service is completed to see if
expectations were met. Second, firms can use a follow-up program, such as an evaluation survey
sent to the customer through the mail or a phone call. Third, companies should have a procedure
for dealing with customer who is not satisfied with the service that will assist in managing future
expectations. The goal during this phase is two fold. The primarily goal is to communicate with
customers to see if expectations were met. The secondary goal is to modify future expectations
to increase the chances of repeat purchases.
Market Segmentation:-
It is process of dividing the total market for good or service into several smaller groups. It
is an element of marketing strategy, recognizes the wisdom of specializing to suit the needs of a
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Services Marketing
segment of the market rather than trying to do “all things t all people”. The purpose of
segmentation is trying to identify specific user group / groups then pursue it with the tailored
products or services supported by appropriate marketing mix strategies.
At one extreme, service firms historically those with a relatively small number of
customers; each of whoms is vitally important treat customers as individuals and develop
individual marketing plans for each customer. At other extreme, some service firms offer one
service to all potential customers as if their expectations, needs, preferences were homogeneous.
Between these two extremes are options that most service marketers choose – offering different
services to different groups of customers. To do this effectively, companies need market
segmentation and targeting.
Process for Market Segmentation and Targeting in Services:-
1. Identify bases for segmenting market:- Market segments are formed by grouping customer
who share common characteristics that are in some way meaningful to the design, delivery,
promotion or pricing of the services. Common segmentation bases for consumer markets are
demographic segmentation, geographic segmentation, psychographic segmentation, behavioral
segmentation and techno graphic segmentation.
2. Develop profiles of resulting segments:- Once the segments have been identified it is critical
to develop profiles of them. In consumer markets these profiles usually involve demographic
characteristics or psychographic segments. Of most importance in this stage clearly understands
how and whether the segments differ from each other in terms of their profiles. If they are not
different form each other, the benefits to be derived from segmentation, that is, from more
precisely identifying sets of customers, will not be realized.
3. Develop Measure of segment attractiveness:- The fact that segments of customers exist does
not justify a firm’s choice of them as targets. Segments must be evaluated in terms of their
attractiveness, size and purchasing power of the segments, worth of investment in marketing and
relationship cost associated with the group, accessibility, and availability of marketing vehicle to
reach targeted customers.
4. Select Target Segments:- Based in part on the evaluation criteria the service marketers will
select the target segments for the service. The must decide if the segment is large enough and
trending toward growth. Market size will be estimated and demand forecasts completed to
determine whether the segment provides strong potential. Competitive analysis, including an
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Services Marketing
evaluation of current and potential competitors, substitute products and services, and relative
power of buyers and suppliers, will also help in the final selection of the target segments. Finally
the firm must decide whether serving the segment is consistent with company objectives and
resources.
5. Ensure that segments are compatible:- Services are often performed in the presence of the
customer, the services marketers must be certain that the customers are compatible with each
other. If during the non peak season a hotel chooses to serve two segments that are incompatible
with each other. For example families who are attracted by the discounted prices and college
students on their summer break it may find that the two groups do not merge well and lead to
negatively influence each others experience and hurting the hotels future business. In identifying
segments it is thus important to think through how they will use the service and whether
segments will be compatible.
Basis for Segmentation:-
1) Geographic segmentation:- Divides consumer on the basis of countries, regions, states,
cities and towns.
2) Demographic segmentation:- It is the study of people in the aggregate, including
population size, age, sex income, occupation and family life cycle.
3) Psychographic segmentation:- It is a technique that classifies life style by investigating
how people live, what interests them and what they like. It is also called as style analysis.
It is otherwise known as dividing market into segments on the basis of consumer life
styles, social class, or personality profile.
4) Volume segmentation:- Classification of consumers based on usage rate, usage expenses
and brand loyalty.
5) Benefit Segmentation:- It is the process of grouping consumers into market segment on
the basis of different benefits sought from the product.
Approaches to Target Market:
Undifferentiated Marketing:- A company’s attempt to appeal to the whole market with a single
basic marketing strategy intended to have a mass appeal. It is other wise known as mass
marketing
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Services Marketing
Differentiated Marketing:- A company’s attempt to appeal to two or more well defined market
segments with a marketing strategy tailored to each segment.
Concentrated Marketing:- A company’s attempt to appeal to one well-defined market segment
with one tailor made marketing strategy.
Target Market Approaches A Comparison
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Services Marketing
Unit - 3Service Quality:
The evolution of quality concepts and movement had been the subject of operational
managers in the manufacturing industry. Recently, quality has gained relevance in context of
service industry with reference to customer needs and expectations. The importance of quality is
recognized every where the concept seems to refer to several different areas, namely, quality of
the product, quality of the process, quality of the delivery system and quality as a general
philosophy of the organsation.
Quality is a difficult concept to define in a single definition. Quality can be viewed from two
points of view:
2. From the point of the service provider – to set up standards or specifications in the
manufacturing process as well as the output which is totally objective and technical in
nature?
