Service Marketing

Module 1
 A service is a transaction in which no physical goods are
transferred from the seller to the buyer.
 The benefits of such a service are held to be demonstrated
by the buyer's willingness to make the exchange.
 Public services are those that society (nation, state, fiscal
union or region) as a whole pays for.
 Using resources, skill and experience, service providers
benefit service consumers. Service is intangible in nature.
What are services?

Services are the non-physical, intangible parts of our

economy, as opposed to goods, which we can touch or
handle.
 Services, such as banking, education, medical treatment,
and transportation make up the majority of the economies
of the rich nations. They also represent most of the
emerging nations’ economies.
Definition: By Philip Kotler

The most comprehensive definition of a service has

been given by Philip Kotler, who defines a service as
an act or performance that one party can offer to
another that is essentially intangible and does not
result in the ownership of anything. Its production may
or may not be tied to a physical product.
Top Service-based companies in
India
1. Tata Consultancy Service
Tata Consultancy Service (TCS) is an integrated company
that provides consultancy, engineering, and business
solutions to India’s top business firms. This company
started back in 1968 is now ranked as the largest
multinational IT Indian company with a market value of
$169.2 billion.
With over 140 offices spread across 40 plus countries, Tata
Consultancy Service is not only the largest IT service-
based company in India but, counted amongst one of the
most distinct technology-centric companies worldwide.
2. Infosys
Infosys with its market capitalization valued at $ 47.7
billion and 228k employees, is recognized to be one of
the best service-based companies in India.
It is the first company from India that got listed on
NASDAQ (National Association of Securities Dealers
Automated Quotations), known for its exceptional IT
and consulting services.
3. HCL
 HCL Technology is a company that provides multi-service
Solutions to clients of Manufacturing, Financial Services,
and many more different industries with an integrated
digital approach inclusive of modern-day technologies like
cloud, artificial intelligence, data science, etc.
 The company with a digital global transformative
approach justifies its motto of “Reimagining Tomorrow’s
Enterprise Today”.
 HCL is counted in the leading service-based companies
list because of its standing out Mode 1-2-3 growth
strategy.
Difference in goods and service in marketing

 Goods are the material items that the customers are ready to purchase
for a price. Services are the amenities, benefits or facilities provided by
the other persons.
 Goods are tangible items i.e. they can be seen or touched whereas services
are intangible items.
 When the buyer purchases the goods by paying the consideration, the
ownership of goods moves from the seller to the buyer. Conversely, the
ownership of services is non-transferable.
 The evaluation of services is difficult because every service provider has a
different approach of carrying out services, so it is hard to judge
whose services are better than the other as compared to goods.
 Goods can be returned to or exchanged with the seller, but it
is not possible to return or exchange services, once they are
provided.
 Goods can be distinguished from the seller. On the other hand,
services and service provider are inseparable.
 A particular product will remain same regarding physical
characteristics and specifications, but services can never remain
same.
 Goods can be stored for future use, but services are time
bound, i.e. if not availed in the given time, then it cannot be
stored.
 First of all the goods are produced, then they are traded and
finally consumed, whereas services are produced and consumed
at the same time.
Service factors influencing the
growth of service sector
1. GOVERNMENT POLICIES:
It is Govt. which makes mandatory for price levels,
distribution strategies, defining procedure attributes.
Another important action taken by the Government’s
“Privatization” means the policy to transform
companies. The transformation of such operations like
telecoms, airlines has led to restructuring cost cutting
and more market focused.
Example of government privatization in
airline industry
October 8, 2021: Government announces Tata group
makes a winning bid of Rs18,000 crore for Air India.
* October 25, 2021: Government inks share purchase
agreement with Tata Group for the handover of Air
India. * January 27, 2022: Tata group takes ownership
of Air India
PROS OF PRIVATIZATION:
1. Private companies often operate more efficiently
than public companies
2. Acceleration of technological progress
3. Less bureaucratic work style
4. May attract more highly-qualified people
5. Higher salaries/wages
6. Product quality may improve
7. Service quality may get better
8. Supervision may be easier
9. Lower product prices
10. Additional source of income for governments
2. SOCIAL CHANGES
Now a day there is a drastic change, two members are working, which
requires to hire individuals to perform tasks that used to be performed by
a house hold member.

