Services Marketing

What is a service?
 It is intangible.
 It does not result in ownership.
 It may or may not be attached with a
physical product
 What is SERVICE?
• A service is an act or performance offered by one party to another that is essentially
intangible and does not normally result in ownership of any of the factor of production.
• The Service industries Journals defines “service as any primary or complementary activity
that does not directly produce a physical product, that is, the non goods part of transaction
between buyer (customer) and seller (provider)
• “Services include all economic activities whose output is not a physical product, is generally
consumed at the time it is produced, and provides added value in forms (such as
convenience, comfort or health) that are essentially intangible concerns of its first purchaser”

CONTINUUM OF GOODS & SERVICES

Pure Goods Combination of Goods & Service Pure Services

Difference between physical
goods and services
Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are Production, distribution and

separated from consumption consumption are simultaneous
processes
A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller

interaction
Customers do not participate in the Customers participate in production
production process
Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

 Examples of SERVICE BUSINESS
• Air line
• Courier service
• Hotel
• Beauty saloon
• Marketing research
• Advertising
• Consultancy
• Education
• Legal services
• Medical services
• Maintenance and repair of equipment
• Banking services
• Investment advising
• Accounting and tax services
• IT services
• Transportation services
• Communication services
Characteristics of services
 Intangibility
 Inseparability
 Perishability
 Variability
 Intangibility : Services can not be seen like the physical products before they are purchased. This can cause lack of
confidence and uncertainty on the part of the consumers. To overcome this, consumers tend to look for evidence of
quality and other attributes in the people, place, equipment, communication material, etc. involved in providing the
service. For example, consumers tend to look for evidence of quality in the décor and surroundings of the beauty
parlours. Therefore, the service provider’s task is to manage the evidence, to tangibilize the intangible. Buyers will
look for signs or evidence of the service quality to reduce uncertainty. They will draw inferences about service quality
from the people, place, equipment, symbol and price that they see.
 Inseparability : In contrast to physical goods which are sold away from the place of manufacturing after some gap,
services typically can not be separated from the creator – seller of the service. This means that the service provider
becomes an integral part of the service itself. Hairdresser has to be available to perform the haircut.

The customers also participate to some extent in the service, and can affect the outcome of the service. This
provider – client interaction is a special feature of service marketing.
 Variability : Services are highly variable. While it is possible to offer consistency and uniformity of products, a
service is always unique, it only exists once, and is never exactly repeated even by the same service provider. For
example, a cook can not make exactly the same flavour in a dish. It is attributed to the key role of human element in
providing and rendering services. This is despite the fact that rules and procedures have been laid down to reduce
the role of human element and ensure maximum efficiency. This can give rise to concern about service quality.
Service firms can take four steps towards quality control. The first step is to reduce the role of human element

Mechanise and automate maximum possible operations to achieve uniformity in service. The second step involves

monitoring customer satisfaction through inviting suggestions and complaints so that poor service can be detected
and

Corrected. The third step is investing in good personnel selection and training. The last step is to prepare service blue

print that shows the service events and processes in a flow chart. This can help to standardise service performance

process through the organisation.

 Perishability : Services can not be stored. If due to any reason, a few seats remain empty in a movie show,
that particular service opportunity is lost forever. The perishability of services is not a problem when demand is
steady,, but in times of unusually high or low demand service organisations can have many problems.

The solution to overcome the problem emerging from perishability feature lies in creating match between
demand and supply by price adjustments according to the requirements of a particular situation. Part time
employees can be hired to serve peak demand.
 FACTORS RESPONSIBLE FOR GROWTH SERVICE ECONOMY
One of the major developments during the twentieth has been the growth of service sector. The factors that contribute

to the growing requirements for services sector are as follow :

