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SM

Services Marketing

Contact: +923006641921 Usman Waheed

Defining Services

• The Service Industries Journal defines“ service as any primary or

complimentary activity that does not directly produce a physical
product, that is, the non goods part of transaction between buyer and
seller.”

• “Services are those separately identifiable, essentially intangible

activities, which provide want satisfaction when marketed to
consumers and/or industrial uses and which are not necessarily tied to
the sale of a product or another service” - Stanton.
• A service is an activity or benefit 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”- Kotler and Armstrong (1981)
• Zeithmal and Bitner defines Services as deeds, processes and
performance. Here ,
• Deeds are the actions of service provider,
• processes are the steps in the provision of service and
• performance is the customer’s understanding of how the service has
been delivered.
Service Classification
• Service Industries and companies
• Service as Product : it is a wide range of intangible product offering
that customer value and pay for in the market place.
• Customer services: it is service provided in support of a company’s
core products. Companies typically do not charge for customer
service.
• Derived Services: all products and physical goods are valued for the
services they provides. The value derived from physical goods is really
the service provided by the good, not the good itself.
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SM Characteristics of Service

• Intangibility
• They cannot seen, taste, felt or touched in
the same manner that you can sense
tangible goods.
• Market implication:
Service cannot be inventoried.
Service cannot be easily patented
Difficult to communication
Difficult for customer to assess quality.
Perishability
Perishability refers to the fact that service cannot be
saved, stored, resold or returned.
For example
A seat on an airplane or in restaurant.
Market Implication
Inability of Inventory
Demand forecasting and creative planning for capacity
utilization is biggest challenge
Heterogeneity
Because services are performances, frequently produced by humans, no two services
will be precisely alike.
Indeed, with many services, we are purchasing nothing else but the skills of the
suppliers. Because of this, it is often very difficult for both supplier and consumer to
ensure a consistent “product” or quality of service.

Market implication
Ensuring service quality is biggest challenge.
Service delivery and customer satisfaction.
Inseparability
A key distinguishing feature of service
marketing is that the service provision and
provider are inseparable from the service
consumption and consumer. For example, we
cannot take a hotel room home for
consumption; we must “consume” this service
at the point of provision. Similarly, the
hairdresser needs to be physically present for
this service to be consumed.

Market Implication
Mass Production is difficult
The quality of service and customer satisfaction
will be highly dependent on what happens in a”
real time” including actions of employees and
the interactions between employees and
Difference between Goods and
Services
GOODS SERVICES
Tangible Intangible
standardized Heterogeneous
Production separate from consumption Simultaneous production and consumption.
Non Perishable perishable
Contribution of Service sector in
Economy
• The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign
investment flows, contributed significantly to exports as well as provided large-scale employment. India’s
services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and
communication, financing, insurance, real estate, business services, community, social and personal services,
and services associated with construction.
Market Size
• The services sector is the key driver of India’s economic growth. The sector contributed around 53.8 per cent
of its Gross Value Added in 2016-17 and employed 28.6 per cent of the total population. Net services exports
from India reached US$ 67.5 billion in 2016-17 while the sector attracted 60.7 per cent of India’s total FDI
inflows.
• According to a report called ‘The India Opportunity’ by leading research firm Market Research Store, the
Indian mobile services market is expected to reach $37 billion in 2017 and grow by 10.3 per cent year-on-year
to reach US$ 103.9 billion by 2020.
• Out of overall services sector, the sub-sector comprising financial services, real estate and professional
services contributed US$ 305.8 billion or 20.5 per cent to the GDP. The sub-sector of community, social and
personal services contributed US$ 188.2 billion or 12.6 per cent to the GDP.
Contribution of Service sector in
Economy
• Service sector is estimated to grow at 8.9 per cent in 2016/17
• The share of services in the world economy stands at 66% in 2013.
The sector also accounted for 45.1% of the jobs in the world economy
in 2013 according to estimates by the International Labour
Organization (ILO).
• Over the years from 2001 to 2013, the percentage share of service
sectors’ contribution to GDP has marginally declined from 68.8% in
2001 to 66% in 2013. It comes as a bit of a surprise as the share of
employment has increased from 39.1% to 45.1% over the same
period.
Why Service Marketing
• Services Marketing refers to the marketing of services as against
tangible products.
• Marketing of services is a relatively new phenomenon in the domain
of marketing, having gained in importance as a discipline only towards
the end of the 20th century.
• Services marketing first came to the fore in the 1980’s when the
debate started on whether marketing of services was significantly
different from that of products so as to be classified as a separate
discipline.
Importance of Marketing of
Services
• Given the intangibility of services, marketing them becomes a particularly challenging and yet extremely
important task.
• 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.
• Service based economy
• Service as a business imperative in manufacturing and IT
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SM Challenges for
Services
• Defining and improving
quality
• Designing and testing new services
• Communicating and maintaining a consistent
• image
Motivating and sustaining employee
• commitment
Coordinating marketing, operations and
human
resource
• efforts
Setting
• prices
Standardization versus
personalization
Challenges for Services Marketing
• How can the organization protect new service concepts from
competitors.
• How does the firm communicate quality and value to consumer.
• How can the organization ensure the delivery of consistent quality
services.
Marketing mix
• The marketing mix definition is simple. It is about putting the right
product or a combination thereof in the place, at the right time, and at
the right price.
• Product
• Product means the goods-and-services combination the company offers
to the target market. Kotler and Armstrong (2010)
• Physical features
• Quality level
• Packaging
• Branding
Marketing mix

Promotion
Promotion includes all of the activities marketers undertake to inform consumers
about their products and to encourage potential customers to buy these products.
Solomon et al (2009).
there are many promotions elements that are often included such as sales, advertising, sales promotion,
public relations, direct marketing, online communications and personal selling.
Physical Evidence
(Physical evidence is) . . . The environment in which the service is delivered, and where the firm and
customer interact, and any tangible components that facilitate performance or communication of the service.
Zeithamal et al (2008)

There are many examples of physical evidence, including some of the following buildings, equipment, signs and
logos, annual accounts and business reports, brochures, your website, and even your business cards.
People
(People are) . . . All human actors who play a part in service delivery and thus influence the
buyers’ perceptions; namely, the firm’s personnel, the customer, and other customers in the service
environment.
Zeithaml et al (2008).
Process
Process is) . . . The actual procedures, mechanisms, and flow of activities by which the
service is delivered – this service delivery and operating systems.
Zeithaml et al (2008).
Place
Place includes company activities that make the product available to target consumers.
Kotler and Armstrong (2010).
Place is also known as channel, distribution, or intermediary.
Price
Price is the amount the consumer must exchange to receive the offering .
Solomon et al (2009).
The company’s goal in terms of price is really to reduce costs through improving manufacturing and
efficiency, and most importantly the marketer needs to increase the perceived value of the benefits of its
products and services to the buyer or consumer.