E.g.1. Child care

2. Laundry
3. Food preparation etc.

Combinations of changing life styles like

 Higher income

 Declining prices for many high technology products –made for people to
buy computers, cell phones etc.
3. BUSINESS TRENDS
 Many professional associations have been forced by Govt. to remove
long-standing bars on adv and promotional activities.
 Franchising has become wider spread in many service industries.
 Licensing of independent entrepreneurs to produce and sell a branded
service according to tightly specified procedures.
4. ADVANCES IN IT:
 Changes come from the integration of computers and tele-
communication
 More powerful software enables firm to create databases that
combine information about customers with details of all their
transaction, so that they can be used to predict new trends, segment
the market, new marketing opportunities.
 The creation of wireless networks and transfer of electronic
equipments such as cell phones to laptops and scanners, to allow
sales and customer service personnel to keep in touch.
Traditional views of Service marketing
 Historical perspectives
 Adam Smith's seminal work, The Wealth of Nations (1776),
distinguished between the outputs of what he termed "productive"
and "unproductive" labor. The former, he stated, produced goods
that could be stored after production and subsequently exchanged
for money or other items of value. But unproductive labor, however
"honorable, ...useful, or... necessary" created services that perished
at the time of production and therefore didn't contribute to wealth.
 French economist Jean-Baptiste Say argued that production and
consumption were inseparable in services, coining the term
"immaterial products" to describe them. In the 1920s, Alfred
Marshall was still using the idea that services "are immaterial
products."
 In the mid nineteenth century John Stuart Mill wrote that services
are "utilities not fixed or embodied in any object, but consisting of a
mere service rendered ...without leaving a permanent acquisition.
Emerging View
 Contemporary perspectives
 When services marketing emerged as a separate sub-branch within the
marketing discipline in the early 1980s, it was largely a protest against
the dominance of prevailing product-centric view. In 1960, the US
economy changed forever. In that year, for the first time in a major
trading nation, more people were employed in the service sector than in
manufacturing industries. Other developed nations soon followed by
shifting to a service based economy.
 "A service is an activity or a series of activities which take place in
interactions with a contact person which provides consumer
satisfaction." Lehtinen, 1983
 "Services are deeds, processes and performances." (Zeithmal and
Bitner, 1996)
"Services are processes (economic activities) that
provide time, place, form, problem-solving or
experiential value to the recipient." (Lovelock,
2007)
"The term 'service'... is synonymous with value. A
supplier has a value proposition, but value
actualization takes place during the customer's
usage and consumption process." (Gummesson,
2008)
Importance of Marketing of
Services
 A key differentiator: Due to the increasing homogeneity in product
offerings, the attendant services provided are emerging as a key
differentiator in the mind of the consumers. Eg: In case of two fast food
chains serving a similar product (Pizza Hut and Domino’s), more than
the product it is the service quality that distinguishes the two brands
from each other. Hence, marketers can leverage on the service offering
to differentiate themselves from the competition and attract consumers.
 Importance of relationships: Relationships are a key factor when it
comes to the marketing of services. Since the product is intangible, a
large part of the customers’ buying decision will depend on the
degree to which he trusts the seller. Hence, the need to listen to the
needs of the customer and fulfill them through the appropriate service
offering and build a long lasting relationship which would lead to
repeat sales and positive word of mouth.
 Customer Retention:
Given today’s highly competitive scenario where multiple
providers are vying for a limited pool of customers, retaining
customers is even more important than attracting new ones.
Since services are usually generated and consumed at the
same time, they actually involve the customer in service
delivery process by taking into consideration his requirements
and feedback. Thus they offer greater scope for customization
according to customer requirements thus offering increased
satisfaction leading to higher customer retention.
 Rise in employment
Aviation, brokerages, tourism, hospitality, software,
entertainment, retail, BPO’s are some of the sectors that get
employments from the service industry. The entire country
gets benefited as a result.
Features/characteristics of services
marketing.
1. Perishability:
Service is highly perishable and time element has great
significance in service marketing. Service if not used in time is
lost forever. Service cannot stored.
2. Intangibility:
Unlike product, service cannot be touched or sensed, tested or felt
before they are availed. A service is an abstract phenomenon.
3. Fluctuating Demand
Service demand has high degree of fluctuations. The changes in
demand can be seasonal or by weeks, days or even hours. Most of
the services have peak demand in peak hours, normal demand
and low demand on off-period time.
4. Inseparability:
Personal service cannot be separated from the individual and
some personalized services are created and consumed
simultaneously.
5. Heterogeneity:
The features of service by a provider cannot be uniform or
standardized. A Doctor can charge much higher fee to a rich
client and take much low from a poor patient.(Diversity)
6. Pricing of Services:
Pricing decision about services are influenced by perishability,
fluctuation in demand and inseparability. Quality of a service
cannot be carefully standardized. Pricing of services is dependent
on demand and competition where variable pricing may be used.
7. Service quality is not statistically measurable:
It is defined in form of reliability, responsiveness,
empathy and assurance all of which are in control of
employee’s direction interacting with customers. For
service, customers satisfaction and delight are very
important.
What is future service marketing?
The future of professional service marketing and the
industry it serves will be radically different in ten
years. Changing clients' demands, employee
expectations, and rapid technological
developments are just a few of the factors that will
create a far different future for business to business
services firms.
Assignment No 1
Topic : What is the Future of service marketing with
examples.
https://www.youtube.com/watch?v=EtdJSOoY4gA
Factors influencing growth of service
sector.
(i) Consumer affluence: Due to the fast rise in the income of consumers –
Personal Security, beauty parlours, entertainment, party hall.
(ii)Working women/Couple: Restaurants, Banking Day Care centres, Packed
food, Home delivery
(iii) Double income no kids (DINK): entertainment, hotels and restaurants,
domestic services, travel resorts, etc.
(iv)Leisure time: travel agencies, resorts, hotels and entertainment, adult
education, distance learning, part time courses, etc
(v)Greater life expectancy: Hospitals, Nursing Homes, entertainment,
investment banking
(vi) Product innovations: Services, repairs, computer, training and
development, education, etc.
(vii Product complexity: Water purifiers, microwave oven, computers, expert
advise, consultancy services
(viii) Complexity of life: legal aid, tax consulting, courier services, insurance,
banking, etc
(ix) New young youth : fast food, computers, Mobiles service, travel, picnic
List of Countries by GDP Sector
Composition
Agriculture Sector: Agriculture Sector contributes 6.4
percent of total world's economic production.
Industry Sector: Industry Sector holds a share of 30%
of total GDP nominal.
Services Sector: Services sector is the largest sector of
the world as 63 percent of total global wealth comes
from services sector.
Importance of Service marketing in
the Economy.
Importance of Service marketing in
the Economy.
Importance of Service marketing in
the Economy.
Importance of Service marketing in
the Economy.
End of Module 1