3. From the point of view of the customer – service quality occurs only when the service
firm provides services to the specifications that satisfy their needs. The idea of quality
here is subjective and will be strongly linked to the needs and expectations of the
customer.
The process used by consumers in evaluating services differs from the process used for
goods. Services tend to be high in experience and credence qualities while goods tend to be
high search qualities.
Search Qualities:- Attributes that consumers can evaluate prior to purchasing a service
Experience Qualities:- Attributes that consumers can evaluate only during or after the
consumption process
Credence Qualities:- Attributes that consumers have difficulty to evaluate even after the
consumption is complete.
Quality Definition Examples
Search Can be evaluated prior to purchaseLawn mover, water service
for automobiles
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Services Marketing
Experience Can be evaluated only after purchase Food, entertainment
Credence Difficult to evaluate even after the service Funeral service, Education
Service Quality Dimensions:
Berry, Parasuram, and Zeithaml conducted extensive research in service quality and
identified 10 dimensions used by consumers
Dimensions Definition Examples
TangiblesAppearance of physical, facilities,
equipment, personnel and communication
Are the bank facilities
attractive?
ReliabilityAbility to perform the promised service
dependably and accurately
Is my credit card statement
free of errors?
ResponsivenessWillingness to help customers and
provide prompt service
Is my stock broker willing
to answer my question?
CompetencePossession of the required skills and
knowledge to perform the service
Does the repair person
appear to know what he is
doing?
CourtesyPoliteness respect consideration and
friendliness of contact personnel
Does my broker refrain
from acting busy?
CredibilityTrust worthiness, believability, honest of
the service provider
Does the bank have a good
reputation?
Security Freedom from danger, risk or doubtA hotel providing safes for
expensive items
Access Approachability and ease of contact
Is the repair service
facility conveniently
located?
CommunicationKeeping customers informed in language
they can understand and listening them
Does my broker avoid
using technical jargon
Understanding Making the effort to know customers and Is the repair firm willing to
be flexible enough to
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Services Marketing
the customer their needsaccommodate my
schedule?
In their subsequent research they found a high degree of correlation between most of
these variables and consolidated them into five broad dimensions. (RATER)
1. Reliability - Ability to perform the promised service dependably and
Accurately
2. Assurance - Knowledge and accuracy of employees and their ability to covey
trust and confidence
3. Tangibles - Appearance of physical facilities, equipments, personnel ad
communication material
4. Empathy - Caring, individualized attention the firm provides its customers
5. Responsiveness - Willingness to help customer and provide prompt service
GAP Analysis:
In 1985, Parasuram, Zeithaml, and Berry developed a model of service quality. Their
model claims that the consumer evaluates service quality experience as the outcome of the gap
between expected and perceived quality. The model emphasizes n the key requirement s for a
service provider delivering the expected service quality.
The model identifies five gaps that can cause unsuccessful service delivery. By learning
the flow of the model, it is possible to exercise greater management control over the consumer
relationships. The study of this model should lead to an improved realization of the key issues at
which service providers can influence the satisfaction of consumers.
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Word of mouth communications
Personal Needs Past Experience
Services Marketing
Gap 5
Consumer
Marketer GAP4
Gap1
Gap 3
Gap 2
Gap – 1 ( Gap between customers expectation and management perceptions)
Causes of Gap Strategies to reduce gap
Failure of management to identify
consumer expectations
Communicate with customers
Conduct market research
Encourage upward communication
Decrease layers of management
Gap – 2 ( Gap between management perceptions and service quality specification)
Causes of Gap Strategies to reduce gap
Resource constraints
Market conditions
Management indifference
Top management commitment
Develop service quality goals
Standardization of tasks
Address feasibility of customer expectation
Gap – 3 ( Gap between service quality specification and service delivery)
Causes of Gap Strategies to reduce gap
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Expected service
Perceived services
Management perceptions of consumer exceptions
Translation of perceptions into service quality specification
Service Delivery(Including pre and post contracts
External Communication to consumers
Services Marketing
Employees unaware of specifications
Employees do not have skills to perform
specification
Employees unwilling to perform according
to specifications
Enhance team work
Ensure employee job fit
Ensure technology job fit
Provide employees with perceived control
Develop a supervisory control system
Reduce role conflict
Reduce role ambiguity
Gap – 4 ( Gap between service delivery and external communication)
Causes of Gap Strategies to reduce gap
Poor or lack of communication
Over promising
Increase horizontal communication
Avoid propensity to over promise
Gap – 5 ( Gap between expected quality and perceived quality)
Causes of Gap Strategies to reduce gap
Perceived quality by the customer depends
on the nature of gaps associated with the
delivery of service quality by the firm
By bridging the gaps 1to 4
Unit – 4People:-
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Services Marketing
In organization manufacturing tangible foods, the personnel perform their duties in the
factories, away from customers. In services, personnel come in contact with the customers in the
process of production and consumption of services. The inseparable nature of service
emphasizes the point that the human element forms an important aspect in the service industry.
