Unit-1 Lecture Notes (Chapter 2)

Concept of Service Triangle

The Service Triangle, also known as the Services Marketing Triangle, is a strategic
framework that highlights the essential relationships and marketing efforts necessary for
delivering high-quality service. It identifies three key stakeholders: the company (or
organization), the customers, and the employees (or service providers). The model also
defines three types of marketing efforts—internal marketing, external marketing, and
interactive marketing—that work together to ensure a seamless and effective service
experience.

Key Components of the Service Triangle

1. The Company (Organization):

o The organization is responsible for creating the service offering, setting standards,
and ensuring resources are available for consistent delivery.
o It plays a central role in defining the vision, values, and service promise that guide
interactions with both employees and customers.
o The company must align its internal processes and external communications to bridge
any gaps in service quality.

2. The Customers:
o Customers are the recipients of the service and play an active role in shaping the
service experience through their expectations, interactions, and feedback.
o Understanding customer needs and setting realistic expectations are critical to
achieving satisfaction.
o Customer perceptions of service quality are directly influenced by their interactions
with employees and the company’s external communication.

3. The Employees (Service Providers):

o Employees are at the forefront of service delivery, acting as the link between the
company and the customers.
 o They are responsible for translating the company's promises into tangible customer
experiences.
o Their skills, motivation, and ability to engage with customers significantly affect
service quality.

Three Types of Marketing Efforts in the Service Triangle

1. Internal Marketing (Company to Employees):

o Focuses on training, motivating, and empowering employees to deliver exceptional
service.
o Ensures that employees understand the company’s service vision, values, and
standards.
o Activities may include:
 Comprehensive training programs to enhance service skills.
 Recognition and rewards systems to motivate employees.
 Regular communication to align employees with organizational goals.

Example: A luxury hotel chain providing ongoing training to staff on delivering

personalized guest experiences.

2. External Marketing (Company to Customers):

o Involves creating and communicating the company’s service promises to customers
through advertising, promotions, and public relations.
o Aims to set realistic customer expectations about the service.
o Ensures that the company’s message aligns with the actual service experience
delivered by employees.

Example: An airline advertising "on-time flights" must ensure their operations and
staff deliver on this promise consistently.

3. Interactive Marketing (Employees to Customers):

 o Refers to the real-time interactions between employees and customers during the
service delivery process.
o This is where the service promise is executed, and the quality of interaction can make
or break the customer’s perception of the service.
o Requires employees to demonstrate professionalism, empathy, and problem-solving
skills.

Example: A barista in a coffee shop ensuring the customer’s drink is prepared exactly
as requested while creating a friendly, welcoming environment.

Significance of the Service Triangle

The Service Triangle illustrates that successful service delivery depends on aligning all three
components (company, customers, and employees) and maintaining synergy between the
three types of marketing efforts. Any disconnect or imbalance can lead to gaps in service
quality, unmet expectations, and dissatisfaction.

Practical Applications

1. Aligning Internal and External Communication:

A retail chain ensures its employees are well-trained on customer service policies
advertised to customers.
2. Enhancing Employee Engagement:
By investing in employee satisfaction programs, a company empowers its workforce
to provide better customer service.
3. Consistent Service Delivery:
An organization that maintains transparency in its marketing promises builds trust and
loyalty with customers.

The Service Triangle emphasizes that a coordinated effort among the company, employees,
and customers, supported by effective marketing strategies, is the foundation of a strong
service brand.
 7P’s of Service Marketing Mix

The 7P’s of Service Marketing Mix expands upon the traditional 4P’s (Product, Price,
Place, Promotion) to address the unique characteristics of services. Since services are
intangible, heterogeneous, inseparable, and perishable, the marketing mix for services
requires additional elements: People, Process, and Physical Evidence. These elements help
organizations design, deliver, and communicate their service offerings effectively.

1. Product

The product in the context of services refers to the service offering itself, which is intangible
and designed to meet customer needs or solve specific problems. It includes both the core
service (the primary benefit) and the supplementary services (additional features that enhance
the customer experience).

 Core Service: The primary value provided (e.g., a hotel room for accommodation).
 Supplementary Services: Enhancements such as room service, free Wi-Fi, or a fitness
center.

To remain competitive, organizations need to innovate and continuously improve their

service offerings to align with customer expectations.

2. Price

The price of a service is the amount customers pay to access the service. Pricing strategies
for services are more complex than for goods because of the intangibility and perishability of
services.

 Pricing Models:
o Cost-based pricing: Based on the costs incurred in delivering the service.
o Value-based pricing: Determined by the perceived value to the customer.
o Dynamic pricing: Fluctuates based on demand (e.g., airline tickets or hotel
bookings).
Factors influencing service pricing include market competition, customer perception of value,
and costs associated with service delivery.

3. Place

In services, place refers to the distribution channels and the location where the service is
delivered. Since many services are consumed at the point of delivery, the accessibility and
convenience of the location are critical.

 Delivery Channels:
o Physical locations (e.g., a salon or a hospital).
o Digital platforms (e.g., e-commerce websites or mobile apps).

Ensuring convenience for the customer—whether through physical proximity or online

accessibility—enhances the service experience.

4. Promotion

Promotion involves the communication strategies used to inform, persuade, and remind
customers about the service offering. Since services are intangible, promotion must highlight
the benefits and value customers will receive.

 Tools for Promotion:

o Advertising (e.g., TV, radio, social media).
o Public relations to build trust and credibility.
o Sales promotions, such as discounts or trial offers.

