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SERVICES

MARKETINGIntroduction


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LevittThere are no such things as service

industries. There are only service industries

whose service components are greater or lessthan other industries. Everybody is in

service.


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Growth of services About 80% of USs GDP is accounted for by

services

In India, it is about 60% Matched by a growth in employment

The software industry is growing at a CAGR

of 28% over the past 5 years


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Characteristics of services Intangibility

Perishability

Inseparability

Heterogenity (variability)


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IntangibilityMarketing implications

No patents

Display issues

Communication issues

Pricing


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IntangibilityStrategies

Tangible clues

Personal sources

Word-of-mouth

Post purchase communication


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InseparabilityMarketing implications

Consumer is involved in production

No mass production

Supply demand match

Strategies

Selection and training of contact person

Multi-site location


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HeterogeneityMarketing implications

Standardisation difficult

Quality control difficult

Strategies

Industrialise

Customise


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PerishabilityMarketing implication

No inventorisation

Demand management

Develop off peak pricing

Non-peak promotion & demand creation Develop complementary services

Create reservation systems


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PerishabilityCapacity management

Use part time employees

Lower options or supply base-versions

Increase efficiency or multi-tasking

Get more participation of consumer

Share capacity

Expansion options


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Consumer evaluation of services

Consistency (reliability of performance)

Concern (prompt service, etc)

Competence (knowledge and skills)

Contact (approachability and access)

Courtesy (politeness)

Communication (keeping customers

informed)


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Consumer evaluation of services

Credibility (trust)

Confidentiality (security at ATM)

Customer knowledge (effort to understand thecustomer)

BatesonHigher degree of perceived control

leads to greater satisfaction


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The Service product

The core service

Facilitating servicesmandatory?

Support servicesdo not facilitate theconsumption of core services

Brand


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Pricing

Pricing strategy can help in handling demand

fluctuations

Factor in cost of tangible clues Price may be used as a quality indicator

Price should be used to ward off competition

from....


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Customer as competitor

During a party, housewife vs catering service

During transfer of residence, packer & mover

vs family Laundry vs spouse,

Taxi vs walk it down

Beauty care services vs do-it-yourself


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Place

Brokers

Agents

Franchisee


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Promotion

Consumers of services are less likely to buy

without prior information, than those of goods

Importance of personal relationship Competency, consistency are main messages

Post purchase communication significant


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People

Internal marketing

Employees are the first market

Focus on developing customer-consciouspersonnel

Investing in people quality is investing in

product quality


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People

Compete as hard for employees as forcustomers

Give the employees a vision to believe in Develop skill and knowledge

Stress team play

Give freedom and structure Measure and reward performance

Listen to employees


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Physical evidence

Customer makes purchase decision on

perceptions based on tangible clues

Essential evidences (cannot be possessed) Peripheral evidence (can be possessed)

Physical facilities are important in facilitating

the delivery of services


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Service gaps

Marketing information gap - Not knowing

what the customer expects

Standards gap - Inability to set the right typeof standards

Service performance gap - Not delivering to

service standards Communication gap - Mismatch between

promise and performance


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Measuring service delivery

Reliability

Tangibles

Responsiveness

Assurance

Empathy


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SERVICES

MARKETINGRe-introduction


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SM Paradigm

Paradigmfundamental set of assumptions

Shapes formulation of theory, focus data

gathering and influences research gathering The validity of underlying assumptions should

be open to challenge


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IHIP

Kerinintangibility, inconsistency,

inseparability and inventory

Kotler Pride & Ferrell add customer relationship and

contact


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Differences between services and

goods

Customers do not obtain ownership of goods

Service products cannot be inventoried

Intangible elements dominate value creation

Other people may form part of the product

There is greater variability in operational

inputs and outputs


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Differences between services and

goods

Many services are difficult for customers to

evaluate

The time factor assumes great importance Distribution channels take different forms


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Origin of the terms

IntangibleAdam Smith differentiated

between output of productive and

unproductive labour Also, material and immaterial production

were widely used terms


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Intangibility

Physical intangibilityit cannot be touched

Mental intangibilityit cannot be visualisedbefore experiencing it


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Servicescape: physical aspects

Sensory package to elicit emotional responses

Afacilitatorto shape consumer behaviour

A differentiatorto distinguish fromcompetitors


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Mental intangibility

Mental intangibility is not correlated with

physical intangibility

Search qualitiesattributes that can bedetermined before purchase

Experience qualitiesattributes determined

after consumption Credencehard to evaluate even after

consumption


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Heterogeneity

Performance variation between workers

Also from one customer to another

External conditions

Customer perceptions of variability

industrialisation, use of technology and

procedures, leads to lesser variability

Standardisation, modularisation and

customisation


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Inseparability

Consumer as prosumer or coproducer

Separable servicesr & m, laundry

To customers possessions


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Perishability

Inventory carrying costs are disguised as idle

capacity

Perishable capacity is not the same asperishable output

Surgery

CDs, tapes and other storages


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Physical acts tocustomers

Physical acts to

possessions

Nonphysical

acts tocustomers

mind

Information

processing

ExamplesHealth care,

haircutLaundry, r&m

entertainment,

education

Banking,

insurance

Intangibility Misleading Misleading Yes Yes

heterogeneity yes exceptions exceptions exceptions

Inseparabilityyes

No exceptions exceptions

Perishabilityyes yes

exceptions exceptions


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So....

Service Marketing is what marketing is all

about.

Make it the core of marketing thought Service marketing ceases to exist as an

independent sub-field


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Focus on independent subfields

High-contact services delivering tangible

actions to the person of the customer

Low-contact highly intangible services like e-services

Separable services

Information-based services that can be stored


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New paradigm: Non-Ownership

Rented goods

Space rental

Labour and expertise rentals

Physical facility usage

Network access


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Implications

Manufactured goods can form the basis ofservices

Services often involve selling slices of largerphysical entities

Labour and expertise is a renewable resource

Time plays a central role

New approach to pricing

Resource sharing (Zipcar, graminphone)

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