According to some authors “people”, the fifth element in the service marketing mix applies not
only to personnel but it recognizes the role of the participants both employees and customers in
the service delivery process. But, as we look at a marketing mix variable as controllable
element, we deal with management of people within the organization as a key task. They are
particularly important in those situations where, in the absence of clues from tangible products
the customer will form an impression of the organization from the behavior and attitudes of its
staff.
In service business, the service personnel reflect the organizational realities, it is through
the interaction with the staff, and the customer forms an opinion of the organization. A service
firm may have all equipment and technical facilities, and yet may not able to provide satisfactory
customer service. This may be due to the lack of interpersonal relationship between the service
provider and customer. In such cases, the customer develops negative attitude towards the firm.
Therefore, service marketers need to develop a high level of interpersonal skills and customer
oriented attitude in employees. According to Zeithaml and Bittner “the service employees are –
the service, the organization in the eyes of the customer and they are the marketer”.
Role of Service Personnel:-
Service employees can be divided into two categories: support personnel and customer
contact personnel. Support personnel are seldom seen by the customer. The quality of the
technical component of service quality is primarily determined by support personnel because
they are generally the ones performing the service.
Customer contact employees are the interface between the service organization and its
customers. These employees are the ones customers see and the ones with whom they interact.
The quality of the functional component of service quality is primarily determined by customer
contact employees because they are more aware of the customer’s needs and wants.
Unfortunately, many service businesses do not understand the value of their employees.
Often they are thought of as mindless robots and disposable components of the operation rather
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Services Marketing
than as actual human resources. Many are paid at or near minimum wage, with a large
percentage earning less than the poverty level for a family of four. Many service employees
have not type of health insurance and are asked to perform monotonous, standardized robotic-
type jobs. Despite these adverse working conditions, companies expect these employees to work
hard and serve their customers with a smile. It is not surprising under these circumstances to see
annual turnover rates in some service industries of 100% or more.
An organization with a high turnover rate not only experiences the direct costs of
recruiting and training new employees, the organization also bears indirect costs and
consequences, such as disruption of the employee team with whom the departing employee was
working. It disrupts the establishment’s productivity because the new employee will need time
to reach the productivity level of the former employee. Most important, customer do not receive
the service that is expected because either new employee doesn’t know what should be done or
the employee who is planning to quit doesn’t care. In the end, the indirect costs in terms of lost
customers and lower productivity are greater than any direct monetary costs encountered.
Service firms must recognize these problems and they must take intensive efforts while
hiring personnel for their organization. The hiring practices based on the job characteristics,
control issue, conflict, stress and etc.,
Job Characteristics:-
Customer contact employees in the service industry serve in a boundary spanning role or
a role of linking an organization or business with its environment thorough interaction between
members of the organization and members of the environment. Support personnel to be
motivated to perform consistent, high quality work for the success of the service firms.
In designing service jobs, firms must be aware of five important motivational job
characteristics. These characteristics are.,
Skill Variety: - Degree or range of abilities required by an employee to do a job
Task identity: - Degree that a job has identifiable units of work with visible outcomes
Task significance: - Degree of impact an employee perceives his or her job has on the lives of
others inside or outside of the organization
Autonomy: - Degree of freedom and discretion an employee has in his or her work design
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Services Marketing
Feedback: - Degree of direct clear information an employee receives from superiors concerning
the effectiveness of his or her performance.
Empathy: - Ability of an employee to identify with the feelings or thoughts of another employee
or customer.
Control Issue:-
A critical element in the customer contact position is the issue of control. Individuals
want control over their and the things that happen to them. Within the service setting, customers
must surrender some control of their lives in order for the service to be performed. Purchasing of
nonprofessional services requires customers to surrender some control during the service
encounter, although usually not as much. To perform the service properly, customer contact
personnel would like to have maximum control. To ensure they get the service they want,
customers want to keep as much control as they can. In addition to these two participants in the
service setting, the firm has an interest in how the service is performed. To ensure the
employees perform the service properly, the firm would like to control the service situation. By
controlling the service encounter, the firm can increase productivity of employees and the cost
efficiency of its operation. The result is a three-way fight for control.
The dominant party in this struggle for control is partly determined by the operational
position of the service business. Firms using the cost efficiency approach will attempt to
dominate the service encounter in order to control costs. Firms using the functional service
quality approach tend to give the most control to the customer contact person, enabling that
individual to build a relationship with the customer. Firms using the technical service quality
approach tend to place the most control in the hands of the support personnel who perform the
service. Customers and employees of firms using the customization approach tend to share
control.
Increasing firm and service personnel control:-
Firms and service personnel must have some control of a service encounter to ensure the
service is performed properly. As already stated the amount of control desired is determined by
the firms’ operational position. The method firms and service employees use to gain control of
the service encounter are physical control, control through leadership, control through rewards,
and educating the customers.
