SERVICES MARKETING

Module I
Dr. Basavaraj Sulibhavi
IBMR Hubballi
Zeithaml and Bitner

Services are deeds, processes, and

performances. Their broader definition states
that 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 that are
essentially intangible concerns of the purchaser.
Kotler

Service as an activity that one party

offers another that is essential intangible and
does not result in the ownership of anything.
Its production may or may not be tied to a
physical product.
 WHAT ARE SERVICES?
• Service industries and companies: include those industries
and companies typically classified within the service sector
where the core product is a service.
Ex: Vasan Eye Care, Nationalized Banks etc..
• Service as a product: represents a wide range of intangible
product offerings that customers value and pay for in the
marketplace. Service products are sold by service companies
and by nonservice companies such as manufacturers and
technology companies.
Ex: TCS etc..
• Customer service: Customer service is the
service provided in support of a company’s
core products.
Ex: Call Centers

• Derived service: the value derived from

physical goods is really the service provided by
the good, not the good itself.
“All products and physical goods are valued for
the services they provide.”
Ex: Medplus offers discounted regular checkups
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 WHY SERVICE MARKETING?
Service-Based Economies: Service marketing concepts and strategies
have developed in response to the tremendous growth of service
industries, resulting in their increased importance to the world
economies.
Service as a Business Imperative in Goods-Focused Businesses:
Companies across industries have discovered the value of service
innovation and service growth strategies. Manufacturers (e.g., GE,
Caterpillar), technology companies (e.g., Avnet, Xerox, IBM),
retailers (e.g., PetSmart), and even packaged goods companies (e.g.,
Procter & Gamble) have begun to discover the potential for service-
led growth.
• Deregulated Industries and Professional Service Needs:
Specific demand for service marketing concepts has come
from deregulated industries and professional services as both
these groups have gone through rapid changes in the ways
they do business.
• Service Marketing Is Different: As the previously mentioned
forces coincided and evolved, businesspeople realized that
marketing and managing services presented issues and
challenges not faced in manufacturing and packaged goods
companies.
• Service Equals Profits
 SERVICE AND TECHNOLOGY
Technology-Based Service Offerings: More recently, people have
seen the explosion of the Internet, resulting in a host of new
services. Internet-based companies like Amazon and
Google/Alphabet offer services previously unheard of and smart
phones now offer innumerable service applications that were not
even imaginable in the recent past.
New Ways to Deliver Service: Technology facilitates basic customer
service functions (bill paying, questions, checking account
records, order tracking), transactions (both retail and business-
to-business), and learning or information seeking.
 STAYING FOCUSED ON THE
CUSTOMER

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Characteristics of services

 Intangibility
 Variability
 Inseparability
 Perishable
 Ownership
Intangibility
Intangibility is the dominant characteristic of
services and is defined as the lack of tangible assets
which can be seen, touched or smelled prior to purchase
The intangible characteristic of services present
service marketers with several problems. The lack of
physical attributes of services makes it difficult to display
or communicate services readily and easily to customers
 The Tangibility Spectrum
Salt
l Soft Drinks

l Detergents
l Automobiles
l Cosmetics
l Fast-food
Outlets
l Intangible
Dominant

Tangible
Dominant l
Fast-food
Outlets l
Advertising
Agencies
l
Airlines l
Investment
Management l
Consultingl
Teaching
Variability
Variability refers to the unwanted or
random variable levels of service quality
customers receive when they support an
organization
The primary reason for variability is the
human element present in the service process,
accordingly sustaining the statement of the
quality of service depends on the service
Inseparability
Inseparability refers to the simultaneous
production and consumption of a service thus it is
often difficult to separate the service provider from
the service performance. Customers are normally
present at and during the service performance and
play an active role in the service production process.
The quality of the service performance is dependent
on the interaction between the service provider and
the customer.
Perishable
Perishability is the inability of a
service to be inventoried or. This characteristic
is of major concern to service marketers
because it inevitably leads to supply and
demand problems.
Ownership
Customers receive only the right to a
service process when they purchase it.
Subsequently it is assumed that payment
for services buys only the right of access to a
service and not physical transfer of ownership
to customers.
 Services Pose Distinctive Marketing
Challenges
• Marketing management tasks in the service sector
differ from those in the manufacturing sector
• The Challenges are:
1. Most service products cannot be inventoried
2. Intangible elements usually dominate value creation
3. Services are often difficult to visualize and understand
4. Customers may be involved in co-production
5. People may be part of the service experience
6. Operational inputs and outputs tend to vary more widely
7. The time factor often assumes great importance
8. Distribution may take place through nonphysical channels
• What are marketing implications?
 Differences, Implications, and
Marketing-Related
Difference Implications Marketing-Related Tasks
Most service products Customers may be Use pricing, promotion, and
cannot be inventoried turned away reservations to smooth
demand; work with ops to
manage capacity
Intangible elements Harder to evaluate
Emphasize physical clues,
usually dominate service and distinguish employ metaphors and vivid
value creation from competitors images in advertising
Services are often Greater risk and Educate customers on
difficult to visualize uncertainty perceived making good choices; offer
and understand guarantees
Customers may be Interaction between Develop user-friendly
involved in co- customer and provider; equipment, facilities, and
production but poor task execution systems; train customers,
could affect satisfaction provide good support
 Differences, Implications, and
Marketing-Related Tasks (2) ( Table 1.1)

Difference Implications Marketing-Related Tasks

People may be part of Behavior of service Recruit, train employees to
service experience personnel and customers reinforce service concept
can affect satisfaction Shape customer behavior

Operational inputs Hard to maintain quality,

and consistency, reliability
outputs tend to vary Redesign for simplicity and
more widely Difficult to shield
customers from failures
failure proofing
Time factor often Time is money; Institute good service
assumes great customers want service recovery procedures
importance at convenient times
Find ways to compete on
Distribution may take Electronic channels or speed of delivery; offer
place through voice telecommunications extended hours
nonphysical channels Create user-friendly,
secure websites and free
access by telephone
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 People

People All human actors who play a part in

service delivery and thus influence the
buyer’s perceptions: namely, the firm’s
personnel, the customer, and other
customers in the service environment.

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 Physical evidence

Physical evidence The environment in which

the service is delivered and where the firm
and customer interact, as well as any tangible
components that facilitate performance or
communication of the service.

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 Process

• Process The procedures, mechanisms, and

flow of activities by which the service is
delivered, consumed, and co created the
service delivery and operating systems.

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GAP Models of Service
Quality
Key Factors Leading to Customer
Gap
Customer Expectations
Customer
GAP

• Provider Gap 1: Not knowing what customers expect

• Provider Gap 2: Not selecting the right service designs &
standards
• Provider Gap 3: Not delivering to service standards
• Provider Gap 4: Not matching performance to promises

Customer Perceptions
 Gaps in Service Quality
Gap Problem Cause(s)

1. Consumer The service features offered Lack of marketing research; inadequate upward
expectation – don’t meet customer needs communication; too many levels between
mgmt. perception contact personnel and management

2. Management The service specifications Resource constraints; management indifference;

perception – defined do not meet poor service design
service quality management’s perceptions of
specification customer expectations

3. Service quality Specifications for service meet Employee performance is not standardized;
specification – customer needs but service customer perceptions are not uniform
service delivery delivery is not consistent with
those specifications

4. Service delivery – The service does not meet Marketing message is not consistent with actual
external customer expectations, which service offering; promising more than can be
communication have been influenced by delivered
external communication

5. Expected service Customer judgments of A function of the magnitude and direction of the
– perceived high/low quality based on gap between expected service and perceived
service expectations vs. actual service service
9
 The End

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