SERVICE MARKETING IN PERSPECTIVE

CHAPTER 1

MARKETING
A social and managerial process by which individuals and businesses obtain what they
need and want through creating and exchanging value to others

The activity, set of institutions and processes for creating, communicating, delivering
and exchanging offerings that have value for customers, clients, partners and
society at large

SERVICE MARKETING AS AN EXCHANGE PROCESS

Is a complex process where the organisation identifies the expectations of their target
market and find innovative ways to satisfy the important needs of their customers

MONEY SERVICE
Value for money affected by:
• Rising petrol price
• High interest rates
these need-satisfying efforts and processes occur within
• Lower disposable income
the constraints of the organisations own, limited
resources and the changing developments, occurrences • More demanding customers
and trends in the larger market environment • Eg) Capitec Bank

ORGANISATIONAL ENVIRONMENTS
To be successful in competitive markets, service organisations need to
inspect the wider market environment before launching into a new
business idea - environmental scanning is then used

MICRO ENVIRONMENT
• Organisations mission and vision statements SWOT ANALYSIS
• It’s competencies and capabilities MARKET ENVIRONMENT
• It’s objectives • Customers
• Competitors
• Suppliers
MACRO ENVIRONMENT
• Economic changes • • Intermediaries
Technological changes
• Political changes • International changes
• Legal changes
• Social changes
• Natural changes
SWOT ANALYSIS
POSITIVE NEGATIVE

INTERNAL STRENGTHS WEAKNESSES

EXTERNAL OPPORTUNITIES THREATS

The analysis must addresses the following questions:

1. Will the service address a specific consumer need?
2. Is the service unique enough to offer a compatible advantage?
3. What is the size of the markets?
4. Will market demand be sufficient for the service to enable the organisation to be
profitable?
5. How strong are the actual and potential competitors?
6. Are there sufficient number of suppliers

SERVICE MARKETING MIX (7Ps)

• Anything offered by the organisation to potential customers,
PRODUCT tangible or intangible
• It is difficult to standardise service (processes and people)

PRICE • Chargers, rents, commissions, tuitions, fees, fares, rents

• Designed to cover costs and generate profits

PLACE • Depending on the nature of the service and what customers value

PROMOTION • Marketers must communicate the benefits of their service to

their target audience through communication channels

PHYSICAL EVIDENCE • Difficult to judge the nature of service before consumption

to its intangible nature
• Tangible evidence of the service can be used (brochure)
• Customers relate the quality of the tangible aspects to the
service
 PEOPLE • The staff of the organisation part of the process of service
delivery
• Staff actions have a direct impact on service quality

PROCESS • “How” the service is provided to satisfy the customer needs

SERVICE DELIVERY EXCHANGE PROCESS

Nature of interaction HOW: interaction between service providers and customer
Core Service WHAT WE DO: depends on technical, experience and know-how

Not physical
SERVICES is an act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. It’s production
may or may not be tied to a physical product

DEGREES OF TANGIBLITY

good on its own without

>
- Physical Products service .

1. Pure Tangible goods - products such as toothpaste, salt and deodorants where the
addition of services cannot enhance customer value
2. Tangible goods with accompanying services - car sold with maintenance plan,
BMW is a tangible product but the service element is used to differentiate the
product
3. Hybrid service offers - consists of equal tangible products and intangible services
(NewsCafe)
4. Core service with accompanying minor goods and services - include airlines:
customer purchase transport but also get meals, drinks and magazines (tangibles)
as well as luggage service & hostess serving passengers (intangibles)
5. Pure services - consists of services (medical, legal, travel agencies)
SERVICE ORGANISATION
One in which the perceived value of the offering is determined more by the service
rendered than by any associated product offered

This includes businesses that provide an entirely intangible offering (accounting,

cleaning, legal, health care) as well as businesses that offer both services and physical
goods (restaurants, retail shopping)