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Increasing customer Control:-
Customers do not like surrendering control of their lives, even in service situations. The
more control customers are forced to surrender to either the service firm or the service personnel,
the greater the probability that the customer will be dissatisfied with the service experience. Yet,
to perform a service, customers must surrender some control. To solve this dilemma, firms
should find ways of increasing a customers’ perceived control, they are more willing to give up
actual control and are more satisfied with the service.
Service firms have two methods of increasing perceived control: behavioral control and
cognitive control.
Behavioral control: - when customers are given the ability to change, modify, or choose how
service will be performed.
Cognitive control: - Belief by customers that they have some control over the service encounter
because of knowledge they have obtained.
Dealing with Conflicts:-
Conflicts among people will occur more service sector than in manufacturing sector
because of labour intensive. An increase in conflict results in increased employees stress. It may
leads to increase employee health problems and absenteeism. A corresponding decline in
productivity and efficiency can also occur. Because of the boundary-spanning role of customer
contact personnel, their position by its very nature is high in conflict.
Types of Conflict:-
Service firms deal with seven different types of conflict. Three types of conflict occur
with employees, three occur with customer and one between customers and employees.
Employee conflict:
Type of Conflict Causes of Conflict Methods for Reducing conflicts
Employee – role conflicts
1. Inequality dilemma2. Dress Code
1.Screen applications carefully2. Provide instruction and training3. Have procedure for employees to complain
Employee organization conflicts
Two boss dilemma 1. Make sure employees understood policies and goals of the firms
2.Empower employees3. Management should train employees in
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
decision making4.Management Should support the decision of employees5. Develop job descriptions for each employee and assign tasks fairly
Employee – employee conflicts
1.Lack of clear communication .2. Lack of designated Chain of command3. Conflict of personalities4. Competition among employees for customersDifference in perceived workloads
1.Clearly communicate to each employee his or her responbilities2. Clearly designate a chain-of-command and be sure it is followed3. Transfer employees whose personalities seem to clash4. Develop a policy for dealing with customers to avoid competing for the same customer.
Employee
– customer
conflicts
1.Either the employee or customer does not follow their expected role2.Mistreatement, misuse or perceived invasion of an employees workforce3. Either the employee or customer does not have behave in a proper or accepted way4. Either employee or customer does not follow the expected or perceived script
1. Train employees in respect to their expected role and script2. Train employees to respect customers and to understand the customer needs to utilize the service facility3. Train employees on how to deal with difficult customers and customer behavioral problems.4. Teach and instruct customers concerning their role in the service and their expected script
Customer Conflicts:-
Type of Conflict Causes of Conflict Methods for Reducing conflicts
Customer – role conflicts
Lack of understanding of their role in the service
1. Provide instruction to customers concerning their role in the service.2. Be empathetic to customers when they do not follow their prescribed role
Customer organization conflicts
Customers disagree with policies and rules of the organization
1.Explain clearly to the customer the rule or policy that is of concern2. Negotiate an equitable settlement with the customer that will not create a major conflict with organizational policies.3. Analyze policies to see if they are fair, out-dated, or need to be changed
Customer – 1.Customers disregard the 1.Train employees in how to deal with
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Customer conflicts
feelings and presence of other customers2. Customer have different expectations from the service provider3. Customer expect different or special treatment from service personnel in the presence of other customers4. Customers are rude toward other customers
customer conflicts2. Separate customers that may conflict with each other3. Treat all customers fairly and the same. If a customer is treated differently, explain to other customers affected why the different treatment.4. Teach customers what to except so all the customers have the same expectations
Employee Customer conflicts:-
Conflicts handle by employees and customers
Customer Employee
Avoidance is displayed by patronizing
another service firm
Avoidance is displayed when the employee
avoids the source of the conflict.
Sometimes this avoidance behavior will be
absenteeism
Retaliation is displayed by spreading
negative word-of-mouth communications
about the firm
Psychological withdrawal occurs when the
employee continues to work, but mentally
disengages from the tasks involved
Direct confrontation occurs when the
customer confronts an employee or
manager of the firm about the service
experience requesting a resolution
Direct confrontation occurs when the
employee directly confronts the conflict
and strives to either resolve, reduce, or
eliminate the conflict
Psychological withdrawal occurs when the
customer continues to patronize the firm,
but is mentally disconnected.
Retaliation occurs when the employee
decides to get even by retaliating against
the firm in some way. Seldom is this form
of dealing with conflict used.
Service Process:-
The service process refers to how a service is provided or delivered to a customer.
Designing a service delivery system is a creative process. Process is the way of undertaking
transaction, supplying information and providing services on a way which is acceptable is the
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
consumer and effective to the organization. It begins with a service concept and strategy to
provide a service with features to differentiate it from the competition. Designing the service
process system involves issues such as location, facility design and layout for effective customer
and work flow, procedures and job definitions for service providers, measure to ensure service
quality, extent of customer involvement, equipment selection and adequate service capacity.