 Increase in the Disposable Income : The rapid industrialisation and globalisation has increased the national
income of many countries. The resultant increase in per capita income has provided people with more disposable
income. It is natural that people want to have better facilities, high quality recreational facilities, health care &
public utilities and hospitality services. The demand for high quality basic services like laundering dry-cleaning,
beauty care, health clubs, medical services, etc. has also increased.
 Increased Complexity of life & business : In liberalised economies life has become highly competitive. The social
values have also undergone changes. Joint family has been replaced by small nucleus family. The legal
framework regulating the business is undergoing radical changes. All these factors have resulted in greater
demand for specialists in management consultancy, taxation laws, labour laws, international trade laws, marriage
counselling, child care etc. The specialists enable people to perform their tasks efficiently and effectively.
 Working Women : With changes in social values, women have been given an equitable role in economic activities
also. Consequently, the household activities are now performed by domestic help or with the help of time and
energy saving electronic equipments. The demand for dry cleaning services, babysitting, etc. have been
increased. Further, the resulting double income households have created greater demand for services like
tourisom, personal financial services , real estate, etc.
 Technology Advancement : the products like mobile phones, digital plasma televisions, electric trains, etc. are few
of the products that have become a part of everyday life in developed countries. Internet services, computer
programming and software development have revolutionised records. The result is that there is greater demand for
specialists in different areas like computer science, electronics, mechanical, etc. Technological advancements in
the field of computer science have created a huge demand for software engineers, system analysts, computer
programmers, etc.
CLASSIFICATION OF SERVICES
It is required to design & apply marketing techniques to completely satisfy the customer & increase profit &

identify new emerging services.

Classification can be done on following basis :

 Classification by nature of organisation
 Classification by nature of service
 Classification by Customer Relationship
 Classification by nature of Demand
 Classification by Service Package
 Classification by Delivery Method

1. NATURE OF ORGANISATION : The first level of the classification system deals with the nature of
organisation. At this level the purpose, structure, and type of the service is identified.

2. NATURE OF SERVICE : The second level of service addressed the nature of service in terms of the degree
of tradability, to whom or what the action is directed , and the degree of merchantability. Tradability is the
relative involvement between goods and services in the production of the service. Merchantability is the
relative distance between the customer and service provider in the acquisition and performance of service.
3. CUSTOMER SERVICE : At the third level, relationship can be either formal or informal. Formal relationships
are used by facilities such as a cable television company that charges a monthly fee for their services. Informal
relationships are pay –as – use system. In terms of degree of participation, there are two situations, one
customers must be present during the service performance, another is no need of customers during the service
performance. In the first case, décor and environment of the business are important to make the customer feel
comfortable, whereas in service where the customer does not have to be present, such as in credit card
companies, décor can be designed to meet the needs of the staff.

4. NATURE OF DEMAND : The fourth level of service addresses nature of demand, in terms of level of demand
and degree of fluctuation. In case of level of demand there are two situations, either demand exceeds capacity
or demand does not exceed capacity and in degree of fluctuation there can be wide, narrow or no fluctuation

5. SERVICE PACKAGE : Level 5 addresses the issue of service package. A service package is the group of
services and goods offered by a service firm. Under service package there are few categories like :
 Number of service & goods : one service, one service & one good, one service & multiple goods, multiple
services, multiple services and one good, multiple services & multiple goods
 Degree of Equipment base : High, medium, and low
 Degree of customization : High, medium, and low
 Degree of Durability : High, medium, low, relative to customer, can not be defined
6. DELIVERY METHOD : The sixth level of classification scheme deals with the delivery of service in terms of
Availability of service either at one site or multiple site; Type of consumption can be independent, collective or
both; Allocation of capacity such as reservation, order of arrival, or preferential
CHALLENGES CONFRONTED BY SERVICE SECTOR
 Defining and improving quality
 Constantly develop new services that will better meet customer needs
 Communicating and maintaining a consistent image
 Accommodating fluctuating demand
 Motivating and sustaining employee commitment
 Coordinating marketing, operations, and human resource efforts
 Setting prices
 Finding a balance between standardization versus personalization
 Ensuring the delivery of consistent quality
 Tangibilizing the service offering
 Keeping promises made to customers
 SERVICE MANAGEMENT
 Service management is to understand how the organisation should be developed and managed so that the
intended quality is achieved.
 Service management is a total organisational approach that makes quality of service, as perceived by the
customer, the number one driving force for the operation of the business.

FIVE (5) ASPECTS of Service Management :

 It is an overall management perspective which should guide decisions in all the areas of management
 It is customer – driven or market driven
 It is holistic perspective which emphasizes the importance of intra – organisational, cross functional
collaboration
 Managing quality is an integral part of service management
 Internal development of the personnel and reinforcement of its commitment to company goals and strategies
are strategic prerequisites for success.