CLASSIFICATION OF SERVICES
LEVEL ONE - MEANS OF DELIVERY
EQUIPMENT BASED SERVICES
• Can be divided into automated services and services provided by either unskilled
or skilled providers
• Automated services (ATM)
• Provided by unskilled (cinemas) and skilled providers (airlines)
• Quality of equipment and ability of staff to use it - critical in determining quality of
organisations service

PEOPLE BASED SERVICES

• Can be performed by unskilled, skilled or professional staff
• Quality is determined by training, knowledge and motivation of the staff

LEVEL TWO - DEGREE OF DEPENDENCE ON CONSUMER PRESENCE

• Some services depends on the presence of the customer and others don’t (medical
surgery - patient is required to be present for the service to be performed)
• Not required - online banking

LEVEL THREE - PERSONAL VERSUS BUSINESS USE

PERSONAL USE
• Service is used for customers own enjoyment and benefit (hairdresser)

BUSINESS NEEDS
• Service is bought by business to produce something else of economic benefit
DISTINGUISHING FEATURES OF SERVICES
Intangibility, inseparability, heterogeneity, perishability

INTANGIBILITY
• Often impossible to taste, smell, see and hear

PROBLEMS:
• Cannot be stored - leads to problematic balancing act between the demand for a
service and to queues and long waiting periods
• Cannot be patented - lose competitive advantage
• Complicates the communication process - nothing to demonstrate to the customers
• No physical goods to determine cost from - labour pricing places monetary on
time spent in production

SOLUTIONS
• Stressing tangible cues - message you want to send to customer
• Stimulating positive word of mouth
• Encourage employee to communicate with customers
• Create strong corporate image - reduce risk perceived by customers

INSEPARABILITY
• Services are often produced, delivered and consumed all at once

PROBLEMS
• Physical connection to the service
• Customer involvement
• Customer interaction
• Mass production - individual service provider can only produce limited supply

SOLUTIONS

• Effective selection of contract staff - ensure consistent behaviour amongst service

providers
• Effective customer management - address different needs and expectations
• Investigate opportunities for mass production - find ways to serve large groups
• Support for frontline staff - erase lines of visibility
HETEROGENEITY
• It is often difficult to completely standardise service delivery

PROBLEMS
• Service standardisation
• Quality control

SOLUTIONS
• Customisation
• Standardisation - train contact staff to deliver consistent service

PERISHABILITY
• Inventory holding proved to be impossible

PROBLEMS
• Demand > Supply
• Demand < Supply
• Demand = Supply

DEMAND
• Differential pricing - shift demand from peak to off peak (travel, agency)
• Non peak demand can be cultivated - offering special promotions during lower
demand periods
• Complementary services - to provide alternatives for waiting customers (cocktail
bar, ATM, internet banking)

SUPPLY
• Part time employees during peak demand
• Peak time routines
• Increased customer participation - wakaberry
• Shared services
• Facilities for future expansion - menlyn park buying more land
CHAPTER 1, ACTIVITY 1 QUESTION
To distinguish between product marketing and service marking
Differentiate between the marketing of intangible and tangible goods

Identify and discuss the degree of tangibility that each of the following services have
• Watching a movie at Ster Kinekor
• Renting self-storage
• Subscribing to a Telkom data contract that includes a WI-FI router
• Dry cleaning your clothes

Watching movie at ster kinekor

• Hybrid Service
• As there is an intangible element of the service (viewing the movie on the big screen
with surround sound) and tangible elects such as consuming popcorn, drinks, sitting
in comfortable movie seats

Renting self-storage
• Core service with accompanying minor goods
• Storage space (such as rooms, lockers, containers) known as “storage units” is rented
to tenants on a short term basis being the core service
• Some storage spaces come equipped with a business center with access to the
internet and scan/copy facilities. Provide trolleys, easy access, packing tips which are
considered the small minor services

Subscribing to Telkom data contract that includes a wi-fi router

• Core service with accompanying goods
• Data bundles and internet access is the main service being purchased, but is
delivered by way of minor good (Wi-fi router)

Dry cleaning your clothes

• Pure service
• A dry cleaner only offers the service of cleaning clothes and do not sell any tangible
products
• The customer hands in items that they already own