Factors to be considered in the service process design and implementation:-
1.Service Itself:-Identify the service is depend on process or equipments. Identify the service is
having highly intangible attributes or depend on process.
2. Customer Participation:- For most service systems the customer is present when the service
is being performed. Customer participation can increase the degree of customization. Involving
the customer in the service process can support a competitive strategy of cost leadership with
limited customization, if focused on a self customer market. Depending on the degree of
customer involvement a spectrum of service delivery system is possible, from self-service to
complete dependence on a service provider.
3. Degree of customer contact:- Customer contact refers to the physical presence of the
customer in the system. Degree of customer contact can be measured by the percentage of time
the customer is in the system relative to the total service time. In the high contact services, the
customer determines the timing of demand and the nature of the services by direct participation
in the process. The perceived quality of service is determined to a large extent by the customer’s
experience.
4. Degree of Divergence:- A standardized service is designed for high volumes with a narrowly
defined and focused service. The tasks are routine and require a workforce with relatively low
levels of technical skills. For customized services more flexibility and judgment are required to
perform the tasks. In addition more information is exchanged between the customer and service
worker.
5. Location of service delivery:- Service delivery process be located at the service providers
premises or should be process carried out at the customer place. Services that generally require
the customer to come to the supplier have a greater opportunity to control the delivery
experience.
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
6. Complexity of service:- It reflects the number of steps involved in delivering the service.
Whether the service is high or low in complexity and in divergence can be readily determined by
looking at its blue print.
Spectrum of service processes:-
Much as we have thought of manufacturing enterprises in terms of different kinds of
production processes, we can also think of service operations in terms of distinct processes.
With the help of a matrix that contrasts the labour intensity of the process on one hand with the
degree of interaction with customization of the service for the consumer on the other, as shown
in figure 13.1, we can roughly define four reasonably distinct service processes.
Service design Options:-
The service design options are determined by the existence and combination of the
following concepts.
Input uncertainty:- It refers to the service organization’s incomplete knowledge of what
the customer is going to bring to the service and how he is likely to behave during the
service encounter.
Customer Willingness to participate:- It refers to ow far customers wish to play an
active part in service. Customers capacity to become involved can be limited by lack of
knowledge, skills and understand their role.
Diversity of demands:- It refers to the uniqueness of customers demands
Interdependencies: - It refers to different patterns with respect to division of service
work and customization versus and standardization of service actions and
interdependencies.
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Sequential standardized service design:- A customer dominated design in which they
serve themselves after service employees have provided the goods and facilities needed
for self service. It is standardized service in which the front and back office can be
decoupled to allow for efficient delivery of service.
Reciprocal service design:- Joint participation of the parties in which the output of each
becomes the input for the others. The service is produced largely on the basis of
significant interactions between front office employees and customers.
Sequential customized service design:- The bulk of the work here is performed by the
service employees in a system of strong interdependence between back and front office.
Pooled service design:- Most of the work is done by an efficient back office, largely
decoupled from front office disturbances. Customers do not interact extensively with
service employees but engage in the sharing of resources that makes mass service
possible.
Service Process Planning:-
1. Basic technological decision
2. Conversion / material decision
3. Specific equipment decision
4. Process flow design
Blue prints
Flow Charts
Front office / Back office
Layouts
Bench marks
5. People decision
Distribution:
Delivery of services differs significantly from that of the manufactured goods. The
production of goods is followed by distribution whereas services usually cannot be separated
form the service provider. Because of this inseparability characteristic the channels for most
service are short and simple.
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
The distribution system may be defined as the channels, or means used by which the
service provider gains access to potential buyer of the service product. It involves availability
and accessibility of a service to consumers.
Before the formulation of channel structure following aspects of service distribution must
be taken into consideration
There is no actual tangible product which is being distributed
It involves consumers’ movement to the service location. As consumer is part of the
service operation, the method of selling and environment within which service product
purchase is made becomes part of service experience.
The intermediaries / agents play a key role in recommending services to consumers
The service organizations have to devise promotional / distribution strategies suiting
customer coming directly, through agents or other modes.
Service locations:-
Identify the location for the delivery of service is a critical decision. Such decision will
be influence by many factors. The target consumers, the degree of interaction required with
them and accessibility are the major influencing factors. While selecting a location for service
outlets, the following factors are to be considered;
Proximity:- The location of the service outlet should be as close to the target market as possible.
The proximity of the service outlet saves timer and energy costs and also develops affinity
among the consumers.
Image:- The image of the location should match the corporate image of the service company.
The level of acceptability of a location by the consumer varies.
Parking Facilities:- It is becoming an important location factor, particularly in cities and metros.
Convenience:- The location of the service outlet should be convenient for customers.
Convenience is often measured in terms of public transport, safety, security and so on.