Service providers often use testimonials, case studies, and demonstrations to reduce customer
uncertainty and build trust.
 5. People

People are a crucial element in service delivery since employees often directly interact with
customers and shape their perceptions of service quality. This includes both front-line staff
(who interact with customers) and back-end personnel (who support service delivery).

 Key Aspects:
o Recruitment and training to ensure staff are skilled and customer-focused.
o Employee behavior, attitudes, and appearance, which influence customer satisfaction.
o Customer participation, as customers often co-create the service experience (e.g.,
providing accurate information for a tax filing service).

6. Process

The process refers to the procedures, mechanisms, and workflows involved in service
delivery. Since services are intangible, the efficiency and smoothness of the process
significantly affect customer satisfaction.

 Key Considerations:
o Standardization vs. customization: Balancing consistent service quality with
flexibility to meet individual needs.
o Technology integration to enhance efficiency and reduce wait times (e.g., automated
check-ins at airports).
o Managing customer interactions to ensure a seamless experience.

Well-defined processes reduce errors, enhance customer satisfaction, and ensure the service
is delivered as promised.

7. Physical Evidence

Physical evidence includes the tangible elements that customers can see, touch, or
experience to form perceptions about the service. It acts as a proxy for the intangible aspects
of the service.
  Examples of Physical Evidence:
o The ambiance and layout of a restaurant or hotel.
o Employee uniforms that convey professionalism.
o Marketing materials such as brochures, signage, or websites.

Physical evidence reassures customers about the quality of the service and helps build trust in
the brand.

Significance of the 7P’s in Service Marketing

The 7P’s framework helps service organizations effectively manage both the tangible and
intangible aspects of their offerings. By aligning these elements, companies can:

1. Enhance the customer experience.

2. Differentiate themselves in a competitive market.
3. Build stronger relationships with customers.

Each element plays a vital role in addressing the unique challenges of marketing services,
ensuring that customer expectations are met or exceeded.
 New Service Development Process

The New Service Development (NSD) Process refers to the structured series of steps
involved in creating and launching a new service. Since services are intangible,
heterogeneous, and often co-produced with customers, this process requires a balance
between creativity, customer insights, and operational feasibility. A well-defined NSD
process ensures that the service meets market needs while aligning with the organization's
strategic goals.

Key Stages in the New Service Development Process

1. Idea Generation

 Objective: Identify potential service ideas that align with customer needs and organizational
goals.
 Sources of Ideas:
o Customer feedback and complaints.
o Employee suggestions, especially from front-line staff.
o Competitive analysis to identify market gaps.
o Trends in technology and consumer behavior.
 Example: A fitness center might explore ideas such as virtual workout classes based on
customer demand for convenience.

2. Idea Screening

 Objective: Evaluate and filter ideas to select those with the most potential.
 Criteria for Screening:
o Feasibility: Can the service be developed and delivered with existing resources?
o Market Potential: Does the idea address a significant need or opportunity?
o Alignment: Does the idea fit the company’s brand and strategic vision?
 Example: A bank may discard ideas for cryptocurrency advisory services if they lack
expertise in that domain.
 3. Concept Development and Testing

 Objective: Transform the selected idea into a detailed concept and test its appeal to target
customers.
 Key Activities:
o Define the core and supplementary service features.
o Test the concept through focus groups, surveys, or prototypes.
 Example: A restaurant considering a subscription meal service might present mock-ups of
meal plans to potential customers for feedback.

4. Business Analysis

 Objective: Assess the financial and operational viability of the service.

 Key Considerations:
o Cost of development and delivery.
o Revenue projections based on pricing and demand forecasts.
o Profitability analysis to ensure long-term sustainability.
 Example: A healthcare provider might calculate the break-even point for offering telehealth
consultations.

5. Service Blueprinting

 Objective: Create a detailed plan for how the service will be delivered, including customer
interactions and back-end processes.
 Key Components:
o Customer journey mapping to outline touchpoints.
o Workflow diagrams to define service delivery steps.
o Identification of physical evidence and technology required.
 Example: An airline launching an in-flight entertainment app would map the process from
customer login to usage.
 6. Prototyping and Testing

 Objective: Develop a prototype or pilot version of the service and test it in a controlled
environment.
 Types of Testing:
o Internal testing by employees to ensure the process works seamlessly.
o Limited rollout to a subset of customers for feedback.
 Example: A ride-sharing company might test a new premium ride service in select cities.

7. Commercialization

 Objective: Fully launch the service to the market.

 Key Activities:
o Develop marketing campaigns to create awareness and generate demand.
o Train employees to ensure consistent service delivery.
o Establish feedback mechanisms for continuous improvement.
 Example: A coffee chain introducing a mobile app for pre-ordering might promote it with
discounts and exclusive offers.

8. Post-Launch Evaluation

 Objective: Monitor the service’s performance and identify areas for improvement.
 Metrics to Track:
o Customer satisfaction scores and reviews.
o Operational efficiency metrics, such as average response time.
o Financial performance, including revenues and profit margins.
 Example: A logistics company might analyze customer feedback on a new same-day delivery
service to refine its processes.

Importance of the New Service Development Process

A structured NSD process ensures:

 1. Customer-Centric Design: Services are tailored to meet real customer needs.
2. Efficiency: Resources are allocated effectively, minimizing waste.
3. Consistency: All aspects of the service align with the organization’s brand promise.
4. Scalability: The service can grow to meet increasing demand while maintaining quality.

The NSD process helps organizations innovate and adapt to evolving market conditions,
ensuring long-term success in competitive service industries.