Accessibility to other services:- A service outlet requires a host to other services and
infrastructural facilities such as electricity, telecommunications, water and sanitation
Competitive advantage:- The effect of the competition cannot be ignored while taking any
decision in services. The location that provides competitive advantage can be preferred.
Channel Structures:-
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
The means used by businesses to reach their customers are known as channels and the
length of a channel varies for different business.
1. Direct Channel – Distribution channel from producer to consumer with no intermediaries
2. Indirect Channel – Distribution channel from producer to consumer using agents or
intermediaries to assist in the delivery of the service
Channel Option:-
1. Exclusive distribution – Use of a limited number of agents or outlets that carry only one
brand
2. Selective Distribution – Use of a few intermediaries but not all who would like to carry a
particular brand
3. Intensive Distribution – Placing a service with as many different agents or third parties as
possible.
Multi Channel Systems:-
To increase market coverage, many service firms are using a multichannel approach.
Multi channel distribution involves the use of two or more channels to reach one or more market
segments. In addition to increasing market coverage, this strategy often lowers costs of
distribution.
Distribution Growth Options:-
Service firms have seven distribution growth strategies available to them. The three
primary options are multi-site, multi service and multi segment.
Multi-site:- Expansion of ser vice to another location
Multi-service:- Addition of a new service to a firm’s existing service portfolio.
Multi-segment:- Expansion of a current service to a new market segment
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Internationalization:-
Now we are in globalize environment. So each and every organization wants to sole their
products or service in the global market. To be successful in the global market the firm must see
the world as a market made up of many submarkets with different needs and social cultures. The
most successful companies are those that identify a potential market early by identifying unfilled
needs and looking for ways to meet them.
Methods of International Expansion:-
Expanding internationally can be done in one of six ways.
1. Direct Exporting:- Service firm uses domestic resources to perform a service in another
country.
2. Joint Venture:- Entity formed by a merger of a domestic firm and a firm from another
country,
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
3. Direct Foreign Investment:- Firm building and operating a facility in another country.
4. Agents:- Appoint agents in other countries to sell their services
5. Franchises:- Service firm may offer franchises in other counties to sell their services
6. License agreements:- Local firms are given a license to ell and provide the service.
Intermediaries:-
Agents: - An agent is who acts on behalf of the principal and has the authority to create a
legal relationship between the customer and the service principal. The agent receives a
commission or a fixed fee for the service done by him. They normally have a longer
relationship with the service principal.
Brokers: - They normally bring the service provider and the customer together for which
they are paid a commission. They have shorter relationship with the buyer and the seller, as
their activities are transaction based.
Advantages of using agents and brokers:
1. Close to customers
2. Special skills
3. Wider coverage
4. Wider choice
5. Selling and distribution costs are reduced
Disadvantages of using agents and brokers:
1. Loss of control for the service firm
2. Service principals depend on intermediaries to deliver service according to their
specifications
3. Unless the service provider ensures that the intermediary goals, incentives and motives
are consistent with their own, they lose control over the service encounter between the
customer and the intermediary.
Franchising:-
Franchising is a method of expanding rapidly with low capital investments. It is a multi-
site distribution growth strategy involving the selling of a service concept to a third party
who agrees to establish and operate a service facility according to a franchiser’s
specifications. Most franchise contracts allow the franchiser to maintain tight controls over
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
the franchisees’ operation. The franchise facility normally has to be designed according to
franchisee guidelines or may even be owned by the franchiser.
The essence of the franchising concept can be highlighted as follows;
It is a contractual relationship
The franchiser has a responsibility of introducing the franchisee to all relevant areas
in the operation of the business
The franchiser owns a trade name, format and procedure
The franchisee must own his own business
Elements of Franchisee Agreements:-
1. Nature of service to be supplied by the franchisee
2. Geographical territory in which the franchisee can offer the service
3. Percentage of revenue from the service to be paid to the franchiser.
4. Length of the franchisee agreement
5. Initial investment of the franchisee
6. Agreement relating to price, reliability of service promotion
7. Technical and administrative support provided by the franchiser
8. An undertaking that the franchises will not deal with competitor services.
Advantages:
Franchiser Franchisee
Wider distribution Obtained established business
Maintains consistency in quality Reduction of risk
Knowledge of local market Training
Risk Sharing
Offers expert assistanceMotivation
Additional income
Capital for growth
Disadvantages:
Franchiser Franchisee
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Profit have to shareLower in profit due to payment franchise
fee
Difficult to control level of service quality Lack of freedom
Difficult to control franchise imageOperation standards dictated by the
franchiser
Inconsistent quality Uncertainty
Electronic Channels:-
In the last decade, number of technological advances has taken place due to immense use
of EDI (Electronic Data Interchange). These advances have led to:
Increased use of self service operations
Providing data bank services
Electronic banking
E-mail and many more
Distribution of service through electronic channel is without any direct human interaction
because services are distributed through a service distribution system. This channel requires a
pre-designed service and a system to deliver it. Delivery of services though alternate channels,
like ATMs, Call Centre, Internet and Kiosks is growing at an ever increasing pace.
Advantages of Electronic Channels:-
1. Convenience
2. Low cost
3. Wide distribution
4. Customer choice
5. Quality control
Integrated communication:-
To successfully market a service, organizations must have a fully integrated
communications programme. Communications within the marketing context involves informing,
persuading and influencing consumer behavior. An Integrated communications program is the
coordinated use of the various communication mediums to accomplish is central objective.
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Communications include the promotional options of advertising, sales promotions, and personal
selling.
Communication Process:-
The key process underlying the promotion mix is communication, therefore to understand
how the promotions mix influences customers, it is necessary to understand the nature of the
communication process. The communication process shown in the following figure.
Steps in Effective Communication:-
1) Identify the target audience:- All communications must be directed at specific target
audience. The audience could be potential buyers of the company’s services, current users,
deciders or influencers. The target audience will critically influence the communicator’s
decision on what to say, how to say it, when to say it, where to say it, and to whom to say it.
2) Determine communication objectives:- All communication seeks to persuade to think, fell or
act in a particular way in their relationship with a brand. The objective should, logically, be
stated in those terms. The stages of relationship between consumer and brand, and the steps
takes to arrive at a purchase decision have been mapped in various easy over the years. The
combinations of emotional and rational elements in buying elements in a buying decision,
combined with extensive external pressures mean that any purchase decision is very complex
and that each is probably unique. R.H.Colley in early 1960 suggested an approach Called
DAMAR approach. It means Designing Advertising Goals and Measuring Advertising
Results. It serves as a example of what are generally agreed to be the main elements of the
consumer decision making process
3) Designing the message:- After defining the desired audience response, the communicator
movers to developing an effective message. Ideally should gain attention, hold interest,
arouse desire and elicit action leading to satisfaction (AIDAS Model). Formulating the
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Sender Encoding Media Decoding Receiver
Feedback Response
Services Marketing
message will require solving four problems, what to say (Message content) how to say it
logically (Message structure), how to say it symbolically (Message Format), and who should
say it (Message source).
4) Selecting the communication Channel:- It is necessary to select efficient channels of
communication to carry the message. Communication channels are of two broad types,
personal and non personal.
Personal Communication Channels involve two or more persons communicating directly
with each other.
Non personal communication channels carry messages without personal contact or
interaction.
5) Determining the total promotion budget:- Promotion expenditure could become a drain on
an organization’s resources if no conscious attempt is made to determine an appropriate
budget and to ensure that expenditure is kept within it. Number methods are commonly used
to determine an advertising budget. They are what can be afforded, percentage of sales,
competitive policy and objective and task.
6) Deciding on the promotion mix:- The promotion budget must be effectively distributed
among the four promotion tools of advertising, sales promotion, public relations and sales
force.
7) Measuring Promotion’s results:- After implementing the promotional plan, the
communicator, must measure its impact the target audience. This involves asking the target
audience whether they recognize or recall the message, how many times they saw it, what
points they recall, how they felt about the message, and their previous and current attitudes
toward the service and the company.
8) Managing Coordinating the marketing communication Process:- The stakes are high,
communication process is complicated and communication is expensive, therefore it is
imperative that it be coordinated. Other wise the messages might be ill timed in terms of the
availability of goods; they may lack consistency; or they might not be cost effective. Left
alone each manager of communication resources will fight for more budgets irrespective of
the relative merits of each tool.
Role of Communications in services:
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
Developing a effective communications program begins with an understanding of the role
of communications within the service organization. The purpose of communications is to
inform, persuade, or influence consumer behavior. However, the specific role of
communications will vary depending on the purchase phase.
Communication and purchase process:-
The purchase process consists of three phases: the pre-purchase phase, the consumption
phase, and the post-purchase phase. Communications is a critical component of each phase.
Pre-Purchase phase:- In the pre-purchase, communication can be used to accomplish any of the
following objectives. a) reduce purchase risk, b) Increase the probability of a purchase, c)
develop the corporate image, d) build brand equity, and e) increase awareness.
Consumption Phase:- During the consumption phase, communications can be used to
accomplish two objectives: enhance customer satisfaction and increase repeat purchase.
Post-Purchase Phase:- Post-purchase communication are designed to reduce cognitive
dissonance, simulative positive word mouth of communications, or increase repeat purchase
behavior.
Advertising:-
It is a paid form non-personal presentation about the products or services to their target
consumers. It is the best tool for building brand and firm equity. It is able to reach a vast
number of consumers simultaneously and is highly flexible.
Role of Advertising:-
1) Informative advertising:- It provides information to an audience about a service.
Eg:- A service retailer advertises its operating hours and store locations
2) Persuasive Advertising:- It involves an effort by the advertiser to convince consumers of a
particular point of view.
Eg:- A service retailer advertises it offers the highest quality service of anyone in town.
3) Reminder Advertising:- It involves the use of cues in an advertising to enhance brand and
firm recall.
Eg:- A service retailer uses a billboard to promote the brand name and prove the location of
the facility
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET
Services Marketing
4) Action inducing advertising:- It attempts to persuade viewers to either purchase a service or
inquire about it.
Eg:- A service retailer offers a 40% off coupon in its advertisements to encourage customers
to patronize the store.
Advertising and Service Characteristics:-
Services possess four unique characteristics. Advertising can be used to reduce the
negative impact of these characteristics. Decreasing intangibility, pershiability, inseparability,
and variability can be beneficial to service firms in the following ways;
It can increase the probability of a purchase by the consumer
Consumer expectations are more clearly defined and understood by the consumer
The perceptions of service quality are normally enhanced since the consumer know what
to except
The level of customer satisfaction with the service increases since consumer go into the
service experience with more knowledge about what will happen.
Ways Advertising can be used
Explanations Example
Intangibility It can be reduced by including
tangible cues in the advertisement
An airline shows the interior of the
airplane in the advt. when discussing
comfort
Perishability It can be reduced by informing the
public about demand levels of the
firm
A resort advertises non-peak periods
encouraging vacationers to book
their trips
Inseparability It can be reduced by advt. the
automation of the service
A bank advertisers their online
banking services
Variability It can be reduced by promoting
either the industrialization or
customization of the service
A fast – food restaurant advertises
they will make your sandwich the
way you want it
Reducing
Purchase risk
It can be minimize through reducing
the consequence component of risk
An automobile repair service advt.
all of their mechanics are certified as
well as receive special training
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Services Marketing
Consumer
positioning of
the firm
Through Advt, the position of the
service relative to the competition
can be reinforced
An accounting service positions
itself as the best accounting service
for retail business operations
Develop brand
loyalty
By promoting the quality and image
of the brand, brand loyalty is
enhanced
An internet service provider
promotes the quality of their brand
name
Encouraging
repeat purchase
behavior
By supporting sales promotions
advertising can be used to encourage
repeat purchase behavior
A dry cleaner can use advertising to
promote specials and to offer
coupons and premiums.
Sales Promotions:
In recent years, firms have shifted more of their communications budget from advertising
to trade and consumer promotions. Trade promotions refer to offers made by to businesses,
whereas consumer promotions are offers given to end-users or consumers.
Reason for shifting to sales promotion:
1. Trade and consumer promotions normally have an immediate impact on sales, whereas
advertising takes a longer period of time
2. Sales promotions is increasing brand proliferation and parity among service firms
3. Increase of sales promotions is greater consumer acceptance of promotions and in some
instances their demand for promotions
4. Increase in sales promotions is the declining impact of advertising
Sales promotion options:-
Coupons:- Printed price reduction offers are an excellent strategy for stimulating sales,
especially in the short term
Premiums:- Free merchandise or services offered to customers for purchasing the service
Contests:- A sales promotions that allows customer to win free prizes for performing some
activity or making a purchase
Sweepstakes:- Sales promotion that awards free prizes to customers based on a drawing of
winning tickets
Tie-ins:- Promotion of two or more services offered within the same sales promotions
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Services Marketing
Frequency Programs:- Sales promotions aimed at current customers to increase repeat purchase
behavior and brand loyalty through regarding them for multiple purchases
Sampling:- Free delivery of a service to a consumer with the intent of gaining future purchases
Price-off:- Temporary reduction in the price of a service designed to stimulate immediate sales
increases
Rebate:- Cash reimbursement paid to a consumer with a proof of purchase for a durable service
Refund:- Cash reimbursement paid to a consumer with a proof of purchase for a service.
Use if Sales promotions in meeting communication objectives:-
Objective CouponsPremium
s
Contests
&
Sweepsta
kes
Tie-ins
Frequenc
y
programs
SamplesPrice –
offs
Rebates
&
Refunds
Reduce purchase risk E P N G N E E PIncrease purchase probability E F F G G E E F
Develop corporate image N G P F G F P F
Build brand equity N G P F G F P PIncrease awareness P P E G F G P PEnhance customer satisfaction P G N N F G P N
Increase repeat purchase behavior E E F F E N E G
Reduce cognitive dissonance N G N P F N P P
Positive W-O-M P G P P G N P F
E – Excellent G- Good F –Fair P – Poor N – No
Use of Sales promotions and service operational positions:
Positions Coupons Premiums
Contests
&
Sweepstak
es
Tie-insFrequency
programsSamples Price –offs
Rebates &
Refunds
Cost efficiency E F E E G E E P
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Services Marketing
Technical service quality P E P G G E P F
Functional service quality P G F P G G P F
Customization P G P P G P P F
E – Excellent G- Good F –Fair P – Poor N – No
Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET